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    • dparsons
    • By dparsons 5th Sep 19, 4:46 PM
    • 3Posts
    • 0Thanks
    dparsons
    TransferWise Fraud Protection
    • #1
    • 5th Sep 19, 4:46 PM
    TransferWise Fraud Protection 5th Sep 19 at 4:46 PM
    Hi,
    We need to open a UK based USD account for our business to receive a large grant in USD. We will spend most of it in USD which is why we don't want it coming into a GBP account.
    We are considering having the money received in our TransferWise USD Borderless account (which we use a lot for transfers already) after comparing with high street bank's USD account options and being disappointed with the high fees.
    We want to make sure we understand the potential risks of this vs. a normal high street bank. I think we are satisfied with the risk of not having FSCS protection in terms of protection of our money. As we understand it, our money will be held in a Barclays Bank in the UK and is still secure even if TransferWise becomes insolvent (according to their website). Our only additional risk is if Barclays Bank becomes insolvent our money may not be protected and we feel this risk is sufficiently small to take that risk for the benefits of using TransferWise.
    The only thing I am not clear on is if there is any other protection we are missing out on with TransferWise (through FSCS or otherwise). Are there other protections we forfeit without FSCS protection? Or, for example, if our account details or card details were stolen and all our money was transferred out of our account, are there any protections we wouldn't have with TransferWise that we would have with a high street bank? Or any other situation where we could suddenly lose all our money through fraud and not have protection that we would have with a high street bank? We're less worried about protections of individual transactions since we will only be making small purchases and sending large amounts to known contacts.

    Any information on this would be very helpful, thanks.
Page 1
    • colsten
    • By colsten 5th Sep 19, 4:53 PM
    • 11,063 Posts
    • 10,356 Thanks
    colsten
    • #2
    • 5th Sep 19, 4:53 PM
    • #2
    • 5th Sep 19, 4:53 PM
    You'd potentially be in the Q behind other creditors and you have no guarantee that you'd ever see a penny of the money in the Barclays account. Depending on the amount of money involved and your risk appetite, you might want to get (pay for) professional advice.
    • dparsons
    • By dparsons 5th Sep 19, 5:13 PM
    • 3 Posts
    • 0 Thanks
    dparsons
    • #3
    • 5th Sep 19, 5:13 PM
    • #3
    • 5th Sep 19, 5:13 PM
    Thanks for the reply. So you're saying that even though it's on their website (I can't post the link as a new user but it's there how-is-my-money-protected page) there are no legal guarantees of recovering the money in that event? Although, there must be some basis for them to be able to claim this on their website?
    • Ro2124
    • By Ro2124 5th Sep 19, 6:00 PM
    • 15 Posts
    • 5 Thanks
    Ro2124
    • #4
    • 5th Sep 19, 6:00 PM
    • #4
    • 5th Sep 19, 6:00 PM
    Yeah been wondering about the security of transferwise myself as I'm considering sending quite a large amount to my borderless account. Without deposit protection its something to think about and be interesting to see the replies on this. In theory it should be safe in a Barclays account, but I never totally believe what banks tell you. They are not known as Banksters for nothing!
    • londoninvestor
    • By londoninvestor 5th Sep 19, 6:21 PM
    • 1,335 Posts
    • 1,175 Thanks
    londoninvestor
    • #5
    • 5th Sep 19, 6:21 PM
    • #5
    • 5th Sep 19, 6:21 PM
    We want to make sure we understand the potential risks of this vs. a normal high street bank. I think we are satisfied with the risk of not having FSCS protection in terms of protection of our money. As we understand it, our money will be held in a Barclays Bank in the UK and is still secure even if TransferWise becomes insolvent (according to their website). Our only additional risk is if Barclays Bank becomes insolvent our money may not be protected and we feel this risk is sufficiently small to take that risk for the benefits of using TransferWise.
    Originally posted by dparsons
    So if Transferwise operates its business properly and inaccordance with the FCA e-money regulations, yes your money would be in a ringfenced Barclays account and be retrievable from there in the event of failure.

    If for whatever reason (whether deliberate or accidental), Transferwise failed to properly segregate client money into a ringfenced account, the FSCS would not cover you for that.
    You would (as colsten says) be in the queue with other creditors.

    The same goes for Revolut and any other institution licenced as an e-money provider (including most of the "smart savings" apps, incidentally).

    Contrast that to an FSCS-protected bank account. If the bank fails and cannot give you your money, it doesn't matter what the reason is (fraud, bad business decisions, accidental administrative lapses, whatever) the FSCS steps in and covers you for the first 85k.

    Transferwise is a sizable business, and generally seems well-run, so I accept this risk for my own dollars and keep them in TW. But that's holiday spending money amounts - only you can make the risk acceptance decision for your business.

    Or, for example, if our account details or card details were stolen and all our money was transferred out of our account, are there any protections we wouldn't have with TransferWise that we would have with a high street bank?
    Originally posted by dparsons
    In this scenario, the protection should be the same, because the FCA's rules about when victims of fraud etc must be refunded apply to all payment providers, not only banks.
    Last edited by londoninvestor; 05-09-2019 at 6:23 PM.
    • COIAHLGW
    • By COIAHLGW 6th Sep 19, 4:35 AM
    • 73 Posts
    • 22 Thanks
    COIAHLGW
    • #6
    • 6th Sep 19, 4:35 AM
    • #6
    • 6th Sep 19, 4:35 AM
    Is the money still held in a Barclays account? The Transferwise sort code is now 23-14-70 for me.
    • Ro2124
    • By Ro2124 6th Sep 19, 10:15 AM
    • 15 Posts
    • 5 Thanks
    Ro2124
    • #7
    • 6th Sep 19, 10:15 AM
    • #7
    • 6th Sep 19, 10:15 AM
    Looking through the comments seems to me, correct me if I'm wrong, the only scenario one can lose one's funds or have problems with them, is if Transferwise goes bust and then Barclays also goes bust?
    That scenario seems pretty unlikely, so I guess Transferwise although not 100% safe the risk does seem to be minimal?
    • Heng Leng
    • By Heng Leng 6th Sep 19, 5:19 PM
    • 4,864 Posts
    • 1,596 Thanks
    Heng Leng
    • #8
    • 6th Sep 19, 5:19 PM
    • #8
    • 6th Sep 19, 5:19 PM
    Looking through the comments seems to me, correct me if I'm wrong, the only scenario one can lose one's funds or have problems with them, is if Transferwise goes bust and then Barclays also goes bust?
    That scenario seems pretty unlikely, so I guess Transferwise although not 100% safe the risk does seem to be minimal?
    Originally posted by Ro2124
    I'm not saying Transferwise is inherently unstable but say a system fails to moved across the funds correctly to Barclays or they are caught in transit and a number of other caveats.

    I use Revolut but wouldn't leave large amount of funds in it at any time and would carefully consider before transacting large amounts via it - due to it's lack of FSCS type protection.

    Also, although Barclays Bank UK is part of FSCS - ringfenced funds aren't covered by that scheme either.
    • Ro2124
    • By Ro2124 6th Sep 19, 9:21 PM
    • 15 Posts
    • 5 Thanks
    Ro2124
    • #9
    • 6th Sep 19, 9:21 PM
    • #9
    • 6th Sep 19, 9:21 PM
    Yes it is a bit of a dilemma. I have a Sterling account with quite a large sum in another European country and want to close that one. Could have transferred the amount to my current account I have in Germany in Euros. But I really want to keep it in Sterling for a while, because of the dismal state of the pound at the moment, which would mean losing a lot of money if converted to Euros.
    Opening an account in Sterling is very difficult unless you live in UK which I do not anymore. That's why I considered sending that large amount, a 5 figure sum, into my Transferwise borderless account but with this FCA problem have to consider the risks,
    In the old days would have been easier and one could use offshore Banks like Jersey or Isle of Man, but that's pretty impossible these days theyre mainly designed for large investors and they want ridiculous amount of deposit.
    So kind of stuffed at the moment.
    • dparsons
    • By dparsons 7th Sep 19, 9:33 AM
    • 3 Posts
    • 0 Thanks
    dparsons
    Thank you everyone for the thoughtful comments. This has given me a better understanding of the risks involved.
    • Heng Leng
    • By Heng Leng 7th Sep 19, 2:19 PM
    • 4,864 Posts
    • 1,596 Thanks
    Heng Leng
    [COLOR=#000000]Yes it is a bit of a dilemma. I have a Sterling account with quite a large sum in another European country and want to close that one.
    Originally posted by Ro2124
    Which European country are you talking about?

    If it's part of the EU/EEA then it will be protected up to €100,000 via that country's FSCS equivalent.
    • Ro2124
    • By Ro2124 7th Sep 19, 5:10 PM
    • 15 Posts
    • 5 Thanks
    Ro2124
    Yes, of course I know that. But there are other reasons for moving the money.
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