For six weeks after his card was first declined — trying to buy takeaway chicken before a night shift — he’d visit the bank close to his home in Luton, Bedfordshire, in search of answers. The 45-year-old’s salary from the Royal Mail was being deposited, but his direct debits bounced, leaving him unable to pay bills.
The Halifax branch manager eventually called and said Ahmed could use his account again if he provided ID. Two months after he regained access, both Ahmed and his wife Iram Khan received letters stating that the bank couldn’t maintain a relationship with them. Savings accounts for his young children were also closed.
He was baffled, initially thinking the letters were a scam. He recalls going into the branch on the day his card froze to let them know he would be going on a family holiday to Morocco — a detail that has played on his mind as he’s never received a better explanation of what happened.
“You know what they say, there’s no smoke without fire,” he said in an interview. “But when it happens to you, you’re thinking, but I didn’t do anything.” Ahmed is a familiar figure in his community, having volunteered for a homeless charity. After three decades banking with Halifax, Ahmed now advises his friends to open multiple accounts like him and not “put all their eggs in one basket.”
A spokesperson for Lloyds Banking Group Plc, which owns Halifax, said they couldn’t comment on individual cases unless they were given the customer’s personal details. “We meet all regulatory and legal requirements and do not close an account, or prevent one being opened, based on a customer’s political or personal beliefs,” they said.
Since Brexit campaigner Nigel Farage declared that he’d lost his bank account with NatWest Group Plc’s upmarket Coutts subsidiary in June, the concept of debanking has catapulted into the spotlight. Bank chiefs have insisted they don’t take personal or political beliefs into account when removing access to financial services. NatWest CEO Alison Rose quit after Farage uncovered documents showing that, in his case, the opposite was true.
For Muslim communities in Britain, accessing financial services can prove especially difficult. From delays with applying and problems passing screening checks, to sudden debanking without an explanation, Bloomberg News has spoken to numerous customers who have struggled with the system.
In early August, the Muslim Council of Britain called for an impartial review of whether banks were closing accounts disproportionately. Figures from the Financial Conduct Authority last year showed about one in fifty UK adults are unbanked — a proportion that rises to one in 10 for Muslims.
The government has promised to examine the issue of debanking, both generally and for politicians in particular, who are deemed more of a money-laundering and corruption risk by the banks. Lenders will soon be obliged to give account-holders 90 days’ notice and a reason for cutting them off.
To be sure, banks have good reason to be wary of money laundering, which has been regulated globally since the 1990s and subject to even stricter rules after 9/11 to curb criminal money flows. The consequences for not being tough enough can be huge: After a record $1.9 billion fine for facilitating drug cartels in 2012, HSBC Holdings Plc has pulled back from multiple countries and business lines, partly to avoid reputational risk.
UK lenders have become increasingly keen to close accounts, with almost 350,000 shuttered last year, compared to about 45,000 in 2017, according to FCA data obtained by the Mail on Sunday. Over 1,300 people complained about their account closure to the financial ombudsman last year. Many of those affected get no explanation.
This was the case for one NatWest customer who received a letter two months ago, which was seen by Bloomberg, informing them their account would be closed after 14 years.
When the person, who asked not to be named discussing their finances, complained about discrimination, the bank wrote it was not willing to reconsider the decision or “divulge the precise reason.” The person said they were told by their banker these decisions are rarely reversed and believed there was little point in complaining to the Financial Ombudsman Service. The account was closed in late July.
NatWest, like other banks, declined to comment on individual cases. “Like all UK regulated banking institutions, we are subject to legal and regulatory requirements, and we treat compliance with them as a matter of priority,” a spokesperson said. “This may mean we are required to delay, or refuse to act on a customer’s instructions, and/or restrict, or close a customer’s account.”
UK Finance, the trade body, said “the decision to close an account is only taken after extensive review. If a firm concludes that it cannot continue to offer services, it must communicate this to the customer so far as permissible and in every case treat the customer fairly.”
Loss of Opportunity
Wasif Mahmood, a financial services lawyer, deals with numerous debanking cases affecting marginalized communities in Britain, including small business owners and overseas students. Debanking has far-reaching implications for these groups, leading to a vicious cycle of lost opportunities, he said.
Among Mahmood’s clients are people with cash-and-carry shops from immigrant, Muslim backgrounds, who banks see as vulnerable to money laundering, he said. Lenders were filing Suspicious Activity Reports like a “sledgehammer to crack a nut” as grounds to shut down accounts, he added.
Access to the SAR database is strictly limited to particular law enforcement and government agency staff, and those with a filing against them often aren’t told, in order to avoid the risk of tipping off criminals. Suspicion of money laundering has become a catch-all, said Mahmood, adding that he’s seen the system disproportionately hitting individuals from lower socio-economic backgrounds.
In modern Britain, “you are a non-person if you don’t have a bank account,” the lawyer said.
Restricted banking access for Muslims is not a new issue. In 2014, HSBC faced criticism by rights groups for closing the accounts of Syrian refugees, Finsbury Park Mosque, and the Ummah Welfare Trust, among others. Data provider World-Check apologized and paid £10,000 ($12,753) in damages after wrongly linking the mosque and other individuals to terror activities. The mosque, which was led by radical preacher Abu Hamza until an anti-terrorism raid in 2003, was reopened by new managers who denounced Hamza and worked to rebuild community relations.
Islamic Relief, a major aid agency, had its accounts shut by HSBC around that time, two years after its UBS account was closed. “Some banks are reluctant to deal with humanitarian charities working in the world’s most fragile and complex states because it’s simpler to just say no,” said Alun McDonald, head of media and external relations. He said banks needed to invest in due diligence and update risk management to factor in the UN exemption on humanitarian assistance from sanctioned regimes.
Anas Altikriti, founder of the Cordoba Foundation think-tank, also received a letter from HSBC saying his current and business accounts, as well as those of his then-wife and teenage sons, would be closed during that period. He opened an account with Lloyds Banking Group Plc, only to find it unusable due to constant phone calls about payments in and out of his account, and it later shut him out too.
Over the years, accounts with Banco Santander SA, Halifax, NatWest, and RBS were also closed, he said. In August, he learned his Barclays Plc account had been shut. None of the banks would comment on individual cases.
After investigative journalist Peter Oborne looked into his case, Altikriti discovered he was on a heightened risk list compiled by World-Check Risk Intelligence. He believes it’s because of his views about the UAE, Saudi Arabia, and Palestinian rights. His father is also a politician in Iraq. As a result, he always has two or three accounts at hand, anticipating closures. Currently, he’s waiting for Wise Plc to verify his details for an account he applied for in May.
“These are lives we’re talking about,” Altikriti said in an interview. “I don’t know whether my marriage broke down because of this. I don’t know whether my relationship with clients broke down because of this. I don’t know if my reputation has been sullied as a result of this.”
Issues also crop up at the beginning of the customer journey. The nine biggest lenders are required to offer free basic accounts under the 2015 Payment Accounts Regulations, allowing all legal residents to receive money and pay bills. Around 7.4 million of these accounts exist, yet there are some examples of difficulties.
Nina Mohanty founded Bloom Money, a savings app designed for diaspora communities, in part to address the obstacles faced by such customers in the rest of the financial services industry. Mohanty said there are cases where Palestinian refugees are turned away because banks don’t accept their travel documents, while those with Sudanese passports are rejected because the country is under UK financial sanctions.
“It is very much a broken system,” she said.
Ibrahim Khan, co-founder of wealth management app Cur8 Capital, said he’s never managed to get an account with Monzo or Revolut and has never received an explanation. He believes it’s due to potential sanction matches with his name, so ran the name he uses for banking through Experian and ComplyAdvantage screens. “You can imagine with a name like Muhammed Khan, you’ll get a fair few hits.”
He argued that it highlighted the systemic “racism and bias creep” in screening processes, with algorithms trained on watch lists heavily populated with Muslim, Black, or ethnic minority names. Identity checks that rely on photos also struggle with Black or Brown faces, potentially leading to longer onboarding times and adding a further barrier to access.
Khan said financial institutions look at roughly the same live sanction screens. Setting the “fuzziness” wide on searches – like including every possible spelling of “Muhammed” – can trigger false positives. Banks can generally change the settings on their checks to suit their risk appetites.
Bloomberg News obtained permission from Khan to ask Monzo about his application. “There are multiple factors that influence decisions on whether to offer someone an account,” a spokesperson for Monzo said. “This decision made in 2021 was not determined by any sanctions or PEP screening and had nothing to do with this person’s name.” They declined to give further information on the reason Khan was rejected.
“We have a sophisticated range of ways to screen customers but we can confirm that a customer’s onboarding or offboarding has absolutely nothing to do with their name, race, ethnicity or religion,” Revolut said in a statement.
For Husayn Kassai, the co-founder and former chief executive officer of global identity-checking company Onfido, a key source of frustration has been blacklisting and reduced access to finance. “I don’t think the banks are doing enough to think through their internal biases in the system,” he said.
Lenders are legally required to shut out certain customers to meet money laundering and terrorism legislation, and serve those who meet the qualifications for “basic” accounts. Beyond that, banks set their own risk tolerance, often in private. Kassai points out the grey areas here, with banks’ strict approach to money laundering compliance in retail accounts in sharp contrast to London’s reputation as a haven for money-laundering among the world’s richest.
Institutions are willing to take on greater risks as long as the accounts are “financially lucrative enough,” he said. “Banks have a fundamental duty to the community and must ensure fair and appropriate access to everyone.”
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