Lloyds freezes 8,000 offshore bank accounts after money laundering crackdown

Thousands of account holders have not provided contact information, three years after being asked for it

Ben Chapman
Monday 24 June 2019 09:40
Lloyds have frozen thousands of accounts after an update to Jersey’s money laundering rules
Lloyds have frozen thousands of accounts after an update to Jersey’s money laundering rules

Lloyds has frozen 8,000 accounts of offshore banking customers after they failed to provide identity information in response to a money laundering crackdown in Jersey.

The lender asked thousands of account holders to provide extra “know your customer” information in January 2016 but, three years later, thousands had failed to respond satisfactorily.

The news, first reported by the Financial Times, comes days after Jersey, Guernsey and the Isle of Man announced they will open up their company registers to public scrutiny.

All three jurisdictions, which have been criticised for aiding financial crime and tax avoidance, will allow the public to access a register of the beneficial owners of offshore companies incorporated in their jurisdictions.

Changes will be implemented by 2023 following growing international pressure over the lack of transparency in offshore tax havens.

Lloyds froze thousands of its customers’ accounts after an update to Jersey’s money laundering rules in response to international standards.

Any accounts that do not have up to date contact information have been frozen. Customers with frozen accounts are advised to contact Lloyds to update their information.

A Lloyds spokesperson said: “In January 2016, we began to contact certain expatriate banking customers to ensure we were provided with up to date information for our records, where customer information was missing.

“This was required to meet international regulatory standards. Over the last three years we have made multiple attempts to contact these customers, asking that they provide us with the necessary information.

“Unfortunately, where a customer has not provided us with this necessary information we have had to freeze their account until we get the information. This is also to protect the customer, as it prevents anybody else trying to use the account if the customer has stopped using it or has moved address.”

Britain and its network of crown dependencies and overseas territories have for years been at the centre of an international debate around financial secrecy, money laundering and tax avoidance.

Last month, the UK was accused by the Tax Justice Network of being by far the biggest enabler of global corporate tax avoidance.

Research by the network found that the UK and linked jurisdictions have allowed companies to avoid billions of pounds in taxes every year.

Topping the list of jurisdictions enabling the most tax avoidance was the British Virgin Islands, followed by Bermuda and the Cayman Islands – all British overseas territories. Jersey, a crown dependency, was seventh while the UK itself came in 13th.

Alex Cobham, chief executive at the Tax Justice Network, has described the hypocrisy of rich nations that enable tax avoidance as “sickening”.

“A handful of the richest countries have waged a world tax war so corrosive, they’ve broken down the global corporate tax system beyond repair,” Mr Cobham said.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments