Britain’s largest retail bank yesterday announced that it had suspended thousands of accounts due to customers failing to provide identity documents after making repeated requests for them to do so within a three-year period.
Lloyds has said that it had no specific concerns about the affected customers but had to block access to their accounts after repeated messages about the stricter regulations were ignored.
It is understood that the frozen accounts made up less then 5% of Lloyds’ offshore accounts.
A spokesman for the bank told the Financial Times: ‘Over the last three years we have made multiple attempts to contact these customers, asking them that they provide us with the necessary information.
‘Unfortunately, where a customer has not provided us with this necessary information we have had to freeze their accounts until we get the information.
‘This is also to protect the customer, as it prevents anybody else trying to use the account if the customer has stopped using it or has moved address.’
Joe Moynihan, chief executive of Jersey Finance Limited – the marketing arm of the finance sector, backed Lloyds’ decision, claiming that the customers had breached Jersey’s regulations.
‘All banks in Jersey are required as part of the jurisdiction’s anti-money-laundering rules to ensure they hold up-to-date information about their customers,’ he said.
‘If customers do not provide the information required or if accounts are considered to be dormant, as can be the case with expatriate accounts, then banks are within their rights to freeze accounts, to protect themselves and their customers.
‘To be clear, this is not part of a crackdown on money laundering, but rather ongoing compliance with Jersey’s high standards of anti-money-laundering, due diligence and “know-your-customer” rules.’
Martin Moloney, director general of the Jersey Financial Services Commission, said that the move reflected Jersey’s ‘high standards of regulation and commitment to tackling financial crime and money laundering’.
‘All financial services businesses in the Island are required to comply with those high standards and, where gaps are identified, they must remedy their activities to ensure compliance,’ he said.
‘Jersey has a mature and sophisticated regime for tackling money laundering and the financing of terrorism and the Island has been recognised by independent global assessors for its leading position in meeting international standards.’
The finance sector has faced increased scrutiny in recent years over its role in combating money laundering and other financial crime.
Last week the Island, as well as the two other Crown Dependencies – Guernsey and the Isle of Man, made a commitment to establishing public registers of beneficial owners of companies, in line with EU member states that are aiming to introduce their own versions by 2022.
The transparency measure, which would make details of individuals who own more than 25% of a company public, could be introduced as soon as 2023 under the pledge.
Transparency campaigners, such as MPs Andrew Mitchell and Dame Margaret Hodge, have called for the public register to be introduced sooner, however.
