"Know Your Customer" rules backfire on the government

As you know, Britain has been putting pressure on financial institutions 
to check ID, in common with most other countries.  The government has 
also been putting pressure on banks to offer accounts to unprofitable 
poorer customers.  The idea is to switch from cash welfare payments to 
payments into bank accounts.  This neatly shifts the cost of running the 
benefit system off the government and onto banks.

The banks, however, have found an ingenious way round this.  The only 
forms of ID they will accept for these "basic bank accounts" are a 
passport or a driving licence.  They need to be sure they have 
adequately identified their customers, you see, otherwise they might be 
helping launder terrorist funds or something like that.  This is a bit 
of a problem for long term welfare claimants; they are unlikely to have 
the money to travel abroad or learn to drive. :-)

It will be interesting to see how the government gets out of this one. 
Would they rather relax the rules on ID, or continue to pay money to run 
the benefit system?  I'm sure neither option will be very appealing.

Pete