Do I need to tell my bank to whom I'm wiring money?
August 26, 2017 2:23 AM   Subscribe

My U.S. retail bank refuses to send a domestic wire transfer from my account unless I first tell them the purpose of the transaction. I think it's none of their damn business. Am I in the wrong?

I have a checking account with a very large U.S. retail bank. I send a few wire transfers a year - all domestic, always between $10,000 and $100,000, for small angel investments and real estate deals - nothing shady, no cryptocurrencies, just traditional, legal investments.

When I initiate one of these transfers (using the bank's web site), I almost always encounter a security check, where the bank either calls me or makes me come in to a branch to prove my identity and confirm that I really want the transfer to go through. This is annoying and more conservative than I would like, but I don't question their right to make me jump through some extra hoops to prevent fraud.

Whenever this happens, the bank always asks what the purpose of the wire transfer is. Up until now, I have always politely refused to answer that question, and my bank has let me go forward anyway. However in the most recent case, I again declined to say what the transfer was for, and they said they would not move the money I gave an answer. In a fit of pique I closed my account and stormed off, but I'm now wondering if my understanding of banking privacy is wrong, and I’m wrong to think “it’s my damn money, I can do whatever (legal) thing I want with it”.

Does my bank have a right (or even a legal requirement) to ask this question? Are there any regulations or customs for consumer privacy on these kinds of transactions? Or can I proudly wear my outraged consumer hat in this case?
posted by anonymous to Work & Money (22 answers total) 2 users marked this as a favorite
 
I cannot answer your main question, but I do hope that you appreciate the bank requiring you to come down in person to "negotiate" a $10K to $100K wire transfer. That's not unreasonable, particularly given that so much fraud is committed utilizing wire transfer.
posted by kuanes at 3:56 AM on August 26, 2017 [8 favorites]


They're asking to protect you- i work in a law office that helps people with scams and financial exploitation, and these run rampant snd once the money is gone it is very difficult or impossible to get back. These scams usually involve sending large amounts of money via wire transfer. I think it's pretty unusual for yhe averge person to be wiring that much money unles they've been a victim of a scam.
On the one hand, it's not the bank's business what you do with your money, but on the other hand, it IS their business to protecy their clients from scams.
Maybe there's a way you can communicate with the bank what your busines is and that you will be making transfers periodically?
posted by bearette at 4:08 AM on August 26, 2017 [12 favorites]


I am not your bank, but I did work for a financial institution where I had to take classes regarding money laundering. Banks are required to perform due diligence with regards to money laundering. If you have a personal account that you're using for investing by wiring large sums of money in an irregular fashion, you are not behaving as a "typical" retail customer, and that's why it's being flagged. The bank is required to perform extra diligence in these circumstances, including but not limited to verifying the source of funds and the purpose of the transfers.

You can get around this by setting up an account solely for this purpose, ideally under a business entity. More hassle upfront, but then you'd have transactions that make sense in the context of the account and will bo longer be flagged.
posted by snickerdoodle at 4:09 AM on August 26, 2017 [40 favorites]


Financial institutions are required to comply with a range of regulations to address money laundering and fraud. I can't say if understanding the purpose of the payment is required in your jurisdiction but even if it isn't they may have elected to require the information as part of their risk assessment process/compliance implementation procedures. And they are within their rights to refuse to process transactions. From their perspective the threat of regulatory non compliance normally far outweighs your average retail customer's ability to generate income. Losing your business is not worth the increased compliance risks. It may simply be that they have had some transactions go through the net and/or reenforced training for all their employees to increase compliance with their internal risk assessment requirements.
posted by koahiatamadl at 4:43 AM on August 26, 2017 [5 favorites]


Banks have to file a thing called a Currency Transaction Report on currency transactions above $10,000. It's unclear to me if wire transfers count as "currency". Some things I've read make it seem like there has to be actual physical currency involved, others suggest currency or things like cashier's checks. There are exemptions where a bank doesn't have to file the report (because the federal government doesn't want to sift through a zillion businesses doing the same things they do every month). Even if wire transfers aren't currency, I expect there's still some anti-money laundering regulation that you're running into.

In other words, you're not laundering money, but you kind of look like you might be.
posted by hoyland at 4:59 AM on August 26, 2017 [5 favorites]


My reaction was also that they're fulfilling their anti-money laundering compliance duties. And even if the transaction doesn't trigger a CTR, because no cash, it can trigger a SAR (suspicious activity report).
posted by snuffleupagus at 5:10 AM on August 26, 2017 [3 favorites]


International anti-money laundering and counter terrorism regulations require financial institutions to identify the recipients of transactions of that size.
posted by His thoughts were red thoughts at 5:11 AM on August 26, 2017 [16 favorites]


I had to fill out an extra form when depositing $10k+ cash from a car sale. This is obviously a money laundering thing.
posted by LoveHam at 6:24 AM on August 26, 2017


It's not necessarily that the bank thinks you are laundering money. For any number of reasons the transfer is flagging in their system. If they do not ask you about it, they have a few things to worry about:

* Banks are regulated by multiple authorities. Regulators literally come to the bank on a regular basis and look at their records and ding them for things like not getting required information on wires and not knowing their customers (which means understanding their activity). Regardless of whether you are laundering money, if the bank was not compliant with regulatory standards in how they handled your transaction, they get dinged. And if they get dinged enough for bad enough things, they pay huge fines, and/or are restricted in how they can do business until they can satisfy the regulators that they've address the issue/s. And it will be all over the news.

* Then there's the actual money laundering piece. If you *were* laundering money, and they should have been able to identify that or should have recognized some red flags that should have prompted additional questions, that's on the bank.

* In my town recently someone lost a lot of money when a fraudster hacked their system to send a wire request to their bank. It was from their email, it looked completely legit, and the bank sent it without contacting the customer to ask more questions or to have them come into the bank. The real customer, who lost money, sued the bank.

So, they probably weren't trying to hassle you, just trying to be compliant. I hope this is helpful.

Wire transfers do not count as currency, but they have their own reporting requirements.
posted by bunderful at 6:28 AM on August 26, 2017 [2 favorites]


The general description for bank regulations that require banks to get more information are generally termed, "know your customer" laws. [wikipedia] In the US, they are called "customer identification programs." These don't address specific transactions, but their implementing legislation and regulation might. They also stand for the general proposition that, yes, banks are authorized and generally required to be nosy.
posted by GPF at 6:44 AM on August 26, 2017


I got questioned hard by my large retail bank that I've been with over 20yrs when I pulled out a large amount of cash under $10K (it was around $8 or $9K, I don't remember exactly). The teller asked me if I was buying a car. I remember being annoyed because it was under $10K (as mentioned above, the legal limit where they have to file the form) but I answered truthfully that I'd borrowed some money from someone who preferred to be repaid in cash.

Afterwards I decided that if ever questioned again I would go ahead and say that I was buying a car. The bank doesn't know and doesn't care if you are an antique car dealer, for instance. I can't say at what threshold of transfers someone like the IRS might get interested, but presumably you have paperwork backing your donations such that a minor discrepancy with your stated purpose of transfer to the bank wouldn't really matter.

You might be able to mitigate some of the hassle by talking to the bank manager or the large accounts manager and asking them to help you streamline the process within their system. You might get a dedicated rep that you can just give a heads up to like 24 hours in advance and they can help you bypass the need to come down in person.
posted by vignettist at 6:46 AM on August 26, 2017


Afterwards I decided that if ever questioned again I would go ahead and say that I was buying a car.

Just know that they might ask you for proof of the transaction.

Your transaction looked like potential structuring - breaking up large cash transactions into smaller amounts to evade reporting requirements. It is a felony (and incredibly common).
posted by bunderful at 6:56 AM on August 26, 2017 [2 favorites]


Being a business account might not stop the questioning.. when I opened mine, I was asked what kind of business it was and they mentioned they were going to drop by for a site visit until it was clear I was just a small time consulting shop working at my kitchen table.
posted by tilde at 7:00 AM on August 26, 2017 [1 favorite]


There are laws in place that banks etc need to follow. A lot of new laws came in after 9/11 to prevent the transfer of money to terrorist groups. There are also laws in place to prevent money laundering by terrorist and other other criminal groups. I am not a lawyer, I was told this by my bank when I was working on transferring regular payment between countries and also by Paypal when doing the same.
posted by wwax at 7:08 AM on August 26, 2017 [1 favorite]


I've noticed that my bank will ask significantly more questions if I'm writing a large bank draft to an individual, as opposed to a law firm or a car dealership or something. What is the relationship, how well do you know this person, etc. I think this is likely the fraud protection issue that bearette mentioned.

When I was getting a bank draft for my ex to settle our separation agreement, the teller asked "how well do you know this person?" and without batting an eyelash I replied, "well, we're getting divorced so I think I know her fairly well".
posted by allegedly at 7:20 AM on August 26, 2017 [2 favorites]


Yes, you're wrong: asking the bank to do something for which they could be fined under various AML regulations is very much their business.
posted by jpe at 7:35 AM on August 26, 2017 [3 favorites]


When I wire money from e-trade after selling my employer-provided stock options online, there's always a text field that asks me the purpose of the wire. There's also a little tooltip 'Why are we asking this?' but unfortunately I can't remember exactly what it said, but I remember it was a compliance thing and they had to ask. For me its always 'selling stock', because duh, thats what I'm here for. They wont let the wire go though unless I put something in that box. I'm not willing to risk the hassles of tracking down lost money to goof around and put stupid phrases there, but I've definitely been tempted.
posted by cgg at 7:50 AM on August 26, 2017 [1 favorite]


I always answer that I am wiring the money for "personal investment purposes". Once I told them it was to pay medical bills and then I went into a long rant about the insurance and medical costs and how congress screwed up the whole ObamaCare thing. I went on for about 2 minutes before the person cut me off and said, "Thanks, that is good enough."

When you think about it, it is an insane question even if the Government is requiring it. Someone up to no good is not going to answer, "I need it for the kilo of Peruvian flake I am buying" or "I am laundering money for my friend in the mob". You are either going to tell them the truth or something innocuous.
posted by AugustWest at 9:12 AM on August 26, 2017


Addition to money laundering requirements, the bank I work for has rules for tellers to question transactions like large wire transfers that could be scams or cons. This is, sadly, due to the large number of people who have been swindled by scammers into sending large sums overseas.

I've read some pretty sad cases, and I can tell you, no bank employee wants to feel that they've helped someone throw away their whole life's savings on a con. There's a feeling that there's a duty of care at play too, even if not legally required.
posted by smoke at 10:19 AM on August 26, 2017 [2 favorites]


When you think about it, it is an insane question even if the Government is requiring it. Someone up to no good is not going to answer, "I need it for the kilo of Peruvian flake I am buying" or "I am laundering money for my friend in the mob". You are either going to tell them the truth or something innocuous.

I wouldn't want to hold up most bank's AML programs as a model of effectiveness, but...you understand that criminals generally don't tell the truth on official documents if it would incriminate them, and yet identifying that they are lying is helpful for catching them, right?

OP, I'm honestly a bit concerned about your vulnerability to fraud that you would be moving that kind of money around in investments and still need to be told these things. I would expect someone who regularly makes independent investments of five to six figures to have a reasonable degree of sophistication in financial matters. Please, do some reading before you lose a few of those checks.
posted by praemunire at 10:49 AM on August 26, 2017 [18 favorites]


Seconding that this is basic "know your customer" stuff required by bank regulations.
posted by Mid at 6:53 PM on August 26, 2017


The primary legal authority for this sort of thing is FinCEN, the Financial Crimes Enforcement Network. They're the US intelligence agency that tracks money. Banks & other financial institutions are required to submit Suspicious Activity Reports on transactions that meet certain criteria which sound a lot like your transfers. Here's FDIC's regulations regarding SARs.
posted by scalefree at 3:49 AM on September 4, 2017


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