Yeah, but the law disagrees

As for the bank’s behaviour, I note what the BBC says. But it always baffles me as to how a bank can be innocent in these cases. It has a duty to make sure it is not handling money laundered funds. Tax evaded money is money laundered in my opinion.

29 thoughts on “Yeah, but the law disagrees”

  1. It has a duty to make sure it is not handling money laundered funds

    No it doesn’t. The Money Laundering Regulations place certain requirements on the bank, such as to verify that customers are who they say they are. And these include a requirement to report to the authorities where the bank suspects money laundering. But ‘suspects’ doesn’t mean the bank must query every single transaction from every single customer.

    No, I don’t know precisely how the UK regulations interface with Swiss law. And I’d bet my life that Ritchie doesn’t either.

  2. indeed Christie – there are obligations to verify customer identities and to identify high risk customers, at which point a bank can chose not to deal with those persons

    There is no obligation not to handle suspected money laundered funds from an existing customer – in fact if a UK bank had a customer suspected of money laundering and decided to exercise this supposed duty by refusing to accept said suspected funds, it would almost certainly be committing the criminal offense of tipping off

  3. there are obligations to verify customer identities and to identify high risk customers, at which point a bank can chose not to deal with those persons

    Yup. Friend of mine involved in some, erm, rather questionable activities which appear to pay him in cash got a 2-week notice from his UK bank that they were closing his account.

  4. It always baffles me just how much cash people leave in ordinary accounts. According to the Times, “8,844 British customers [are] linked to accounts holding $21.7 billion”. Assuming a normal distribution, the average account has at least a six-figure sum just sitting there. Don’t these people use investment funds?

  5. Unless you are talking normal skewed distributions and you actually meant average as in median average, and in which case yes, that’ll probably be the reality…

  6. PF: Yes I mean the median, and assuming 80:20 distribution: that comes out around the $500,000 figure. Some 4,000 people have more than that in their savings accounts. The mind boggles.

  7. I do love the pick’n’ choose approach that gets adopted on ‘Vomit is Free’ over at the Graun. As our Ritchie demands ever more regulation George Moonbat bemoans the regulation that stops remittances to Somalia. After all, we’re only talking terrorism there. What’s that compared with tax evasion?

  8. $500,000 figure. Some 4,000 people have more than that in their savings accounts

    Nah, that’s easy. Until recently I had around that much in there, and a lot of my colleagues do. Working as an expat in shitholes, you rapidly accumulate money (mainly because of high salaries, low tax, but especially low outgoings). A typical assignment will be 3 years, and racking up $400k in that time is easily doable.

    Now you’ll want to invest in property most likely, but the question is where? You live in a shithole and have little opportunity to go visit places and learn what the investment climate is like; you probably haven’t lived in the same place for more than 3 years in the last 15; you have no idea where you’ll be working next; and you probably have no idea where you actually want to live and have a home (if at all).

    So a lot of people are sitting on cash piles waiting to spend it once their lives settle down a bit (a lot of bankers are in this situation too, and probably most expats). And others are in the process of finding somewhere they want to buy, a process that takes so long they accumulate another $150k by the time they’ve figured it out. In my world, $500k sitting in an offshore bank is pretty common (although the music has stopped now and these sort of gigs are going to be a lot harder to come by).

    For my part, I’m in the process of buying a place in France having decided almost on a whim that I might as well make France my home because I don’t really know anywhere else and the wine and cheese is nice. So I’m about to spend my cash pile, but it took a good year of being in France to figure out what I was going to buy with it (and I still don’t really know much about where I’m buying, I’m seriously winging it). I know guys with £1-2m in the bank, with no idea where they even want to live, let alone buy a house.

  9. Funny story. A mate of mine worked about 8 years as a day-rate contractor, 5 years of it in Nigeria on serious cash. He split up with his partner in that time, and so when he eventually quit is job he was single and decided to travel the world. But he had never bought a house, and was staying with his parents between travel trips until he figured out what he’d do next. He could have got a job within a few days easily, he just wanted some time off. He did this for about a year, and then joined me on a ski trip.

    In the chalet he was busy explaining to everyone that he hadn’t worked in a year, lived with his parents, was bumming around on a ski trip, and “might get a job at some point”. If anyone in the chalet thought he was a waster he certainly looked the part as well. Only he was sitting on well over a million quid which he’d not figured out what to do with yet. There’s lots of people like this around, but you’ll not meet them in ordinary circles in the UK.

  10. Tim N: Thanks for the picture. Still seems odd to have the money piling up as cash, rather than in some half-decent investment vehicle.

    JeremyT: Why on earth do you say that? Are you privy to some inside information that says the market is about to crash? If not, then I respectfully suggest you haven’t any more of a clue than anyone else.

  11. JeremyT et al: Also, of course, you’d have to be insane to tie your cash up in the market at the moment.

    Well, quite. A lot of people (I’m one of them) are utterly risk-averse. Add onto that the value that some (again, I’m one of these) put on having instant (or more or less instant) access to the cash should something happen, or should you want to buy a house (think what 20% of a Swiss house looks like as a cash figure), and you can end up sitting on a pile of cash, which utterly annoys your banker.

    Eventually you may have enough that the private banks may take an interest, but then again you’ve got to not just have that kind of cash but that kind of cash *to spare* that you don’t want access to. That kind of person, however, is unlikely ever to be me……….

  12. I can’t make specific advice, but if you have a couple of grand a month in spare income, you’d typically drip-feed it into a stockmarket fund. By spreading your investment over time, you smooth out the risks (in theory). Conversely, you might get ripped off by the financial services industry’s notoriously opaque fee structure, and find yourself with less money than if you’d just kept it in cash.

    Of course some people prefer the safety of cash, and that’s fine.

    Tim N: Sounds to me like there would have been a lot of money in selling financial advice to oil workers.

  13. I have well over that amount knocking around in various accounts, mostly just current accounts. Some savings some working capital. I’m too busy working making more to spend time working out where to invest it, and there’s no decent rates nowadays anyway. Plus it means more bits of paper to keep hold of for the tax man. Easier to let it sit in a current account – no interest equals no tax to pay equals no bit of paper to file. And if something turns up I can get at it immediately.

  14. “Conversely, you might get ripped off by the financial services industry’s notoriously opaque fee structure, and find yourself with less money than if you’d just kept it in cash.”

    It’s every time I look at the fee structures, that are in no way based on the performance of the fund, and you pay even if you lose, that I think “f*ck it” for the Nth time. And stay in cash.

    Conversely, the best investment decisions I ever made were the ones I didn’t make – I didn’t go into gold in 2012/13, I went into the CHF from the EUR at 1.20 due to moving house (thinking I’d lost a fortune by not having moved a year before at 1.35) and didn’t move any back into EUR for the higher interest rate which has basically gone anyway now, and the EUR tanked against the CHF.

    So in the current climate staying in cash has been good for me.

  15. I can’t make specific advice, but if you have a couple of grand a month in spare income, you’d typically drip-feed it into a stockmarket fund.

    Try doing that when resident of Nigeria. 😉

  16. Sounds to me like there would have been a lot of money in selling financial advice to oil workers.

    Indeed, and a lot try: but they’re not financial advisers, they are simply salesmen working for Devere and groups like that who cold-call everyone on LinkedIn trying to flog them a pension scheme, they collect a commission from Friend’s Provident or Standard Life, and you never hear from them again. They’re ten a penny.

    Proper financial advisers are few and far between, and most won’t touch somebody living in Nigeria (except to sell them aforementioned plan, only the investor needs to run around for 6 months trying to get notarised copies of passports and other shit before being told without any reason their application is rejected). Yup, been there and done that.

    Plus, a lot of these rich guys in the oil business are as thick as pigshit and are in the process of losing all their money to a 22 year old Thai “bride”. 🙂

  17. Andrew N,

    Aren’t you assuming that the £500k in a Swiss bank is all they have? Who’s to say they don’t have a house in Knighstbridge, a company pension and £10m in the stockmarket? The cash in Switzerland is just an emergency fund in case of revolution.

  18. No. As a young engineer you should be going balls out to take on as much risk as you can. If there is a correlation between risk and reward.

    If your investments tank with the oil price (NEVER set up home in Aberdeen!) then there’s always some automotive job you can get. (Counter cyclical.)

    There is some wisdom in deleveraging and going lower beta to protect a pension. But not much. With a bit of luck you’ll be so rich you can put most of your dosh in trust for the grandchildren and start taking big risks on their behalf. They’ll thank you for it.

    I’m amazed by the risks people take physically, but won’t take economically. Madness, when going bust means you can still eat but getting handicapped means you can only eat through a drip.

    I’ve interviewed young people who’s first and second questions are about the pension plan and the health insurance. They don’t get the job.

  19. @Tim Newman

    I just read the article on your site, Tim, and the following rang like the loudest bell:

    2. Australia has not experienced a recession in the last two generations, and is therefore going to get a colossal shock when the reality of the current downturn starts to bite.

    Swap ‘Australia’ for ‘Ireland’ and 2015 for 2005 and you have the situation we had here for much of the last decade. As you’re well aware, I’m sure.

    I can remember sensible, intelligent, clear thinking work colleagues of mine saying out loud that “property has never fallen in price, and never will. The one investment that always works.” Not all of them had splurged on houses for investment, but some did. Quite a few held onto second homes they’d have sold in ordinary times but kept for their “retirement”. Each and every one of them would sell them tomorrow morning, if they could.

    A solicitor friend of mine, one of the brightest guys I grew up with, told me one night he had bought 6 houses in a pretty out of the way, rural area in the North West of the country. He’d rent them out for the next couple of decades while servicing the mortgages and then retire on the income. It made perfect sense at the time and any investment professional would have told you you’d be mad not to do it. One of the more surreal creations of the time was the ‘under-borrowed individual’.

    I wonder how that worked out for him as prices in that particular region plummeted and are unlikely to ever get close to what they once were.

    The psychology at the time here was a little weird in that Ireland had never really experienced a boom in its history, of any kind. Rough times were the default, so maybe the country seen it as our time to join the First World and there was no chance we’d ever slip back to those days when a sizeable percentage of the population had to emigrate to survive. It couldn’t happen.

    It did, and it was one painful lesson. Wonder if we’ll learn from it. Probably not.

  20. An old friend of mine describes himself as a back street abortionist. He’s medically trained and travels a lot, doing stuff the official bodies won’t do or will ask too many questions of those seeking services. He has a few cash piles in banks around the world, stuck in current accounts and just left to pile up.
    When earning a few thousand for a day’s work what can you do with the money? 🙂

  21. So Much for Subtlety

    Tim Newman – “If you know of one, feel free to share it with us. :)”

    This nice guy from Nigeria keeps offering me one. Perhaps I can hook you up?

    “Plus, a lot of these rich guys in the oil business are as thick as pigshit and are in the process of losing all their money to a 22 year old Thai “bride”.”

    Yeah but you know 1. those girls have *earned* it and 2. at their age, it is probably the best thing to do with their money.

    This seems to me to be a perfect meeting of supply and demand. Apart from the fact that the think-as-pig-shit man is probably much better off renting or leasing than buying outright.

  22. Andrew

    “Sounds to me like there would have been a lot of money in selling financial advice to oil workers.”

    Yes, these people are called hookers.

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