What would you say if your bank refused to hand over your money to you unless you prove to them that it was going to be used for legitimate purposes? This is what has been happening recently at HSBC.
Staff at HSBC have been authorised by the bank to stop some of the larger cash withdrawals if they are not satisfied with the reasons for it.
The Mail reports that some customers have not been allowed to withdraw sums of £5,000 to £10,000 and they were forced to ‘barter’ with the bank to get some of their own money out of their accounts.
The bank says that this is a legitimate move to combat financial crime such as money laundering and also that it did not tell customers about this as it did not change their terms and conditions.
But there are already anti money-laundering procedures in place; it is a criminal offence and covered by the Proceeds of Crime Act 2002 and Money Laundering Regulations 2007.
When a person in a bank suspects money laundering is taking place they should report it to their company’s appointed ‘Money Laundering Officer’ (MLO), who then reports it to the Serious Organised Crime Agency (SOCA). As I understand it SOCA then decide whether the transaction should go ahead and, if there is no time to contact SOCA, the potential criminal should not be alerted and the transaction should go ahead.
It is an offence to ‘tip-off’ the person who you believe may be involved in a financial crime punishable by 2 years inside and a fine. (There is one exception for professional legal advisers who tell their client in order to persuade them to desist from criminal activity.)
I can find nothing in these regulations that gives someone the power to prevent their access to all or part of their own funds during a legitimate withdrawal procedure. How can clients possibly launder money that is already clean? Where is the crime? So what have HSBC employees based their reports to their MLO on and was it reported to SOCA?
Money laundering for financial institutions normally concerns people depositing ill-gotten cash into a bank so they can then use the financial system to clean it up before they then take it back out – deposits are normally the problem, not withdrawals. Unless they think that the cash they are giving out is a result of money laundering or financial crime in which case SOCA should already be on the case as it would already have been reported by the bank when the money was first deposited.
In fact the more you look at it the less it looks like a real policy to address financial crime, so you have to wonder why they are doing it?
If banks start routinely doing this it will encroach on the ordinary person’s rights to do what they want to with their own money and how they conduct transactions with legal tender. What on earth gives a bank the power to decide that a customer can’t have their own money?
Except of course that it is not the client’s money is it. It is actually the bank’s money because the depositor, under case law, is just another creditor of the bank not the owner of the money. So perhaps they are able to tell you how much you are allowed to have, leaving you having to sue them if you want more.