Account-opening time

The practice of “feeding customers excuses” during the account set-up process drew the FCA's wrath. The bank's standard account application forms included the question “What is the main reason for applying for the account? (Please specify eg day to day expenses).” To nobody's surprise, many applicants - 13 Nigerian residents – wrote “day-to-day expenses” even though this conflicted with their profiles in every case. The bank, which was grateful for their custom, probed no further until the FSA came on the scene.

The FCA's emphasis on the need for accuracy in account-opening procedures is noisier than usual. The reason it gives for this, and it does so often, is that only a good pad of information given at account-opening time can help a bank monitor its customers' transactions and work out whether they are appropriate for their profiles or whether they diverge suspiciously. This is a very fair point.

Indeed, FSA investigators found that 46 of the 51 investigated files did not have enough documents to back up the information contained therein. The bank did, however, correctly identify these files as posing a “higher risk of money-laundering”; it fell down in not giving reasons. In the final notice it berates the bank for this with the same argument: an absence of description frustrates the monitoring process after each account has been opened. In 23 of the 51 “higher-risk” customers' files, the bank failed to establish and collect documents to verify the purpose and intended nature of the business relationship. Indeed, the bank did not always seek a reason for the application for an account.

Sources of wealth and funds

Vague explanations for wealth or the funds that the new customers were trying to deposit included “sale of business” or “earnings or profit.” The bank accepted these without further probing, despite its duties to research them. In other cases, the customers said that their wealth emanated from their salaries. When a Nigerian HNW or PEP claims that his salary made him rich, alarm bells should be ringing. General Abacha's annual salary was $25,000 - not enough to explain the billions that he and his family routed through the City's most illustrious banks in the late 1990s.

Unhelpful vagueness

The final notice is vague in some tantalising areas. It is well-known, for example, that whenever a bank begins a credit relationship with a politically-exposed person (PEP), it has to induce a senior executive or manager to approve it. At 4.13 it says that of the 18 PEP relationships, 13 “did not contain the correct level of senior management sign-off.” Money-laundering reporting officers are agog to hear how many levels of such sign-off the FCA thinks there are.

Documents were threadbare in the Guaranty Trust money-laundering office and the FCA rightly points this out. In its call for correct verification of identity, however, it relies on vague phrases such as “information obtained from a reliable and independent source.” This could mean anything and is too often taken to mean government sources. As the officials of many third-world countries create government documents (such as passports) at the jingle of a handful of coins, it seems a mistake to invest such documents with such credence. Many governments, including Nigeria's federal and state governments, are far from “independent” of organised crime. The FCA has never bothered to sift through the official identifying documents of the Third World with some knowledgeable investigators to earmark the more trustworthy ones.