HSBC (Britain's largest bank) Restricts Large Cash Withdrawals

[dixiegrrrrl]

X-post from Economy group...

Following research last week suggesting that HSBC has a major capital shortfall, the fact that several farmer's co-ops were unable to pay back depositors in China, and, of course, the liquidity crisis in China itself, news from The BBC that HSBC is imposing restrictions on large cash withdrawals raising a number of red flags.
The BBC reports that some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it. HSBC admitted it has not informed customers of the change in policy, which was implemented in November for their own good:
"We ask our customers about the purpose of large cash withdrawals when they are unusual... the reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime."
As one customer responded: "you shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours."

http://www.zerohedge.com/news/2014-01-24/bank-run-fears-continue-hsbc-restricts-large-cash-withdrawals

the article goes on to say that the bank claims this is an effort to prevent "financial crime"....
In truth, the bank has been charged with having 80 billion shortfall, in a report of last week.
"Large cash withdrawals" =3,000 pounds or more.

The Latest HSBC Scandal: An $80 Billion Capitalization Shortfall

Forensic Asia on Tuesday began its coverage of Britain’s largest banking group with a ‘sell’ recommendation, warning the lender had between $63.6bn (£38.7bn) and $92.3bn of “questionable assets” on its balance sheet, ranging from loan loss reserves and accrued interest to deferred tax assets, defined benefit pension schemes and opaque Level 3 assets.

http://www.zerohedge.com/news/2014-01-16/latest-hsbc-scandal-80-billion-capitalization-shortfall

[Agschmid]

1. Big red flag.

[jwirr]

12. Yes it is - they are afraid of a run on the banks.

[DFW]

2. I get the logic

"We are obligated to help prevent money-laundering, so we are going to hold on to your money until our balance sheet looks a little better."

They might as well tell depositors they can't give them their money because the dog ate it.

[ChairmanAgnostic]

3. The best way to start a run on a bank

is to let people know they can't take out all their money.

[Jesus Malverde]

4. Hong Kong Shanghai Banking Corporation

Last edited Sat Jan 25, 2014, 04:47 PM - Edit history (1)

Ran out of Mexican drug money ......

Boo hoo

HSBC Judge Approves $1.9B Drug-Money Laundering Accord

HSBC was accused of failing to monitor more than $670 billion in wire transfers and more than $9.4 billion in purchases of U.S. currency

http://www.bloomberg.com/news/2013-07-02/hsbc-judge-approves-1-9b-drug-money-laundering-accord.html

https://www.google.com/search?q=HSBC+opium+trade


Eager to move cash through the teller windows of HSBC’s Mexico unit in the largest amounts possible — sometimes as much as hundreds of thousands of dollars per day — drug traffickers designed specially shaped boxes, a document released by the Justice Department on Tuesday states. Once the cash was in HSBC accounts, brokers wired it to exporters in New York City and elsewhere in the United States as payment for goods destined for Colombian businesses, according to a”statement of facts” that was filed in federal court in Brooklyn along with a deferred prosecution agreement (DPA).

Those Colombian importers would have provided an equal sum of pesos to the Colombian drug traffickers, via so-called Black Market Peso Exchange (BMPE) brokers, completing the money laundering cycle, sources familiar with the process said. The Justice Department said the Sinaloa Cartel in Mexico and the Norte del Valle Cartel in Colombia took full advantage of HSBC’s failures to police its Mexico-linked transactions, pumping more than $881 million through the bank, the statement of facts said.

The money was a drop in the river of currency that flowed through HSBC’s Mexico unit to its U.S. unit, however. As part of HSBC’s U.S. dollar banknotes operation, currency provided by banks, money-changing businesses and other entities in Mexico was transported into the United States and deposited with the Federal Reserve. Between 2004 and 2007, HSBC’s Mexico unit funneled more than $3 billion per year to the bank’s U.S. unit as part of the banknotes business, court documents state. These numbers reportedly prompted Mexico’s Central Bank to express concern because the volume seemed unusually high.

http://blog.thomsonreuters.com/index.php/less-drug-money-traffic-at-hsbc-may-mean-more-risk-for-other-banks-in-u-s/

[FarCenter]

5. Governments don't want people making large cash transactions -- they're hard to tax

Unless HSBC restricts checks and wire transfers, this is a non-story.

It is actually the regulators at work.

[dixiegrrrrl]

6. Has nothing to do with the 80 billion shortfall, eh?

riiiight.....


regulators??? at work??????...

[FarCenter]

8. If they had a liquidity issue, they would restrict wire transfers.

So long as you can freely wire millions in and out, they don't have a capitalization issue.

Cash transaction restrictions are related to anti-money laundering regulations.

HSBC to pay $1.9 billion U.S. fine in money-laundering case

Under the agreement, which was reported by Reuters last week, the bank agreed to take steps to fix the problems, forfeit $1.256 billion, and retain a compliance monitor. The bank also agreed to pay $665 million in civil penalties to regulators including to the Office of the Comptroller of the Currency, the Federal Reserve, and the Treasury Department.

http://www.reuters.com/article/2012/12/11/us-hsbc-probe-idUSBRE8BA05M20121211

[Aerows]

14. It's always the fault of those darn regulators

It certainly has nothing to do with a capital crunch. Nothing whatsoever.

[Sgent]

15. Cash withdrawls

even large ones, are such a small amount of the banks liquidity needs that its a rounding error most likely.

If they start imposing restrictions on wire transfers and the like, that's when I would be worried about a bank run. Currency withdrawals are about money laundering.

[Renew Deal]

7. Is it possible to write a really big check to yourself?

[LiberalArkie]

9. They just got though selling their credit card accounts to Capital One.

That happened to many of the failed banks in the US right before the US had to give a lot of them money.

[marmar]

10. from Max Keiser

[dixiegrrrrl]

11. I watched that yesterday

which made me look up HSB where I found the Z Hedge stuff.

Meanwhile, over at JP Morgan....
charts and more at the link.

JPMorgan's Gold Vault Has Biggest One-Day Withdrawal Ever

Curious why over the past few months JPM has quietly been accumulating a substantial amount of eligible physical gold (even as its registered gold inventory is the lowest it has ever been at just 87K ounces since December 13, 2013 when 147K ounces of gold was withdrawn - keep that date in mind for a few minutes)? This may have something to do with it: moments ago the daily Comex gold vault report confirmed what many expected, namely that the JPM accumulation was merely in advance anticipation of major withdrawals. How major? Well, on January 23, JPM saw 321,500 ounces of gold depart in one day. This was tied for the single biggest daily withdrawal in history!The last time JPM had an identically sized withdrawal? December 13.... 2012.

http://www.zerohedge.com/news/2014-01-24/jpmorgans-gold-vault-has-biggest-one-day-withdrawal-ever

[trublu992]

13. Time to get your money out

[lindysalsagal]

16. SO GLAD I GOT OUT OF HSBC 9 MONTHS AGO!!!

Shitty bank, horrible customer service, I fired the bastards and went to a local credit union.

F>U> HSBC! I hope my withdrawls hurt alot, 'cause I'm Looooooooooonnnnnnngggggg gooooooonnnnnee!

Everyone else, get the hell out. I mean it. Get. Out. Now.

[Jesus Malverde]

17. maybe true but dated...

HSBC has said that following customer feedback, it was changing its policy: "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. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for."

"The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. 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."

http://www.bbc.co.uk/news/business-25861717