Why is it so hard to open a bank account in the UK?
Money Laundering is the standard reason given, and there certainly is a regulatory requirement to Know Your Customer (KYC), but the reason the banks make it so difficult is to manage their risk. An account with no overdraft facility has 3 primary risks to the bank: financial, regulatory and reputational. Financial risk comes from things like depositing a cheque, waiting for it to clear, taking all the cash out and then the cheque is later cancelled by the issuer. Regulatory and reputational risk comes from assisting people who are later discovered to be dodgy and the bank can be fined or put on the front page of the Daily Mail or Metro. Of course, some banks are a little smarter and have finally realised that managing risk is (supposed to be) what they do best, and that it’s possible to put a mitigation cost to this risk. For example, HSBC offers the Passport account where you pay 6 pounds a month for 12 months
In 2002, opening bank accounts got a lot harder worldwide thanks to new policies outlined in the USA PATRIOT Act. You might be interested in the Know Your Customer quick reference guide which outlines anti-money laundering compliance standards in 50 countries.
