Decision Maker Response
Sep 27, 2013 — Thank you for inviting Barclays to respond to this survey. We welcome the opportunity to explain what is happening here and the reasons why.
Firstly, the decision that has been made by Barclays has not been an easy one. From the outset our aim has always been to do the right thing given the constraints upon us. We would like to give you some further background on our decision so you can see what we have had to take into account before coming to a conclusion.
As a global bank, we operate in a very different regulatory environment to money service businesses. It is well recognised in the industry as well as by regulators and law enforcement agencies that some money service businesses (including some money remitters) don’t have the necessary checks in place to spot criminal activity with the degree of confidence required by Barclays’ regulatory environment.
Two recent reports highlight why it’s become even more important for us to take immediate action. These concern instances where the money service sector has been used as a conduit for financial crime, including terrorist financing. In their recently published Annual Financial Crime Report, our regulator, the Financial Conduct Authority, drew attention to the heightened money laundering risks, with the sector “being at particularly high risk of abuse by those seeking to launder money or finance terrorism, and some money service businesses have been seen to be complicit in these activities”.
In addition, a report by the ‘Monitoring Group on Somalia and Eritrea’ to the UN Security Council on 12 July 2013 highlights the financial crime risks in relation to terrorist financing.
If these money service firms have their services abused, it can have significant negative consequences on society, by enabling criminals to move money around and the funding of terrorist attacks.
Barclays does not want to unwittingly facilitate such transactions, given these serious risks.
Additionally, if we were caught up in such transactions Barclays could be punished by our regulators and potentially fined, as we have seen with global banks receiving fines of hundreds of millions for anti-financial crime failures.
The regulatory environment compels us to take reasonable steps to not knowingly or unknowingly facilitate such activities. As a global bank, we must comply with the rules and regulations in all the jurisdictions in which we operate. The risk of financial crime is a crucial regulatory concern and we take our responsibilities in relation to this very seriously.
We have recently reviewed our eligibility criteria for money service businesses to take into account the above regulatory concerns. Having done that, we then assessed our UK money service business clients against our new criteria. As a result of that review, we have asked those clients who in our opinion no longer meet our new criteria to rebank, and provided them with sufficient time to do so, extending deadlines to allow this to happen where appropriate. Only a small proportion of those clients whom we have asked to rebank (4 to be precise) send money to Somalia. The vast majority do not.
Although we have tried to work hard to find a resolution, given the regulatory environment, we believe that we have no choice but to exit these firms. However, to help them and the remittance industry, we have proactively engaged with the UK Government, remittance industry bodies and other stakeholders to discuss the issues around providing banking services to the remittance industry.
We understand how many of you feel about this issue, and hope that this post goes some way towards explaining how important this matter is to us and how we have thought long and hard about the reasoning behind our decision. Barclays remains committed to responsibly supporting the remittance industry and we recognise the benefit that money transfer firms provide to local communities around the world. We are happy to continue to serve companies who, in our opinion, have sufficiently strong anti-financial crime controls and meet our eligibility criteria.
We appreciate all your comments on this, and every one of them helps us make informed decisions for the future. We know not everyone will agree with our decision but hope you can now see why we made it.