HSBC puts MPs under microscope | Money | The Guardian.
When practising abroad as an international lawyer, I often had to raise with clients dealing with companies associated with local politicians the delicate issue of money laundering. You can imagine how the politicians concerned reacted when informed that English legislation required enquiries as to their past, and contractual provisions as to their possible future, misconduct. I rather tired of apologising for it. I can't quantify how much business was lost because of these laws, but let's face it, the counterparties had other, easier choices.
As I never had to deal with UK politicians, I did not realise until this morning that they had exempted themselves. Here is the HMRC guidance mentioned in The Guardian article (my emphasis);
In some situations you must carry out 'enhanced due diligence'. These situations are:
- When the customer isn't physically present when you carry out identification checks.
- When you enter into a business relationship with a 'politically exposed person'. Typically, a politically exposed person is an overseas member of parliament, a head of state or government or a government minister. Note that a UK politician isn't a politically exposed person.
- Any other situation where there's a higher risk of money laundering.
I suspect that HSBC, a truly global bank which just happens (for now) to be headquartered in Britain, simply decided to apply its procedures in this respect on a consistent, non-discriminatory basis. If so, it had the salutory effect of exposing some British politicians to the insulting insinuations they require British companies to make to their counterparts elsewhere. Isn't it amusing to read of the pompous indigation of the anonymous MP who brought his complaint to The Guardian? Isn't it amusing to see that sometime champion of equality take up the cudgels in defence of the exemption he had given himself?
The very least we can ask of our legislators is that they will never apply to us rules they will not submit to themselves. Apart from the ethical issue, it makes in practice for very bad laws. To enshrine in law an assumption that transactions involving "politically exposed persons" involve a higher risk of corrupt behaviour, while exempting their British equivalents, seems rather undiplomatic. If I regarded that word as anything other than an stupid incantation to kill thought and discussion, I might even call it "racist". Yet can the current position be understood in any other way? Had the people to whom I have had to apologise over the years have accepted it even less graciously, had they known the politicians behind the laws in question were exempt?
Now here's the rub. The only current hope of UK economic growth, is to do more business with what Jim O'Neill (the man who defined BRICs) calls Growth Markets. They are the reason the current economic difficulties are not a world, but an Old World, recession. Yet those are countries where, to put it politely, the boundaries between business and politics are even more blurred than they are here. I know from my own experience that people in those countries react with anything from amused incredulity to anger at Britain's constant moral lecturing. If America behaves as if it were the world's policeman, Britain sometimes seems to think it's the world's vicar.
As Britain's political (though not, I hope its economic) influence in the world declines, the polticians in those countries may be less inclined to look at our wagging fingers and listen to our homilies. They will simply not take it when, from a position of moral superiority, we assume that they are probably crooks. Even when they are. So if our politicians believe it's really necessary to jeopardise business by making these insinuations to politicians elsewhere, the least they can do is submit themselves.
Of course it would be preferable to accept that its better to let "dirty" money find "clean" uses than to have laws that force it to be reapplied to crime, while making the law-abiding majority's lives more miserable and their banking more expensive.