It’s hardly an exaggeration to state that Nigel Farage, the former UK politician who led the successful campaign for the United Kingdom to leave the European Union, is a polarizing figure.
Not only is he the single person most credited (or blamed) for the UK’s divorce from the EU, he’s also a fierce opponent of what he views as overly generous asylum rules for migrants who illegally enter the UK. Farage also opposed COVID-related lockdowns in the UK and the country’s green energy policies.
Because Farage is politically prominent, he’s what’s known in financial circles as a “politically exposed person,” or PEP. As such, under anti-money laundering rules issued by the EU and adopted into UK law, he’s subject to enhanced scrutiny when it comes to opening and maintaining bank or other financial accounts.
Thus, last March, when long-time political rival Chris Bryant made a parliamentary speech accusing Farage of accepting “£548,573 from Russia Today in 2018 alone,” UK financial institutions surely took notice. (Russia Today is funded by the Russian government.)
This accusation was false, although under UK law, statements made in Parliament can’t form the basis of a libel action. Farage does acknowledge that the assets in his media company totaled £548,573 as of May 31, 2018. (In the UK, this is a matter of public record.) The year before, the total was only £157,604.
The difference of £390,969 represents the company’s entire income during the 2018 tax year. Much of the income likely came from lucrative contracts Farage had with Fox News and LBC (a British talk radio station). And indeed, while Farage has been a guest on Russia Today, his last appearance was in 2017. So it’s impossible that Bryant’s claim could be true.
But on June 29, Farage released a disturbing video in which he revealed that UK banks, including Coutts & Co., had closed the accounts of himself and members of his family. Farage attributed the closure of his account, which he had held for 43 years, to his spearheading the Brexit campaign, along with the false accusations made by Bryant.
A few days later, an extraordinary article appeared on the BBC website. Apparently based on information provided by Coutts, it revealed that Farage’s account had been closed because it fell below the £1 million threshold required to maintain a relationship with the bank. (So much for financial privacy in the UK!)
Farage denied that Coutts had ever informed him that a minimum balance was necessary to maintain an account. And since then, he claims that nine other UK banks have refused to open an account for him.
We could excuse you for believing that Farage is an outlier; that as a non-PEP, you have nothing to worry about in terms of a bank targeting you for an account closure.
But you’d be wrong. Nearly a decade ago, we asked, “What does a porn star have to do with your bank account?” At the time, we had just learned that Chase Bank had closed the account of Teagan Presley, featured in dozens of adult films. We wrote that Presley’s loss of banking privileges was an example of a much larger trend. It’s called “de-risking;” the decision by a bank or other financial institution to end a relationship with a customer to avoid possible embarrassment or, worse, government witch-hunts.
When we published that article, we weren’t yet aware of an initiative by the Obama administration called Operation Choke Point. This was an effort to persuade banks not to offer services to businesses it deemed undesirable. The main targets were precious metals and firearms dealers. But many other accounts held by politically incorrect customers were also targeted. They included dating services, US citizens living abroad, Muslim students, money service businesses, and even diplomats from countries that Obama disapproved of. Eventually, the FDIC prepared a list of 30 different industries that it viewed as high risk.
It even happened to us. In 2018, EverBank (now TIAA Bank), with whom we had a nearly 20-year relationship, notified us that all four accounts we had with them were being closed. The first paragraph of the notification read:
We regret to inform you that EverBank is unable to continue a customer relationship with you at this time. Therefore, we are requiring closure of the above referenced accounts within 30 days from the date of this letter.
So much for 20 years of customer loyalty. Fortunately, we had other accounts, so we weren’t locked out of the financial system.
Indeed, even entire countries have been de-risked, as the economic sanctions imposed against Russia in the wake of its invasion against Ukraine demonstrate. But again, this is nothing new. Among other jurisdictions, banks in Belize, the Cook Islands, the Cayman Islands, and Nevis began losing the ability to clear US dollar transactions as early as 2014.
More recently, banks involved in the cryptocurrency industry have been targeted by US regulators. Indeed, last March, we asked, “Did Uncle Sam start bank runs to crush crypto?” We based that article on the explosive allegations of venture capitalist Nic Carter. In February, he provided strong evidence to conclude that the Federal Reserve, acting with the blessing of high-level government officials, deliberately caused the collapse of Silvergate Bank and Signature Bank, two of the last crypto-friendly banks in the United States.
There are no easy answers to the problem of de-risking. One precaution we’ve taken is to open accounts at multiple banks, so if one is closed, we have alternatives available. But in the end, without a bank account, it’s extraordinarily difficult to function in a modern society. And with banking increasingly politicized, being on the wrong side of the political spectrum means your very financial existence could be at risk.
Just ask Nigel Farage.
