ICT Views

CDD Withdrawals?

by: (Associate Director, Research and Development) on

You may have seen earlier this week that HSBC were in the news in the UK because of an apparently new policy relating to the withdrawal of cash.

It was reported on both the BBC website and the Mail Online that some HSBC customers had been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it:

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother.

"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. They wanted a letter from the person involved."

Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

What’s the problem?

moneyAccording to the reports, banks are responding to their obligations to protect their customers and to minimise financial crime - a stance which seems to be supported by the British Bankers Association (BBA), who said banks were ‘sensible’ to ask questions of their customers.

A good point well made. But when you are withdrawing cash? That’s a new one on me.

(Actually - I would imagine this has been in force for some time for particular demographics within the customer population (Potentially Vulnerable Customers for example), but it’s interesting it is being extended).

The assertion is that this helps banks fight fraud. But can you really satisfactorily demonstrate what you are going to use the cash for by providing a ‘supporting’ letter? I’m not so sure on that one.

The other aspect of this was that banks had identified cash as presenting an increased risk of financial crime. Again, nothing revelatory, except that this time it’s leaving the bank, not entering?

And is cash withdrawal currently really more of a risk to institutions and customers than the fraud risks posed by e-crimes?

Out of Character

The key thing here seems to be that banks are looking to identify something which is out of the ordinary.

Is this transaction part of the expected pattern within your relationship with the customer? If the answer is ‘no’, then suspicions may be aroused and additional investigation warranted.

Sound familiar?

Well essentially, it’s the same premise as establishing a customer relationship and undertaking robust CDD. Except in this case it’s the funds exiting rather than the funds arriving.

So are we entering a brave new phase of CDD in reverse?

I suppose we’ll find out over the coming months. I’m certainly not knocking banks for trying to reduce financial crime impacts on customers. It’s just this ‘initiative’ just caught my eye in respect of what it was trying to achieve vs. the fuss it might generate.

Up in Smoke

But to finish, and by way of a counterpoint…

I’m in the UK and I want to get my cash out of a bank. I need evidence.

I’m in the US and I operate a legal marijuana business. How do I join in the banking sector? It seems I can’t…

Maybe taking in a letter from your mum doesn’t seem so bad after all…


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