Closing in on suspicious transactions

September 26th, 2006 at 19:01 UTC by Gerhard Hancke

After almost 3 years of problem-free banking in the UK I recently received the following letter from HSBC’s “Accounts Review Team”. It advised me that the HSBC group no longer wished to have me as a customer and that I had 30 days to move my banking to an establishment in no way connected to HSBC, before they would close my account. Confident that I had not indulged in any illegal activity recently, and concerned about their reasons for taking such action, I attempted several times to phone the number given in the letter, unsuccessfully reaching a “we are busy, please try again” recording each time. Visiting my home branch was not much more helpful as they claimed that the information had not been shared with them. I was advised to make a written complaint and was told that the branch had already referred the matter, as a number of customers had come in with similar letters.

After two written complaints and a phone call to customer services, a member of the “Team” finally contacted me. She enquired about a single international deposit into my account, which I then explained to be my study grant for the coming year. Upon this explanation I was told that the bank would not close my account, and I was given a vague explanation of them not expecting students to get large deposits. I found this strange, since it had not been a problem in previous years, and even stranger since my deposit had cleared into my account two days after the letter was sent. In terms of recent “suspicious” transactions, this left only two recent international deposits: one from my parents overseas and one from my savings, neither of which could be classified as large. I’m not an expert on complex behavioural analysis networks and fraud detection within banking systems, but would expect that study grants and family support are not unexpected for students? Moreover, rather than this being an isolated incident, it would seem that HSBC’s “account review” affected a number of people within our student community, some of whom might choose not to question the decision and may be left without bank accounts. This should raise questions about the effectiveness of their fraud detection system, or possibly a flawed behaviour model for a specific demographic.

My account is now restored, but I have still had no satisfactory explanation as to why the decision was made to close my account, nor do I know how this sorry affair will affect my future banking and credit rating. Would an attempt to transfer my account have caused HSBC’s negative opinion of me to spread to other institutions? A security mechanism that yields false positives or recommends a disproportionate reaction, e.g. closing an account based on a single unexpected transaction, should be seen as somewhat flawed. The end result is that the system runs on a guilty until proven innocent premise, with the onus for correcting marginal calls placed on the customer. Ultimately the bank will claim that these mechanisms are designed to protect the customer, but in the end randomly threatening to close my account does not make me feel any safer.

Entry filed under: Banking security

35 comments Add your own

  • 1. Carlos  |  September 26th, 2006 at 19:28 UTC

    Could this be over-zealous interpretation of anti-terror regulations rather than consumer protection or fraud prevention?

    I don’t know what penalties banks face for negligently transferring terrorist money, but they will certainly outweigh the non-existent profit from a few student accounts.

  • 2. Frank Stajano  |  September 26th, 2006 at 19:40 UTC

    One can only imagine what their reaction would have been to a large WITHDRAWAL, rather than deposit…

  • 3. Nicolai Plum  |  September 26th, 2006 at 20:46 UTC

    This seems like a very fit subject for the Banking Ombudsman to regulate. See also http://business.guardian.co.uk/story/0,,1869046,00.html where someone suffered even more than you; HSBC froze his account and wouldn’t talk to him about it.
    This is a fit area for regulation because the banks have a dominant market position, as well as customers having been encouraged by banks to do all their transactions automatically or electronically and so the sudden freezing of their bank account on flimsy (or no) evidence has a disproportionate effect on their life.

  • 4. Chris  |  September 26th, 2006 at 22:57 UTC

    Wow. That is somewhat disconcerting, isn’t it?
    Aside from how this might impact your (imputed) creditworthiness and such, I’d wonder to whom your status as a receiver of suspicious funds may have been reported to, and what *they* might do with such information.

  • 5. Caspar  |  September 27th, 2006 at 00:19 UTC

    File a Data Protection Act subject access request for Everything. Useful test of the Act, and their legitimate scope to redact information about this is, in theory, virtually nil.

  • 6. Kostas P.  |  September 27th, 2006 at 07:15 UTC

    To be honest, this sounds a bit ridiculous from the bank’s part. First of all if we’re talking about bank transfers I think that they can see who sends the money. Of course students are definately expected to receive “large” amounts every once in a while. I also have to admit that halfway through your post I thought that this was some kind of snail-mail phishing attempt…someone trying to steal your cards or maybe phish information on the phone when you’d call that number…

    I’ve no idea how you can investigate this or what legal actions you can take in the UK about it. In Greece we have and independant authority that settles disputes betweek banks and customers. IMHO, now that everything’s clear, you should formally explain to them that there are other banks in the UK that pay more attention to things like that and that as of now you’ll be closing your account to HSBC and moving all your money elsewhere. Should all students that had the same problem do that, HSBC would think twice next time…

  • 7. student  |  September 28th, 2006 at 04:08 UTC

    The same thing happend to my mom’s bank account when she transfered money to my account to pay for my tution fees… (different bank ) and to be honest ,I think it is the anti-terror legislation

  • 8. Chris Lightfoot  |  September 28th, 2006 at 09:32 UTC

    A DPA request is an excellent idea, though they may try to evade it by claiming (as some businesses have) that account data isn’t “personal data”. You might even be able to demand details of “the logic involved in” their automated procedure–s.7(1)(d)–though I imagine they’ll find some way to weasel out of supplying those.

  • 9. Mike Bond  |  September 28th, 2006 at 15:18 UTC

    Carlos made a very good point that this could be over-zealous interpretation of legislation, which I probably agree with, but I would point out that student accounts may not be initially profitable, but today’s students are tomorrow’s executives, so I think it is genuinely unwise for a bank to piss off this sort of customer.

    Often the problem is that important decisions are made like this by mainly automated systems with little human interaction. Yes a human may sign the letter, but ultimately they just rubber stamp a list of “bad names” that comes out of the computer.

    There is tremendous difficulty resolving disputes in phantom withdrawal cases in part due to the ad-hoc way in which they are investigated. A team of fraud investigators at the bank look over the details of the dispute for not much more than 15 minutes in the initial case, then punch a few figures into a computer, turn a few handles, and then make a judgment call about whether to offer a refund. Ok, so I’m exaggerating, but the point is that the process is far from transparent, so its difficult to argue whether or not it’s being done properly, fairly, or rationally.

    So maybe the right response when HSBC randomly tries to close your account is that I believe I first heard proposed by a certain professor here… to say “Is it cos I is black?”. Just like Ali G, you don’t actually have to be black to try it on.

    Banks (i.e. corporations in general) are much more afraid of the stigma of being seen as discriminatory, so a big scare that there might be discrimination in the account closing/refunding process would cause it to be better documented and formalised. This allows them to defend against (groundless) accusations of racial discrimination. But it also has the side effect of improving the quality and transparency of the process, allowing anyone who is caught out to stand a better chance of sorting out their problem.

    That’s the theory anyway ;-) .

    Mike.

  • 10. Alan Clark  |  October 5th, 2006 at 11:26 UTC

    The reason given; that you had received a large deposit from overseas would suggest that others like yourself who study here but originate from outside the UK are likely to fall foul of this.

    Is this a case of racial discrimination? (either directly or indirectly)

  • 11. bal  |  October 8th, 2006 at 05:57 UTC

    I work for a bank (not yours) and this sounds very much like the (negative) side effect of how banks implement required money laundering regulations. The banks get held responsible if they *dont* pick this up and the fines are pretty high…combine this with new – flawed – technology implementations to detect this (some are just extensions of existing fraud detection system) and a situation is created where they end up being somewhat trigger happy – even worse if your name (or similar name) appears on any of the AML lAnti Money Laundering) lists provided by the government (which the banks have to check against). If/when they review their customer attrition rates perhaps they’ll figure out the impact of their current approach. Its very unfortunate they didn’t provide you with a way to easily discuss the problem with someone closer to the issue. The comment re: racial discrimination is a huge stretch – banks don’t care about the colour of your skin – its the colour of your money that counts ;-)

  • 12. ant  |  October 9th, 2006 at 01:15 UTC

    This might run against Financial Inclusion principles that banks are supposed to follow, as mentioned in the Banking Code.

    http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=140&a=5229
    http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=140
    http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=137&freesearch=inclusion&Submit.x=8&Submit.y=4

  • 13. JR  |  October 9th, 2006 at 14:31 UTC

    Mr. Fogg, you wish to withdraw 20,000 pounds from your account?

    Yes

    Can you please explain?

    Why do you ask?

    I’ll do the asking. What is your explanation?

    I have decided to take a trip around the world in 80 days.

    Yes? I’ll have to refer thsi to security

    And Fogg loses the bet.

  • 14. Chin  |  October 9th, 2006 at 18:38 UTC

    Same problem has happened to a lot of overseas students as they usually receive financial support from their family. Unfortunately I am one of the victims here. I phoned up the so-called “Account Review Team” this afternoon and what I got was “We are unhappy about the way you use the account” and I was told that I will not be able to open any account in any UK HSBC branch after the closure of the accounts for good. That means now I am blacklisted by UK HSBC forever because they don’t like my overseas transaction records, eventhough there is no problem with them at all. At that time I was surprised to see the team did not resolve the problem by “re-reviewing” my account but just giving me a reason that is absolutely unacceptable to most people. This matter was reported on the BBC news. However, it is shocking to see there is still no action taken from HSBC to resolve this particular problem. There are also rumours that if you received a single transaction that is over 1000GBP from other country you probably will have your account closed and your name on the HSBC blacklist.

    Maybe this is another reason for them to move their headquarters outside England in the future. Who knows.

  • 15. Alan Clark  |  October 9th, 2006 at 21:19 UTC

    There is an example of a bank that refused to give mortgages on houses in a particular estate. The bank was refusing for an innocent reason; that houses in the estate were seen to be a high reposession risk with possible financial loss for the bank.

    Because the majority of residents of this estate were foreign, the bank was guilty of indirect racial discrimination.

    Now if the current trend of closing bank accounts similarly affects mainly foreigners (becuase they are more likely to make payments to/from overseas) then I would suggest that it is the same as the example of refusing mortgages. If so, then I’d think that the bank are on shaky ground.

  • 16. ant  |  October 10th, 2006 at 12:59 UTC

    More fun – I can’t wait to see the classified appeal process.
    http://news.bbc.co.uk/1/hi/uk_politics/6035861.stm

  • 17. Manowar  |  October 27th, 2006 at 21:13 UTC

    I got exactly same letter from hsbc account review team. I went to my branch may be 20 times or more. I rang so many time account review team and Just I asked them WHY ARE YOU CLOSING MY ACCOUNT? Answer is was always same, BECAUSE WE ARE NOT HAPPY HOW YOU OPPERATING YOUR ACCOUNT. What’s mean that? What I spouse to do make you happy ? No answer. Anyway I went to my branch once again and I said I want to speak manager of account review team (because his sign on the letter, but not name), after my investigation I found that Mr manager name is ROD ELLIOT, I try to speak to him so many times on the phone but of course they always refuse my request. I was really very very angry that I getting no answer from hsbc, just I wanted to get any specific answer why they closing my account, is there is any specific answer? NO
    By tricky way I found manager of account review team MR. ROD ELLIOT’S direct number which is 02072604743. I rang him straight to way, he was very surprise that I got his direct number, he is asked how did I found his direct number, I said it’s my secret. I said; now tell me please why you are closing my account. He is give me the exactly the same answer which because HSBC bank not happy with you. This is can not be answer. I said I am already contact with financial ombudsman to make a complaint about hsbc. He been very stress when I said that, and he is said this is not necessary to go to ombudsman. He is said that I will check your account again and I will contact with you, I said ok. He is rang me back after 20 minute he is said ok we are not closing your account.
    But still I am not happy with hsbc’s service or how they treat me.
    It’s should not be like this. They open back my account but now I am going to close my account very soon with my few friends.
    If any one has similar problem with hsbc please use his direct number to call him that’s really better way.
    Thanks

  • 18. Marcine  |  November 10th, 2006 at 23:56 UTC

    I need to know what everyone has done in regards to what HSBC has done? I used to be an employee there for 5 yrs and quit about 6 months ago. All of a sudden I get a check in the mail and they closed all my deposit accounts. They will not tell me why when I tried to call them adn I have not recieved any letters either. I have everyones name from the Fraud Dept , which I also worked in for about 2 months at HSBC after I quit and they will not give me any answers. Closing my account has caused major stress and not too mention my Credit Card payment to bounce which then caused me an addition bounce check fee and now an over the limit fee on 2 of my accounts. This has set me back financially. I have written to the BBB so far and am now gonna pursue this to the Banking Commission and everyone else under that list, not to mention a letter to the head of the company. This will NOT be let go, someone will loose their job from this. I have never done anything illegal or fraud on my accounts. Working in that dept. was the worst. They put a hold on peoples account that were sick and needed their money and didnt care. I will also go to the news about them if I have too. They also lost some peoples account information when supposedly taking papers to the shredder. Yes I have a lot of information on them. I just hope someone listens.

  • 19. Geraldine Rasmussen  |  December 5th, 2006 at 15:54 UTC

    This is somewhat like FEMA telling Bank of America that in an emergency a FEMA officer is the only person allowed to open Safety Deposit boxes, and that depositors will not be given anything in the box except papers.
    Part of this problem is that those going into professional banking study slanted “education” just as medical doctors do.

    For instance, books which teach banking published by the Alexander Hamilton Institute
    do not give the financial student correct or complete historical information about the Federal Reserve; only the student’s own research can give this. In the case of medical doctors, even books on nutrition in local city med school libraries are removed from the shelf, while students interested in alternative healing are not even accepetd as students. Students must show an interest in pharmaceutical background to be sure of being accepted in the Medical School.

    In banking, concerned employees and banking students, should read B. Edward Griffin’s
    book on Jekyll Island and the financiers who pushed through legislation as well as the income tax together with Griffin’s online interview of Norman Dodd, director of the Reece Committee investigating the five major
    Foundations.

  • 20. .$author.  |  December 20th, 2006 at 23:33 UTC

    [...] Light Blue Touchpaper » Closing in on suspicious transactions When Computer-Based Profiling Goes Bad Scary story of someone who was told by his bank that he’s no longer welcome as a customer, because the bank’s computer noticed a deposit that wasn’t “normal.” [...]

  • 21. njharman  |  January 15th, 2007 at 13:09 UTC

    Why on earth would you still want to have an account with a bank that does this?

    It is unlikely to be their only “bad” system/process.

  • 22. Samiam  |  January 15th, 2007 at 14:32 UTC

    In a society that has accepted AS(S)BOs, can this really come as a surprise? The Magna Carta has effectively been repealed. Instead of being at the arbitrary mercy of a King, you are now totally in the capricious hands of bureaucrats who make the Vogons appear to be highly intelligent libertarians by comparison. Congratulations, Britain! You have finally completed the transition: Empire => Banana republic sans bananas => Bureaucratic dictatorship.

  • 23. Jason Alexander  |  January 15th, 2007 at 17:45 UTC

    Sooo…this bank obviously has a sloppy method of examaning your records, had no immediate concern over maintaining your business, as indicated by your inability to get a quick response, and apparently has triggered your name and account to a national watchlist, and you still want to keep your business with them?

    Color me cynical, but I think I’d find another bank. ANY other bank.

  • 24. MikeVa  |  January 16th, 2007 at 01:55 UTC

    Reporters and others need to investigate and reveal the names of the consulting groups that devise these assine programs. Here in the US, we are plagued with Booz Allen Hamilton and many others that are involved in developing similar hare-brained schemes.

  • 25. me@privacy.net  |  January 16th, 2007 at 05:59 UTC

    This is typical of HSBC, an extremely heavy-handed and unfair banking institution.

    I had an account with them for almost a decade, which I closed recently after they sent me a similar letter about “security issues” surrounding my deposits.

    I would advise all HSBC customers to jump ship immediately. When this kind of unfair behavior starts to impact their profits, they will (possibly) sing a different tune.

    That’s why there’s an expression, “as cold and black as a banker’s heart”.

  • 26. Andy  |  January 18th, 2007 at 18:03 UTC

    This is yet another reason not to bank at HSBC. Other reasons include them making mistakes such as transferring someone elses money in and out of your account, loosing paper work and just being generally rude.

  • 27. Kasra  |  January 20th, 2007 at 16:57 UTC

    I have got the same letter two weeks ago, i am an internationl student in UK and haven’t yet accepted to alter their decision.

  • 28. Will  |  January 23rd, 2007 at 18:22 UTC

    I and my wife got letters from HSBC recently to close our accounts. I had an old HSBC basic accout five years ago but never used it. I closed the old one and opened a new current account last May and deposited some money into it. Now HSBC wrote me to close the new account and my wife’s as well.

  • 29. Alex  |  January 25th, 2007 at 12:49 UTC

    I got the same letter last weekl. Thanks for the information given by Manowar. I called Mr Rod Elliot, the manager another day. He insisted I have to call the number in the letter which is extremely difficult to get through however and never get the matter sort out. Today, the manger seems not want to pick the phone. Then I called another numer next to Mr manger’s, 02072604742. It works and my problem got sovled.

  • 30. .$author.  |  February 10th, 2007 at 21:12 UTC

    [...] letters from HSBC telling them that their accounts are frozen and offering no explanations (http://www.lightbluetouchpaper.org/2006/09/26/closing-in-on-suspicious-transactions/). For most of them, it was a case of false positives– their accounts have been closed on [...]

  • 31. Robin Kelly  |  March 27th, 2007 at 11:52 UTC

    It is probably too late now, but you ought to know that if you had written the the CEO of HSBC and copied it to the offending department stating that the bank’s attitude throughout had been insulting, offhand and generally unacceptable, then saying you were minded to take professional advice as to obtaining compensation for damages before taking your business elsewhere, you would probably have got a decent offer of restitution. Banks will only EVER go to court if they have been robbed. They won’t argue if they see that their universally poor management will be exposed. Don’t bother with the ‘area manager’, it’s their job to field the ‘difficult’ cases. Write to the CEO (currently Stephen Green) and point out that he wouldn’t put up with such poor service, so why should you, and how is he going to make it up to you?.

  • 32. joey wang  |  April 27th, 2007 at 13:12 UTC

    i got the same letter and they asked me to give a memo code to the local brahcn staff toe proceed the appealing. i did and the staff told me the account will stay open. i thought i was relieved but they still closed it exactly 30 days later after the letter was sent.
    i am so angry but i kept polite and calm when i called the review team and requested to speak to their manager and they said, no, the next step you shoud take is to write to the manager and he would reply approx. 14 days after receipt.
    i am left with few options and the account was closed already due to the misleading information from the local branch.
    i wonder if it still helps that i write to the manager and the CEO and get in touch with the ombudsman?

  • 33. anmol gupta  |  April 16th, 2008 at 18:17 UTC

    Hi,i am a customer of HSBC INDIA and pleased to knew that i am not only the alone person who had been torcured by HSBC.I am having a POWER VANTAGE ACCOUNT with this bank.a few days back i was trying to make a payment to my HSBC CREDIT CARD from this saving account but payment could not be processed and the error message i got was YOUR TRANSACTION COULD NOT BE COMPLETED.PLEASE CONTACT CUSTOMER SERVICE.the moment i called up on +911123738989 and enquired on IVR ,it was saying,YOUR ACCOUNT BALANCE IS 1,50000.00 INR.YOUR AVAILABLE BALANCE FOR WITHDRAWL IS ZERO.i was shocked.when i asked for the reason,i was told that risk department has blocked my account and i have to speak with MR.AMIT HANDOO,MANAGER(FRAUD AND INVESTIGATION).when i called up this guy he did not responded.i immediately contacted with my legel advisor and told him about the situation.then finally i lodged a case against HSBC in BANKING OMBUDMENT and as a result,they have restored my account.i withdraw the full amount and now i dont wana to keep any relation at least with HSBC.

  • 34. vangroom@yahoo.com  |  July 31st, 2008 at 20:43 UTC

    I bank with HSBC, recently i got money deposited from India for about 2500 pounds. Because of this i guess they issued me a letter that i have some suspicious account.

    I am really worried now.

    I called up the review team , they are not responding properly repeated saying the same reply and not giving any reason.

    I dont know what to do now?
    I am really worried now. It is my hard earned credit i am going to loose without doing any fraud or mistake or anything illegal.

    Please help me .

    thanking you

    vangroom

  • 35. stefan  |  September 12th, 2008 at 20:13 UTC

    Another AMAZING story !!!

    I get a letter from HSBC cancelling my credit card but no explanation.

    I ring them, and some guy tells me

    ” We have closed your account because you have been using the card for illegal purposes ”

    ” What you’re joking ” … I say

    ” No he says ”

    I ask what ILLEGAL activity I am supposed to have done.

    I am then told ” because you have used your card on a gambling site ”

    I have this card 9 months, I made 5 days ago ONE bet to a British online bookie ” Coral ” …. the FIRST EVER with this card

    Fu** me !!!! betting shops are NOT illegal in the UK … there are thousands of them … Even the UK Government has its OWN nationalised bookmaker … Its called ” Tote ”

    SO how the F*** can a UK to UK ( I’m a British citizen living in London ) transaction be illegal

    If HSBC look at a ” Bet ” as illegal activity … then why the F do they authorise the transaction in the first place when the online bookie zips off the ” request for confirmation ” before depositing the funds to your online account…

    I’ve placed bets using my HSBC current account Debit card no problem …. I’n essence, how can the SAME bank view transactions that are the SAME as illegal if its on a credit card, and legal if its on a debit card …..

    Needless to say, they will be losing my 15 pounds a month current account business ASAP

    Stefan

Leave a Comment

Required

Required, hidden

Some HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to the comments via RSS Feed


Calendar

September 2006
M T W T F S S
« Aug   Oct »
 123
45678910
11121314151617
18192021222324
252627282930