imagine if some bank knowingly facilitated money laubdering, and needed to show they gave strong controls. What eould you do?
Thats right, you would close 10k minor accounts of random schmucks for 'suspicious activity', report 'job done' to the regulator, and continue your corrupt practices
And the reason for that is that if anybody knew that somebody was engaged in criminal activity, they wouldn't have their bank account closed, they would be arrested and their finances seized by court order. So the bank account closures only happen to people for whom there is not enough evidence to charge them with a crime. In other words, a ton of innocent people.
Conversely, the bank is not a law enforcement agency and has no real way to distinguish between the kind of criminals who know how not to be obvious and the aforementioned totally innocent people, and if anything the practiced criminals are the ones who know how not to trigger the fraud detection algorithms, unlike the innocent people.
So the criminals don't get caught and the government blames the banks for this, but the banks still don't have any good way to know who the criminals actually are, so all they can ever do is round up random innocent people to put on a show of punishing somebody.
The fraud is that law enforcement should be an obligation of the banking system and that fraud needs to be eliminated.
You won't have to imagine very hard, HSBC was caught laundering money, told they had to strengthen their controls, but ultimately all the Justice Department wanted was a small cut of the action in the form of fines and HSBC has been allowed to continue their corrupt practices even after being caught laundering money again and again (in addition to all kinds of other crimes). It seems like as long as they can pay the fines, banks are basically above the law.
GP says "monitoring transactions should not be sufficient to satisfy KYC" - of course monitoring transactions is required to satisfy AML, flagging any transactions indicates specific knowledge of them being suspicious, and failing to act in any cases where it was warranted will be used as proof of lax controls, with fines starting in the hundreds of millions.
The second time it's flagged for reason X+1, include 10 lines from rank 2 manager.
The moment you start use Zelle heavily, one of those zelle recipients is linked with suspicious activity, that's a problem (btw, Zelle is owned by big banks). Banks find so many things suspicious: many check deposits, many zelle transfers, low balances, many cash/money order deposits, asking for cashier checks, wires(both domestic and foreign), any crypto activity, being a public figure, names similar to those on OFAC list, etc. Basically, they want normal customers (4 pay stubs, paying 10 bills a month) or extremely wealthy clients. Otherwise, you don't fit the average profile, and whatever you do is construed as not being legitimate.
Of course they do. If they didn't have a reason, why would they do it?
I've never used a credit union and have had access to mobile deposits at everything from large multinational banks to small local ones for well over a decade.
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).