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article imageHSBC says 'No' to large cash withdrawals

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By Kelly Fetty     Jan 29, 2014 in Personal Finance
English branches of the multinational bank HSBC have refused to let customers withdraw large amounts of cash from their own accounts unless they present documents proving how it will be spent, British media reports.
Both the BBC and MailOnline report that HSBC customers have contacted them complaining that they have been denied access to their own money.
Stephen Cotton of Worcestershire was refused when he went to his local HSBC branch to withdraw £7,000 to repay a loan from his mother.
"When we presented them with the withdrawal slip they declined to give us the money because we couldn't provide them with a satisfactory explanation as to what the money was for," he told BBC's radio program Money Box.
"They wanted a letter from the person involved — which was ridiculous," he said.
Another HSBC customer identified only as "P.H.D" emailed MailOnline's This is Money column with a similar complaint.
"...HSBC will not let me take out anything over £1,000 cash over the counter. I gave them warning, but they say they must know what I will use it for — they want to see evidence of hotel bookings etc," P.H.D. wrote.
Other HSBC customers said bank officials demanded to see contractor's invoices or proof of hotel reservations before they would hand over any cash.
When Cotton wrote to HSBC to complain, he received the following response:
"Documentary evidence must be taken to validate all cash/credit transactions. If this cannot be provided, then the transaction will be declined. As this was not a change to the terms and conditions of your bank account, we had no need to pre-notify customers of the change."
HSBC officials told Money Box that the policy had been in place since November.
Customers Should Tell Banks to "Get Stuffed," says MP
Reporters with both Money Box and MailOnline contacted other banks to ask if they had similar policies. Santander, Barclays and the Nationwide Building Society admitted they give counter staff the right to request documentation if they suspect the withdrawal might be connected to fraud.
Conservative MP Douglas Carswell blamed the policy on "arbitrary" and "officious" rules. He encouraged customers to rebel.
"Saying 'Get stuffed!' can actually get you a long way," he told Money Box.
Money Laundering, 'Vishing' and Courier Scams
This is not the first time HSBC has attracted negative publicity.
A 335-page report issued by the United States Senate Committee on Homeland Security and Government Affairs in July 2012 accused the bank of money laundering. The report portrayed HSBC "as a facilitator of shady transactions involving launderers ranging from Mexican drug cartels to residents of Iran and other countries—some of which have terrorist ties—that are barred by law from U.S. trade," wrote Daily Beast reporter Jesse Singal.
In December 2012 HSBC paid a $1.9 billion dollar fine to settle the allegations.
Did HSBC develop the new withdrawal policy in response to its previous money laundering troubles? Eric Leenders, executive director at the British Bankers’ Association, says no.
"I don't think it's just about money laundering; I think it's also about fraud," Leenders told Money Box.
British banks lose £475 million to fraud each year, MailOnline reports. Recently there has been an especially sharp rise in fraud schemes such as "vishing" and courier scams.
In vishing scams an automated message tricks consumers into giving up their card numbers and bank account details. In courier scams, victims are told their bank accounts are no longer secure and are persuaded to give their money to a fraudster posing as a police officer or bank official.
Both scams put cash in the hands of criminals — cash that is difficult to trace.
HSBC officials have pointed out that customers can still withdraw unlimited amounts using electronic transfers, bank drafts or checks.
‘There is a clear tension between, on the one hand, providing customers easy access to their money and, on the other hand, protecting customers from the threat of a fraud that could have a devastating effect on someone’s finances,’ Leender told This Is Money.
In response to the outcry, HSBC has changed the withdrawal policy and issued an apology to its customers, Money Box reported.
"However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that 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. We are writing to apologise to any customer who has been given incorrect information and inconvenienced."
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