De-banking, also known within the banking industry as de-risking, is the closure of people's or organizations' bank accounts by banks who perceive the account holders to pose a financial, legal, regulatory, or reputational risk to the bank.
Examples of this include the enforcement of anti-corruption and anti-money laundering laws, the closing of bank accounts of sex workers, [1] and people considered to be politically exposed persons. [2]
The closure of accounts is generally performed without giving a reason and without the prospect of appeal. De-banking can have severe consequences for individuals, as it cuts them off from many activities in society.
Following the Nigel Farage Coutts bank scandal, in which Coutts & Co. removed Nigel Farage as a client, the British government has begun an investigation of de-banking practices within the UK banking industry. [3] The Financial Conduct Authority reported that the UK banks were closing nearly a thousand of accounts daily, with just over 343,000 closed in 2022, compared to about 45,000 in 2017. [4]
In September 2023, the FCA announced that it had found that banks had not been closing customers' accounts for political reasons. There had been four accounts that the FCA investigated for potentially having been closed for political reasons but it found that the reason had actually been for the way the individuals had acted towards the staff of the respective banks. Nigel Farage dubbed the outcome 'farcical'. [5]
Accusations of disproportionate de-banking of British Muslims have also resulted in calls for political scrutiny. [6] British Nigerian community has been reportedly affected as well. [7] Poole-born Alexandra Tolstoy suspected that her account might have been closed by NatWest due to her Russian name. [8] [9] Baz Melia MBE accused NatWest of destroying his business by closing his and his family's accounts, which he suspected had happened because of a connection with a Saudi-based business partner. [10] Examples of companies being de-banked for trading with Ukraine were reported by British Ukrainian business groups. [11]
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Multiple instances of U.S. and Canadian banks reportedly dropping Muslim clients on questionable grounds have been covered in the media. [12] In response to the Canada convoy protest of 2022, at least 76 bank accounts linked to the protests totaling CA$3.2 million were frozen under the Emergencies Act. [13]
NatWest Group is a British banking and insurance holding company, based in Edinburgh, Scotland.
Nigel Paul Farage is a British broadcaster and former politician who was Leader of the UK Independence Party (UKIP) from 2006 to 2009 and 2010 to 2016 and Leader of the Brexit Party from 2019 to 2021. Farage is currently the Honorary President of Reform UK and a presenter for GB News. He served as Member of the European Parliament (MEP) for South East England from 1999 until the United Kingdom's exit from the European Union in 2020.
Online banking, also known as internet banking, virtual banking, web banking or home banking, is a system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website or mobile app. Since the early 2000s this has become the most common way that customers access their bank accounts.
HSBC Bank Canada, formerly the Hongkong Bank of Canada (HBC), is a Canadian chartered bank and the Canadian subsidiary of British multinational banking and financial services company HSBC. HSBC Canada is the seventh largest bank in Canada, with offices in every province except Prince Edward Island, and is the largest foreign-owned bank in the country. The corporate headquarters are located at the HSBC Canada Building in the downtown core's financial district of Vancouver, British Columbia. HSBC Bank Canada's Institution Number is 016.
Know Your Customer (KYC) guidelines and regulations in financial services require professionals to verify the identity, suitability, and risks involved with maintaining a business relationship with a customer. The procedures fit within the broader scope of anti-money laundering (AML) and counter terrorism financing (CTF) regulations.
Coutts & Co. is a British private bank and wealth manager headquartered in London, England.
HSBC UK Bank plc is a British multinational banking and financial services organisation based in Birmingham, England. It is a wholly owned subsidiary of the global HSBC banking and financial group, which has been headquartered in London since 1993. The UK headquarters of HSBC is located at One Centenary Square in Birmingham.
Egging is the act of throwing eggs at people or property. The eggs are usually raw, but can be hard-boiled or rotten.
Sir Howard John Davies is a British historian and author, who is the chairman of NatWest Group and the former director of the London School of Economics.
The Royal Bank of Scotland is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest and Ulster Bank. The Royal Bank of Scotland has around 700 branches, mainly in Scotland, though there are branches in many larger towns and cities throughout England and Wales. The bank is completely separate from the fellow Edinburgh-based bank, the Bank of Scotland, which pre-dates the Royal Bank by 32 years. The Royal Bank of Scotland was established to provide a bank with strong Hanoverian and Whig ties.
Messrs Drummond is a formerly independent private bank in the United Kingdom that is now part of NatWest Group. The Royal Bank of Scotland incorporating Messrs Drummond, Bankers is based at 49 Charing Cross in central London. Drummonds is authorised as a brand of The Royal Bank of Scotland by the Prudential Regulation Authority.
In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold. The terms "politically exposed person" and senior foreign political figure are often used interchangeably, particularly in international forums.
National Westminster Bank, trading as NatWest, is a major retail and commercial bank in the United Kingdom based in London, England. It was established in 1968 by the merger of National Provincial Bank and Westminster Bank. In 2000, it became part of The Royal Bank of Scotland Group, which was re-named NatWest Group in 2020. Following ringfencing of the group's core domestic business, the bank became a direct subsidiary of NatWest Holdings; NatWest Markets comprises the non-ringfenced investment banking arm. The British government currently owns 35% of NatWest Group after spending £45 billion bailing out the lender in 2008; the proportion at one point was 54.7%. NatWest International is a trading name of RBS International, which also sits outside the ringfence.
Zopa Bank Ltd. is a British online bank which offers deposit accounts, personal loans and credit cards. It began as the world's first peer-to-peer lending company in 2005 and gained a full banking licence in 2020. The peer-to-peer side of its business closed in December 2021.
Simon Jack is an English business journalist and news correspondent. He is currently the business editor for BBC News, known for appearing on BBC Breakfast until September 2011 and on BBC Radio 4's Today. He has also presented business and financial podcasts for The Daily Telegraph.
International Westminster Bank was a wholly-owned subsidiary of National Westminster Bank and its predecessors from 1913 to 1989, with branches in London, France, Spain and West Germany.
NatWest Holdings is an intermediate holding company for the NatWest Group's retail banking interests in the United Kingdom.
Catherine Blaiklock is an English financial trader and hotelier who was the founder and first leader of the Brexit Party, a political party established in January 2019 to support a no-deal Brexit. She was forced to resign as leader in March 2019 when it was disclosed she had made anti-Islamic and racist statements online. Blaiklock had been the Economics Spokesperson for the UK Independence Party (UKIP), which she left in late 2018. Before entering politics in 2016, she worked as a financial currency and derivatives trader. She also founded a Nepali healthcare charity with her ex-husband, an Everest Sherpa. Her father was polar explorer Ken Blaiklock.
Dame Alison Marie Rose-Slade is a British banker, who was chief executive (CEO) of NatWest Group from November 2019 to July 2023. She became the first woman to lead a major UK lender after leading government investigations into the poor representation of women in business. She was appointed a Dame Commander of the Order of the British Empire in the 2023 Birthday Honours. Later that year, she resigned from her position at NatWest for what she admitted was a "serious error of judgement", after she broke client confidentiality in relation to the closure of Nigel Farage's account.
Nigel Farage Coutts bank scandal occurred in June 2023 when the private bank Coutts closed the account held by the British broadcaster and former politician Nigel Farage. NatWest, the owner of Coutts, initially claimed that he failed to meet the Coutts eligibility criteria of holding £1,000,000 or more in his account, following the expiry of his mortgage. NatWest instead offered him an account with the retail side of the bank.
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