UK Regulatory Body Initiates Discussions with Crypto Firms and Banks on Debanking Concerns
The Financial Conduct Authority (FCA) of the UK has released a comprehensive report addressing the issue of debanking, particularly in relation to crypto firms' struggles to access banking services within the country. This report comes in the wake of allegations made by broadcaster Nigel Farage, who claimed that his bank account was closed due to his political views, sparking broader concerns about discriminatory debanking practices.
According to the FCA's report, the most frequently cited reasons for the rejection, suspension, or termination of personal and business account applications included suspicions of financial crime, concerns over due diligence, and instances of inactive or dormant accounts. Some crypto companies have faced significant challenges in establishing bank accounts in the UK, with institutions like NatWest openly stating their refusal to do so for crypto-related businesses.
The report, based on data gathered from 34 credit institutions and payment firms, revealed that crypto was among the industries that certain payment account providers were reluctant to grant banking access to. Despite acknowledging its limited capacity to intervene in businesses' banking endeavors, the FCA asserted that it has taken measures to influence decisions with the aim of upholding market integrity.
The report emphasized the importance of ongoing dialogue between crypto firms and banks, stating that it can contribute to a fair and balanced approach, provide clarity on decision-making processes, and explore suitable methods for addressing concerns and potential risks.
Earlier reports suggesting that the FCA found no evidence of banks closing accounts based on customers' political views were met with skepticism from Farage, who dismissed the findings as "total nonsense." The report clarified that due to limitations in available data, detailed conclusions about the specific demographics affected by account closures could not be drawn. Cases where political expression may have played a role in closure were largely unfounded, with instances predominantly attributed to customer behavior, including incidents of racism.
Emad Aladhal, a director at the FCA, emphasized the importance of adopting a risk-based approach rather than a broad-strokes method when onboarding customers, aligning with both expectations and regulations. This statement was made during a briefing held on Tuesday.
You might also like: Elon Musk's Venture Secures Multi-State Licenses for Payment Processing, Including Cryptocurrency