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HSBC strike a negative note

Just received a copy of an email from Dominic Thorncroft, Chairman of the UK Money Transmitters Association, that makes for interesting reading. 

It appears to be related to the issues the bank has faced with anti-money laundering fines in the USA, but the way the bank has handled the problem adds to a growing list of issues the bank has raised in recent years where decision making appears to be in the bank's, rather than the customer's, interest (think student overdrafts and Securekey).  

They need to tread the waters a little more carefully methinks.

Fellow money transmitter …

Many of you will be aware by now that HSBC bank has, without
any prior warning, taken a global decision to exit the MSB (Money Services Business) sector and to close
all MSB bank accounts forthwith.  Some firms have been given no more than
30 days to find an alternative banking provider.

We are sure that many of MTA members will have been
negatively impacted by this news – we believe this decision could effect at
least 100 PI (Payments Institutions)/MSB companies in the UK.

Whilst we cannot contest the bank’s right to take a
commercial decision, we can have concerns about the process and the
timing.   Giving MSB 30 days to find alternative banking providers is
asking the impossible and puts their business viability in serious
jeopardy.   There must be a question as to whether HSBC is treating
its customers fairly.  The FSA (Financial Services Authority) may have genuine concerns about whether the
safety of clients funds can be guaranteed during this process.

Nor can we assume that other banks in the MSB sector are
entirely comfortable about the HSBC decision.  In practice, we know that
banking in this sector is concentrated with a very few high street banks. 
These banks will find it operationally impossible to open accounts for all the
business they want to take on within the time scale imposed by the HSBC
decision. Additionally, no single bank likes to be in a position where it is
providing banking services to a disproportionately large section of the total
number of businesses.  And, of course, this situation cannot be in the
interests of consumers since a truly competitive market does not exist.

We must do more to encourage other banks to get involved in
banking the MSB sector – it is in the interest of the sector as a whole that
there is a wide diversity of banking provision.   As an association,
we would be pleased to hear if members are aware of new banks which are
providing services to our market.

We feel that it is important that the UKMTA communicates our
view both FSA and HM Treasury to emphasise how destabilising the HSBC decision
is for the payment market as a whole.  And to request that
legislators/regulators do what they can to mitigate the impacts.

We would be interested in any comments you may have – please
let us know as soon as possible (ideally by end of this Friday) so we can
contact the authorities with our formal opinion so they can take action


Dominic Thorncroft, Chairman, UKMTA




About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • james

    HSBC sent Funds for Salvatore Frieri Gallo from HSBC Swiss acct to HSBC Panama then HSBC Venezuela. This money was so Frieri and his brother and other brokers could buy 100 of million in Venezuela bonds illegally. Money would go to black money
    markets then buy bonds at deep discount sell them move money to Merrill Lynch Grand Valoro Swiss they never pay taxes in any country they do business. Salvatore is wanted by Colombian police for AML and fraud. He is hiding from the police in Roma. His name should be on Interpol list but he paid money to keep his name out of the system.

  • HSBC and other banks should be aware that they will be held accountable for their actions if not now then later and then they cannot hide behind that he said this and she said that. They should follow the laws of the country or they should be kicked ot of the country. All banks and entities who take advantage and loopholes in the law should be held responsible for their past actions even if they come up with stupid excuses

  • Government has failed to prescribe a simple set of actions the bank and the MSB can to take to get on with their business. Until government makes it an affirmative public policy goal to make sure licensed entities have full access to the banking system, and provide banks and MSBs with a pathway to “Yes,” this situation will only get worse.

  • Ricardo Jaoude

    We are being hit by this decision. I am a compliance officer and director of a MSB in London. It’s been extremely difficult to even start talks with the banks. There is only one bank in the market and is in the position of choosing who they will take onboard or not, and they will impose as much as they want in charges. This will make existing business to struggle due the lack of competition amongst the banks. This decision will force some MSBs to register themselves as agents of other companies if they still want to be in business (working on a profit zero margin) or close for good, as this situation is not commercially viable for anyone in this scenario. The situation is heading for something catastrophic. If they do not change their position I think HSBC should be held accountable for the financial losses these companies will suffer if the bank do not secure a safe transition for these companies that made profit for them in the past. They were naughty, they helped the bad guys and it is not acceptable to force the good guys in the sector to pay for their mistakes. This issue concerns me a lot.

  • Nick Hampton

    Can anyone suggest a bank that will accept a MSB in the UK? We have been told by HSBC that our account is being closed and we have talked to all the banks and nobody wants our business… can anyone help or know of a bank?