Small charities are a low risk to banks, John Thurso MP tells Treasury Select Committee

The Liberal Democrat says increased scrutiny is badly affecting smaller organisations and urges the Financial Conduct Authority to help reduce the administrative burden

John Thurso MP
John Thurso MP

A Liberal Democrat MP has called on the Financial Conduct Authority to help reduce the administrative burden that he says increased scrutiny of money laundering has placed on small charities.

At a meeting of the Treasury Select Committee on Tuesday, John Thurso, the MP for Caithness, Sutherland and Easter Ross, questioned Martin Wheatley, chief executive of the FCA, about the extent of banks’ risk assessments on small voluntary organisations.

After the meeting, Thurso told Third Sector that the FCA should provide a signal to banks that charities with small amounts of funds were low-risk accounts and did not require the same level of diligence.

"The money laundering legislation is supposed to be risk-based," he said. "Banks are supposed to assess the risk involved and do sufficient checks commensurate with that risk, but what they’re doing is the same due diligence for a village hall as for an international plc."

He said that a number of issues had been raised repeatedly at advice surgeries in his constituencies – these included accessing accounts when a treasurer has left a charity and the complexity of the application processes.

Thurso has also written to Anthony Browne, head of the British Bankers Association, asking the trade body to look into how accounts could be designed for small voluntary organisations.

"It’s difficult for small, local, voluntary organisations to have and operate bank accounts," said Thurso. "The banks should take a more proactive approach as part of their corporate social responsibility."

An FCA spokeswoman said: "We are aware of suggestions that some banks are withdrawing from offering financial services to certain customers in light of a perceived increase in the cost of compliance and their own decreasing risk appetite.

"Any decisions firms take to de-risk their business should not unduly impede legitimate access to financial services or financial inclusion."

A BBA spokeswoman said: "Banks want to serve their customers, but they also have to tread a fine line or risk falling foul of sanctions, anti-money laundering measures and moves to combat the financing of terrorism.

"Thurso raises some important issues. We hope to meet him to discuss his concerns and to outline the actions being taken at an industry level in this area."

Thurso is a member of the Treasury Select Committee, chair of the Finance & Services Committee and a member of the Audit Committee.

He said he planned to question the senior bankers he meets in these capacities about the issues for small charities.

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