The press has reported that Lloyds Banking Group has frozen the accounts of 8,000 offshore clients in Jersey because they did not yield up extra KYC information called for by a revision of that island's Money Laundering Order. This may not, however, be the case.

The British press reported at the weekend that "international standards," which presumably meant the demands of the Financial Action Task Force, the world's AML standard-setter, prompted Lloyds to write to its customers with accounts in the jurisdiction in January 2016, asking for the some extra identifying information and supporting documents. The London Financial Times reportedly quoted a Lloyds spokesman as saying that over the last three years 8,000 customers had failed to provide the information, despite the bank's attempts to contact them.

This begs all manner of questions. Yesterday this publication asked Lloyds whether it had frozen the accounts all (or mostly) at once, the exact nature of the extra information for which it was asking, why it started asking for it in 2016 and not in some other year, whether anywhere near the same number of accounts went dormant at Lloyds in Jersey in the preceding three-year period of 2013-2016, whether Lloyds had generated suspicious activity reports in respect of most of the 8,000 accounts, how much money was frozen in toto, how the press acquired the story in the first place, what proportion of the 8,000 refused to hand over the information when Lloyds contacted them and what proportion did not reply at all, what proportion did not reply to the request for information but did keep on replying to other correspondence from the bank, and whether the 8,000 customers were individuals, perhaps HNW individuals, or not.

To all this, the bank replied that the story was "speculation" and added: "This was initiated following changes in Jersey’s Money Laundering Order. It is very important to note that we have frozen accounts because the customer has failed to respond to our attempts to contact them – this action is not because of any other specific concerns. If the customer has failed to keep their contact details up-to-date, we hope the action will drive them to contact us so that we can update our records and provide access to their accounts. This is all part of our continuous review and we work with our regulators and internal policy teams to ensure that we operate to the highest possible standards at all times.

“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.”

At first glance the moral of the tale appears to be that ever-tightening regulation is rooting out dirty money in the sense that people who have parked such monies in their offshore accounts are now too frightened to reactivate them and face the glare of the Lloyds compliance department. As the bank declined to say whether it had generated any SARs, it is hard to say whether or not those expats - human or corporate as the case may be - are now facing unwelcome attention from the authorities.