Database giant used by banks wrongly flagged up businessman as a terrorism risk

A data giant used by major banks to check for red flags had to pay hundreds of thousands of pounds in legal costs for wrongly flagging a businessman as a terrorist.

World-Check Risk Intelligence is used to search for regulatory red flags ranging from terrorism, crime or political exposure but has faced a string of complaints over its database.

However, The Telegraph can reveal that the company behind it had to pay nearly £200,000 in legal fees after libelling Mehmet Baltaci, a London-based businessman.

Mr Baltaci, 52, from Turkey, has a range of business interests across the global oil, gas, renewable energy and real estate sectors but was forced to issue legal proceedings against Refinitiv, the owner of World-Check in December 2020.

The High Court claim for libel and misuse of data was settled in April 2023 with World-Check removing a profile, retracing the claims and agreeing not to publish the inaccurate information again.

Marketed as ‘reliable’

The company paid £10,000 in damages and another £180,000 in legal costs.

In court documents, Mr Baltaci’s lawyers argued that World-Check was marketed to subscribers as “a reliable and comprehensive one-stop shop”.

The submission said that Mr Baltaci had originally been listed on World-Check in September 2014 as a politically exposed person due to his role as the Honorary Consul of Malawi in Istanbul.

However, in January 2020 a new profile was created marking him as “non conviction terror” and stated that he was an “alleged associate” of two suspected members of the Gulen Movement in Turkey, on trial for being part of a terrorist organisation.

This caused “serious adverse consequences”, according to the court documents, which included “the termination of existing financial relationships and/or the refusal to contract for the provision of additional or new financial services”.

The court was told this had “a serious and harmful impact on the claimant and his ability to conduct business” and that within months of the new profile being added to the database banks began closing his accounts.

More than 10 bank accounts across three countries were closed and another bank refused to provide services.

Refinitiv was bought by the London Stock Exchange two years ago and insists it regularly checks data to ensure it is accurate and up to date but has faced several other lawsuits.

In 2017 it had to pay out £10,000 in damages plus legal costs after Finsbury Park mosque in north London was wrongly linked to terror activities.

The erroneous finding prompted HSBC to close the mosque’s account and other banks declined to take on the place of worship.

In the same year, the data provider had to pay damages to Maajid Nawaz, the founder of the anti-extremism think tank Quilliam, after it placed him in a terrorism category.

Politicians and others classed as a politically exposed person – ranging from British political leaders to the rulers of regimes in Africa and the Middle East – are subject to enhanced checks by banks to ensure they are complying with the law.

World-Check helps financial institutions with regulatory requirements and is intended to stop banks being used to launder the proceeds of crime or be associated with corrupt or criminal business people and practices.

If a person is on a sanctions list world-wide, they will be on the database and politically exposed individuals are added based on criteria set by central governments.

How the service is used will vary by individual banks and is up to lenders how to act on information or to decide to shut an account.

Most commonly used service

High Street banks will not reveal if they used the service but the Financial Conduct Authority has previously said it was “by far the most commonly used database service for screening clients in this way”.

Lawyers said on Thursday that they had seen a rise in complaints against World-Check as regulations around the world changed.

Thomas Cattee, head of white-collar crime at Gherson Solicitors, said there had been an increase in the past three years in enquiries relating to the database.

“We’re getting two or three enquiries a month at the moment which is an increase over the past few years. From the point of view of the clients they are trying to open a bank account, for example, and they are being told that they can’t and are not being given a reason.”

Refinitiv has said it gathers data using the criteria set by government agencies and it was aggregated from publicly available information and reputable media sources.

A spokeswoman added it did “not draw any conclusions on an individual or make any financial decisions. 

“Our data is continuously assessed to ensure it remains up to date and we have multiple fields and secondary identifiers to minimise false positives with manual human fact checking and verification,” she added.