to want to close my bank account after this gross invasion of privacy?

[somanymiles]

I went to get cash out of my bank account this morning to pay the builders (£6,000) and was told I could not take that amount out without hard copy proof of what I was spending the money on eg an invoice. I was given no notice of this so of course did not have anything except a quote on my phone which they did not accept, even though I offered to email it to them. This was not a question of confirming my identity- it was that they have a new policy where you gave to prove what you are spending your cash on. When I asked what the threshold was for the new policy I was told they were not allowed to tell me. I am furious. Surely what I spend my money on us nobodies business but mine. It certainly isn't HSBC's business.I am thinking of closing my accounts there with all the hassle that will entail. AIBU?

Why is £6000 (cash) to pay builders questionable?

A few of the issues are that it is slow, cumbersome, inconvenient, insecure and leaves no or little audit trail (that you might need if your new extension falls to bits). The only real upside is that it helps you if you want to dodge the VAT. Maybe some people prefer it but that's their personal quirk and not based on it giving them any advantages.

Crescentmoon a builder wouldn't use the placement/layering/integration thing because they are not strictly laundering money - they are trying to keep it below the radar as cash not turn it into an apparently legitimate sum in an account.

But banks under their anti money laundering requirements now need to watch for tax evasion not just money laundering. Banks are not just like any other enterprise - they have a legal obligation to uphold "proper market conduct " ironically.

The money is "dirty" because it has been obtained illegally, it doesn't matter that it's legal tender. The process of lodging £10,000 or more, in cash, on a regular basis, will attract attention and more than likely a investigation instigated by the bank. If they think there is cause for suspicion, law enforcement will become involved at this point.

Bank transfers on the other hand, are becoming increasingly automated and lower figures are not open to the same degree of scrutiny. If, as in the example above, one individual is noticed to be lodging a significant amount of cash to an account regularly, followed by a transfer or withdrawal of the same sum within a short period of time, then either the trail can be followed or the pattern of usage investigated in more detail.

On the issue of HMRC and VAT, this didn't cross my radar much during my time in retail banking, thank god! Haven't a baldy on that issue, although I would guess that the means to circumnavigate having to register for VAT are not dissimilar to money laundering.

I was in the post office before Xmas,there were three people in front of me each one had parcels to post, the counter assistant said to each one "do you mind telling me what is in your parcel," they all said what was in the parcels but none of them asked why she wanted to know. I'm very curious as to why she asked,anyone any ideas

DamnBamboomaybe you do pay those sorts of sums in cash. I don't and I'd be surprised if people did. It will cause raised eyebrows because it's unusual and unless the builders issued an invoice for exactly that amount ( whether or not the builders are VAT register) then there is a possibility of tax evasion.

If the real cost of a job is £6,000 plus VAT but the builder only takes £6,000 and doesn't issue an invoice the VAT won't be paid. If the builder doesn't bank the cash or only part of it he won't be paying income tax either. If the money is paid into the builders' bank it shows up on his accounts.

The builder here is not laundering money as such but there's scope for tax evasion.

Craic has explained very clearly how layering and placement works.

Money laundering doesn't just mean money from sale of drugs or illegal porn and just because money has come from a clean source doesn’t stop it being part of money laundering schemes.

When paying in a large amount of cash the lady sniffed the notes and said they smelt damp and asked where I had kept them..... I felt like saying under an old mans mattress who must be incontinent! The cheek!!

Sorry, ChatNicknameUnavailable I was agreeing with you. I worked in a bank for 6 years. I meant it may sound arrogant to an 'outsider' but it is very true.

I have been asked this - was stunned - said it was builders but wasn't asked for proof. Now I simply say that I enjoy gambling or sometimes restaurants and shopping, (expensive tastes). Agree gross invasion of privacy!

It sounds very strange. I have withdrawn 5-10k in cash several times (from Coutts) and I think I have only once been asked what it was for, to which I replied it is none of your business and I can have as much of my own money as I want (true).

I think some people are misunderstanding money laundering rules. They are (as far as I know) about paying in money I.E turning 'dirty' cash into clean money. They can ask about a large deposit but not about a withdrawal (at least unless things have changed recently).

[facepalm]

at misunderstanding the money laundering rules...these are the rules as those of us who work in financial services have been explaining.

Quangle,

I used (until about 5 years ago) to work in investment banking and attended money laundering tutorials every year. As far as I know, the problem is depositing money that may be dirty into the system. If the money in your account has been deemed to be clean (as it is checked on deposit), you can have as much of it as you want in cash. What do you think genuine high stake gamblers do, other than draw out large amounts of cash?

In addition, what do you think happens if you want to close your bank account and withdraw the money in cash (for instance, in a Northern Rock situation)? Clearly, for large sums, you have to give notice. However, to the best of my knowledge, you do not have to give a reason. Individual banks may have their own policies but, again, to the best of my knowledge there is no law against large cash withdrawals. If you can point me to the policy in law, I would be grateful. Otherwise, less of the condescension, please.

There is no law about large withdrawals but the AML rules cover tax evasion which is what would have triggered the question. Not condescending to say these are the facts and they are mentioned frequently n the thread.

Quangle,

Again it is not tax evasion to withdraw money, or to pay someone in cash if requested. It is the payee's obligation to correctly declare the income. Again, please explain (ideally with a link to the appropriate authority) where the AML rules state that a bank has any business in limiting cash withdrawals.

You say that these are facts but then they should be easily provable. I am highly sceptical.

To be fair, Quangle has not said that a withdrawal would be prevented, rather that it would trigger a line of questioning from the cashier. Taken from the HMRC website; There are many different reasons why you or one of your employees might become suspicious about a transaction or activity. Often it's just because it's something unusual for your business - perhaps a customer has tried to make an exceptionally large cash payment. Maybe the customer behaved strangely, or made unusual requests that didn't seem to make sense. Perhaps the transaction they wanted to make just didn't add up commercially.
You must look carefully at all unusual transactions to see if there's anything suspicious about them.

It goes on to say that suspicious activity should be reported to a nominated officer who decides if further action is required. As PP's have said, although maybe when you were working in investment banking "suspicious activity" would only have applied to deposits, retail banking and other service providers are coming under more and more scrutiny. Guidelines are becoming increasingly restrictive. Some banks are voluntarily tightening up on their AML policies, and looking at what's going out as well as in is part of this.

Anyone spouting off about "police states" and invasion of privacy needs to get a grip. Or spend an afternoon in Maghaberry Prison. Because it's this type of low cost, high impact policy that helps put criminals away. Also, churlish responses to cashiers asking routine questions as part of their job make you look like a dick. If anyone is that bothered about a bank's AML policy, take it up with Head Office, not the person behind the cash desk.

TheCraic,

I agree with your last point in that there is no point in shooting the messenger.

What you posted from the HMRC website is clearly aimed at businesses accepting large cash payments from a customer, not someone withdrawing money from a bank. There is zero point in a policy which has no meaning. As many have said above, all you need to say is that you are going to the races and the cashier has to give you the money. Or even, I have no confidence in the strength of your institution, so I am choosing to close my account.

I think that there is a degree of overcaution at whatever level. I don't think the AML laws ever intended to stop people withdrawing their own (clean) money in cash. There is another issue of security etc. However, I think that during the Northern Rock crisis, they paid out six figure sums to several customers, in cash.

Hmmm - just because the government has decided that cashiers in banks can be added to the list of those who may intrude on our private lives without good reason, does not make it right. If I choose to withdraw £2,000 from my bank it is not the business of the cashier why I want it (regardless of the exasperation seen above from those in the banking industry). In my opinion, the quote above does not justify intruding on my right to a private life. A society that treats all its citizens as potential criminals is a hostile society and we really should resist this creeping criminalisation of individuals. The last time I looked, my right to a private life (with certain conditions) was still enshrined on the law and this includes my right to withdraw my money from a bank without having to justify my reasons to the employee being paid to hand it over!

From the tone of your original post, perhaps the reason they asked for further proof in the form of an invoice was because you were acting defensively, if you had answered in a straightforward way they wouldn't have given it a second thought. The posts about breaches of privacy make me laugh, why would you think the government would care about the minutae of our lives, you're not that important!

Yes, but as I also stated (and others upthread) these guidelines are changing, and will eventually include withdrawals as well as deposits. HSBC, it would seem, have preempted this move after a nasty run in with the cartels in Mexico, amongst other less than desirable customers.

Individual banks base their AML policies on current legislation and regulations, including those set out by the HMRC. Looking at Deutsche Bank and Barclays' current policies online now, they do not go into more detail than "suspicious activity", a broad term. No, the requirement to question customers withdrawing cash has not been enshrined in law, but it's the way things are headed in terms of bank policies generally.

As I've said, it's your reaction to the questioning that's as important as what you actually say, in conjunction with the activity on your account. Perhaps my outlook has been coloured by my background working in branches frequented by racketeers and hoods (not an exaggeration unfortunately), but I think it's an important policy.

I think at the post office, you have to complete a customs declaration if posting outside the uk

Craic,

The enitire raison d'être of the banking system is to store money on behalf of customers until such time as they need it. It is not a bank's job to suck your money into a black hole and only give it back to you if you fulfil certain arbitrary criteria.

Certain banks with over zealous compliance officers might be (wrongly) interpreting broadly phrased government guidance. I suspect, however, they would pretty quickly have to give you as much of your own cash as you wanted if legally challenged, regardless of you supplying a reason.

If banks cease to provide their primary function to customers, you will quickly see sales of safes going up. I am shocked to hear this is happening and would be curious to see what the government's official line would be. Good question for question time.

The rules are fairly broadly drawn but more guidance is being issued all the time by the Jpint Money Laundering Steering Group suggesting new ways for banks to up their game. As Craic and I have both said, it's not the transaction per se that's a problem but something about it triggered some questions which is what the AML rules require. You have to show that you have processes in place to trigger checks when necessary - it's not about blocking the transaction necessarily. The FCA wants to see processes in place for raising questions at the right time. Large cash withdrawals would and should trigger questions if they are unusual on your account t and cannot be explained otherwise. Some banks might choose to implement the rules differently but they all have to show they have a considered approach and a robust process. That's why there is nothing defined in legislation about withdrawals - its for the institutions to consider the guidance, act accordingly and show that they have a process. But again as Craic says - this area is only growing.

This is how AML works - and tax evasion is covered hence the questions. Also as Craic pointed out, retail has a different standard to IB.

Qua gale,

See my post above. It is also ironic to discuss aml in the context of cash withdrawal. The entire point of money laundering is to turn dodgy cash into a nice safe deposit in a bank. Withdrawing cash is the precise opposite.

Sorry to worry you but a bank is not a safe. It's a financial institution with a set of responsibilities beyond holding customers' money. It seems like a safe but it's not. In fact money on deposit is more akin to a loan to a bank than it is to cash under a mattress. That's why you can have a run on the bank - because the bank might not be able to pay you back. You can't have a run on a safe iyswim. And that's why we have the £85k guarantee on deposits - to reassure customers that it is more likea safe than it really is. BUt it's not the bank's guarantee - its the FCA's guarantee effectively.

This is a bit far into the legalities of banking for this thread but if you want total dominion over your money you need to keep it in cash and if you don't want state intervention you need gold but that's not really practical hence the choice to abide by certain regulations and participate in the banking system.

That said, no of course the bank can't hold your money without cause. But they could if they could show they had good reason. As I keep saying , at this level they need to show they have a process which they have done.

AML covers tax evasion. That's why withdrawals are covered. Not sure what else I can say.