A British private investigator jailed in China after GlaxoSmithKline’s bribery scandal has been blacklisted by banks, including HSBC and Royal Bank of Scotland, after authorities helped bring him back to the UK.
Peter Humphrey, who was convicted after a closed-door trial in 2014 of illegally obtaining information on Chinese citizens, told the Financial Times that HSBC had withdrawn his personal and business accounts without explanation on his repatriation last year after a decades-long relationship. RBS’s offshore arm, with whom he had banked since 2012, also pulled services.
While the banks declined to comment to the FT on specific cases, Mr Humphrey believes that the reason they closed his accounts was because of a confidential database used by 49 of the world’s 50 biggest banks, including HSBC and RBS.
World-Check, owned by Thomson Reuters, is used by banks, law firms and government agencies to research individuals and go through sanctions lists. Banks use it as part of their “know your client” checks, or KYC for short, that they must carry out as part of anti-money-laundering rules.
But detractors allege that the database serves as an unaccountable blacklist, aggregating unverified blogs and newspaper articles, including some from state-sponsored sources, as well as court judgments from around the world.
The database’s own fine print states that it provides merely a snapshot that “should be read by users in the context of the fuller details available in the external sources provided” and cautions their customers to verify the information. Individuals can request changes to inaccurate information.
World-Check said in a statement that it aggregated information from government watch lists and sanctions databases, as well as “publicly available information from reputable sources in order to help clients comply with anti-money laundering and counter-terrorist financing regulations. Customers can then use this data to follow their own regulatory compliance policies and procedures.”
HSBC said in a statement: “HSBC has a moral and regulatory obligation to have systems and controls in place to manage financial crime risk. As part of managing this risk, we periodically review our customer relationships and in doing so we gather information from a wide range of sources and take a number of factors into consideration.”
RBS declined to comment.
An insider at one high-street bank said that while cross-checking might occur for potentially lucrative new customers, a red flag for anyone else would be enough to terminate any relationship.
World-Check’s results for Mr Humphrey, seen by the FT, group him with GSK and its former employees charged with bribery, even though he was not part of that investigation. The records go on to state that he was arrested then subsequently jailed “for alleged illegal trafficking of personal information”.
“That is erroneous and injurious; there was no ‘trafficking’ or buying and selling of information. We produced in-depth reports,” said Mr Humphrey. “The database also equates the validity of convictions in a country like China with those of countries with a long rule of law.”
Mr Humphrey and his wife were detained by Chinese authorities in 2013 after helping GSK, which was not mentioned during their trial, identify the source of a secretly filmed sex tape of its then top executive in China in bed with his girlfriend.
GSK was fined £300m in 2014 by a Chinese court for funnelling billions of renminbi to hospitals, doctors and officials in an attempt to boost sales in one of the world’s biggest and fastest-growing drug markets. The company remains under investigation by the UK’s Serious Fraud Office.
Mr Humphrey is not the only person to take issue with the database. Maajid Nawaz, a former Liberal Democrat candidate and co-founder of an anti-extremist think-tank, was incorrectly labelled by World-Check as having terrorist links. He has now instructed Mark Lewis at Seddons, the solicitor used by celebrities and other victims of the phone-hacking scandal, to pursue a claim against the company.
Iqbal Asaria, an academic and former Bank of England adviser on Islamic finance who was made a CBE in 2005, was also erroneously labelled as having links to terrorism on the database after it picked up unsubstantiated allegations on a blog.
Thomson Reuters declined to comment on any specific case, citing data privacy laws. The FT competes with the company in providing news.
Banks have taken a conservative approach to KYC since US authorities in particular started cracking down on money-laundering. HSBC is especially sensitive since it was landed with a $1.9bn fine in 2012 from the US Department of Justice. It has taken a cautious approach and has closed entire business lines if they are deemed too risky.
But regulators are concerned that banks have taken “de-risking” too far, shutting out charities, innocent individuals, or indeed whole countries, deemed by banks to be too dicey.
According to a report published this year for the Financial Conduct Authority, banks have severed ties with clients they deem risky at an accelerated rate over the past three years in response to stretched compliance teams and a reduced appetite for risk in the wake of fines.