HSBC asks diplomatic missions to close their accounts

PanARMENIAN.Net - HSBC bank has asked more than 40 diplomatic missions to close their accounts as part of a program to reduce business risks, according to BBC News.

The Vatican's ambassadorial office in Britain, the Apostolic Nunciature, is among those said to be affected.

The head of the UK's Consular Corps told the Mail on Sunday, Aug 4 the decision has created "havoc".

The Foreign Office has been in touch with HSBC, stepping in to help diplomats open other bank accounts. HSBC said embassies were subject to the same assessments as its other business customers. They need to satisfy five criteria - international connectivity, economic development, profitability, cost efficiency and liquidity.

A spokesman said: "HSBC has been applying a rolling program of "five filter" assessments to all its businesses since May 2011, and our services for embassies are no exception. We do not comment on individual customer relationships."

Embassies are treated like business customers by banks as they generally use services like cash and payroll management and can take out loans. They also have to pay for ambassadorial accommodation and costs such as school fees for the children of diplomats - expenses that are difficult to meet without a valid UK bank account.

They are sometimes considered to be at risk of money laundering activities because of their political exposure and banks have been warned in the past for failing to flag up suspicious accounts.

The Riggs National Bank in Washington was fined and later sold off after a 2004 U.S. Senate report revealed executives in its embassy business had helped Chilean dictator Augusto Pinochet hide millions of dollars.

HSBC was fined $1.92bn by U.S. authorities last year after it was blamed for alleged money laundering activities said to have been conducted through its Latin American operations by drug cartels.

The bank admitted at the time that it had failed to effectively counter money laundering.