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So can anyone explain why banks would suddenly close an account like that in the UK? Would they do that in the US? He is despositing a lot of cash and electroni

by Shinkei 12y ago

So can anyone explain why banks would suddenly close an account like that in the UK? Would they do that in the US? He is despositing a lot of cash and electronically transmitting money from that account. Wouldn't any small business that does a lot of cash transactions run into this same problem?

deleted 12y ago
[deleted]
pdeuchler 12y ago
He is despositing a lot of cash and electronically transmitting money from that account. I think that's your answer right there. Small businesses usually have personal connections with their bank and can easily dispel any suspicions of money laundering as well.
bobbles 12y ago
They would have a small business account with the bank instead of a personal account I'd say.
- jfoster 12y ago
  Good point. His transactions indicate business-like activity. His account is personal.
WillNotDownvote 12y ago
It happens with US accounts too. Banks have a strong incentive to avoid money laundering activities, and no real penalty for false positives.
- r00fus 12y ago
  Except of course, when they profit handsomely from money laundering [1]... maybe you just need a bigger balance in the account? [1] http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge-approves-1-9b-drug-money-laundering-accord http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge...
- engendered 12y ago
  Banks have a strong incentive to avoid money laundering activities Most banks have automated systems that flag on certain automated conditions (I know because I built one). Contrary to some of the posts in here, they do not want to flag accounts, and most do the absolutely minimal mandated under AML legislation. We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else". As always everyone is operating under very incomplete information.
  - desdiv 12y ago
    We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else". "Fill out AML suspicious activities report" and "close his account" are mutually exclusive courses of actions. Just because one happened doesn't mean the other ones didn't happen. Like you said, we're operating under very incomplete information, so let's not assume "fill out AML suspicious activities report" didn't happen here.
    - engendered 12y ago
      They usually are mutually exclusive, at least in the US and Canada. If an AML flag is triggered, or there is reasonable suspicion, they have to report it and are barred from telling you that you've been reported. Kick you out as a customer would be a great way to undermine the whole AML thing. It is entirely possible that if he simply had transfers to or from known Bitcoin entities, that would have triggered it. Not because he did anything illegal -- Bitcoin isn't currently illegal in most places, and they have zero onus to report anything in that case -- but that the bank is hedging that there will be issues that come up in the future and they don't want the hassle. That they have determined that Bitcoin is going to be a regulation hassle in the future so they simply want to have nothing to do with it. This is in no way money laundering, or suspicion of it, and they needn't report anything -- just tell him to get lost so in a year or two when this becomes a big thing they have limited their exposure.
petercooper 12y ago
Banks can choose who they do business with and at least in the UK they're known for closing accounts for reasonably arbitrary or accidental reasons. http://www.bbc.co.uk/news/business-15794539 http://www.bbc.co.uk/news/business-15794539 http://news.bbc.co.uk/1/hi/programmes/moneybox/9637740.stm http://news.bbc.co.uk/1/hi/programmes/moneybox/9637740.stm http://www.bbc.co.uk/news/business-18540832 http://www.bbc.co.uk/news/business-18540832 At least in this case, it wasn't a freezing of assets, more a "we're not the right bank for you, go away".
patio11 12y ago
No, because a small business that does a lot of cash transactions would, on review of the account, look like a business, not like a money transmitter. There would be checks written to vendors, withdraws from a payroll company corresponding to a predictable cycle, probably a rent check on a predictable cycle, etc. If your only two transactions are "Deposit lots of cash" and "transfer it to another bank" the bank will come to the conclusion "To the extent that there is a business here, it is probably money laundering." The bank was right.
- code_duck 12y ago
  These transactions would be half money laundering only if the buyers only came from illegal activities and they were avoiding deposit in a typical bank. It's not laundering by the author as he is not involved or aware of the buyers' money's providence. I don't see how it would be money laundering more than say, buying $3000 of gold from a local gold and silver shop. I'm hardly an expert in... Anything, though. If you care to explain that would be lovely.
  - TeMPOraL 12y ago
    Most of legitimate financial activity forms follow well known patterns. Illegal activities often follow different patterns. It's reasonable for a bank to flag suspicious accounts, even though you'll always have some false positives - because if it looks like money laundering, most of the time it is. Also I don't know if this works with banks (having no personal experience here), but I remember back from the time when early Kickstarter projects got their PayPal accounts frozen, that the rule of thumb was: if you're going to do something on your PayPal account that looks weird/atypical, it's a good idea to call them in advance and tell them about that.
    - code_duck 12y ago
      I agree it may look like money laundering. But one can't really say "the bank was right" in this case since it wasn't money laundering.
Spooky23 12y ago
Banks have an obligation to report suspicious activity, and many will cut you off if they see a pattern or trend that could be suspicious to reduce risk. The governor of New York's prostitution habit was discovered a few years ago when a bank risk guy flagged money transfers from his account.

by Shinkei 12y ago

deleted 12y ago

[deleted]

pdeuchler 12y ago

He is despositing a lot of cash and electronically transmitting money from that account. I think that's your answer right there. Small businesses usually have personal connections with their bank and can easily dispel any suspicions of money laundering as well.

bobbles 12y ago

They would have a small business account with the bank instead of a personal account I'd say.

jfoster 12y ago
Good point. His transactions indicate business-like activity. His account is personal.

WillNotDownvote 12y ago

It happens with US accounts too. Banks have a strong incentive to avoid money laundering activities, and no real penalty for false positives.

r00fus 12y ago
Except of course, when they profit handsomely from money laundering [1]... maybe you just need a bigger balance in the account? [1] http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge-approves-1-9b-drug-money-laundering-accord http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge...
engendered 12y ago
Banks have a strong incentive to avoid money laundering activities Most banks have automated systems that flag on certain automated conditions (I know because I built one). Contrary to some of the posts in here, they do not want to flag accounts, and most do the absolutely minimal mandated under AML legislation. We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else". As always everyone is operating under very incomplete information.
- desdiv 12y ago
  We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else". "Fill out AML suspicious activities report" and "close his account" are mutually exclusive courses of actions. Just because one happened doesn't mean the other ones didn't happen. Like you said, we're operating under very incomplete information, so let's not assume "fill out AML suspicious activities report" didn't happen here.
  - engendered 12y ago
    They usually are mutually exclusive, at least in the US and Canada. If an AML flag is triggered, or there is reasonable suspicion, they have to report it and are barred from telling you that you've been reported. Kick you out as a customer would be a great way to undermine the whole AML thing. It is entirely possible that if he simply had transfers to or from known Bitcoin entities, that would have triggered it. Not because he did anything illegal -- Bitcoin isn't currently illegal in most places, and they have zero onus to report anything in that case -- but that the bank is hedging that there will be issues that come up in the future and they don't want the hassle. That they have determined that Bitcoin is going to be a regulation hassle in the future so they simply want to have nothing to do with it. This is in no way money laundering, or suspicion of it, and they needn't report anything -- just tell him to get lost so in a year or two when this becomes a big thing they have limited their exposure.

petercooper 12y ago

Banks can choose who they do business with and at least in the UK they're known for closing accounts for reasonably arbitrary or accidental reasons. http://www.bbc.co.uk/news/business-15794539 http://www.bbc.co.uk/news/business-15794539 http://news.bbc.co.uk/1/hi/programmes/moneybox/9637740.stm http://news.bbc.co.uk/1/hi/programmes/moneybox/9637740.stm http://www.bbc.co.uk/news/business-18540832 http://www.bbc.co.uk/news/business-18540832 At least in this case, it wasn't a freezing of assets, more a "we're not the right bank for you, go away".

patio11 12y ago

No, because a small business that does a lot of cash transactions would, on review of the account, look like a business, not like a money transmitter. There would be checks written to vendors, withdraws from a payroll company corresponding to a predictable cycle, probably a rent check on a predictable cycle, etc. If your only two transactions are "Deposit lots of cash" and "transfer it to another bank" the bank will come to the conclusion "To the extent that there is a business here, it is probably money laundering." The bank was right.

code_duck 12y ago
These transactions would be half money laundering only if the buyers only came from illegal activities and they were avoiding deposit in a typical bank. It's not laundering by the author as he is not involved or aware of the buyers' money's providence. I don't see how it would be money laundering more than say, buying $3000 of gold from a local gold and silver shop. I'm hardly an expert in... Anything, though. If you care to explain that would be lovely.
- TeMPOraL 12y ago
  Most of legitimate financial activity forms follow well known patterns. Illegal activities often follow different patterns. It's reasonable for a bank to flag suspicious accounts, even though you'll always have some false positives - because if it looks like money laundering, most of the time it is. Also I don't know if this works with banks (having no personal experience here), but I remember back from the time when early Kickstarter projects got their PayPal accounts frozen, that the rule of thumb was: if you're going to do something on your PayPal account that looks weird/atypical, it's a good idea to call them in advance and tell them about that.
  - code_duck 12y ago
    I agree it may look like money laundering. But one can't really say "the bank was right" in this case since it wasn't money laundering.

Spooky23 12y ago

Banks have an obligation to report suspicious activity, and many will cut you off if they see a pattern or trend that could be suspicious to reduce risk. The governor of New York's prostitution habit was discovered a few years ago when a bank risk guy flagged money transfers from his account.