FINANCE NEWS: Regulations on new accounts generate backlogs for banks

New regulations that increase the level of checks on opening bank accounts are a "nightmare" for banks as well as charities, the Unity Trust Bank has claimed.

The bank, which specialises in the non-profit sector, says legal changes designed to crack down on the proceeds of crime, have massively increased its administration and made opening accounts for charities much more complex.

"It's been a nightmare for charities, and for banks as well," said Unity Trust's director of marketing, Stephanie Lennon. "Thirty to 40 per cent of our service staff deal solely with account opening. But we need to abide by the law and also ensure that charities' money is safeguarded."

Banks have been accused of operating "ridiculous" procedures hindering charities trying to open new bank accounts.

But Lennon blamed the Financial Services Authority, the body responsible for regulations to prevent money laundering, for not publicising the effect the changes would have. "There wasn't a great deal of publicity before the Proceeds of Crime Act became law about what impact it would have. Charities didn't realise this would happen."

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