HSBC Bank Customers Told They Must Explain Large Withdrawals To The Satisfaction Of The Bank

250px-HSBC.svgHSBC customers are understandably confused in England after they went to the bank to withdraw their money only to be told that any large withdrawals would require disclosure of why they needed it and the agreement of the bank. That’s right, you need to show the bank why you need your money and the bank has been saying no to customers, according to the report below.

HSBC never informed its customers of the new policy and told irate customers that the policy was changed in November and “[a]s this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change,”

That came as a surprise to Stephen Cotton who went to his local HSBC branch to withdraw £7,000 from his instant access savings account. That is a large but not particularly outrageous amount of money. He needed it to pay back a loan from his mother. The bank refused the withdrawal and asked for a detailed explanation. Then Cotton says the bank refused to say how much it would let him withdraw: “So I wrote out a few slips. I said, ‘Can I have £5,000?’ They said no. I said, ‘Can I have £4,000?’ They said no. And then I wrote one out for £3,000 and they said, ‘OK, we’ll give you that.'” He then asked if he could come back later and make another withdrawal but was told that he could not withdraw his money twice in one day.

HSBC has now responded to the backlash by tweaking its policy:

“We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for. . . . The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced.”

Thus, you will still be questioned about your use of your money but you will not have to prepare a formal presentation of evidence to support your request for your own money.

What I fail to understand is how anyone could approve the original policy and not be fired. I also fail to understand how banks continue to assume such seemingly unchecked authority. If a person has demonstrated their identity, why is the bank even allowed to question a customer on their use of their own money?

Source: BBC

43 thoughts on “HSBC Bank Customers Told They Must Explain Large Withdrawals To The Satisfaction Of The Bank

  1. Seems a bit too intrusive….. But in actuality our own banking laws with treasury, dea, ATF, CIA etc require notification of withdrawl of anywhere between 5 to 10 k…. Treasury is 10…. But the others get notification of transactions in cash 5 or greater….. Not sure what HSA has set at this time…..

  2. What I fail to understand is how anyone could approve the original policy and not be fired. I also fail to understand how banks continue to assume such seemingly unchecked authority. If a person has demonstrated their identity, why is the bank even allowed to question a customer on their use of their own money?” – JT

    Conditioning?

    Testing the waters?

  3. I’m sorry, but hasn’t it always been this way? I seem to remember language about the right to limit withdrawals when I signed up with every bank I’ve had an account with. Or maybe I am the only one who reads documents before signing them?

  4. Of course the REAL reason is that they are scared to death of everybody trying to remove their money at once – they do not HAVE that money – it is in their own
    investments which is not for customer’s benefit but for the bank’s benefit (or loss – ha !) – this is why the previous controls on banks used to be in place – they were not allowed to do this in prior days ! Anybody think they really want their money in a bank now – they are not responsible entities ! We should all get away from them asap – personally I am working on just that, but it is not simple, the little guy doesn’t know who he CAN trust any more !!!

  5. It is a corporate world of tyranny in which we, the many, live to provide exceptional comfort for the few. Just because they can no longer (openly) declare that someone should “off” our heads; is no good reason for the many to believe they are any where equal to the the few!

  6. And Obama just had a moment of clarity. All deposits of over 5k have to be reported, how about just doing away w/ this pesky cash and have everything electronic so the NSA can track ALL of your habits.

  7. Given banks run now in fractional reserve banking, the fact HSBC Bank ask to be warned about large withdrawals can be understood in terms of wanting to preserve its money reserves.

  8. That reality, nick spinelli, of the mark of the beast being the pin number in your head and the card number in your hand, as the ONLY way to do transactions – is a lot closer than you think.

    BitCoin controversy is a snow job.

    If you think it was a rough day at the office, when you landed and they told you “No sir, you don’t have any car and/or hotel reservations; because it’s NOT in the computer”.

    Then, think of the day, the grocery store clerk tells you that;
    because the NSA sent all your money to Osama’s niece!


    N’est-ce pas!

  9. Laser, Are you familiar w/ Bitcoins. I read about these exchanges a few months ago. Ironically, there’s a piece @ the Daily Beast this morning about the government going after some people on this exchange.

  10. There are some similar dynamics afoot in the U.S.eh? …

    The Bank Secrecy Act of 1970 (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires financial institutions in the United States to assist U.S. government agencies to detect and prevent money laundering. Specifically, the act requires financial institutions to keep records of cash purchases of negotiable instruments, and file reports of cash purchases of these negotiable instruments of more than $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. Many banks will no longer sell negotiable instruments when they are purchased with cash, requiring the purchase to be withdrawn from an account at that institution.

    The BSA was originally passed by the Congress of the United States in 1970, and amended several times since then, including provisions in title III of the USA PATRIOT Act. (See 31 USC 5311–5330 and 31 CFR Chapter X.) The BSA is sometimes referred to as an “anti-money laundering” law (“AML”) or jointly as “BSA/AML”.

    (Wikipedia, emphasis added).

    Remember to boil your frogs slowly so they don’t jump out of the pot before done.

  11. Dredd, While money laundering is a problem, the government has used that as a pretext to control, and eventually eliminate, the use of money.

  12. Many US financial institutions require a day or two advance notice for large cash withdrawals simply because they may need to order extra cash from the Fed for the day of the withdrawal. As to asking the reason for unusual cash withdrawals, in many instances (including the large credit union for which I worked prior to retirement) it’s an attempt to prevent unwary members from being victimized by scammers. One of our elderly members lost her home, her car, and over $300k in a Nigerian-type fraud, even after one of our senior VPs practically begged her not to send more money. In the end, though, the CU had no right or authority to refuse her access to her own funds.

  13. I think several people have given correct answers here: 1. control over citizens 2. the banks are failing due to their gambling with customer funds via “legal” mechanisms various govts. have allowed them. 3. a testing of the waters for even more draconian measures taken by the state/corporate partnership.

    We live in interesting and very scary times.

  14. I see my post came in 4 minutes after it was written, as I was requesting that it be found. Yesterday, Glenn broke a story on the real time monitoring of facebook, twitter and blogs to name a few of the places they do this.

  15. Nick, as the head of eToys in 2001, there were many discussions about getting into competition with PayPal by utilizing “fractional units as international currency” (the real dreaded, multi headed hydra of Europe, China and US of A).

    It is the policy of the oligarchy to push the limits of the masses, to the test, as often and as ludicrous as it can. For, if we are all screaming about polluted waters, in an entire state, while people are freezing left and right; no one will give a dang about the fact that Christie gave Ashcroft a $50 million no bid contract and Romney is taking more companies into an off shore tankers for those “protected” camps where children are sleeping on the floor with a port-a-potty hole 3 feet away.

  16. This approach by HSBC is disgusting, but here in the states, the Bank Secrecy Act does not require that the bank ask where the money is going if it is over $10,000. They have to file a report that large sums were withdrawn. Remember that when you deposit money into a bank, you no longer own that money. The bank owns it and you become an unsecured creditor of that bank. Stay away from large banks and stick with neighborhood banks and credit unions. They park their funds “overnight” with the Feds, but they are a safer bet.

  17. This is the next most obvious step in the same direction of the Cypress fiasco.
    It would seem to be a business suicidal policy for any bank that wants cash depositors. Who would deposit, or keep an account with a bank that will demand you explain what you want your money for, when there are banks that will not.
    I think selling HSBC stock short would be a great idea now.

  18. We need land mines. Then we can place one over the waterproof vault we have buried. My land mine works by remote control or by disturbance.

    This is another example of that Convergence thing that some economist articulated years ago. The capitalist countries will get more socialist, fascist and the communist countries will go more capitalist and libertarian. Which is why Snowden is in Russia not Sweden.

    These Brits need to teach that bank about Bailouts. Bail Out Now Like Your Mother Should Have.

  19. cash means they cant track you. so therefore they don’t know your business and the corporation does not like that. the banks have the nerve to talk about stopping fraud.? i wonder how many realize that hsbc are the initials of the hong kong and shanghai banking corporation which is located in the united kingdom…….

  20. “. If a person has demonstrated their identity, why is the bank even allowed to question a customer on their use of their own money?”

    ******************************

    There are various types of accounts but I assume we’re talking savings accounts. There’s a misconception around that savings account deposits remain your money. They don’t. Bank deposits become accounts payable by the bank who then takes your former money as its own and invests it deriving returns on those investments. The money is shown by the banks as its asset and not yours. Your asset is the account receivable which you obtained when you deposited the money. Your withdrawal constitutes your demand for payment of the debt owed you by the bank. Bank’s routinely limit withdrawals but I have never seen the limit enforced this way.

  21. Robin, Bingo!! And, the government wants every cent of tax they believe they are owed. I live in a very liberal city. I have had liberal friends tell me the govt. has a right to keep track of me to make sure I pay every cent of tax. Now, I am hyper vigilant because my wife was a Federal Probation Officer. But, that mindset is frightening. Taxes are like a sacrament to tax and spenders.

  22. Once you get bogged down into “what” constitutes the right/large amount that the bank may ask you personal/private questions concerning the withdrawal of your own monies;

    then you’ve already lost!

  23. They’re just trying to sort out their real customers (money launderers) from the unprofitable hoi poloi.

  24. I wonder if depositors could set up a checking account with the bank, transfer funds to checking and then write a check to their spouses. The bank would have to honor this withdrawal if there were sufficient funds.

    I would stop doing business with a bank that had such a policy as I too would be worried about the solvency of the bank.

  25. $10K or more in a single withdrawal or over the course of one business day from a single institution in the USA requires notification of the Feds as per the Bank Secrecy Act of 1970 (another egregious and overbearing law courtesy of your Congress). A CTR (Currency Transaction Report) will be filed by your institution with the IRS, but one can still withdraw the funds. This is one reason why if I know I’m going to need more than $10K cash at any point (such as for a coin show), I’ll make a series of withdrawals under $10K over multiple days until I’ve got the amount I need. Or I’ll withdraw from multiple institutions. There is no reason Uncle Sam needs to be in my business when I’m perfectly within the law.

    However, if I was confronted with a policy similar to HSBC, my response would be “all of it, as I’ll be changing banks”.

    I stopped doing banks the favor of making money from my money in the early 1990s and have used credit unions exclusively since.

  26. mespo:

    Perhaps the standards are different in the UK?

    While most customers don’t really appreciate the distinction, in the U.S., a savings account is a time deposit, not a demand deposit. Banks are allowed (in some respects, required) to limit withdrawals from time deposit accounts in both frequency and amount. In fact, if the deposit agreement so provides, they can delay paying the customer even when the account is closed. The negotiable order of withdrawal is a relatively new (1980’s) phenomenon.

    Checking accounts are a different matter — because they are demand deposits, negotiable instruments drawn against checking accounts must be honored “on demand”.

    dredd:

    While the quoted material from Wikipedia is technically accurate, it is somewhat misleading. Banks kept track of purchases of negotiable instruments for cash or otherwise long before there was a Bank Secrecy Act. There has always been a line on a cashier’s check or bank draft for the name of the remitter — and good practice of double entry bookkeeping generally requires an audit trail in order to preclude forgery, anyway.

    The description is under-inclusive as well; banks are also required to be aware of cash transactions, including deposits, of less than $10,000 in order to report “structuring” — that is, breaking up a single transaction into a series of transactions in order to evade the reporting requirements. There are exemptions available for businesses that transact business in cash on a regular basis (places like convenience stores, liquor stores, casinos, etc.).

  27. I wonder if ” I no longer trust you with my money and I don’t like the way you treat people” would be a suitable answer for them.

  28. ModernMiner:

    I hate to break it to you, and, much as you may not like it, your multiple withdrawal strategy is a felony. 31 U.S.C. 5324 .

  29. To add to Porkchop’s response, tellers also are on watch for financial crimes such as elder abuse and scams like those Nigerian princes and lotteries you never entered.

  30. HSBC employees should have been prosecuted for money laundering. See http://www.theguardian.com/commentisfree/2012/dec/12/hsbc-prosecution-fine-money-laundering . While I have no personal knowledge of why HSBC and its employees escaped prosecution, it would not surprise me if one factor was the possibility of information embarrassing to the regulators/government being made public if criminal charges were brought. Even if you believe that DOJ was genuinely concerned about HSBC being “too big to fail,” such a concern, if it was genuine, does not explain the failure to criminally charge individual bank employees.

    The prior misconduct of HSBC employees illustrates that the management of this bank leaves something to be desired. So it is no surprise that the management of this bank would come up with this type of boneheaded policy.

    I deal with Title 31 matters, civil and criminal, with some regularity. I’ve seen a number of businesses get slammed by the government for alleged structuring of deposits. IRS Special Agents can and do obtain a warrant to seize the funds in the account in which the alleged structuring occurred and seize all funds in that account. More often than not in the matters I handled, the majority of the money seized by IRS was returned to the business. But the effect of the seizure on the businesses was traumatic. None of that would have happened had the businesses regularly made cash deposits of more than $10K and completed the required paperwork for deposits of over $10K.

    Guess again if you think you have escaped government detection by making multiple withdrawals (or deposits) of less than $10K in cash over a relatively short period of time. That conduct probably was reported on a Suspicious Activity Report submitted to Treasury by the bank and could lead to seizure of funds in the account per the previous paragraph or criminal prosecution. If you want to get an idea of how Treasury regulates businesses under Title 31, go to http://www.fincen.gov/ and look around.

  31. it smacks of the uber thieves making sure we are going to keep paying for the lavish lifestyles from now thru eternity. from us to our descendants is what it really smacks of. and it will stop when the people realize the irs is a illegal entity..

    this is just one, keep clicking the videos and see just how many of their agents realized the truth and quit.

    the only reason the irs has been allowed to flourish is because of the lies they have managed to tell and the very few they have jailed… imagine what would happen if NO ONE FILED. what are they going to do? put the whole world in prison? i would love to see that……

  32. Outrageous HSBC Settlement Proves the Drug War is a Joke
    By Matt Taibbi
    POSTED: December 13, 2012
    http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213

    Excerpt:
    If you’ve ever been arrested on a drug charge, if you’ve ever spent even a day in jail for having a stem of marijuana in your pocket or “drug paraphernalia” in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

    Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who’s ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a “record” financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

    The banks’ laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC’s Mexican branches and “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.”

  33. Chase also has a policy for auto deposit payments where the PAYEE is required to sign a 10 page contract absolving Chase of any theft or missing funds going to the payee by requiring them to accept binding arbitration which favors banks and forbidding recourse in a court of law.
    I emphasize they require a payee to sign to receive funds from a depositor.

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