After Public Outcry From Customers, Britain's Biggest Bank HSBC Heads Off Complaints Over Small Business Account Closures (theguardian.com)

Julia Kollewe writing for The Guardian: HSBC has rushed to head off complaints from small businesses that found the bank had frozen or closed down their accounts as part of a crackdown on financial crime. Hundreds of small firms are thought to be affected, whose businesses range from an avocado importer to marketing and design companies. Britain's biggest bank, which has faced accusations of reacting slowly to the debacle, said that after becoming aware of problems in the past week, it was putting extra staff on its helpline and speeding up the process for dealing with complaints. It said staff were reducing the amount of time to unfreeze an account once a review had been completed. Earlier on Monday, Richard Davey, an HTML5 game developer and creator of Phaser, shared his ordeal dealing with HSBC, which had suspended transactions from his accounts without much explanation. It was only after thousands of users brought it to the company's attention on social media that the company fixed Davey's account, he said.

Comments

Lesson Learned

[Anonymous Coward]

Don't bank with HSBC unless you're a drug kingpin needing to launder money.

Re:Lesson Learned

[NettiWelho]

Would rate parent up but don't have any points..

Not the bank's job

[Anonymous Coward]

Investigating crime and punishing wrongdoing is not the bank's job. They shouldn't be blanket freezing all these accounts themselves unless as a precaution because they have evidence of fraud.

Re:Not the bank's job

[Anonymous Coward]

how do they know if they have evidence of fraud unless they freeze the accounts?
1. Freeze account
2. Look for fraud
3. trace where that account has transferred money
4. freeze those accounts
5. foreach new account go to step 1 (might just be a shell account so better do a deeper dive)

It will only be several years until you find all the guilty parties!

What's so confusing AC?

Re:Not the bank's job

[ewibble]

Is this post a joke, if not:

You do know banks keep history right?

you simply don't freeze the account until you have the evidence. That way you don't freeze random innocent peoples accounts, which can stop them doing things like buying food to eat, paying rent, etc. In the case of companies paying wages which mean employees can buy food etc.

Yes the fraud would continue for longer, but its not like it hasn't being going for a long time already.

Re:Not the bank's job

[whoever57]

you simply don't freeze the account until you have the evidence.

You are so naive.

Re:Not the bank's job

[Midnight Thunder]

Investigating crime and punishing wrongdoing is not the bank's job. They shouldn't be blanket freezing all these accounts themselves unless as a precaution because they have evidence of fraud.

Depending on the jurisdiction this may just be the requirement of law. Financial institutions typically have a responsibility to monitor for unusual activity and act upon it, without notifying the customer, while the investigation is in progress. The challenge here seems to be a number of false positives and a poorly implemented process to identify and resolve these issues.

Re:Not the bank's job

[Anonymous Coward]

Apparently people with mod points are also naive.

Re:Not the bank's job

[jandersen]

Investigating crime and punishing wrongdoing is not the bank's job.

The British government places certain, strict responsibilities on banks when it comes to business accounts, especially when it comes to identifying who is the ultimate beneficiary. These requirements have changed quite a lot in recent years, with the last round of changes being as late as last autumn - here's a link to a relevant page on the government's official site: http://www.legislation.gov.uk/.... It's sort of in the middle of the Money Laudering Regulations, but it sums up the gist of things: they are really keen on making life difficult for white collar criminals, and it will only get tougher. I think this is well overdue - London has been far too easy for shady, financial activity for a long time. Unfortunately, it places a burden on the banks that they have not done enough to lift, for example by training staff to understand the regulations and know how to deal with affected, but legitimate customers, so a lot of particularly smaller companies, who really didn't see this coming, have got into trouble and have no-one capable of giving them advice. In most cases it ought to be simple enough, but when faced with the question "Who is the ultimate beneficiary?" a small, 2-person company may not understand what they are talking about, and unfortunately, the support staff at the bank appear to be unable to translate it into language that people do understand. I worked with a small business who got thrown out because of this - the company owner started on a long story, which only served to make them look suspicious; it would have helped a lot if the bank staff had had enough insight into things to say "In your type of business, what we are after is simply the director that is registered with Companies House" - weirdly, HSBC's account managers are not allowed to refer to Companies House (which is the official register of companies in UK and freely available online), but have to use an intermediary, who do little more than skim information from Companies House - but in this case were some 10 years out of date. Bizarre, but such is life.

Re:Not the bank's job

[petermgreen]

Unfortunately our ruling classes have learnt that if you punish people directly using state power you run into all that due process stuff but if you bully private companies into doing it then you can punish people based on mere suspicion.

Re:Not the bank's job

[hackel]

There's no way any for-profit bank is going to do that unless we *force* them to through regulation. A credit union is answerable to its members. A bank is answerable only to its shareholders.

Re:Not the bank's job

[mikael]

Their "evidence of fraud" was companies sending money overseas in small amounts to places in Europe and China without reporting the transactions to the authorities. Which looked like money laundering. When added together, all those small amounts looked like large amounts. But the bank never gave customers any warning or questioning about the risk of accounts being frozen. So that makes them liable for business losses.

Re:Not the bank's job

[Anonymous Coward]

There's no way any for-profit bank is going to do that unless we *force* them to through regulation. A credit union is answerable to its members. A bank is answerable only to its shareholders.

You seem pretty ignorant of the intense regulatory scrutiny that banks operate under globally...certainly sufficiently uninformed to make a throwaway comment like that. Recommend you begin by Googling the FCA

US, too

[JBMcB]

The US does this, too. There have been dozens of stories of small business owners having their accounts frozen for "structuring," or making multiple payments or withdraws under $5,000. Transactions over $5000 are reported to the government, so it supposedly is "shady" if you are doing multiple transactions below that limit. Problem is, some people make these types of transactions during regular business. Once frozen, it's up to the business owner to prove to the government that their transactions were legitimate, which can take months, during which time they can't access the money in their bank, which usually drives them out of business.

Re:US, too

[alvinrod]

I don't run a small business, but the sheer incompetence of large banks like these are why I do my banking with a credit union. Any time I've had an issue, I've been able to resolve it in under five minutes. If you get to know some of the people who work there, they'd probably nip idiotic moves like this in bud.

Re:US, too

[JBMcB]

I don't run a small business, but the sheer incompetence of large banks like these are why I do my banking with a credit union. Any time I've had an issue, I've been able to resolve it in under five minutes. If you get to know some of the people who work there, they'd probably nip idiotic moves like this in bud.

It's not the banks doing it, it's the federal regulatory agencies. Small banks have to report this behavior, too. It's the regulatory agencies that are ordering the banks to freeze accounts.

Also, it's apparently $10,000 per transaction, not $5000.

Re:US, too

[Anonymous Coward]

It's $10,000 cash daily, not per transaction.

Re:US, too

[Anonymous Coward]

The moronic part is that the $10k figure was set way back in a time when $10k was worth something. As time has passed, $10k has become less and less valuable, so larger swaths of people and businesses have been caught up by the RICO fishing net. Make no mistake -- it's a giant, ongoing, fishing expedition.

Re:US, too

[houghi]

This could be "just" a database fuck-up.
To check accounts and transfers, there are several databases that need to be looked at. There are internal ones that look if there are things that need to be paid. There are also outside databases that check if the account the money goes to is somehow noted as suspicious.
e.g. known whitewash companies or terrorists.

There are several companies who provide these databases. They ask money, so my guestimate here is that they changed data provider and somehow misinterpreted some data.

To be clear, these databases are not always go/nogo. Some will be adding points and if a certain point is reached, it will be blocked.
There will be plenty of rules and they are updated
and fine tuned all the time.
There is a shitload of if/then/else going on.
There will be legal demands as well as internal demands for those rules.

The reason I think this is somehow a serious fuck-up with the database is the sudden number of companies affected with one bank.
Most likely to happen if you change data providers.
Blocking will happen sometimes, but that will most likely just freeze the transaction. Blocking the account itself needs some serious triggers and if that happens in such a large scale, people will get fired.

Re:US, too

[Anonymous Coward]

"Structuring" is the biggest bullshit "crime" ever invented, and considering all the stupid money laundering crimes we have that's saying a lot. The laws says you have to report >$X. That law shouldn't exist and frankly is a huge invasion of privacy but let's go with it for the moment. If you don't transact $>X then you don't. So now you're guilty of what, exactly? Complying with the damned law?

This financial reporting and monitoring bullshit has got to stop. I am absolutely not in favor of easing regulations on these financial criminals (the banks, that is) but we need to stop turning them into the police and we need to start making them common carriers of money: they should not be responsible for things their customers do that they themselves have no participation in.

Re:US, too

[netsavior]

in the US it is $10,000 in any number of transactions OR "any suspicious amount" which is to say "for any reason at all"

Re:US, too

[coofercat]

Unlike the US, the UK has something called the "current account switching service" (which covers personal and business accounts). For anyone affected by this, or anyone who thinks it's time to get out of HSBC, here's what you do:

1) Get HSBC to unfreeze your account
2) Pop into your local branch of Metrobank, talk to them and have them fill out the forms for you (other banks are also available, but stay away from FirstDirect as they're owned by HSBC, and the likes of Barclays and Natwest are about as bad as HSBC, so avoid them unless you're a masochist)
3) Wait a while until your account is approved (not sure why business accounts need this, personal ones are approved instantly)
4) Have your new bank switch your account, and say goodbye to HSBC - you don't even need to speak to HSBC to close your account there*.

Then, for the next 2 years, any money that happens to arrive at your old HSBC account will simply be forwarded to your new account.

I realise some small businesses will find this a hassle, but the 'one mad band' type small businesses should be able to do this by the end of the day if they so choose. 2 years to get your clients to send their money to your new account should be manageable - although any stragglers will eventually see their payments 'bounce'.

Honestly, banks need to realise that in the UK we have some pretty customer-focussed regulation, and doing this sort of shit will mean business opportunities for the other banks (which is what the regulator intends). There's a lot of things wrong with the FCA (and the FSA that preceded it), but this isn't one of them.

* If HSBC do feel the need to hassle you, argue a bit, and then mention that you don't believe you're being treated fairly. Remind them of their legal obligation to 'treat customers fairly' and ask that your case is reviewed and handed as a suspected contravention of that rule.

Re:US, too

[aaarrrgggh]

As others pointed out, the limit is $10k.

My bank has an account manager that is required to understand enough of our business to be able to flag odd transactions. Open an account today as a one-man operation, and you will be asked questions like how much monthly income do you expect, expenses, average income and expense transaction sizes, percentage of cash transactions, and even seasonality and number of different customers. They also are required to understand what your business does. Hint: don't say it is a holding company or management consultant...

While this stuff is a pain in the ass (tried to open a new bank account Friday without my Social Security card), if you are trying to control money laundering it is needed.

Re:US, too

[aaarrrgggh]

Credit unions are great as long as you are their median demographic. They don't do as well with outlying customers and lag badly on technology. I was a very happy credit union member for ~10 years, but now they don't do nearly as good of a job as my other bank. The fact that I use two different banks apparently puts me well outside of their median customer profile.

Re:US, too

[bradley13]

What's equally stupid: there is no sane reason why deposits under $10k should be signs of criminal activity. That's just people trying to avoid a hassle - in fact, some bank personnel will advise people not to cross that limit, because it makes more work for the bank to do the reporting.

And yet: It isn't that the US government then takes a look at your accounts. No, not at all: they'll freeze your accounts, and in many cases seize the money under asset forfeiture laws.

Which is basically banditry, backed up by government guns.

Re:US, too

[Anonymous Coward]

Which is why your company should have accounts in multiple banks . . .

Re:US, too

[Trickster Paean]

There's a very sane reason why deposits of under $10k in cash is a sign of criminal activity: it is often a sign that someone is trying to avoid the reporting requirements. This is usually done to hide unreported income or as part of a money laundering scheme. Any bank personnel advising people not to cross that limit are subjecting the bank to potential liability and giving their customers bad advice.

Why is it bad advice? By avoiding the reporting requirements, you've just created probably cause to believe that something illegal is going on with that money. In which case, you have just given the U.S. government the ability to freeze the account and seize the money.

If the deposit is from legal sources, it is better to take the time to fill out the reporting forms. It is a hassle, but it is better than the alternative.
Even if the deposit is from illegal sources, it is often better to fill out the reporting forms, so long as you can do so without lying, which is another crime.

Huh?

[Ol Olsoc]

Small businesss accounts are where the criminal action is?

Oh - I forgot, big business crime is considered normal and good.

Seriously, HSBC might just be committing a damn fine crime by doing this..

Awp....There I go again - Any way to take little people's money is just good ethical business practice.

Re:Huh?

[Anonymous Coward]

Big business never commit any crime: too big to fail, too rich to jail. It's the law and there's nothing you can do about it.

HSBC rotten to the core

[supernova87a]

I had an HSBC US personal checking account earlier last/this year, and I wrote to them saying that this was the most inept, understaffed, lack-of-executive attention operation at a bank that I'd ever seen.

I experienced months of hearing nothing from them after opening an account online, the worst mobile app ever, nonsensical online password procedures, 30+ minute phone help line waits, and then to top it all off, an IRS form 1099-R delivered 2 weeks before the tax due date this spring.

If you ever come to realize that companies are a lot like people and they have their own personalities, then you will find that HSBC (and Wells Fargo) are senile old people who nonetheless still want to be seen as growing and profiting, but taking shortcuts and leaving behind sloppy messes of customer accounts in disarray and miscommunication.

Executives at the top who don't want to get into the details, and order things like, "I want to see customer numbers growing, and I don't care how you do it or what it takes! And it had better not cost us a lot to get it!"

I hope they get fined into the stone age so that someone realizes you can't run a bank on the cheap. Or at least, cheap in the functions that matter.

Re:HSBC rotten to the core

[thegarbz]

My sister is with HSBC. We both traveled to Australia recently. First day shopping, her credit card gets hard blocked, I end up paying for her stuff for several days while she tries to get it resolved.

Idiots.

Re:HSBC rotten to the core

[Anonymous Coward]

That is very much her own fault.
She shouls have informed tem that she is travelling to Australia and that they can expect transactions from there.

The bank software had Australia on a blacklist for her account.

Re:HSBC rotten to the core

[Anonymous Coward]

I worked in IT at HSBC, 3 different managers in 3 years, none of which lived in the same State as one another, and none of whom lived in the same State I worked in. 3 month projects took 2 years and only moved forward when members of the project subverted the process to force the hand of holdouts. I ended up with people calling me from outside of the country begging for help getting software to work simply because I was the only one in the organization that knew enough scripting knowledge to redo the broken mess that Indian programmers had slapped together. After my experiences on the inside I canceled both my Checking and Savings accounts with them.

Re:HSBC rotten to the core

[Anonymous Coward]

When I get a credit card - they don't say "You must tell us your travel plans in advance". I have various region blocks - but I set them myself. If the bank blocks something else, it is breach of contract.

If they worry, they should check. It is quite likely the card was used to book the trip - so of course transactions will come in from there. Not suspicious at all with regular payments for food & souvenirs . . .

Re:HSBC rotten to the core

[Anonymous Coward]

Did you inform them of the intended travel? That sounds like sensible card fraud prevention to me...you would be on here screaming about it if your card got maxed or your account emptied if they hadn't caught an obviously odd spending pattern right?

That happens to me all the time with every card I hold and I proactively inform the issuer I'll be travelling

Re: Quit copying HackerNews

[Anonymous Coward]

MsMash doesn't have much variety in his source sites, and there haven't been many reader contributions.

By Murder Of HSBC Account Holders

[Anonymous Coward]

Very simple.

Just mobilize the "rank and file" with a cheap pistol and bullets, unmarked, and go out there and "BE ALL YOU CAN BE" by killing HSBC account holders. :-D

Banks are for suckers

[DogDude]

Banks are for suckers. Smart people use credit unions.

Re:Banks are for suckers

[Anonymous Coward]

Same shit, different name

Re:Banks are for suckers

[hackel]

What a surprise, an anonymous coward doesn't know what he or she is talking about.

Over-reliance on cloud services

[Dutch Gun]

I also view this story as a warning against an over-reliance on pay-to-play online services. What happens if it's not a banking issue, but a simple lack of funds that causes a scenario like this? Granted, with an online presence of any sort you can't exactly do completely without paid services, but at the very least, for example, if you actually own copies of your software that aren't tied to the cloud, you can simply choose not to upgrade them, and they'll continue working forever. Slack is handy, but it's a third party service that can, in theory, disappear at any moment. I've seen people building critical infrastructure into these types of tools, and I think they're insane.

Instead, having all these online services chewing at your bank account every month means you have few options when it comes to tightening your belt for a short period, something that nearly all small businesses run into at one time or another.

Re:Quit copying HackerNews

[EzInKy]

not aggregated curated garbage from a shit American site that restricts speech.

Slashdot IS a news aggregator site, what the hell is you problem?

The FSP is looking like a better idea every day

[Anonymous Coward]

The Free State Project is the migration of liberty minded people to New Hampshire for the purpose of organizing a revolution in freedom. This is exactly the kind of crap that those who partake in this migration are fighting. They're doing it via various means from electing reps (20 or so principled state reps currently elected by those who migrated and in-state friends) at the state house and getting legislation passed that rids New Hampshire's banking authority of having the authority to regulate crypto currencies to developing businesses that focus on returning control over our devices/systems back to the users / community (EOMA68 modular computing that is 100% free for example). There are also crypto vending machines to businesses developing point of sale apps for crypto currencies to ease adoption by businesses and the masses. New Hampshire is leading the way in moving to crypto. For example Keene outnumbers San Francisco for Bitcoin accepting businesses on a per captia basis. That's significant considering that San Francisco is #1 amongst the counted cities (ie big cities, the City of Keene is smaller than what they require to get counted in the stat).

Paypal...

[tlhIngan]

So what these business should've done is use not-a-bank Paypal instead, amirite?

</sarcasm>

Or apparently, being a bank doesn't shield you from the screwage Paypal does...

expropriation

[Anonymous Coward]

Bankers rob the poor. It's time for a palintokia.

Dead to us

[Anonymous Coward]

Heads of the bankers is heads off complaints. Murder the liars with aggressive prejudice; and eliminate progeny as an afterthought. Rest easy in the knowledge they will burn in hell sooner if you act sooner.

HSBC? What's that?

[Anonymous Coward]

Some form of organized crime?

How Simple Became Complicated

[Anonymous Coward]

How Simple Became Complicated is a common mantra that is openly used as an excuse by staff to customers.

HSBC are a pack of cunts

[Anonymous Coward]

...anyone banking with them get what they deserve.

Re:Quit copying HackerNews

[Khyber]

"For a better experience, check out Ars Technica."

Nope. They are so wrong in so many of their articles that they're simply not worth the effort to read.

Re:Quit copying HackerNews

[Khyber]

Used to be the users decided the stories, which quite often would not show on other sites.

Now the fire hose is rarely looked at, and we get copies straight from HN. No joke, comparing every other 'tech website' front page right now, Slashdot looks more like HN than any other.

This just happened to me too

[codah]

Unfortunately, I also have a business account with HSBC, and was brought into the 'Safeguard' process on 21 JUN (under threat of account closure).

After making an appointment, I spent a long time on the phone for a very detailed interview about by business and how funds arrive and why they leave the account. There were some oustsanding documents required, I was assured an email would be sent to follow up, detailing what was required. It never arrived, I learned later that the the person taking the call managed to miss-spell my email address and website, and the bounce of non-delivery wasn't understood/actioned.

After some time passed, phoning to enquire about status I eventually got an email request for more information on 2 AUG, that I supplied. After 7 days I asked for an update, I got a HSBC response that the review is with the Processing Team. This matters, as the people you can actually talk to are HSBC, it seems communication is all never direct between Processing Team and us, the customer. Anyway, 18 days later I declare my unhappiness by email, and get .... nothing.

On 30 AUG I get another request by email for info, that I reply to, and ask for an update given the near zero communication. A few days into SEP I get the final notice:

"IMPORTANT NOTICE: Suspension of your payment services and closure of your HSBC Business Banking / Corporate accounts."

Well **** me, stuff got real. I phone HSBC (they cant respond or comment because the processing team is dealing with it and there is nobody available). Awesome.

Despite continued efforts to communicate with HSBC over Safeguard, their inability to communicate effectively with me, has resulted in my business accounts being put on notice for closure! At this point, one has to start implementing contingencies, as there is now a very real chance that this ineptly implemented bank process will actually kill my accounts / business.

I'm gob-smacked by how this process has been handled, what the hell is wrong with these people? I've logged a formal complaint for the good it will do. Meanwhile, contingency planning is now in action - I can't put faith that I will receive a letter that this was all a terrible mistake. I have 8 weeks from now before my business gets killed.

If you use HSBC for business banking and receive money from all over the world, be very afraid, they are not in your corner. Diversify your business banking as a matter of priority, no one bank should hold all your company assets and payments.

Sounds like ...

[PPH]

... British banks are being shoved down the same path as US banks. The government doesn't have the legal standing to do something. So get private sector entities to do the enforcement for you. Rule of law and due process aren't an issue because banks are free not to do business with anyone they choose.

We (the USA) have FATCA to keep individuals from banking overseas. And Britain now has Brexit to accomplish the same.

Meanwhile in the Land of the Free

[mi]

Meanwhile in the US, the Federal Government was forcing banks to close/freeze accounts of some businesses. Ah, and the taxmen are empowered to confiscate personal accounts on mere suspicion of wrong-doing.

Here in India.....

[vasanth]

I used to work in the UK and it was crazy to see the amount of control the bank had on your finances in terms of blocking transactions etc.. here in India even if the bank suspects an illegal transaction occurring, the best they can do is report it but they have no authority to block or stop it unless a competent authority of the court asks them to..

Big banks for big business

[bradley13]

And small banks for small business. That's the only way it can work. Big banks don't care about little businesses, because SMEs are a rounding error in their accounts.

When my wife and I wanted to expand our tiny business by buying a property, we were still with a big bank (UBS). First of all, whenever we needed something, we always had a different advisor, who was obviously the newest and least experienced person the bank had. Anyway, we sent a written summary of our idea to the bank, got a written rejection, and that was it. I called, and asked to speak to our advisor, and was told to get lost. I showed up in the lobby, phoned our advisor, and was told that I would not be allowed to see anyone, and I should just leave.

So I did. We moved all our business to a local bank, got our mortgage, and expanded our business as planned. That was 20 years ago and the business is doing fine, so we weren't nuts or anything.

Big banks just don't care about little customers. The one exception you may find, is if a big bank allows its local branches a lot of autonomy. That was the case for us: our local bank was still autonomous, even though it belonged to a big bank. That didn't last long - when the head banker retired, the branch was assimilated, and ultimately closed entirely. Which led us to change banks yet again, this time to a bank with zero international presence, truly only interested in local business.

HSBC should die

[whitroth]

Ah, yes, these SOBs, a few years ago, but the right to service a card I'd have, which had been sold at least two or three times, but was owned by another company when they "serviced" it.

And they cranked my interest rate up to, IIRC, 25.9%, and then, when I didn't use it for about a year because of that, and they wouldn't lower the rate, they cancelled my card.

But wait, it gets better: they sent a letter informing me of this, and when I wrote back to complain, the USPS bounced it, no such addressee.

AND this was while they were being investigated for money laundering. They clearly weren't interested in earning money the old-fashioned way, when they could make more by crime.

People getting what they deserve

[hackel]

This is what happens when you use a bank instead of a credit union. Why is this concept so difficult for some people to comprehend? It just happens over and over and over again...