Why banks are suddenly closing down customer accounts

Multibillion dollar organisation with an essentially unlimited scope for bureaucratic work versus kid trying to move house at the weekend.

The “why did he do this to himself?” meme seems appropriate.

Also, yes. I’ve gotten better over the years at taking a breath and just doing it but it still sets me off. Employers exploit this in people by adding hurdles in expense systems. It’s an oft forgotten corporate dark pattern.

> What is not being said is that many folks are operating at the limits of their executive function.

I don't think this can be understated. I didn't pay income taxes for two years. Not because I was dodging them, but because I was going through a divorce, single-parenthood, and depression and was barely able to hold onto my job.

2 years later, I got my shit together, paid back taxes and fees (I had the money all along), and it was easy... when I had the bandwidth for it. I just couldn't at the time.

Most things are easy in isolation, it's having patience for someone-who-can't get-your-one-simple-thing-right-because-they-have-too-many-other-simple-things-on-the-go-right-now that is hard.

https://en.wikipedia.org/wiki/Eggshell_skull

Well, it's one of those things right.

Everyone's says it's easy to wake up at 4 am for a flight. Just wake up, duh.

But actually doing it is another thing.

> There is a solution - not sure if everyone's ready to hear it yet: Decentralized finance.

I want the pendulum to swing the other way. Everybody gets and gets to keep forever an account at the Reserve Bank.

> self-hosted Ethereum wallet

I'm sorry. The technology might be fine But I simply do not trust the people involved with cryptocurrency. Not just the scammers such as SBF, I don't trust the "victims" to make wise choices. They see this as a get rich quick scheme. They are not "victims". They are money hungry speculators. Most don't even host a full node. Even people who have a means to do so Such as this guy tech deals on YouTube. The miners want to turn a good profit when they should be happy to just break even. The transaction costs are still too high. It should be very close to if not exactly zero dollars. The block chain should not be a place to make huge profits. The prices should not go "to the moon". In fact, you shouldn't even be thinking of the price of your cryptocurrency with respect to the US Dollar. This already means we lose if we constantly compare Bitcoin oh sorry ethereum and the dollar.

Yeah, but most people opt for exchanges and VC-backed wallets instead of dealing with custody. The reality has become even more regulated than banks. I've lost access to my Coinbase account, which I used to facilitate some fiat/crypto transactions, simply because of my nationality (I'm Russian but have been living outside of Russia for a decade). It was right after the 22/02 and the massive sanctions.

I wouldn't say fintech or neobanks are very trustworthy. Wise, a fintech platform, blocked my company's account for four weeks for "further investigation" right after the war as well. This caused me to miss bill payments.

I think the only way to mitigate the risk of a bank taking over your funds is to not store all your money in one account. Now, I have over 20 different accounts.

You're on the right track, but cryptocurrency has unfortunately shown repeatedly that it is not the solution (nevermind the ubiquitous fraud, scammers, but nearly 2 decades in, there is no good easy-to-use and secure system, the UX sucks).

It does appear necessary to spread your risk across multiple unrelated financial institutions. Make multiple bank & ccard accounts, and do not link them. Far less convenient, but should improve your safety.

> There is a solution - not sure if everyone's ready to hear it yet: Decentralized finance

Carrying some emergency cash is also a solution for this sort of thing.

We simply should not blindly rely on services like banks. You can invent any other new system, but you will never avoid this to happen. The lesson to be learned here is never let yourself get cornered.

Having cash counts as “decentralized” finance just as well, no?

> There is a solution - not sure if everyone's ready to hear it yet: Decentralized finance.

Another good option is to have checking accounts in more than one bank. Whatever triggers bank A to close your account is unlikely to also trigger the same action by bank B. It requires more funds, but you decentralise your finances within the classic financial system.

If something triggers a close of your accounts on multiple banks at the same time, odds are you have much worse problems than access to liquidity.

The problem is the government deputized the banks, yet the banks are not held to the same standard that government agents are.

Until that’s fixed, this will only get worse.

I got a random call from Wells Fargo fraud department and I refused to give them my information. Escalated and the supervisor also pretended to not understand my concern. In fact, they placed a stupid hold. I went to a bank and the bank manager has to call them back and basically beg these people to remove my holds.

These people in the fraud department don't even deserve to get found in a river.

I'm surprised we haven't heard more lawsuits about this in notoriously litigious America. I find it hard to believe that "we can ruin you at any time" is a sustainably fair contract term.

Ah yes the classic "I'm completely innocent so I murdered this bank manager."

OTOH I do hope a bank is allowed to go full stop on the brakes if needed. I had my CC blocked 4 times because of fraud detection. All done by the CC company and it never cost me anything but inconvenience.

If the bank would be liable, we all suffer. How much will banks charge if we would be both secured from fraud risks and indemnified from account closure damages? I would think 1% of your cashflow would not be unreasonable.

This is a tongue-in-cheek sarcastic reply, right? Because the only two cash-less options I'm aware are crypto, which is filled with rug-pulls, scams, and DPR-wannabes, or just having everything in commercial banks which is exactly what got the GP into this position in the first place.

Maybe we can go back to bartering?

One is online only (the one I use the most), the other one is a completely different bank with very different objectives and clients plus physical offices everywhere.

Each account can send money to the other via wiring, but that's it.

Saved my ass several times already when I lost my credit cards or other unpleasant situations.

Regulators fined Chase and other big banks for "weak controls". One way to show that these big banks have "strong controls" is to change parameters for these algorithms. Many legitimate transactions fall under structuring, layering, smurfing, laundering. After all, any goal of money laundering is to make their transactions appear "legitimate". Now almost all transactions (except for big businesses and people with few bills and pay stubs) come under scrutiny.

Strong controls = more false positives, more account closures, more SAR reports. That's what regulators want, and politicians don't want to rein on these regulators either by amending laws or by reducing "too much discretion" given to regulators. Of course, those affected by debanking (ordinary citizens and small businesses) don't have that kind of lobbying power to bring any such changes.

Big businesses instead can own small banks in fly over states, and run their transactions through those banks. Maybe, it is time to bank with local credit unions, as the latter allow mobile deposits. Once FedNow takes hold across credit unions, better switch to credit unions.

Another lesson: every one should have at least three checking accounts (one or two big banks; one or two credit unions).

>No such thing as "an algorithm run amuck" - more like "another department run amuck". Someone programmed the thing, someone is running it deliberately.

Not to defend banks, but you know how many bugs the average large software system has?

Or rather two departments being very good boys: these banks claim to have human reviewers. A first level of automatic flagging (with people running that) and a human review that the flagging deserves debanking (with people doing and running that).

> The risk of being debanked by two independent banks _at the same time_ seems lower than crypto.

I use 3 separate banks for this reason. But honestly, the 'reason' for dropping me might be a 3rd party risk assessment that flags something and services all three banks... Or some sort of story or hysteria that could trigger three similar systems.

Using a decent crypto currency with good practice, the biggest threat is me messing something up. And i can put systems in place to minimize this. The only issue is that most things i spend moneys on don't accept crypto and so still need banking services to use crypto. I hope this changes.

I use 5 different banks and have cash. The problem is that with the lame (primarily US driven) overreaching AML nonsense, banks will not take any risks and close whatever they don't make a lot of money on at the first sign of issues. Why would they not. What do you do if multiple/all banks closed your accounts for no reason at all outside that you are too small a fish to put an actual human on to verify the validity of the closure? Is there anything outside crypto and stuffing money and gold in your mattress?

...until they implement a system to automatically corroborate your accounts and close them all at once, which will happen, "because crime". security theater only gets worse over time. but right now you "hackers" can stop this since 99% of transactions can still be done in cash. but you won't because you're all fake.

Absolutely possible if you are, say, an immigrant. And will be possible in many other cases in the future.

How can I pay my bills with bitcoin while being debanked?

Bitcoin is a cryptocurrency, Chuckles.

Ethereum trumps bitcoin in pretty much every metric except for market cap, which is lagging because bitcoin has the name brand, simpler for people to understand, and misinformation spread by bitcoin maxis and competing chains

I'm very far from dealing with 500k personal banking transactions, but my immediate thought is that if you're doing so you're probably making mistakes. If it's revenue from sale of a company or similar, move it through escrow with your attorney. If it's a legal settlement, do the same. If you don't have an attorney but are dealing with hundreds of thousands of dollars, get an attorney. If it's income from trading or investing it should likely be a transaction from a recognized brokerage which shouldn't raise red flags - and if it's a private investment, see above about an attorney.

And of course if it's business transactions, do it with a business account.

Kind of amazing that doing “aaand it’s gone” with $500k that is provably legitimate is “an issue requiring a complaint to a specialized bureau” and not “a grand larceny charge from the DA.”

If you are moving this much money regularly using these means you will be using a private bank which is a completely different experience. Maybe some people get caught in the transition to wealth before private banking but having moved significant amounts of money a few times, the banks generally do not want to hang onto it against your will.

Glad to hear they gave your money back in full. I'm now really concerned. It sucks that there seems to be no accountability in the system. I get that they want to catch the folks who abuse the banking system, but if they do, they (the government and the banks) should at least set up a proper channel to give reasons and allow folks like us (regular Joe's) to file complaints. The current system seems really ripe for abuse.

"Trust me bro" is not evidence.

What sort of “political reasons”?

[flagged]

In a world where several thousand people have just been killed by an internationally funded terrorist group, I think scrutiny on groups which are (a) armed and (b) make political statements is probably justified. And the argument that "Al-Quds Weekend Rifle Club and Prayer Group" isn't allowed while a comparable Christian one is is pure unconstitutional religious discrimination.

> At least in the UK, NatWest debanked Neil Farage's account for his political views. Even its CEO resigned over her lying.

No, a subsidiary of NatWest closed Farage's account when he no longer met the investment thresholds for the account he held. The CEO resigned for telling a journalist the above.

That's not the same thing, at all.

The fact that someone with a political opinion had their account closed is not evidence that Chase is monitoring all their customers' political activity and systematically closing accounts for political activity Chase doesn't like.

The same way that Chase closing a restaurant's account is not evidence that Chase is tasting the food in every restaurant and systematically closing accounts for restaurants that cook food that Chase doesn't like.

No, Natwest got rid of him because he is broke, and the CEO resigned for discussing his personal details in public.

This is a false claim.

Even if Farange was targeted for his political beliefs, that is independent of whether Chase monitors customers political activites. Farange's politics were a matter of celebrity.

In some a case going to the Ombudsman costs the bank regardless of the outcome.

In the UK the first three cases in a year are free, but from the fourth onward the bank has to pay £750 [1]. It doesn't matter the outcome is - the customer could be totally innocent or the next Bernie Madoff - the bank has to pay. A customer saying "I will get the Ombudsman involved" is heard by the bank as "if we don't make this go away right now, we will get charged £750 (plus any compensation the Ombudsman may award)". It does tend to make them sit up and take notice, I hear, presumably because banks get a lot of complaints and so a large bill.

[1]: https://www.financial-ombudsman.org.uk/businesses/resolving-...

> can label you an ultra-right extremist and retroactively lock all your money down

Nitpick: about half the time (on sufficiently long term average), they'll instead label you a ultra-left extremist (most infamously anti-COMINTERN initiatives in the 1930s-1950s, but it tends to wobble back and forth depending on what's politically convenient).

> Crypto today is the only way how you can take control of your own funds.

Well, digging a hole in the forest and storing money there technically remains an option.

May be more viable than crypto for certain rare use cases.

No one had their accounts closed in Canada purely based on a donation.

I am always surprised how HN folks fall in hook line and sinker for Democratic talking points from senators FAR removed from any understanding of technology and insistent on curbing basic internet freedoms. The previous version of this was the proposal to ban encryption because bad actors can have a private conversation. If you oppose banning encryption but are in support of banning crypto, I would encourage folks to think more deeply about their positions

The technology no, the tradfi companies that "use" it (aka custodial user funds) then yes, but those regulations exist since they're no different than any other financial product company.

For conversations sake I'm curious about specific evidence. It's also fun to consider which country or group of countries would provide the regulations and enforcement.

Technically, people wishing to use crypto as a bank account would care as much about the exchanges as a ‶normal″ bank customer should care about regulation enforcement on some random bookmaker; both run on [insert currency], but that's about it.

Ah yes, I was wondering why NYT was reporting on this instead of Breitbart or perhaps Coindesk like you usually see, and it's probably because a bunch of people are about to get debanked for donating to various Palestine-related organizations.

I've heard when you get an SSSS ticket, you can make up some of the lost time by going to the first class security line. It's not like they're going to send you back to the regular line when it bings and alarms after they scan your ticket.

Heh, yeah. I was "randomly" pulled aside for extra security screenings every flight. To be fair, I later learned that I was going to the same Arabic language school that John Walker Lindh did. I managed to avoid doing what he did though lol.

SSSS isn’t related to having financial things. Booking a one way ticket transiting a middle eastern country to the US is often enough.

If you're comfortable sharing, which one?

Why is America the only country that taxes people who have citizenship but aren't residents?

The only one, guys.

The foreign tax credit is provided to prevent the double tax burden when your foreign source income is taxed by both the United States and the foreign country.

You just submit that you already paid taxes on that income to a foreign government and then no additional US taxes (to a limit, I beleive).

Ahh, good point I was running my own VPN with all traffic coming through Dallas for financial stuff.

I traveled to SEA extensively in 2022 and 2023. Never had any problems with using ATM to withdraw money. The only problem was with using Amex card.

The compliance officer was following up with me I think because it looked like I was doing structured transactions, back when crypto exchange max ACH was $500/day. I did some explanation of crypto and he was like “so it’s for investment?” and that was it.

What exactly did they tell you?

I've been doing it for the last 7 years without any problems.

Only half of those 27 countries were in Europe, others were all kinds of shitholes.

they are vague they catch every tom, dick and garry but so strict that every cartel still has acees to the banking system

For pseudo private banking, HSBC Premier is decent if you travel often to Europe or Asia. They are basically Wise for HNWs with a dash of money laundering thrown in.

Indeed. As someone who lived overseas I knew plenty of people who maintained US accounts and US credit cards. The only time an issue ever came up is if they told the bank they no longer lived in the US. Then boom account closure.

We'll probably see people get demailed then too. They'll probably go for inmates first.

In New Zealand the government added a bank (kiwibank) to the postal offices in 2001.

However the postal offices are now being closed.

I expect the same problem would occur with The US Postal Service shutting down branches?

Also see: https://news.ycombinator.com/item?id=38158144

https://wikipedia.org/wiki/Kiwibank

Canada has a funny approach: banks can pretty much close an account willy-nilly but they're also required to open up a basic bank account to anyone that can properly prove their identity. Not sure how far anyone has pushed that envelope.

>What are the new revenue channels that will pay for all that extra staff (and considering it’s USPS, their pensions)?

The federal government, unlike most other entities, does not need to match new revenue to new spending. It can and does create new money for any spending it deems worth it.

Funding basic banking for all through the USPS is worth it.

Worth mentioning that they are already involved in the financial anti-fraud business by way of postal money orders, and are already involved in electronic support by way of the very many services they already offer online. Very little of this proposal is entirely new to them.

There is no requirement that the service be revenue-neutral.

> That alone exceeds the requirement of “minimal"

Does a car with 4 wheels exceed requirements of minimal? Who operates a payment service without handling fraud? Can you operste a postal service without handling fraud?

> pay for all that extra staff?

Do roads create revenue?

Like you are fee to argue that its not worth it, but government services do not need to charge fees, rhey can create economic growth and get the money back through taxes

Postal banking is a thing in half the world.

> I don’t see the connection between the Postal Service and banking. Is it just it was historically there? If that’s the case, you could attach it to any department.

https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...

Before the FDIC was created to cover bank runs & closures, the USPS was proposed to expand into being a postal savings system, a system that was already done by the UK beforehand & had proven to work.

https://en.wikipedia.org/wiki/Postal_savings_system

History not withstanding The reason people talk about the post office is a bank is because it has physical branches in just about every community in the country. More so than any other federal organization, and it is designed to serve all citizens on a frequent basis versus other federal organizations that might deal with citizens on a much less frequent basis.

It used to provide some limited banking services up until the 60s and it still does billions of dollars worth of money orders a year so a lot of the infrastructure is still there.

Many countries have postal savings systems, often very significant. The first was in the UK, 1861.[1] In the US, existed 1911 - 1967, started in the wake of the Panic of 1907.[2] The Japan Post Bank is among the largest savings institutions worldwide.[3] France's La Poste Group website[4] highlights "eliminating banking customer refusal" and provides an extensive suite of services.

The U.S. Constitution, Article 1, Section 8, explicitly gives Congress the power "To establish Post Offices and post Roads." A few lines earlier the same article grants Congress the power "To borrow Money on the credit of the United States." Would it then seem odd for the Congress to be assumed to have the power to create postal bonds, so common in much of the world?

[Addendum]

Might not be such a stretch then to imagine a Postal Savings System or something similar with great reach in the US, potentially encompassing much of what commercial banks handle today. The advantages including stability and availability, and perhaps even efficiency. Perhaps Hyman Minsky might have wished for things to... go postal?

[1] https://en.wikipedia.org/wiki/Postal_savings_system

[2] https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...

[3] https://en.wikipedia.org/wiki/Japan_Post_Bank

[4] https://www.lapostegroupe.com/en/banking-accessibility-la-po...

banking does sometimes require actual money still, much more so if you're poorer. What's another institution that has offices everywhere, ships things every day, and privately and securely stores things for huge numbers of customers? Remember, DMVs/RMVs are state-level.

Hell, they're even surprisingly used to keeping large amounts of valuable paper safe. It wasn't that long ago that you could make a lot of money stealing stamp sheets.

Funny thing is Finnish Posti (ex. Itella) kinda does it. They have online service where you sometimes get your mail "scanned" before it actually arrives. Probably due to them actually printing it (in better quality somehow?) and delivering to you.

I agree, and I think banks 2.0 are already here: exchanges. Some of them offer credit cards, loans, leverage, investing, and savings accounts already. The catch is that they're largely unregulated, so I see a lot of people opting to keep their cryptocurrency in personal wallets. Like cash, if you lose your wallet, you lose your currency. So people might have a hardware wallet at home in a safe, and one which they top up when they do their shopping each day. In fact, wallets are safer than cash because currency can be retrieved if they're well designed. Bitcoin wallets, for example, merely hold a key to one's funds in the cloud. That key can be shared with multiple devices. Many offer retrieval methods using pass-phrases, which can be stored electronically or printed and kept in a safe or deposit box, for example.

I'm not claiming crypto is better or more convenient today than banks. At least not for most people. My premise is that they will become more valuable over time relative to their risks and limitations.

I don't think it will ever become a default currency for modern nations. I think it will be used for parallel economies, which will expand. People will be able to buy more and more goods and services with crypto. Many more services will be set up to facilitate the conversation from USD, for example, to BTC. The scale of these parallel economies will depend on the lengths to which governments attempt to stifle freedoms. As they become more egregious, more and more people will opt to be paid in cryptocurrencies, and shop at places which accept it. There are many ways governments can and will clamp down on cryptocurrencies, but there are even more ways to achieve circumvention.

Everyone here is not seeing the elephant in the room. No country will implement KYC on foreign money. It's free money. Yet, we live in world where pretty much every country requires a residence (and a dozen other documents) to open a bank account except, uhm, the USA.

I find the money transfer system created in Malaysia to be interesting. It started as a transfer system between banks, then an e-wallet that you can use to pay in stores, then they added a Visa card, then they integrated with Singapore, Indonesia and Thailand where you can pay locally with your MYR wallet. Now they added a remittance service that basically acts as a SWIFT transfer (though it looks expensive). It seems like they have found a way around the KYC rules. I wonder how long they can keep at it before they get hammered and if they can increase their Fx integrations to more countries.

When once I was deregistered from an address (Abmeldung), the German bank instantly went apeshit hysterical with "Are you American?" letters. At least half dozen of them ignoring all of my previous responses or feedback. Of course I have nothing to do with US and none of my personal details indicate that I do, I'm fully EU person.

Some are, some are not. The US tax reporting requirements for their citizens abroad made a lot of banks refuse American customers.

But there are also other requirements that are not related. The most effective workaround at the moment is to choose a EU bank outside of Germany. This skips the requirement for a residence permit or a registered address, so people can land in Germany with a functional bank account.

Another workaround is to rely on branch employees to be a little pragmatic and let immigrants open an account. These exceptions are naturally impossible to document, but they are a normal part of German bureaucracy.

A third and last workaround a symbiotic relationship between a relocation consultant and a bank employee. They expedite the process and in return they get a steady stream of high-income customers.

> It's not like you get a pass on the tax evasion because you're also strongly suspected of committing much worse crimes, is it?

Tax evasion is what did Al Capone in. Because the bar to prove that he was involved in a lot of seriously criminal activity was quite high, but proving that he committed tax only required proving that he had undeclared income.

I'm pretty sure money laundering at least requires intent.

Doing anything to intentionally avoid triggering scrutiny policies is a crime, even if you're not doing anything else wrong.

Unfortunately, we run into the same problems as DMCA where hugely powerful, essential corporations run into poorly crafted laws that don't function at scale, and small users that never did anything wrong get shafted.

look, US politics is a shitshow, regulators are beholden to politics, lobbying is a very big influence in the US. from the crazy anti-porn, anti-abortion, anti-gay/trans, anti-welfare xenophobic fundamentalist anti-anything lobby to the anti-gun, super-duper-pro-trans, militantly-feminist, pro-eat-the-rich lobby.

and during all this banking in the US suffers from all the usual problems, it's 50+ regulatory regimes all in one, banking systems are laughably ambivalent old and legacy plus too new and full of bugs, and so on.

it's not surprising that things are not ideal. there's no need for some extreme conspiracy. big banks are user-hostile. just as the police, as healthcare, and so on.

The most tragic thing about this is that most of the legislators are exactly the same. There's no problem until it happens to them. It's acceptable for "others" to be thought of as drug dealers and other miscreants who don't deserve to have bank accounts.

I think that was the point. There are a lot of useful idiots out there.

that's not totalitarianism. it's a shitty system with a ridiculously bad trade off (catching some money launderers versus fucking innocent customers)

the problem is that banks can't handle this requirement well. if they think something is suspicious, sure file the SAR/CTR, and then if they think there's a need for KYC, tell the customer that. the customer provides information about the transaction, the bank then can chill the fuck out. if this keeps going on they can eventually tell the customer that okay, it's too much work for them, please close the account in 1 month.

but no, they immediately switch into this crusader mode, because it's just easier for them, and customers have no recourse.

> telling a bank they need to keep dealing with customers that cost them tons of money and are actively trying to defraud them (and other customers) seems awfully harsh.

So, the legal system? The only reason regulated banks should be able to deplatform someone is if they also have a legally actionable case, and they do legally action it, and the person is found guilty.

In the USA, all of the large banks are part of the Federal Reserve System and the FFIC insures all accounts up to a certain amount. I would say this nullifies their claim to refuse the public as a largely publicly funded institution… the government, however, doesn’t care about the hoi polloi so this situation isn’t likely to ever change.

Postal banking could be an option, but otherwise, the federal government seems to not want to deal with the customer service involved in running a banking operation.

It would probably be more reasonable to make some sort of tightly regulated basic bank account that banks would be required to offer in some situations.

Nobody would be happy, but hold all deposits for a long period, so that they fully clear. Possibly restrict the sources of funds; maybe a basic bank account can only accept payroll and government deposits, maybe a limit of N unique payers per unit time. Etc. Social security and state benefit programs have specialized accounts for people without other bank accounts, because it works better than sending checks in the mail, maybe one of those programs could be slightly more generalized.

Allow a bank to refuse to service an otherwise qualifying basic banking customer only if the bank goes through a court process and/or is accompanied by actual criminal charges filed.

>> I think the government should provide a basic bank account to anyone who wants one though.

Absolutely agree. Holding and transferring money should be a basic human right.

I’d say “better regulation” rather than “less” - things like fraud and money laundering are important to fight (consider how bad ransomware would be if the attackers didn’t have to convince their victims to make a cryptocurrency transaction first) but we sacrificed due process to get there. It shouldn’t be impossible to have better regulations but the national security ratchet effect is pretty strong, as I’m reminded every time the TSA scrutinizes my sandals.

> The government is the prime culprit when it comes to financially de-platforming people, if you want more secure access to banking, the solution is lighter regulation of banks, not more.

Banks are creatures of government, they're never going to be private competitive businesses. The solution is to recognise this and subject them to the same oversight that government is: FOIA, the equal protection clause, all of that good stuff.

> the solution is lighter regulation of banks,

Seriously? Nope. Nope. Nope. No.

Remember 2008.