A few people got hot under the collar last week when the BBC published an article saying that HSBC is not honoring withdrawals unless the customer gives a good reason for wanting the money. In some cases tellers were refusing to allow the withdrawal unless the customer showed invoices or other documents to prove they need the money.
Most of the social media world was quick to blame the bank for introducing draconian measures and needless red tape. Commentators did not hesitate to remind anyone who cared to listen about the bank’s recent fines for alleged money laundering for drug cartels and terrorists. In fact, the explanation is on the one hand less villainous and on the other more clandestine than those commentators say.
Under new laws, banks are expected to build up an understanding of who their customer is from their dealings with the bank. Tellers are expected to ask friendly questions when a customer makes an unusual transaction. If the answer doesn’t sound right, this information might be passed to a manager and someone will eventually decide whether the matter is worth further investigations. For example, if someone deposits a large amount of cash, the teller should ask questions about the customer’s business and record the answers. HSBC had not been doing this, and it is one reason why they got caught out having so many dodgy customers.
After the bank settled the charges made against it, I imagine some senior HSBC executives put the word out that customers needed to be interrogated to ensure they are not all criminals. Tellers and junior managers were not properly trained in how to implement this regime discretely. Hence some got the message that they should refuse to release money if the customer couldn’t come up with a very good reason that he should have it, and evidence to prove it!
I think it’s a good thing for a bank to understand its customers. It can be in the customer’s interest if the bank queries an unusual withdrawal, maybe protecting them from possible frauds or bad decisions. The bank might be able to offer the customer a better service if it picks up on an unusual banking pattern. Certainly there is a big brother aspect to this, but that’s what seems to come from living in the digital age. If you don’t want the government to know what you’re doing, don’t use the pieces of paper that the government gives you (bank notes).
In today’s world where civil forfeiture is increasingly used by governments against its people, it’s important to keep records of monies paid to you so you can prove your ownership and hold on to what is yours.
And the clandestine part? Well, there are some who say HSBC is one of the few banks, maybe the only Western bank, that has disregarded US sanctions and continued to help its Iranian customers, most of whom have not even met a terrorist, but many of whom have family back home who sometimes need money for things like medicines, weddings, buying a car etc. They say this is the real reason the laundering charges were brought against the bank. The US cannot shut HSBC down completely because it has become a pillar of the world’s financial system, being one of the few to have remained healthy since the current financial crisis began. It’s possible that this current BBC news story is innocent enough, based on the observations of one of their reporters. It’s also possible that the story is part of a continuing campaign by US interests who feel the fine did not go far enough and HSBC needs to be reminded where its loyalties need to lie.