The Treasury and You

Sean-Paul has posted about the Providence man who upped his credit card payment, tripped a red flag, and had VISA send his name to Homeland Security.

I work in the financial industry, and despite being in Canada, I work in the US financial industry. So let’s talk a bit about this, because I’ve been involved with it on the other end. 9/11 led to a huge tightening of money laundering tracking. Before 9/11 you had to report payments of over $10,000 in cash or cash like instruments (money orders and cashiers checks, for example), and you had to report any payments that looked structured to avoid the $10,000 limit. (So, don’t send in 9,999.99 – you’ll get reported. Also don’t send in two 5,000 money orders a day apart.)

After 9/11 the rules were tightened. So, for example, if you normally pay your own bills but suddenly someone else sends in a check for your account, we have to question that. Know your customer was tightened significantly – in the old days if someone else paid your bills, we couldn’t care less most of the time – as long as someone was paying them, we were happy. Now the poor payment processers are constantly on the phone irritating customers, brokers and agents by saying “and who exactly is Mr. Smith? What is his relation to you?”

We also have to check all payments against a rather large list of people and companies. If your pattern of payments changes significantly we may have to report that (that’s what got the Providence guy). If money comes from any bank in a lot of countries, we have to question that.

The mistake VISA made was a simple one, and it makes me wonder if they really don’t like the new rules.

They told the customer. You’re not supposed to do that. So I wouldn’t be mad with VISA, I’d be mad with Homeland Security (and Treasury, and Congress.)

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Ian Welsh

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