Lloyds Banking Group has confirmed it has frozen offshore accounts in Jersey as part of a regulatory process to meet international standards.
This comes after UK newspaper the Financial Times reported that the bank froze the accounts of around 8,000 offshore banking customers as part of a crackdown on money laundering.
The bank has been looking to improve its “know your customer” (KYC) processes, which look at verifying the identity of clients and assessing their suitability, as well as potential risks.
Three-year process
A spokesperson for Lloyds said to International Adviser: “In January 2016, we began to contact certain expatriate banking customers to ensure we were provided with up-to-date information for our records, where customer information was missing.
“This was required to meet international regulatory standards. Over the last three years, we have made multiple attempts to contact these customers, asking 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 account 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.”
Ongoing compliance
Joe Moynihan, chief executive at Jersey Finance, said:“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.
“If customers do not provide the information required or if accounts are considered to be dormant, as can be the case with expat 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.”
Given to charity?
In the UK, assets that have lain dormant for more than 15 years can be donated to a charity called the Big Lottery Fund.
It is a voluntary scheme, currently open to just banks and building societies.
HM Treasury, however, published an industry-led report in April calling for the initiative to be expanded to include shares and bonds, as well as insurance and pension schemes.
Among those represented in the commission was Lloyds Banking Group.
International Adviser reached out to Lloyds for clarification about what will happen to the money in the accounts and, as they are based in Jersey, if they will be eligible to be handed over to the Big Lottery Fund after the required time period.
Regulatory improvement
This news comes just days after the crown dependencies (Jersey, Guernsey and the Isle of Man) finally committed to providing mutual access to each other’s beneficial ownership registers and opening them up to the EU as well.
The crown dependencies will ensure they comply with EU’s Fifth Anti Money Laundering Directive (AMLD5), which was published in June 2018 and gave jurisdictions 18 months to translate it into domestic law.
The directive focuses on enhanced powers for direct access to information and further transparency on beneficial ownership information and trusts.
Jersey, Guernsey and the Isle of Man agreed on three key steps for the islands’ registers:
- The interconnection of the islands’ registers of beneficial ownership of companies with those within the EU for access by law enforcement authorities and financial intelligence units;
- Access for financial service businesses and certain other prescribed businesses for corporate due diligence purposes; and
- Public access aligned to the approach taken in the EU Directive.
