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British bank HSBC rescinds policy that required users to explain large withdrawals

By Catholic Online (NEWS CONSORTIUM)
January 27th, 2014
Catholic Online (www.catholic.org)

It was an idea that failed - and as such, British bank HSBC has apologized to its customers after some were prevented from withdrawing large sums of cash from their accounts. Put in effect in November, some customers were asked to show evidence of what they planned to do with large cash withdrawals. The policy has since been rescinded.

LOS ANGELES, CA (Catholic Online) - "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," the bank said in a statement. "We apologize to any customer who has been given incorrect information and inconvenienced."

Some HSBC customers were not allowed to withdraw amounts above 5,000 pounds in cash, or about $8,253 in U.S. dollars.

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One frustrated customer said he met a roadblock while trying to repay 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.\"

The man said that 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.'"

He asked if he could return later that day to withdraw another 3,000, but he was told he could not do the same thing twice in one day.

The policy was ostensibly to comply with regulations to fight money laundering, or which require banks to report suspicious behavior. Currently, U.S. banks are required to report cash transactions above $10,000 to the government, as well as transactions that occur under suspicious circumstances.

"Cash presents more risk, and in particular financial crime risk, than other payment methods. It also leaves customers with very little protection if things go wrong," the bank said.

"Therefore, we need to monitor particularly closely movements of cash in and out of the banking system. This is why 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."

HSBC had agreed to pay a record $1.9 billion two years ago to settle charges by authorities in the U.S. that the bank had lax controls against money laundering. The bank was accused of allowing hundreds of millions of dollars of suspicious transactions by customers in Mexico and other nations, including drug proceeds.

HSBC bank pleaded guilty to violating several laws in the U.S., including the Bank Secrecy Act, but avoided criminal prosecution.

"Asking the right questions, protecting our customers and reducing the risk of money laundering, fraud and other crimes, means we are doing the right thing and fulfilling our responsibilities as a bank and to society at large," the bank said.

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