A colleague of mine sent me this item, from the BBC:
Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt. Listeners have told Radio 4’s Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000. HSBC admitted it has not informed customers of the change in policy, which was implemented in November. The bank says it has now changed its guidance to staff.
How jolly decent of them.
Mr Cotton cannot understand HSBC’s attitude: “I’ve been banking in that bank for 28 years. They all know me in there. You shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”
Well, he now knows differently. A person with a bank account does not own the cash contained by the bank and has total control over it. (I am not aware of any line in my bank contract saying as such.) A deposit is a credit to the bank, and under modern banking laws, with the system as it operates, a bank is not obliged to instantly hand that over, no questions asked. (Under fractional reserve banking, the only kind of guarantee is by deposit protection, but that is usually only up to a certain limit.) In a full free market of course, people could make whatever kind of agreements with banks that they wanted, even consenting in some cases, perhaps, to having to give information to a banker to prevent fraud. However, government regulations in the UK (and certain other nations) being what they are (such as controls to stop money laundering and tax dodging), banks are increasingly operating as proxies for government agencies.
According to HSBC, the issue is to combat financial crime. Maybe that is true but this is not the whole picture:
HSBC has said that following customer feedback, it was changing 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.”
One of the ironies of the situation is that HSBC last year was hit by a massive fine for anti-money laundering offences (stuff to do with Iranian sanctions and drugs); hitting long-standing clients with this sort of intrusive crap will not do much for that bank’s brand reputation. It is right to stop fraudsters taking money out of accounts of clients, but perhaps the bank should be more frank with clients on why it makes these kind of demands and what is driving this situation. To a considerable extent, banks are no longer really part of any free market, capitalist system.