I am the accountant for a successful IT company based in US and had open a company in the UK 9 years ago, The directors are based in US
They have been banking with HSBC for four years. For some reason HSBC closed their Euro Account and transferred the money to the Sterling Account. They have been using the Euro account and have six figure sum in the account.
HSBC have not given any reason - I don't believe my client has a poor credit rating or been involved in money laundering etc. Any idea why banks suddenly close bank accounts ? Has this happened to any of your clients.
Replies (22)
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I believe that the Money Laundering compliance function with some banks is "trigger happy" - if in doubt close an account and make a MLR report, especially if there are out of pattern high value transactions or transfers of funds to or from abroad.
I had HSBC close an account like this for a client. Four weeks later we had accounts at Barclays and Lloyds!
Did they also close the current account? or indeed - did they actually put a stop on the current account so that your client could not use it? These two actions would give you a bit of a clue as to why (money laundering or other) but if they have not done so then I would say get hold of the UK Chief Executives name and email and drop him a strongly worded (near ranting) email - usually does the trick!
The ombudsman will not respond with regards to the case unless they have first exhausted the banks complaints process.
Hi,
this happened to me this week whereas I had a phone conversation with a premier account manager last month that informed me over the phone that no details were needed for my euros account, i suffered a decent loss as I realised it only a month after. I would like to take legal action. Any direction you could guide me ? Thank you so much for your help
I would keep an open mind on this one and not be so certain that there are no money laundering issues. Why did they have a UK company with a Euro bank account if the Directors are US based? Is this one of the companies that has no UK connection and asked you to act as a Director to open a U.K. Bank account in the past?
Apart from checking my own AML responsibilities I would not get involved.
Frankly does not matter which country they have clients in as money laundering goes on all over the world, even in little old Blitghy!!! BUT, if the Bank just closed the euro account, where did they put the balance? If they plonked it into the current account and suspected money laundering then I wouldve expected someone with a brain to think that they would also need to take action on the current account as well. Maybe the account has since been stopped? Unfortunately most high street Banks have made most of the ones with brains redundant and there is often a disconnect between two different departments and lets face it HSBC's business banking section if pretty rubbish! It could well be based on some information they have just received that have made them act, or just some error, hence why a complaint should be made. This complaint needs to come from the Director - no point trying to second guess it, just get them to do the complaint (and to the top of the tree as you will get a faster response!!!!!)
Ordinarily if a bank suspects money laundering through an account then the account will be frozen. That does not appear to be what is happening here.
It sounds to me as if the bank no longer has an 'appetite' to offer the euro account to this customer - perhaps because of the general risk profile or the relationship of charges earned v work required.
David
Although generally when a bank has no appetite it just hikes its charges until they go of their own accord.
No. They close the account like has happened here.
I don't really believe the OPs client's comment that no notice was given. Maybe short notice, but not none.
This isn't new. Ive had a couple of them and I belive its been mentioned on AWeb before too. I would search but TBH it's not a big enough deal to warrant it and since Aweb destroyed any answers with the downgrade, it could be time consuming
They do a lot of hiking prices, not just shut downs. But I agree with you on the notice - its probably in a pile of post somewhere, or already shredded as looking too much like junk mail.
If a bank close an account which they suspect contains proceeds of crime & transfer the balance to another account belonging to the customer then they risk committing a money laundering offence under s327 PoCA 2002 (unless they have consent from the NCA or other authority to make the transfer).
So they should only close & transfer if they have received consent (having submitted a Suspicious Activity Report, or deemed consent by expiry of time limits) or have no suspicion of money laundering.
David
I had a client have a bank account frozen with £16m in it by Santandar, yes banks are a law unto themsleves.
For the past several years, bank customers in the UK have had an excellent set of legal powers to tackle their banks if they think they have been treated unfairly.
Unfortunately, hardly anyone knows about them, and the relevant authorities have failed to give the powers any meaningful publicity.
The rules were been laid down by the Financial Services Authority (FSA). They are known as the Banking: Conduct of Business sourcebook (BCOBS) and they apply to small businesses as well as to private individuals.
Most significantly, they give any aggrieved customer the right to sue their bank in the county court.
This explicitly links breaches of these rules to the right of individuals to take legal action under section 150 of Financial Services and Markets Act.
What is unfair?
Under BCOBS, your bank has a duty to operate your current account so the consequences are not unfair to you. Your bank cannot just go ahead and apply your contractual terms regardless of the consequences. It is obliged to have regards to your interests, when making decisions.
Your bank may want to say they are only obliged to treat you fairly within the limits of the account contract. However, fair treatment under BCOBS means you are entitled to receive fair treatment despite the limits of the contract (otherwise BCOBS would be rendered completely ineffective by the bank's terms and conditions).
Unfairness depends on the circumstances.
British judges have been deciding what is reasonable or unfair for hundreds of years so it does not pose much of a problem for them.
The Judgement can then be passed to the FSA and OFT who are obliged to act.
Hi,
This happenned to me this week, whereas I had a phone conversation with a premier customer manager last month that informed me they required details for my GBP account but nothing for me Euros account. I suffered a decent loss on the account. Would be so kind to guide me through legal procedure ? Thank you so much
This is an forum for Accountancy professionals rather than members of the public, plus we do not provide legal advice. have you followed the formal complaints procedure as described above? If that fails, consider seeking legal advice.
I am FCA registered (previously FSA) I think what HSBC is doing is much more than just closing account without notice. After a week of research I suspect them to front run their clients. Their FX profit in Q42017 is due to front running. I made a complain for my case to the FOS but I think the problem is bigger than mine !
there is a reason and I think it is called Front Running !
The operation is complex but with the help of everyone I think we can find out that HSBC is front running their client !