Thanks to everyone who's filled in and submitted ExpatMoneyChannel's Offshore Britain questionnaire. Your answers and comments will help us campaign for a change to current banking regulations whereby British expats seeking to keep open their existing bank accounts when they move abroad, and/or open new UK bank accounts whist overseas, are barred from doing so.
It seems that whilst many Brits on the brink of moving overseas are told by some UK banks that they must close their onshore accounts and open new ones offshore, other banks are turning a blind eye and allowing pre-existing arrangements to continue. The situation is further confused because, whilst the government maintains that the banks are not legally prevented from offering products and services to British expatriates, the banks claim that to do so would put them in breach of 'know your customer' (KYC) regulations, which clearly state that they can only provide accounts to applicants providing UK postal addresses.
The collapse of the Icelandic banks in Guernsey and the Isle of Man dented the confidence of expats looking to start up a new relationship with a bank in an offshore location, such as one of the three finance centres that make up Offshore Britain, Jersey, Guernsey and the Isle of Man. In many cases, expats first put their toes into offshore waters on a trial basis and closing off the continuity of long-held banking arrangements and relationships early on is neither sought nor welcomed. In fact, there are far too many stories of the whole process of switching to a new bank taking far too long, endless teething problems in re-establishing standing orders and direct debits, and little by way of back-up when the new expatriate needs bank documentation to support a new tenancy application or open an account with a utility company abroad. And then there's the pure comfort factor of leaving savings and money management back on UK soil and familiarity of its regulatory environment. Who wants to turn their back on that? The ideal solution would be for expats, particularly working expats who plan to return to the UK, to keep their UK bank account as well as open an account offshore.
The obstacle lies with the existing KYC anti-money laundering regulation which place stringent demands on the banks to insist on various documentation and practice which proves the bank manager does, indeed, know each customer and their business very well. It is the unhelpful detail in this regulation that has to be challenged, whilst preserving a bank's awareness and understanding of its customers' financial comings and goings, and safeguarding its ability to detect money laundering and other illegal practices.
Our campaign needs your help. To begin with we need a list with examples of the kind of documentation you've been asked to produce to comply with KYC regulation when opening a bank account either back in the UK or overseas (including details you've been asked to provide when moving to an offshore branch of your existing bank). This, plus a note of the kinds of questions you've had to answer will enable us to build a complete picture of current practice. Please also let us know about any occasion when you were turned down by a bank and, if so, on what grounds. What are the banks saying to you, the customer? What documentation or ID do they insist you present to comply with KYC regulation? What services are they saying they can no longer provide you with if you become (or are already) an expatriate?
This campaign is not seeking to get around or transgress the current regulations but it will be appealing for modification that takes into account the expats' plight, highlighting why these rules go so against them. Keep us informed with your responses and we'll keep you informed with what's being reported back to us from the government authorities, the regulator and the banking sector. And if you haven't already filled in your Offshore Britain questionnaire, you can download one here.
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2 comments:
Hannah,
In response to your request, here is an outline of my experience.
When I left the UK for France 26 years ago, my UK current and deposit bank accounts were transferred, at the suggestion of my bank, to their offshore subsidiary on the IoM. This was of course long before the current stringent 'know your customer' regulations and seemed a sensible move at the time to simplify my tax declaration (not at all to avoid tax, always fully paid in France). Shortly after that, I closed my UK building society account, having used most of my deposit there towards a house purchase in France. Thereafter I had no mainland UK accounts and no UK address.
In 2001, looking to deposit a lump sum from my UK retirement scheme in a 'British' building society, I therefore opened an account with the IoM subsidiary of The Derbyshire. A bad mistake! Derbyshire Offshore was sold to Kaupthing in November 2007 and integrated into Kaupthing Singer & Friedlander (IoM). Less than a year later I was part of the collateral damage resulting from the collapse of KSF (UK) ...
When I received part of my funds from the IoM compensation scheme, anxious to remove my money as soon as possible from the Isle of Man, I searched in vain for a mainland building society which would allow me to open an account as a non-resident. I explored the websites of a fair number of the more well-known ones, but all said somewhere in the small print that accounts were for UK residents or required, at some point in the application process, a UK postcode, thus confirming what many other KSFIOM victims had reported on the action group's website. I am unable now to list with any certainty which one's I checked, but it was totally discouraging. I finally opted to open an account with ns&i (National Savings), where interest is paid gross and overseas addresses are acceptable! The interest rate is low, but savings are guaranteed by the Treasury.
On a recent visit to the UK, I went in person to a branch of the Nationwide, explained my situation and was told categorically that I could not open an account without providing proof of a UK address. Once opened however, there would be no problem in changing the address to a non-UK one and continuing to operate the account. How ridiculous can you get? I'm quite sure anyone with dubious motives could get around that one quite easily. As always, it's the honest law-abiding citizen who suffers.
Similar experience: nigh on impossible to open a UK bank account without a UK address. You can't even do so using a relative's address because their systems check whether you're on the electoral roll. So even if you can produce a legitimate post code you're still shut out.
Former Chancellor Darling issued guidance to the British Bankers Association, recommending that they instruct their members to open their accounts to British expats. However, the BBA merely posted links on their website to some of the major UK banks, with most roads again leading you off to UK offshore, which is where expat savers don't want to be after the Landsbanki Guernsey fiasco.
www.landsbankiguernseyfiasco.net
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