One might assume that working in a bank is pretty much the same everywhere, given the extent of globalization and how international the industry is. But there are problems with that assumption. In many countries the real economy is based far more on cash than on any other method of payment. On top of this, each country has different legislation. And one aspect that is clearly overlooked is the liability of the branch manager and the employees in general in regards to money laundering.
INCREASED DEMAND FOR DOCUMENTATION
In France, there are many situations where the law requires payment through a bank, and banks are legally obligated to open an account for anyone. I have previously explained in detail how this works; briefly, it is very similar to the assigned risk system for uninsurable drivers in the USA. Someone who is denied even the minimum service can go to the state authority to be assigned to a company that is required to provide the minimum legal service. Remember that French law says all salaries must be paid through a bank account, either by transfer of funds or via a check that cannot be cashed or endorsed but must be deposited. All payments issued by the administration in the normal course of life are made the same way.
French bank managers, under the Tracfin legislation against money laundering, are personally liable if clients of their branch launder money, and the penalties could include time in jail. This puts huge pressure on branch managers, so they carefully check their clients and their transactions.
That factor combined with the minimum service requirement gives banks considerable reason to ask for a lot of documents. Historically, a normal bank account could be opened with an ID, a utility bill and a recent pay slip or a job contract. (There is no need to deposit money; most accounts are opened with zero deposit.) But banks are now asking for an income tax declaration (avis d’imposition sur le revenue), a description of the job held, a recent copy of the ID card or passport, and the previous year’s pay slips. They are also pushing clients to enter “lottery games” and other special award games that ask clients to provide more personal information. They are looking for ways to get to know the client better so they can offer their services in a more pertinent way. Many consumer unions (associations de consommateurs) are fighting this policy since it violates the right to privacy when such actions are pushed to an extreme.
GETTING RID OF THE “GOOD CLIENTS”
Banks traditionally made their money by lending to some clients the money that other clients deposited. The difference between the interest rate charged on loans and that paid on savings was their profit margin. The more money the client put in the bank, the more valuable the client was, since he enabled the bank to make more money.
Today, the vast majority of banks’ client-derived income comes from fees and charges that clients pay for various services. The old-fashioned “good client” who has never bounced a check or been overdrawn, and who does not use such modern bank services as debit cards and revolving credit, simply does not produce that much income for the bank. So French banks have started getting rid of such clients by terminating their accounts and asking them to bank elsewhere. Thus far, however, the number of people faced with this situation is small, and there seems little likelihood of it happening on a larger scale. Also, keep in mind that foreign clients of French banks often generate good revenue for the banks by using debit/credit cards and by receiving and sending international wire transfers, among other things.