Why money laundering rules just won't wash

As Tor - or Master Webster as the SWBS kept referring to him in letters - discovered, it is very difficult to set up a bank account if you don't pay for your own utilities. Those recently arrived in the UK, those who still live with their parents or other relatives, or those in accommodation that includes all bills, can really struggle to prove where they live - particularly if the institution takes the Saffron Walden-esque interpretation of the rules.

Anyone living with a partner, where all the bills are in their partner's name, may struggle to prove where they live, particularly if they have recently moved house, or don't share the same surname.

According to Anna Sofat, director of London-based Independent financial advisers Destini Fiona Price, there is no standard format to tell companies how they should interpret the regulations.

"We deal with hundreds of different financial institutions and they all interpret them in different ways.

"Some are happy to let us establish our clients' identities and fill in a form to show we have done so. Most are happy to accept certified copies of passports and other documents, but others will demand to physically see it.

"The whole thing has become a bit of a nightmare since the regulations changed in 2004 - you soon learn from painful experience which companies take a more flexible approach and which don't.

"In our experience insurers are easier to deal with, while some of the banks are very rigid and can be an absolute nightmare," she says.

One reason why the banks are taking such a strict approach to the money laundering rules may be because the Financial Services Authority has already slapped fines on Abbey (£2.3m), Bank of Scotland (£1.25m) and Northern Bank (£1.25m) for breaches of the rules.

One of the more bizarre aspects of the regulations is the importance which is attached to utility bills.

There's nothing to stop anyone ringing up a power company and telling them they have just moved into an address, and the power company will be only too happy to sign the person up and bill them accordingly. Some will start billing you even if you haven't asked them to. Certainly no serious money launderer would have any problem getting their hands on a utility bill in this way.

Perhaps the banks and building societies would be better advised looking for unusual payment patterns rather than denying children like Tor, a market-leading return on their £45 savings.

Sharing these mutual problems

Mrs Barnes and her grandson aren't the only ones who have had problems with the Saffron Walden Herts & Essex BS.

Members of my family have had a number of accounts with the mutual society since they moved to the Essex town in 1979, and yet they have had endless problems opening child accounts for each of my two, and my sister's four children.

They, like grandparents across the country, pay small amounts into their grandchildren's accounts on birthdays, Christmas and the like.

However, when my sister and her husband moved to Italy, and she gave birth to her fourth child, it almost proved too much for local staff at the building society. Although my sister sent over the birth certificate, coupled with all the required proof of identity, including utility bills, staff initially refused to open an account.

Despite several visits and phone calls - they'd sent all the bills they had - my mother was told that the Italian telephone bill was not sufficient proof. Only when she pointed out that she, the child's three other siblings, his two cousins, and his uncle all had accounts with the society, did finally they agree to look at it.

Only after a long consultation that went up to director level did they finally agree to open a Ladybird account - and only then, because the other three children already had accounts.

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