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It's a direct result of the regulatory and reputational risks that banks now face. Threatened with multi-billion dollar fines for facilitating money laundering

by retube 10y ago

It's a direct result of the regulatory and reputational risks that banks now face. Threatened with multi-billion dollar fines for facilitating money laundering they're not taking any chances.

rlpb 10y ago
Sure. What I'm saying is that the bank should also face consequential damages when they suspend an account for an extended period of time without a criminal standard of proof. This will help redress the balance. Instead of them "not taking any chances", they will be forced to consider the situation and make a real determination.
- zigzigzag 10y ago
  Anti-money laundering laws explicitly do not require a criminal standard of proof. This is by design - governments and in particular the US government which insists on all this stuff regardless of what other countries thing absolutely love a system that fights crime, as they see it, without all the hassle of due process and court cases. AML account closures only require 'suspicion', for example, a name match against a blacklist compiled by a government agency is 'suspicious' even if it wouldn't hold up in a traditional court of law.
  - rlpb 10y ago
    And what I'm saying is that government-sanctioned removal of services upon citizens who have broken no law should not be tolerated in a society that values the rule of law.
    - zigzigzag 10y ago
      I absolutely agree. Unfortunately convincing governments to roll back anti-money laundering laws would be like pulling teeth. They only ever make them more aggressive.
wavefunction 10y ago
I suppose the many banks that have been fined for _actively_ laundering money shouldn't have done that then, casting a pall as it has over the entire industry. It's always 'boohoo the Banks are so troubled' but how hard is it to refrain from actively laundering money for drug cartels or third world despots or any number of other illicit sources? How hard is it to refrain from rigging the LIBOR or selling sub-prime CDOs to your clients to clear your own books after marking years of profit building up another debt bubble? I have very little patience or sympathy for the modern banking industry and their travails screwing the rest of us over, and getting off with rather unimpressive fines, if we're honest. This guy had his entire account seized. What if the banks were fined commensurate to their profits and they really started to feel the pinch? That, combined with personal liability for the officers involved with these scandals would certainly clean the problem up expeditiously.
- retube 10y ago
  You realise that no bank was fined for _actively_ laundering money? And by that I mean there was no institutional conspiracy to do so. The money laundering that occurred was facilitated by a very small number of low-level staff who hid what were doing (e.g cashiers in branches), plus a slightly larger number who didn't pick up the activity. What the banks were fined for was insufficient controls to detect laundering, not laundering itself. Banks process 100s of millions of transactions a day, including taking large numbers of cash deposits in developing countries like Mexico. It is _incredibly_ hard to build a framework which reliably detects suspicious activity without a lot of false positives. But given the potential repercussions, banks are being very cautious. They cannot afford more scandals.
  - Spooky23 10y ago
    So HSBC helped drug cartels launder a billion dollars due to the actions of a few tellers? No way. Even a cursory examination will find many cases where banks were suspected of actively facilitating criminal activity.
  - EdHominem 10y ago
    >You realise that no bank was fined for _actively_ laundering money? And no banker was jailed for 2008. > And by that I mean there was no institutional conspiracy to do so. That simply means that the conspiracy was too big to reasonably punish. Too many friends of the prosecution would have been hurt, so miraculously nobody was charged. > But given the potential repercussions, banks are being very cautious. They cannot afford more scandals. Which is what the OP was saying. We've dumped risk on the banks and now they're hurting legitimate customers to avoid that risk. And because it's essentially mandatory to have a bank, customers are being forced to use services that - like Paypal - will hold their money for months or years without feedback simply because they can. They don't care that they freeze your accounts and you can't pay your mortgage, they're indemnified against claims from customers. "Oh, sorry, it was vaguely related to anti-money laundering. Check back in 90 days." It's almost like our governments are trying to make us use non-bank solutions.
toss1 10y ago
Great, they now face regulatory and reputational risks, and rightly so. They should be allowed to take steps to prevent themselves from unwittingly supporting laundering, terrorism, etc. However, those steps should not include STEALING THEIR CUSTOMERS' MONEY, which is no less than this bank did until contacted by the media. If they decide the person or transaction is insufficiently verifiable to accept, hold, or move the money, fine. Refuse to keep the funds and RETURN THEM TO THE OWNER. Keeping the funds is simply theft. This is no better than the "asset forfeiture" going on in US police departments who are behaving as robbery gangs.

by retube 10y ago

It's a direct result of the regulatory and reputational risks that banks now face. Threatened with multi-billion dollar fines for facilitating money laundering they're not taking any chances.

rlpb 10y ago

Sure. What I'm saying is that the bank should also face consequential damages when they suspend an account for an extended period of time without a criminal standard of proof. This will help redress the balance. Instead of them "not taking any chances", they will be forced to consider the situation and make a real determination.

zigzigzag 10y ago
Anti-money laundering laws explicitly do not require a criminal standard of proof. This is by design - governments and in particular the US government which insists on all this stuff regardless of what other countries thing absolutely love a system that fights crime, as they see it, without all the hassle of due process and court cases. AML account closures only require 'suspicion', for example, a name match against a blacklist compiled by a government agency is 'suspicious' even if it wouldn't hold up in a traditional court of law.
- rlpb 10y ago
  And what I'm saying is that government-sanctioned removal of services upon citizens who have broken no law should not be tolerated in a society that values the rule of law.
  - zigzigzag 10y ago
    I absolutely agree. Unfortunately convincing governments to roll back anti-money laundering laws would be like pulling teeth. They only ever make them more aggressive.

wavefunction 10y ago

I suppose the many banks that have been fined for _actively_ laundering money shouldn't have done that then, casting a pall as it has over the entire industry. It's always 'boohoo the Banks are so troubled' but how hard is it to refrain from actively laundering money for drug cartels or third world despots or any number of other illicit sources? How hard is it to refrain from rigging the LIBOR or selling sub-prime CDOs to your clients to clear your own books after marking years of profit building up another debt bubble? I have very little patience or sympathy for the modern banking industry and their travails screwing the rest of us over, and getting off with rather unimpressive fines, if we're honest. This guy had his entire account seized. What if the banks were fined commensurate to their profits and they really started to feel the pinch? That, combined with personal liability for the officers involved with these scandals would certainly clean the problem up expeditiously.

retube 10y ago
You realise that no bank was fined for _actively_ laundering money? And by that I mean there was no institutional conspiracy to do so. The money laundering that occurred was facilitated by a very small number of low-level staff who hid what were doing (e.g cashiers in branches), plus a slightly larger number who didn't pick up the activity. What the banks were fined for was insufficient controls to detect laundering, not laundering itself. Banks process 100s of millions of transactions a day, including taking large numbers of cash deposits in developing countries like Mexico. It is _incredibly_ hard to build a framework which reliably detects suspicious activity without a lot of false positives. But given the potential repercussions, banks are being very cautious. They cannot afford more scandals.
- Spooky23 10y ago
  So HSBC helped drug cartels launder a billion dollars due to the actions of a few tellers? No way. Even a cursory examination will find many cases where banks were suspected of actively facilitating criminal activity.
- EdHominem 10y ago
  >You realise that no bank was fined for _actively_ laundering money? And no banker was jailed for 2008. > And by that I mean there was no institutional conspiracy to do so. That simply means that the conspiracy was too big to reasonably punish. Too many friends of the prosecution would have been hurt, so miraculously nobody was charged. > But given the potential repercussions, banks are being very cautious. They cannot afford more scandals. Which is what the OP was saying. We've dumped risk on the banks and now they're hurting legitimate customers to avoid that risk. And because it's essentially mandatory to have a bank, customers are being forced to use services that - like Paypal - will hold their money for months or years without feedback simply because they can. They don't care that they freeze your accounts and you can't pay your mortgage, they're indemnified against claims from customers. "Oh, sorry, it was vaguely related to anti-money laundering. Check back in 90 days." It's almost like our governments are trying to make us use non-bank solutions.

toss1 10y ago

Great, they now face regulatory and reputational risks, and rightly so. They should be allowed to take steps to prevent themselves from unwittingly supporting laundering, terrorism, etc. However, those steps should not include STEALING THEIR CUSTOMERS' MONEY, which is no less than this bank did until contacted by the media. If they decide the person or transaction is insufficiently verifiable to accept, hold, or move the money, fine. Refuse to keep the funds and RETURN THEM TO THE OWNER. Keeping the funds is simply theft. This is no better than the "asset forfeiture" going on in US police departments who are behaving as robbery gangs.