Financial News

  • 13 February 2014, 10:25

Laundering Fears Prompt RBS Account Closures

The taxpayer-backed Royal Bank of Scotland (RBS) is to close thousands of customer accounts amid growing international scrutiny of banks' compliance with anti-money-laundering rules.

Sky News has learnt that RBS will shortly begin writing to the holders of around 36,000 personal non-sterling currency accounts to inform them that the product range will be shut down within weeks.

The move is being motivated by a desire to save costs under the stewardship of Ross McEwan, RBS's new chief executive, as well as greater pressure on banks to "know their customers" more thoroughly.

Insiders said on Wednesday that Simon Turner, head of current accounts at RBS, would write to affected customers at both NatWest and the parent brand to offer them alternative arrangements.

In a statement issued to Sky News, an RBS spokeswoman said: "As part of our focus on simplifying our product range, we have taken the decision to close these accounts.

"There are a decreasing number of customers using these type of accounts and we are supporting them to make alternative arrangements."

A source close to RBS confirmed that 36,000 accounts would be affected but insisted the "vast majority" of these were inactive.

The bank declined to say how many of the accounts were registered to customers outside the UK, although it is thought to be a significant minority.

The closure of the accounts comes as many large global banks strengthen their compliance functions by recruiting tens of thousands of new employees following a series of money-laundering and other scandals.

In December, RBS itself agreed to pay $100m to US regulators to settle civil allegations that it violated sanctions prohibiting business dealings with Iran and other regimes.

RBS's agreement made it the latest UK bank to reach a settlement with US authorities, following Standard Chartered's $667m (403m) fine and deferred prosecution agreement in 2012.

HSBC paid a record $1.9bn (1.15bn) fine for money-laundering and sanctions violations after weaknesses were exposed in its operations in Mexico. The bank is now subject to a five-year deferred prosecution agreement with the US Department of Justice.

Other banks have faced criticism for retrenching from overseas operations because of concerns about customer probity.

Barclays said last year that it was disappointed with a ruling preventing it from closing customer accounts in Somalia, adding: "Barclays made a legitimate decision to exit these businesses based upon the well-known risks of money laundering and terrorist financing in the money service business sector.

"The risk of financial crime is an important regulatory concern, and we take our responsibilities in relation to this very seriously."

HSBC, meanwhile, wrote to dozens of diplomatic missions last year to ask them to make alternative banking arrangements.

The decision by RBS to close the personal currency accounts comes a fortnight before Mr McEwan announces the details of his vision for the banks.

Sky News revealed last month that Project Cook would result in thousands more job losses at the Edinburgh-based lender.

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