Yaneek Page | Bank customer feels naked and exposed

ADVISORY COLUMN: SMALL BUSINESS

QUESTION: I have a personal account and business account with a leading commercial bank in Jamaica for the past several years. Every year the bank requests that I provide further information to ‘update my account’ in accordance with Bank of Jamaica regulations. Some of the information they are requesting is highly confidential and intrusive. For example, I was recently asked to provide a partnership agreement, separate and apart from the partnership registration documents, and up-to-date tax returns or a tax compliance certificate.

When I expressed concerns about the personal and strategic nature of this information, what it would be used for and how it would be protected, I was told that the bank would take steps to close my account if I do not comply. I would like to know what the bank is doing with this information. Who has access to it? Does it get sent to the Bank of Jamaica, and if so how? This is not right. I feel the bank is high-handed, and as a customer who pays the huge fees that make them profitable, I feel naked and exposed. - Kingston

BUSINESSWISE: I share your concern about the practices of this and other large commercial banks, particularly given the fact that Jamaica’s banking industry still operates as an oligopoly in which a few very large players exert incredible dominance in the market which enables them to impose high bank fees and charges and self-serving banking agreements.

Unfortunately, in Jamaica large banks with their expansive branch networks and lion’s share of government and corporate accounts still hold the handle while consumers are left clutching the blade.

In trying to get answers to the significant questions you posed I contacted your personal banking officer and the Bank of Jamaica. Their responses give credence to your concerns about being naked and exposed. Interestingly, your personal banking officer would speak only on the basis of anonymity and advised that he was only following the bank’s internal protocols regarding Know Your Customer rules.

What I found alarming was his admission that there were no defined data privacy protocols around how this information was to be sent, received, and accessed within the bank. He couldn’t say how this information would be used or protected, except that it was “needed on file” and the bank has a duty of “trust and care” to its customers.

A few minutes after our initial conversation he contacted me to further advise that the bank’s request of you was in accordance with the Bank of Jamaica’s “2004 (Revised 2009) Guidance Notes on the Detection and Prevention of Money Laundering and Terrorist Financing Activities.”

Unfortunately, the only question the Bank of Jamaica was able to answer definitively, over the course of several days via two emails, is that all financial institutions are entitled to ask for just about any information they deem fit in order to satisfy themselves that they know their customers and the level of risk involved in an ongoing banking relationship with said customers.

Below is the official response I received:

• Email 1: “In response to your query regarding a bank requesting a copy of a customer’s company partnership agreement - All financial institutions have obligations under the Proceeds of Crime Act (POCA) and the Terrorism Prevention Act (TPA) to ensure that their institution is not unwittingly used to launder the proceeds of criminal activity or to finance Terrorists or their operations. As such, they are mandatorily required to know their customers (KYC) and carry out such customer due diligence (CDD) as to allow them to identify the level of risk presented by the prospective customer relationship and whether they have the capacity to accept and manage the identified inherent risks in the potential relationship on an on-going basis. Therefore, financial institutions are required to collect such information that will allow them not only to know the customer that they are on-boarding but relevant information to inform decisions about the relationship as well as to allow them to effectively monitor the relationship on an ongoing basis to inter alia know when the risk has changed and to inform their reporting obligations to the FID if warranted. Bank of Jamaica provides guidance to the industry by way of its Guidance Note which can be accessed at http://www.boj.org.jm/pdf/AMLCFT%20GN%20Mar%2009%20published.pdf.”

• Email 2: “Further to my previous response (attached for your convenience), please find below additional information which you may find useful. KYC and CDD obligations require financial institutions to:

1. Identify the customer and verify the customer’s identity – for legal persons and arrangements this would normally include – name, legal form and proof of existence, such as certificate of incorporation, the partnership agreement, deed of trust, etc; the powers that regulate and bind the legal persons and arrangements, names of the senior management, directors, trustees; identification of the natural persons who are the beneficial owners of the customer.

2. Determine whether there are circumstances where the risk of money laundering or terrorist financing exists or is higher and apply enhanced CDD measures. This means looking at risk factors – nature and substance of the proposed relationship with the customer; whether customer is resident or non-resident; the nature of the customer’s business; whether the business is cash intensive; whether the ownership structure of the customer appears unusual or excessively complex given the nature of the customer’s business; nature of services requested by the customer and whether this seems commensurate with the indicated business activities; source of wealth of the customer; source of funds to be placed on account with the financial institutions.”

The only promising information I can offer you at this time is that based on my research, different banks have varying requirements and yours seems to be among the most intrusive and inflexible.

Perhaps it may be time to consider another financial institution.

One love!

Yaneek Page is an entrepreneur and trainer, and creator/executive producer of The Innovators TV series.

Email: info@yaneekpage.com

Twitter: @yaneekpage

Website: www.yaneekpage.com