JAMES GRAHAM
You may have heard one or two high profile stories about ‘debanking’ in recent years. Most infamously, Nigel Farage was debanked in 2023. The dispute led to the resignation of the bank’s CEO and was only resolved earlier this year.
If you had to guess how many others have been similarly debanked, what would you venture? A few hundred? A couple of thousand? Wrong. Last year nearly half a million people and businesses were debanked. Since at least 2018, the annual number has been more than 100,000. That means over a million people in the past seven years.
Two years ago, the Reverend Richard Fothergill received a letter from his bank telling him that their relationship had irrevocably broken down and that his account was being closed. Had he been suspected of money laundering, say, or been abusive to staff, perhaps one would sympathise with the bank.
But what was the Reverend’s crime? He had responded to a customer feedback survey saying that his bank were “putting an awful lot of energy” into LGBT Pride activities, rather than simply focusing “on managing the money”. A fair comment for a Christian Minister to make.
The presumption of ‘innocent until proven guilty’ is an ancient English right. Yet our banking system seems to have forgotten it. In 2017, the then-Conservative Government introduced the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations. These rules impose a burden on banks to apply enhanced due diligence (EDD) – essentially a duty to investigate customers if they meet a broad list of criteria which are said to increase their risk of financial crime.
Perhaps if somebody had a long history of criminality there may be some justification in carrying out extra checks on them. But the regulations needlessly pull a wide range of individuals into scope. For instance, choosing to enter public life, such as by becoming a politician, will make you a “politically exposed person” (PEP), and thus subject to this enhanced due diligence. This can prove a useful excuse for a bank that would rather not serve politicians of certain stripes, as it seems to have in the case of Farage.
It is not just the most prominent and outspoken of the political class who are at risk. Royston Smith, a former backbench Tory MP, spoke in 2023 of his own harrowing experience of being debanked, where he was forced to wait a year before gaining access to his own money. If you happen to be related to a ‘politically exposed person’ or a good friend of one, I’m afraid you are also in scope. ‘Close associates’ of PEPs are in the high-risk bucket under the current rules.
The regulations also require enhanced due diligence for anyone who poses a “high risk” of money laundering or terrorist financing. Such risk indicators include inconsistent transactions. This implicates people such as tradesmen, who may be paid in cash on a job-by-job basis.
Those with Russian names also fall afoul the regulations, as Countess Alexandra Tolstoy, relative of the great novelist, discovered to her peril. Tolstoy had her account closed in 2023. She was initially told that this was because of her status as a PEP, but the bank later admitted that she was not classified as such, and the sources it claimed to have used were highly inaccurate.
These burdensome regulations cost banks over £30 billion a year – that’s significantly more than the yearly budget of the British police – and a cost that is naturally passed onto customers in the form of low interest rates for savings and high fees.
The regulations often lead banks to close the accounts of low value customers for whom the cost of applying necessary due diligence outweighs the value that the customer generates for the bank. On the darker side, as illustrated, they give banks a legitimate justification to offload clients whose viewpoints, politics or heritage they disagree with, such as those of Revd Fothergill, Royston Smith and Alexandra Tolstoy.
To add insult to injury, whilst these regulations lead to the debanking of innocent customers, they fail to actually prevent money laundering, reports of which have nearly doubled since 2017, while there is little evidence they have had an impact on terror financing.
Indeed, while people are routinely debanked for transgressing establishment orthodoxies, others fund proscribed organisations in plain sight. Sally Rooney, the Irish author of Normal People, recently pledged all her royalties, including from the BBC, to Palestine Action, now a proscribed terrorist organisation in the UK. Under the regulations, in these circumstances Rooney could expect to have her assets frozen or to be debanked given she is indirectly funding a proscribed group. Yet there is no indication this has happened. (The BBC, meanwhile, might also want to consider halting its payments to her; it avoided the question when asked in a recent Freedom of Information request.)
Whilst we know from the raw statistics that debanking continues, since the flurry of stories in 2023 driven by the Farage scandal, there has been far too little attention given to the huge numbers who have found themselves targeted.
That must change. That is why this week the Prosperity Institute has launched a campaign to expose this widespread injustice and to end debanking entirely.
But we need your help. If you or somebody you know has been a victim of debanking, please join us. Our online campaign is seeking to gather the stories of those who have been victims of debanking, in order to tell the tale of this British scandal and to leverage these stories to apply pressure on the the banks and the regulators, forcing them to take action.
Banks must be made to understand that choosing to debank customers they consider controversial or uncouth will in fact increase, not decrease, their reputational risk. This flagrant weaponisation of their services to chill and curtail free speech will no longer be allowed to stand.
Of course, it goes without saying that all details will remain entirely confidential unless we have received your express permission to use them publicly. If you or someone you know has been a victim of debanking, please head to our campaign website now to take part and help end this injustice today.
James Graham is Senior Researcher on Financial Freedoms at the Prosperity Institute. You can watch his recent appearance on the Sceptic here. Get in touch with his debanking campaign here. Follow him on X here.
This article (Debanking Hasn’t Gone Away) was created and published by The Daily Sceptic and is republished here under “Fair Use” with attribution to the author James Graham
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