Banks turn their backs on embassies

More than 40 diplomatic missions have been left without banking facilities after HSBC closed their bank accounts.

HSBC told Embassy this was part of a wider review of the bank’s business sectors and they would not be taking on new diplomatic clients.

According to sources in the banking industry, diplomatic missions are considered to be ‘politically exposed’ which means they are at risk of money laundering activities. For banks to open accounts for PEPs (politically exposed persons), an extra layer of checks are needed.

HSBC may be taking extra caution after it was fined for money laundering in the US last year and in March this year it was hit with fresh claims of illegal activity in Argentina.

The missions were given 60 days to find a new bank. While some of the EU missions have been able to open new accounts at banks that continue to take on diplomatic business on a “case by case” basis, it is becoming increasingly difficult for missions, particularly those from developing nations, to open a bank account.

A chargé d’affaires for a newly-opened mission in London has been trying for more than two months without success to find a bank that will accept the mission as a client.

“This is most uncommon,” the Chargé d’Affaires told Embassy. “According to the Vienna Convention the receiving state should offer all facilities to embassies.”

According to the 2011 Embassy census, a quarter of envoys said opening a bank account was the most difficult aspect of relocating to London.

The Foreign Office is aware of the situation but has said there are “limitations” on what assistance they can offer. “We can’t force a commercial bank to take anyone’s account,” said an official in Protocol Directorate.

The FCO provides letters of introduction to missions. “Such letters have proved useful in helping missions…and we remain ready to provide these letters as required.”