Bank Due Dilligence

BenjaminClarke

I am really hoping someone can help me with this because I have found it very difficult to find answers online. In November 2020 I moved my business account over from HSBC to Revolut, an up and coming digital bank. 

Everything had been fine with them, no problems what so ever. They asked me a few weeks ago to provide them with the full name and address of a payee as part of their due diligence checks and I obliged. They asked for various invoices too, all of which I supplied to them without any issues. 

On Wednesday 10th February 2021 a new customer by the name of Mr Khan paid an amount of £55.00 to me for some items. Revolut contacted me, again as part of their due diligence checks, however, this time they asked for Mr Khan's full name, address, date of birth and nationality! I informed them that I did not feel comfortable doing that for numerous reason, namely because he is a new customer and I am not obliged to do so! Also I wonder if there would be data protection breaches even if I did know the information they were asking for? This does not sit well with me at all and I chased them up further about it, it took them two days to get back to me even though I pay £25.00 a month for 24/7 support! When they did they told me that this was normal due diligence checks and they targeted Mr Khan because he had a common name. On the same day I had a Mr Smith pay me and also a Mr Moore. Neither were targeted like Mr Khan was. I struggle to believe this is racial discrimination against my customer, Mr Khan, but I really don't understand why his nationality is important to them. They told me it's part of Know Your Customer regulations but I told them that Mr Khan isn't their customer, he is my customer. Does that matter? 

This scenario would be like going to Tesco, doing your shopping, but when you get to the till the clerk asks you to prove your nationality before they will serve you as part of their banks due diligence checks! 

I have looked online as best I can and I cannot find anywhere where it states companies should ask for nationalities for due diligence checks but I wonder if anyone here knows better? Mr Khan's payment was returned to him and I was forced to inform him that I was unable to accept his order because my bank rejected his payment. I think it's outrageous, but, is it legal? 

CKhalvashi

Revolut have a right to know who you are trading with, especially as you're a new client as is your new client. This will not be discrimination, as there may be someone with this name or a very similar name on the UK AML/International sanctions list, which would make it illegal for Revolut to process the transaction.

You are of course welcome to not provide the information, but may find yourself looking for other banking facilities.

BenjaminClarke

CKhalvashi said:

Revolut have a right to know who you are trading with, especially as you're a new client as is your new client. This will not be discrimination, as there may be someone with this name or a very similar name on the UK AML/International sanctions list, which would make it illegal for Revolut to process the transaction.

You are of course welcome to not provide the information, but may find yourself looking for other banking facilities.

Thank you for your response. I do not feel comfortable asking my customers for their nationality, I do not understand why that is important and from what I have read under the FCA's due diligence guide it is not normal due diligence to request to know people's nationalities. 

What confuses me greatly is the fact that Mr Khan could just lie to me about his date of birth and nationality -  how would I know? Should I request that he sends me proof, I.E. a passport or driving licence? Is this really normal practise for businesses? I held my business account with HSBC for five years prior to this and they never once asked me to provide them with my customers' personal details beyond their name and addresses. They never once asked for proof of date of birth or nationality. Also, when I set up my business I spoke to a solicitor regarding what information I required from my customers and was told that I didn't need to request proof of their date of births because what I am selling isn't restricted. 

I have already closed my account with Revolut because I simply do not feel comfortable asking my customer's these personal, intrusive, questions and, therefore, by using Revolut I am losing money. I shall be going back to the high street banks, I realise the mistake that I have made. I just cannot believe that this is normal practise, I have never been asked to provide my nationality when buying items from a shop - have you? Has anybody reading this ever, in their lifetime, been asked to provide such information when buying an item for £55.00 from a shop? 

BenjaminClarke

CKhalvashi said:

Revolut have a right to know who you are trading with, especially as you're a new client as is your new client. This will not be discrimination, as there may be someone with this name or a very similar name on the UK AML/International sanctions list, which would make it illegal for Revolut to process the transaction.

You are of course welcome to not provide the information, but may find yourself looking for other banking facilities.

Also, as an add on, I contacted Mr Khan regarding this situation, to inform him that his products were not going to be sent due to my bank refusing to accept his payment. He told me that this had never been asked of him before and he has lived in Britain his entire life. So, is this something new that we should all be worried about? I would hate to have to prove my identity any time I bought something. 

BenjaminClarke

CKhalvashi said:

Revolut have a right to know who you are trading with, especially as you're a new client as is your new client. This will not be discrimination, as there may be someone with this name or a very similar name on the UK AML/International sanctions list, which would make it illegal for Revolut to process the transaction.

You are of course welcome to not provide the information, but may find yourself looking for other banking facilities.

Sorry, also, why have they only asked previously for my customers' names and addresses? What I am most concerned about, why I am worried about discrimination here, is because they have asked specifically for Mr Khan's nationality. The last time they just asked for full name and address. I can only assume they asked for the nationality because his name is Khan. I cannot see how that isn't discrimination but I will wait to hear what reason you can give to me. 

CKhalvashi

BenjaminClarke said:

CKhalvashi said:

Revolut have a right to know who you are trading with, especially as you're a new client as is your new client. This will not be discrimination, as there may be someone with this name or a very similar name on the UK AML/International sanctions list, which would make it illegal for Revolut to process the transaction.

You are of course welcome to not provide the information, but may find yourself looking for other banking facilities.

Sorry, also, why have they only asked previously for my customers' names and addresses? What I am most concerned about, why I am worried about discrimination here, is because they have asked specifically for Mr Khan's nationality. The last time they just asked for full name and address. I can only assume they asked for the nationality because his name is Khan. I cannot see how that isn't discrimination but I will wait to hear what reason you can give to me. 

Because as above, if there is someone with the same/similar name for whom it would be illegal to process a payment, this would make everything easier to pin down.

I'm interested to know exactly what values we're talking in relation to these transactions, as I've never been asked to provide such information regarding customers, over several banks and a number of years. I assume that either this transaction is much larger than those previously, or you're regularly dealing in amounts of over €10000 (may have been changed to £ in most recent legislation), which do require further checks if the bank aren't sure.

J_B

CKhalvashi said:

I'm interested to know exactly what values we're talking in relation to these transactions,

From the OP .....

BenjaminClarke said:

On Wednesday 10th February 2021 a new customer by the name of Mr Khan paid an amount of £55.00 to me for some items.

All sounding most odd to me - couldn't you just fabricate an address and DOB for him?

CKhalvashi

J_B said:

CKhalvashi said:

I'm interested to know exactly what values we're talking in relation to these transactions,

From the OP .....

BenjaminClarke said:

On Wednesday 10th February 2021 a new customer by the name of Mr Khan paid an amount of £55.00 to me for some items.

All sounding most odd to me - couldn't you just fabricate an address and DOB for him?

Thanks JB, I missed that part.

Yes, it sounds very strange to me in this case.

Mistral001

Unfortunately many new companies providing financial services ask for intrusive details.  In this case they are asking you to compromise your relationship with your clients, which is a step too far as far as I am concerned.  I would see this as a deal breaker and would move immediately from this bank, back to a more traditional bank if the new bank insists on wanting you to collect these details.  Remember the client is YOUR client and not the new bank's client.  YOU will be collecting these details and any complaints you have from any clients will be directed at YOU and not this new bank.  

BenjaminClarke

Update:
Revolut contacted me today apologising and told me that they do not require his date of birth or nationality. 

I am still closing my account with them though because they seem unprofessional and I have still lost out on the money from Mr Khan. It's made me look unprofessional too. 

Overall I am not sure these digital banks really know what they are doing at the moment. I would encourage people to stick to the mainstream banks for the time being.

Thanks everyone for your time! 

Sandtree

Banks are required to check that no one is receiving or making payments to people on the sanctioned list (a condensed version of the list is at CONSOLIDATED LIST OF FINANCIAL SANCTIONS TARGETS IN THE UK (windows.net) for the UK alone, depending on where a bank operates it may need to check against the EUs, USAs etc too). If there is a partial match then further checks are triggered to confirm if it is a sanctioned person or not.

There has been some accusations that this is creating institutional racism because certain names, like Khan, appear more frequently than western names. 

A former work colleague used to have a host of problems both travelling and with banking etc as he has the same name as someone on the USA sanctioned persons list and DoB is only a couple of days difference. He did use to travel with news clippings showing the actually on the list was jailed for 20 years and was different race, height etc as he kept getting stopped at immigration when trying to go into the USA.