As bizarre customer care exchanges go, one we featured on this page last week between a reader and Revolut is hard to top. You may recall that our reader had Ryan as his surname and it led to him being contacted by his virtual bank and repeatedly asked – without anything by way of an explanation – if he was related to Eamon Ryan, the Green Party leader.
Mystified, our Ryan refused to answer what he believed to be a pointlessly random question and as a result his account was locked. Unable to get any kind of resolution, he mailed us and we mailed Revolut. It told us that it was merely doing what it was legally obliged to do under EU anti-money laundering rules.
It said it was obliged to perform what it said was “enhanced due diligence” on so-called “politically exposed persons” and legally required to establish “whether a customer is a close relative or a close associate of a politically exposed person”.
The statement said that our reader – and its customer – shared a name with a relative of an Irish politician and “on that basis the customer was asked whether he was related to that politician”.
Revolut was right about having to follow the rules but even as we were writing the story, we realised it was asking more questions that it was answering. What is a politically exposed person(PEP)? How far down the political food chain does it reach? How did Revolut know our reader shared a first name with a relative of Eamon Ryan? What would have happened if he had answered the question with a yes? Or what if he had simply said no? Are other people similarly impacted? How do other banks deal with this EU directive?
And that was just for starters.
So we set about trying to answer some of the questions.
First things first. The EU Anti-Money Laundering Directive was transposed into Irish law in 2018 as an amendment to the Criminal Justice (Money Laundering and Terrorist Financing) Act of 2010. The law says that a “politically exposed person” is an individual “who is, or has at any time in the preceding 12 months, been entrusted with a prominent public function”.
‘Due diligence’
This includes a “head of state, head of government, government minister or deputy or assistant government minister”. TDs, members of the “supreme court, constitutional court or other high level judicial body whose decisions, other than in exceptional circumstances, are not subject to further appeal” also feature as do members of a court of auditors or the board of a central bank, ambassador, chargé d’affairs or high-ranking officers in the armed forces.
The Central Bank has said banks are obliged to carry out “enhanced customer due diligence” in relation to “politically exposed persons” as well as their immediate families and known close associates.
“That’s because people who hold – or have held – a high political profile can pose a higher money-laundering risk to firms as their position may make them vulnerable to corruption such as accepting bribes or contributions to election campaigns and political parties in return for advantages”, the director general for financial conduct Derville Rowland said some time ago.
The piece we carried about reader Ryan and Eamon Ryan prompted others who have had similar experiences when dealing with Revolut. Three of them stood out.
First we heard from the daughter of an ex-county councillor in the west of Ireland who described a “truly bizarre situation”. She said her father had lost his seat in 2014 elections but Revolut still “badgered me through multiple messages asking was I related to [her father]. When I finally gave in and said yes, he’s my dad, they wanted to know what was his political affiliation, does he still hold those views, do I agree with them, will he go for a higher political position in the future and so on. A bit mental considering he was only a local councillor. They made me feel so uncomfortable I just cancelled the application, will stick with good old AIB.”
Then there was the former minister’s son who said Revolut asked if he was related to the minister in question. “They just blocked my account with no explanation and I was really taken aback,” he said. “It was so bizarre and concerning. I asked them why they asked me about dad and they said they couldn’t disclose that information. It seems very irregular for a bank to ask for such information,” he said.
His account remains blocked.
We also heard from a former TD and Senator’s brother who was asked by Revolut if he was any relation. “I answered truthfully yes. I was informed that it was due to EU money laundering regs. My account is now frozen, I loaded up some documents, proof of savings but they now want to see proof of my employer’s account where my payslip wages come from. I don’t have the authority to give third-party details to anyone let alone Revolut. It looks like I am going to have to walk away from Revolut over this because I don’t wish to load confidential info up to an app to God knows who.”
We highlighted these stories to Revolut. A spokesman stressed that all financial institutions “are required to identify immediate family members or close associates of PEPs using their products”. He said while such “questions may appear intrusive to those unfamiliar with regulatory requirements, establishing whether someone is a PEP is a legal obligation for all financial institutions.
In relation to the daughter of the former councillor from the west of Ireland, the Revolut spokesman said it could “not locate any questions about the political affiliations of the individual’s father, his views, or his political future”. He said such questioning did not form part of its screening processes.
The brother of the TD’s account was indeed limited until he supplied the requested documentation which Revolut said was its legal requirement. Similarly with the son of the former minister, the spokesman said the company was legally obliged to “verify his source of funds”, adding that it “should have explained to our customer that we are required by law to establish whether or not he was connected to a PEP. As made clear previously, we are updating our processes to ensure that this obligation is made clear in the future.”
Humans not computers
We also contacted Rachel Woolley, the global director of financial crimes at Fenergo, a company which among other things develops compliance software for financial institutions.
She questioned Revolut’s approach as outlined by our readers although she stressed that all banks are obliged to follow anti-money laundering legislation.
Anyone who opens a bank account will be asked for a lot of information and many application forms now have a section to declare if you are a politically exposed person or related to someone who is. Answering yes is not a bad thing, Woolley stresses, and not a black mark “but it does mean the account is monitored more closely”.
The names of existing account holders, Woolly says, can also be thrown up as potential matches to PEPs or their friends and family through routine trawls of third- party software. “It is an ongoing process and if my mother becomes a politician that would come up as part of routine screening. Then an enhanced level of scrutiny would be applied to my account to confirm the source of funds and the source of wealth.”
For a virtual bank such as Revolut, the source of the funds is typically another bank account and the source of the wealth is, more likely than not, a job. “Generally speaking this can be confirmed via a written statement or even an email but it should be an uncomplicated process,” she says. “It is not impossible to ask for pay- slips but it is certainly uncommon.”
She says that financial institutions need to be compliant but should not be asking “completely out-of-context questions. This needs to be done in a sensible way and that is not always by trusting what the computer tells you to do. You always need a human at the end of the process to establish if this makes sense”.
