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Nobody disagrees that this is what you have to do in PayPal's current state. The debate is to whether you should have to do it, or whether, given that it walks

by _pmf_ 7y ago

Nobody disagrees that this is what you have to do in PayPal's current state. The debate is to whether you should have to do it, or whether, given that it walks and talks like a bank, PayPal should nationally and globally be treated as a bank.

Silhouette 7y ago
IIRC, PayPal has a banking licence in Europe and as such is regulated by Luxembourg's supervisory authority. It's strange, given the nature of PayPal's services, that it hasn't yet been deemed to be a bank or the equivalent in other places as well though.
kristianc 7y ago
A bank that suspected money laundering or suspicious activity would be expected to behave in exactly the same way. Any regulated entity would.
- harimau777 7y ago
  I think the argument is that with a bank they cannot arbitrarily freeze your account, you are given a reason for any freeze, and have the opportunity to fight it. However, I don't know enough about banking law to know if that's accurate.
  - kristianc 7y ago
    That's not the case, a bank works in the same way. Typically a bank or financial institution will employ a set of machine learning models or rules (combined with human review) and freeze accounts on that basis. Like PayPal, a bank also will not tell you why it has frozen your account (to avoid ripping off others in a crime ring). PayPal (like banks) give you an opportunity to fight it, but like banks they can't simply let you have the money if it is frozen. Also, working in banking - banks and financial institutions will go out of their way to avoid false positives but do still need to remain compliant. https://monzo.com/blog/2019/04/04/why-we-block-freeze-close-monzo-accounts/ https://monzo.com/blog/2019/04/04/why-we-block-freeze-close-...
- mcv 7y ago
  From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves. At least, that's how I understand the banking situation in Netherland, which seems about as reasonable as you can get. American companies do seem to be much more likely to play police.
  - kristianc 7y ago
    > From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves. Not the case. They're obliged to freeze the account when they suspect suspicious activity, and then submit a SAR if it is proven to be suspicioue. Freezing the acct is part of the investigation, and they usually now use automated tools to do so. They're obliged to work every alert generated and unfreeze if the activity is proved to be legitimate.
- _pmf_ 7y ago
  > A bank that suspected money laundering or suspicious activity would be expected to behave in exactly the same way. How many lawyers do you think a bank will have to retain to deal with the flood of preliminary injunctions they would have to deal with if they locked accounts at will?

by _pmf_ 7y ago

Silhouette 7y ago

IIRC, PayPal has a banking licence in Europe and as such is regulated by Luxembourg's supervisory authority. It's strange, given the nature of PayPal's services, that it hasn't yet been deemed to be a bank or the equivalent in other places as well though.

kristianc 7y ago

A bank that suspected money laundering or suspicious activity would be expected to behave in exactly the same way. Any regulated entity would.

harimau777 7y ago
I think the argument is that with a bank they cannot arbitrarily freeze your account, you are given a reason for any freeze, and have the opportunity to fight it. However, I don't know enough about banking law to know if that's accurate.
- kristianc 7y ago
  That's not the case, a bank works in the same way. Typically a bank or financial institution will employ a set of machine learning models or rules (combined with human review) and freeze accounts on that basis. Like PayPal, a bank also will not tell you why it has frozen your account (to avoid ripping off others in a crime ring). PayPal (like banks) give you an opportunity to fight it, but like banks they can't simply let you have the money if it is frozen. Also, working in banking - banks and financial institutions will go out of their way to avoid false positives but do still need to remain compliant. https://monzo.com/blog/2019/04/04/why-we-block-freeze-close-monzo-accounts/ https://monzo.com/blog/2019/04/04/why-we-block-freeze-close-...
mcv 7y ago
From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves. At least, that's how I understand the banking situation in Netherland, which seems about as reasonable as you can get. American companies do seem to be much more likely to play police.
- kristianc 7y ago
  > From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves. Not the case. They're obliged to freeze the account when they suspect suspicious activity, and then submit a SAR if it is proven to be suspicioue. Freezing the acct is part of the investigation, and they usually now use automated tools to do so. They're obliged to work every alert generated and unfreeze if the activity is proved to be legitimate.
_pmf_ 7y ago
> A bank that suspected money laundering or suspicious activity would be expected to behave in exactly the same way. How many lawyers do you think a bank will have to retain to deal with the flood of preliminary injunctions they would have to deal with if they locked accounts at will?