Bank caution hurting gambling sector
By Warwick Bartlett
One of the most frequent enquiries received by GBGC from e-gaming companies in recent months has been “Can you help us open a bank account?”. At first glance it seems a strange request. After all, people should perhaps not be going into business if they need help to open a bank account. But all is not as it first seems.
Banks have become highly risk averse due mainly to government regulations imposed upon them since the 2008 recession and banking collapse. The banks have decided that internet gambling would expose themselves to allegations of money laundering because internet gambling companies may be accused of breaking the laws in markets commonly described as “grey” where there is no law either prohibiting or permitting e-gaming.
A business cannot trade without a bank account and this trade discrimination is surely not what the government has set out to achieve.
But it is not only internet gambling that is going “unbanked”. I hear of small independent bookmakers being told to move account or have the account closed. But move to where? They have been told they handle too much cash and that poses a risk to the banks.
Banks are the corner stone of commerce. Imagine trying to conduct your affairs without a bank account. The banks’ financial well-being should be your concern. After all they hold your money. The system post-crash of 2008 is fragile. HSBC now employs one in four people on compliance.
In my early career the definition of money laundering counted as criminals taking their ill-gotten cash and laundering it into legitimate money that could be invested in hard legal assets.
Not today. Evading tax has now been included in the money laundering regulations and the way the government is going tax avoidance is likely to be included. Ten years from now it will probably be a crime to be even thinking about laundering money! (I am joking, I think)
You may think all this attention on money laundering is a good thing. It isn’t actually because these bank bean-counters could be engaged doing things that will actually have an impact on the economy like lending money to entrepreneurs that will design and make things people want.
These entire goings on seem to be working against the natural course of economic theory and you should be concerned. Here is my theory. Government revenues are in a mess, they seem unable to cut spending and they need to raise more tax.
So the government introduces bank fines and bank levies. The last budget caught the banks for GB£9 billion. At some point the banks will pass this levy on in charges to their customers. Free banking which we all enjoy will become a think of the past.
Any future bank charges impose on customers will go straight to the Government. It really is very clever. Taxation by stealth, not even registered on the electorate’s radar screen.
In the meantime, our risk-averse banks are doing their best to keep their noses clean and avoid further fines and levies and if that means closing down your business so what! The risk of taking on a bookmaker or any business where half its revenue could be in cash is not worth it measured against a few thousand pounds in bank charges, low interest on loans, versus millions in potential fines.
Is this really what the Government intended? We all accept the banks have been culpable, they have done very bad things and they must pay for it. But why does it have to affect small businesses, what did they do wrong?