I recently got a letter from a financial institution that I do a lot of investing with regarding periodical anti-money-laundering checks. I’ve gotten this kind of letter from two out of three banks that I use, and I’ve just ignored them with no repercussions. But this is the first time I’ve gotten one from a company that I’ve been investing with before.
Anyone else who’ve gotten these letters before, how did you deal with them? Were you completely honest in answering all of the questions?
Any expats working in finance that have any insight on this issue?
Thanks
5 comments
If you’re not laundering money then just answer the questions.
You must be a whale to get this kind of attention (or maybe ignoring it makes it worse over time). I would assume that it is mostly to protect themselves that they send these out. Some companies may have rules as towards how much shareholder ownership can be in foreign hands and or need to be declared etc.
Really depends on the situation. If letters you received directly indicate money laundering or anything like that, might be just a prevention or an update on your KYC (personal information). Usually when it comes to being a suspect of any financial crime and bank contacts you to clarify some things, they don’t tell you directly that you are a suspect or something, but asks about information they need for example about your account activity.
Any bank related information you have to answer honestly, except if you are laundering money, then go ahead and lie until you will get caught. Also, if you are going to lie and bank figures out, not only they can offboard you, but also you might get into legal trouble.
Another thing, if your income has changed or you have received significant amount from investing and so on, bank might be interested why your recent activity has changed and if you are not laudering money and so on. They might ask you proof for your source of funds/wealth and explanations about some counterparties or transactions in general.
You had “no repercussion” likely because they haven’t come around to find you again yet. Usually financial institutions will send a few letters out and ask you questions, if you ignore every single one, they may just decide you’re too high risk for them to continue the relationship and exit your account. Once it reaches that stage, it’s very difficult to undo the whole thing.
Remember, it’s not you. They do this to many people. Regulators are very stringent on anything involving large amount of money, and you wouldn’t believe how common financial crime is. The only way a financial institution truly understands you’re not a criminal is to know where your money came from. They look at your income and see if your story makes sense, and/or ask to have paper trails on the source of funds. It’s annoying but the institutions are just trying to cover their arses, if the regulators are unhappy about how much effort they put into it, the fines can be very high and the resulting audits very annoying.
Of course if you’re from the US then your government would also want to know everything so that they can charge you tax.
Tl;dr: yes, unless you’re actually laundering money, answer everything truthfully or it will come back and haunt you.
My experience is with Canadian AML compliance (FINTRAC) but the principles are pretty standard.
To that end, it’s pretty common to get flagged for a check if you have active international brokerage accounts.
If you have a, say, US bank account, US brokerage account, J bank, J brokerage account, they (your home institution) needs to ‘perfect’ the accounts to make sure money isn’t being shuttled between them and that residency rules are being followed.
(Edit: Nomenclature may vary, but perfecting accounts = making sure there’s a traceable, 1:1 accounting
of assets between them)
(Coincidentally, there was just an item in the news last week about a UK bank closing thousands of accounts held by overseas clients for residency non-compliance).
tl;dr If your accounts are compliant, there’s no harm in filling out the form. The hassle comes from ignoring it and the bank deciding to make A Thing out of it.