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Bank Blocks Customers From Withdrawing Cash

January 28, 2014

One of the world’s largest banks has prevented customers from making large cash withdrawals.

The BBC reported that HSBC Bank (bank formerly known as the Hong Kong and Shanghai Banking Corporation) was stopping account holders from withdrawing large sums of cash.

Account holders were being required to show a legitimate need for such cash withdrawals, BBC’s Money Box program reported. The policy outraged some customers who complained to the media.

Customer of 28 Years Refused Cash Withdrawal

“When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for,” HSBC customer Stephen Cotton told the BBC. “They wanted a letter from the person involved.”

Cotton said he was trying to withdraw £7,000 ($11,554.20) to repay a loan to his mother. When staff refused, Cotton said he asked if he could withdraw £4,000 ($6,602) but they said no. Cotton said he was allowed to withdraw £3,000 ($4,951.80) but no more.

“I’ve been banking in that bank for 28 years. They all know me in there,” Cotton complained. “You shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”

Cotton noted that he has been able to make such withdrawals in the past, but not anymore. He was particularly upset because the bank couldn’t give him an explanation for the actions.

Bank Apologizes for Policy

The bank has since apologized and announced that it’ll start allowing such withdrawals again, The New York Times reported. A bank spokesman said cash withdrawals were being limited in order to comply with restrictions on money laundering.

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Cash presents more risk, and in particular financial crime risk, than other payment methods,” an HSBC statement noted. “It also leaves customers with very little protection if things go wrong.”

“Therefore, we need to monitor particularly closely movements of cash in and out of the banking system,” an HSBC press release printed in The Times noted. “This is why 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.”

HSBC was forced to pay a $1.9 billion settlement to get out from under money laundering charges in the United States two years ago, according to The Times. The federal government had accused HSBC, which is headquartered in London, of transferring large amounts of cash for organized crime.

Money Laundering Laws Ensnare Law-Abiding Citizens

“Asking the right questions, protecting our customers and reducing the risk of money laundering, fraud and other crimes, means we are doing the right thing and fulfilling our responsibilities as a bank and to society at large,” an HSBC press release stated.

The Times and the BBC noted that bank executives have ordered tellers to stop enforcing the withdrawal limits.

“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,” an HSBC statement to the press read.  “We apologize to any customer who has been given incorrect information and inconvenienced.”

It is not clear if the deposit limits were the result of a misunderstanding of bank policy or a test to see if the public would accept such limits on cash withdrawals. In the United States, federal law requires banks to report any cash transaction over $10,000 to the government.

Off the Grid News reported that some businesses in Michigan had funds seized from bank accounts by the IRS last year because of cash deposits of around $10,000. The funds were later returned when a federal judge ruled that the seizure was illegal.

It looks like regulations designed to hamper criminals are instead hurting average citizens.

CREDIT TO:  Daniel Jennings / Off The Grid News 




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