By Lawrence White
LONDON, Aug 24 (Reuters) – An avocado importer, an e-cigarette seller and a toilet-cleaning gun maker are among British companies that have had accounts closed or frozen by HSBC in the last two months, unintended casualties of a crackdown by the bank on illicit money flows.
Dozens of companies have been affected, with some unable to pay staff and suppliers, and others suffering financial losses they fear could force them to close.
HSBC told Reuters there may have been “an issue with how we’ve been communicating” and that it would put right “any case where we have done something wrong”. It unfroze the accounts of at least three companies whose cases were brought to the bank’s attention by Reuters.
“Inhibiting an account is always a last resort, so to get to that stage we will have done everything we can to contact the customer and get the information we need,” said Amanda Murphy, head of commercial banking for HSBC UK.
Fourteen companies told Reuters in interviews they had lost access to their accounts after answering questions from HSBC as part of a review of customers. The bank is trying to tighten checks on clients following a $1.9 billion fine in 2012 for allowing itself to be used to launder drug money from Mexico.
More than 30 companies have lodged complaints with HSBC about their accounts being closed or frozen, according to sources with knowledge of the complaints and social media postings by the affected companies.
David Johnston, whose company Interbrands (Europe) imports frozen avocados, said he received a letter on Aug 10 saying HSBC would freeze his foreign currency accounts on Aug 11, leaving him unable to pay his Mexican suppliers and a shipment stranded.
More than two weeks later, the bank told him it had “no set timeline” for resolving the problem and that meanwhile he would be unable to make overseas payments, according to emails seen by Reuters.
Johnston said HSBC had told him on Thursday it would unblock his account after Reuters’ inquiries. Agustin Larocca, whose firm Bellmonte supplies luxury e-cigarettes, said his account was also unfrozen after being blocked for nearly seven weeks because of the Reuters’ inquiries. A third company, MHL Consulting Engineers, said its account had also been unblocked.
Anti-money laundering regulations prevent banks from informing customers why their accounts are being closed or suspended where such activity is suspected. In some cases, HSBC may be powerless to tell customers why they are suffering.
The problems of many of the businesses interviewed by Reuters date back to September 2015, when they received a questionnaire presented by the bank as a routine check.
This followed HSBC’s launch of a programme called Safeguard after the 2012 fine to glean more information about customers.
HSBC, which has a 10 billion pound ($12.8 billion) fund to support small businesses in Britain, started taking action in earnest this year. Some companies that had their accounts closed in July or this month said they had been under the impression they had provided all the information needed.
Calan Horsman, whose company Loogun makes a hand-held water gun for toilet cleaning, said he was left in default to suppliers, with stock stuck in China and the company unable to pay staff, after his account was frozen.
“My business ground to a halt. I had to unload a container of product that was stuck in a port. We’ve lost a month in our production timeline,” Horsman said.
Like most of the other companies affected, Martyn Fisher’s company Fisher Fabrics does business abroad. It supplies customers in Asia from suppliers in China and South Korea.
“I should be the ideal business post-Brexit. I do nothing within the EU. I’m doing deals with all these countries that are supposed to be our trade partners after Brexit,” he said after his company had its account frozen.
Banks worldwide have in recent years shut thousands of customer accounts as they seek to avoid fines from U.S. authorities for abetting money laundering and sanctions-busting.
More than 300 charities based in Britain have had their bank accounts closed in the last two years after being caught up in the crackdown, Reuters reported last month.
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