Setting up UK bank accounts whilst living abroad

[Tony F Dordogne]

Just picked this up from a round robin letter from a UK MP, may be of interest or useful to some among out happy band:

EXTRACT

Non-residents (`ex-pats`)

UK nationals who are resident abroad and who do not have an address in the UK sometimes experience difficulties in gaining access to domestic banking services.  There are no legal or regulatory barriers to banks providing services to non-residents, but many banks and building societies have decided not to do so, on commercial not regulatory grounds.  I understand that they are driven chiefly by concerns about fraud prevention and additional administrative requirements in dealing with people living abroad.  The number of banks and building societies prepared to offer services is small.

Consumers may find it helpful to know that while the Government cannot offer a referral service to help non-residents, the British Bankers Association has begun to offer an account finder service through its website at www.bba.org.uk. It is intended to help those who have difficulty in finding a suitable onshore account.

Money-laundering (identification) checks

It is reported that some customers continue to experience difficulties meeting identification requirements. It is important that banks should identify their customers for their own commercial purposes as part of the fight against financial crime.  We also recognise that the measures taken need to be proportionate to the risks posed and avoid unnecessary intrusion, as well as being effective.

The requirements on firms to identify customers were originally introduced by the Money Laundering Regulations 1993. Those requirements were updated by the money laundering Regulations 2003, and were further updated in 2007.

However, the Regulations are not prescriptive, instead setting high-level objectives for businesses to meet. It is for them to decide how to interpret the Regulations.  Each will have their own policies on identification, and on the circumstances in which other checks should be undertaken. Government does not prescribe those detailed policies. To help banks and other financial firms make such policies they are assisted by the availability of guidance.  For the financial institutions, this is the Joint Money Laundering Steering Group (JMLSG) guidance notes. The Chancellor approved a revised set of these notes at the end of 2007.

The Government encourages financial institutions to adopt a risk-based approach to customer checks and to follow the JMLSG Guidance Notes, or, where appropriate, other guidance. The JMLSG Guidance Notes encourage firms to act reasonably where, for example, customers do not have passports or driving licenses, or where customers experience difficulties in managing their own affairs. Driving licenses and passports are useful, and banks and other institutions may ask for them as they are the most commonly encountered documents, but our Regulations do not require banks to demand sight of them, and the guidance encourages them to consider a wide range of other evidence.

Under the signature of
Sarah McCarthy-Fry, MP
11th August 2009.

Exchequer Secretary to the Treasury

 

[Glyn]

I am afraid that this is just more of the spin we have come to expect from this Government.

The 'useful' web site that they direct you to is of no use whatsoever to those UK non residents wishing to deposit money in the UK as all it does is refer you to each banks Offshore subsidiary.

It seems that the Government can involve itself in your lives when it is not necessary, such as monitoring what you put in your dustbin, but when it could actually do something worthwhile falls woefully short.

[Russethouse]

Thanks for posting that Tony, trying to make the most of what money my mother has for her, is always difficult because she has never had a driving license and her passport is long out of date. Add to that significant mobility problems which make it difficult to get her to a bank......

[Sprogster]

The problem is that as long as the UK government makes UK based banks liable themselves for UK tax on bank interest paid gross to non residents, who turn out to be UK tax resident, then no UK based bank in its right mind is going to take the commercial risk of operating non resident accounts. That is why they direct this business to their offshore Channel Islands and Isle of Man operations, who usually offer the same cheque/debit card facilities. 

[mint]

[quote user="Glyn"]I am afraid that this is just more of the spin we have come to expect from this Government. The 'useful' web site that they direct you to is of no use whatsoever to those UK non residents wishing to deposit money in the UK as all it does is refer you to each banks Offshore subsidiary. It seems that the Government can involve itself in your lives when it is not necessary, such as monitoring what you put in your dustbin, but when it could actually do something worthwhile falls woefully short.[/quote]

Thank you for putting my thoughts into words much more clearly than I could have done myself!

[Mikep]

I've had similar problems trying to notify a Power of Attorney on my mother's accounts - she's resident in England, I'm resident in France. The money laundering regulations apply to Powers of Attorney too.

I found Lloyds TSB (as it then was) excellent and very helpful, Halifax mediocre, and Alliance and Leicester an absolute bloody nightmare.

Why not just use the bank's Channel Islands subsidiary? You still have to pass money laundering checks, but they are much more used to international operations, and there are few blocks on operating an account. I did have problems with HSBC who wanted to raise heavy charges if we didn't keep £15,000 in our account, so we moved to Bank of Scotland in Jersey - excellent service, no problems, and no charges. Interest is paid gross, and declared and taxed in France.

Naturally I have no connection with any of these apart from as a customer.

[Will]

That's true. The money laundering regulations are usually given as the reason why non-resident accounts can be difficult to open. It's not the regulations themselves that prohibit the accounts, it's the fact that the administration involved can make it uneconomic for the banks to offer them. So they don't, as is their right. Or they direct people to offshore accounts, which are more economical to run, because larger deposits are normally involved.

[AnOther]

The real problem is crass stupidity on the part of the banks in not applying common sense.

The Money Laundering Regulations are oft quoted but if you take the time to actually look them up then essentially this is all they say considering which it should be little more onerous opening an A\C as an expat than as a UK resident.

Meaning of customer due diligence measures

5.  “Customer due diligence measures” means—

(a)

identifying the customer and

verifying the customer’s identity on the basis of documents, data or

information obtained from a reliable and independent source.

Note it makes no mention of place of residence and the vast majority of expats will have more than sufficient documentation to establish their identity within the definition.

Who but a government department could span out 51 sections spread over 10 pages to cover this topic [:'(]

[Jazzer]

The basic problem is that as part of the computerised account openeing procedures at British Banks,a check is made against the electoral roll, and also at credit reference agencies.The first is self expnatory, the second enables the bank to assess what kind of card they can issue and provide a guide to any overdraft or loan request.

Until recent legislation it was almost impossible for many UK residents to open a Bank account, because they failed the second test. Now everyone can open a simple account with only a solo card and are ineligible for any kind of overdraft/loan.

I wouldimagine it to be almost impossible to carry out the same kind of checks for overseas residents.

[Sunday Driver]

[quote user="AnOther"]The real problem is crass stupidity on the part of the banks in not applying common sense.
[/quote]

The real problem seems to be people who have no understanding of things work...

Of course the Money Laundering Regulations make no mention of place of residence because their purpose is to set out the overall legislative framework.  As one would expect, they do not provide low level instructions covering the myriad types of customer and the various risks associated with their accounts.  That is why the BBA Money Laundering Guidelines were created - as explained in Tony's original post.

As Jazzer has pointed out, banks are commercial operations dealing with high customer volumes therefore they have to use automated systems to verify address eg, through links with UK credit reference agencies/voters roll.  Identity documentation must also be capable of being verified as genuine.  In the case of non-UK residents, these automated processes have to be replaced by alternative manual checks, usually at a cost, so from a commercial standpoint, the decision whether or not to accept foreign applications would appear to be a straightforward case of the banks applying common sense.  

 

[quote user="AnOther"]

Who but a government department could span out 51 sections spread over 10 pages to cover this topic [:'(]
[/quote]

There is actually more to the regulations than just this topic.....

Try reading the BBA Guidelines themselves - over two inches thick.  [;-)]

 

 

[AnOther]

Maybe I'm just neive but common sense to me would dictate that the vast majority British expats can demonstrate more than sufficient previous and ongoing financial ties to UK, be they through pensions (state or private), savings, existing bank Accounts, property, past history with credit reference agencies, previous electoral roll information, children in UK - the list goes on and on - to be judged as bona fide applicants rather than potential money launderers.

Like so many other things the little man just trying to do his best is the one who often suffers more than the real crooks [:'(]