Err, no Tim, no

In order for somebody resident in Russia to open an account on the Isle of Man, they need to have an opening balance of 60,000 Pounds Sterling, which despite my status as cigar-puffing oilman, I do not have. The reason why they demand such a high opening balance for Russian residents (the normal requirement is 5,000 Pounds Sterling) is because of the risk of “money laundering”. And that is about as detailed an explanation as I could get.

What is interesting is that HSBC do not advertise this requirement anywhere, it is simply a decision which gets made at the application stage. Personally, I think the explanation is bollocks. Anyone wanting to launder money from Russia is probably not going to be doing so in small amounts, and I can’t see how a 60,000 GBP opening balance is going to do anything to discourage such activities. If anything, putting a maximum balance on the account would be more of a control on money laundering rather than a minimum balance.

They\’re not putting that minimum on so as to insist that only rich bastards who are going to money launder open and account.

They\’re doing it because the costs of doing the checking of who you are, of monitoring what you\’re laundering or not laundering (yes, even to the laughably inadequate levels that HSBC have been doing so), as so high that only someone who is putting £60k or more into an account makes any money for the bank.

What you\’re seeing here is the costs of the money laundering regulations.

5 thoughts on “Err, no Tim, no”

  1. Not a real surprise as Russia is not on the list of low risk jurisdictions, so you would expect to have extra checks done if you are resident there.

    As Tim says these checks cost, and cost more in places like Russia.

  2. There’s a more direct reason for the large minimum – it makes it much harder for smaller fraudsters to open multiple accounts to use in scams.

    It’s a lot easier if you’re, say, channelling stolen cash through an account, to get away with things if you only use the account for a few days, which limits the amount of cash you can push through it assuming you have a relatively slow rate of income. If you’re stealing enough that the 60k minimum is not a problem, it’s a different sort of crime. If you’re dealing with a few thousands, then needing 60k minimum balance means you need significant capital up-front.

  3. I opened up a new business bank account with Barclays yesterday and they asked me if I was in the online gaming industry. It was just one question on it’s own. I asked what it was about and she said that they wouldn’t be able to open an account if I were. Seemed odd. It’s not illegal is it?

    Tim adds: No, not illegal. But the US splutters about taking banking licences away from those that service online gaming companies.

  4. I’m sure Kevin, were he running a small online gaming company, would be in the position as Tim N.

    Online gaming (ie gambling, not Zynga) is legal – even with the Yanks – if you don’t service US nationals.

    But the checks from the bank to ensure that you’ve got strong controls in place to avoid servicing US nationals are presumably onerous enough that – given that you’re opening a small business account – it’s not worth the cost. I’m sure if you were Anurag Dikshit and Ruth Parasol, they’d be happy to take your business…

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