IF YOU want to know about the British Establishment’s determination not to clean up banking, take a look inside the Queen’s bank. You’ll see that instead of jailing bad bankers, we are still giving them honours.

Coutts holds the royal bank account. In return for supplying Her Majesty with her cheque book and cash card, Coutts has a special place in the Establishment.

This is a shame, because recent cases show that Coutts is especially involved in bad practices, particularly those linked to tax avoidance and money laundering.

And instead of chasing down the guilty bankers, Coutts is getting a free pass in Britain. In March 2012 British regulator the Financial Services Authority (FSA) fined Coutts £8.75 million. The authority didn’t pull its punches when it explained the reasons for the fines.

Coutts offers “private banking and tailored wealth management.” That is, they are a bank to the super-rich.
The rules say they are supposed to make doubly sure that clients who are “politically exposed persons” — politically connected people from countries with corruption problems — are not depositing dodgy money.

Instead, Coutts gave bonuses to execs signing up “high-risk customers.”

Coutts “failed to identify serious criminal allegations” against new clients and ignored “adverse intelligence.” The FSA said Coutts “failings were significant, widespread and unacceptable. Its conduct fell well below the standards we expect.”

According to the FSA these were “serious, systemic” breaches of money-laundering rules that “were allowed to persist for almost three years.”

However, while the FSA judgement was harsh, the fine was by the current standards quite low.

The figure £8.75m would be a lot of money to you or me, but by their nature banks have a lot of cash. And no individual was prosecuted.

The FSA could have “struck off” bankers from their register, to get the bad apples out the City barrel, but it didn’t. The fine was paid, but the bad bankers were allowed to carry on.

The FSA has since been named the Financial Conduct Authority (FCA) to make it sound more stern. But overseas regulators are actually being sterner with the royal bank.

Coutts is part of the Royal Bank of Scotland (RBS). In its 2014 annual report RBS told investors that the US Department of Justice was investigating Swiss banks over “concealing the assets of US taxpayers in offshore accounts”, so helping tax evasion. The US prosecutors told banks that they could get “non-prosecution” agreements if they admitted their wrongdoing and paid a fine.

Coutts runs a lot of their private banking through a Swiss arm. Coutts told the US Department of Justice that it was going to give the US prosecutors a “detailed review of all US related accounts” in late 2014, as part of a non-prosecution deal.

According to the latest RBS annual review, Coutts gave the Department of Justice the details of these possibly tax-avoiding accounts in November 2015, and expect to come to a financial settlement some time this year.

However, it also admits that “a prosecuting authority in Germany is undertaking an investigation into Coutts & Co Ltd in Switzerland, and current and former employees, for alleged aiding and abetting of tax evasion by certain Coutts & Co Ltd clients. Coutts & Co Ltd is co-operating with the authority.”

So just as Coutts is negotiating a settlement with the US, it is being investigated by the Germans for helping tax evasion.

This combination of tax evasion, possibly corrupt clients and Swiss banking should sound familiar — it is exactly the pattern exposed in the HSBC leaks.

Thanks to bank bailouts, RBS is 81 per cent owned by you and me. So here is a perfect chance to clear out the people who helped tax evasion and money-laundering in the City.

We own the bank, so we could command it to really open up the history of bad behavior, to expose it so it doesn’t happen again. We own this slice of the City, so we could easily clean it up.

However, we are doing the opposite: RBS is just going to sell off Coutts to a French bank and try shuffling sideways away from the dirty business.

It is worth remembering that while you and I own Coutts, the bank has impeccable connections to the political Establishment. 

So much so that one of the men in charge of the bank when all the malpractice over money laundering and tax evasion happened actually got knighted very recently.

David Douglas-Home was chairman of Coutts from 1999 until the end of 2013. He is still chairman of their international arm, Coutts Switzerland.

Earl Home is son of Tory former prime minister Alec Douglas-Home, and is himself a Tory lord.

Even though his bank was fined by the FSA and was soon to be caught in US and German investigations, Douglas-Home of Coutts was knighted in the last New Year’s honours.

So even after the financial crisis, as all the scandals unravel, we are still knighting bankers. His knighthood got little publicity because it appeared in a separate list from the others.

This is because he was knighted directly by the Queen in her personal “Order of the Thistle,” which does not appear in the main list of awards. Buckingham Palace told me that the award went to those who have “contributed significantly to the nation.”

I asked them about the wisdom of knighting a banker running an institution recently fined for breaking money-laundering rules, but the Queen did not wish to comment.

There is no doubt in my mind that the authorities will be reluctant to really dig in to the workings of a bank run by a man who just got a big medal from the Queen.

The very British way would be to try and brush this under the carpet instead. Because of the close links between the banks and the Establishment, financial crimes go uninvestigated.

They avoid embarrassment, but our financial sector stays dirty.