Bank closing accounts

Ed-1

A friend of mine recently received notification from one of his banks that his accounts were to be closed in 60 days due to some recent risk assessment.

It seems that they picked up on the fact that he had been (legitimately) transferring some of his money to and from 2 of his current accounts in order to exploit the differing cut-off times of these two banks.

He initially thought fair enough - the bank can close his account if it wants as this is part of the terms and conditions. The problem has come in that he can't open a bank account elsewhere due to a 'misuse of facility' CIFAS that the bank registered.

Now firstly, am I right in thinking the activity (although obviously construed as suspicious/fraudulent) was legitimate? The money was his - the transfers weren't fraudulent so how can the bank justify a CIFAS marker? Isn't anyone free to move their money between their accounts as often as they wish?

Secondly, what can he do about it?

Thrugelmir

The purpose of markers is to warn others of conduct. While banks are in competition for business. No one wants a delinquent customer.

As you say one of his banks. Then they've still got banking facilities.

Chalk it up to experience.

stclair

I think banks are wising up to this 1k recycling through accounts to obtain certain incentives.

jonesMUFCforever

stclair wrote: »

I think banks are wising up to this 1k recycling through accounts to obtain certain incentives.

I agree but recycling money from one account to another is not illegal or a reason for closing an account.
There must be more to this than has been posted.

stclair

jonesMUFCforever wrote: »

I agree but recycling money from one account to another is not illegal or a reason for closing an account.
There must be more to this than has been posted.

Yeah I know that but I think money recycling is rousing eye brows and could be possibly mistaken for money laundering.

CKhalvashi

stclair wrote: »

Yeah I know that but I think money recycling is rousing eye brows.

However it's another case of guilty until proven innocent.

There's the chance that OP's other accounts could be closed asa result of this, and it's important to remember that in this day and age, noone can live normally without banking facilities.

Which bank, out of interest, although I suspect I know the answer to this (the green one)

leskerr

I suspect the bank sees this as a form of "kiting". I can't find a good description that might cover what your friend was doing, but this link might help... http://en.wikipedia.org/wiki/Check_kiting#Corporate_kiting
The page itself is entitled "Check kiting", but kiting can take many forms where effectively someone transfers money between two or more accounts to effectively create a situation where the money is in two places at once (probably not the best description). Worst case what your friend was doing was fraudulent, best case is carrying out a practice that banks perceive as possibly fraudulent. Hence the markers.
Les

redux

stclair wrote: »

I think banks are wising up to this 1k recycling through accounts to obtain certain incentives.

Someone I know had this suggested to her by the bank staff, between 2 accounts at the same bank, and it was going on for 4 or 5 years.

CKhalvashi

redux wrote: »

Someone I know had this suggested to her by the bank staff, between 2 accounts at the same bank, and it was going on for 4 or 5 years.

If I worked for a bank, I'd recommend it to customers, too.

rizla_king

stclair wrote: »

Yeah I know that but I think money recycling is rousing eye brows and could be possibly mistaken for money laundering.

Usually it's not, but that is the excuse they will use for closing or restricting accounts anyway.

SnowTiger

leskerr wrote: »

I suspect the bank sees this as a form of "kiting". I can't find a good description that might cover what your friend was doing, but this link might help... http://en.wikipedia.org/wiki/Check_kiting#Corporate_kiting
The page itself is entitled "Check kiting", but kiting can take many forms where effectively someone transfers money between two or more accounts to effectively create a situation where the money is in two places at once (probably not the best description). Worst case what your friend was doing was fraudulent, best case is carrying out a practice that banks perceive as possibly fraudulent. Hence the markers.

Yes, that's the way I read it too. The OP wrote:

It seems that they picked up on the fact that he had been (legitimately) transferring some of his money to and from 2 of his current accounts in order to exploit the differing cut-off times of these two banks.

I suspect banks take a snapshot of the account's balance at a certain time of day and use that to calculate interest. If one bank did this at 2am and another at 3am it would be easy to earn interest twice on the same money. :T