Topic: Bank account opening rejected - seeking advice. (Read 4436 times)

Ok, considering the following scenario.

A business wants to open an bank account with a certain bank.
The business and the people running that business have a good credit standing, and no run-ins with the law.

The business the company want to conduct is legal in that particular jurisdiction. In this case it's obviously dealing with bitcoins, but let's say for the sake of argumentation that it could be anything.

The bank rejects the application and says it will not discuss the reasons for the rejection.

How is this different from being rejected from purchasing something in a hardware store, or a computer store.

For example, if I was a muslim, wearing a turban on my head, and I entered a computer hardware store, I walked around the store, and looked at different computers, and finally decided to buy a laptop, then the manager came, and he hates muslims, and he just states: "We can't sell you this laptop, sorry, you're not wanted in our store".

That would not be legal in most countries, would it ? I understand a customer may be rejected from purchasing anything in a store if the customer has an anti-social behaviour, but as long as the customer behaves in a normal way, and just want to buy some merchandise, you can't really reject him one way or another, can you ?

And then back to the bank example. There could be a racist guy working with account applications, and he would regularily reject applications from those with strange sounding names, so Muhammed Al Banjar would be rejected, while Kurt Siegermann would not, that would clearly be illegal, would it not ?

Then let's extend it another step. What if the clerk rejecting the application were a prude, and had a certain dislike for anything related with the adult/porn business, so a business selling legal items, for instance sex-toys (dildos etc.) would be rejected just because the clerk in question was uncomfortable with it, or perhaps even the entire bank was uncomfortable with such customers. Would it be legal to just reject such business ?

Now, it's established that bitcoins is not illegal in the jurisdiction were the bank denied the bank account opening, and the company wanting to open the account has been perfectly candid about it's business, and there's nothing nefarious going on, is this still legal behaviour by the bank ?

In the muslim with the turban example above, we could imagine the man just going into the store, but since this was a racist store, he might already be rejected while entering the store, and when he asked why, he would just receive the response: "You are rejected for undisclosed reasons, Sir. You have to leave." Would that not be basis for a law suit ?

Or instead of the racist rejection, it could just be an overzealous manager trying to avoid anything that could remotely be dangerous, so seeing a muslim with a turban could create fears (ridicolous, I know) that the he would use any merchandice purchased for terrorist purchases. Ie. a laptop could be used to write and transmit plans for acts of terrorism, or a camera could be used to take pictures of a target and so on. This is completely far fetched, and stupid, but I've seen so many silly things happening in real life, so I wouldn't be surprised if someone actually did this.

But my final point is that, as long as the bank can't prove that you're criminal, have no reason to belive so, you have a good credit rating, no outstanding issues with law enforcement and the legal system could they still reject you, and would that be legal ? That doesn't look good with me. Also, when the issue of money laundering is brought up, and the company wanting to open the account clearly explains it's business model, and even offers to provide audits and complete transparency, does the bank still have a basis for rejecting the account opening ?

Not that the company in question intends to do any money laundering, but if they did, would that not be an issue between the company in question and law enforcement ? How could the bank possibly be blamed for this ? At the same time, most banks do business with other major banks, and as we know, most major banks have been involved in serious illegal acts, and many of them have paid hefty fines, yet these banks do not stop working with each other, yet they aim at the small businesses, instead of stopping to do business with the major players that defraud for hundreds of thousands and millions of dollars/euros.

While I understand that a random company does not have the god given right to do business with a certain bank, I wonder if there's any reason that a bank account opening could be rejected when the company in question clearly are not into nefarious business practises and is perfectly willing to cooperate and answer any concerns the bank may have.

Another example, what if I was a bank manager, and I hated guns. I could then instruct everyone at the bank to reject any account applications from businesses that deals with guns, be it soft-guns, air-guns, replicas, whatever. I just hated guns, and wouldn't have anything to do with anyone that was involved in said business. I could claim that guns could be used to kill people, and that my bank didn't want to be involved with such businesses, would that be a legal thing to do ?

This could really be extended to anything, so bank account applications could be rejected completely at random. We can't simply live in a society where this is how you do business. For instance, there are people with various sexual preferences, or other particular interests that are far outside the scope of what I want to deal with, but a company can't just reject business with such people because they have certain interests.

Doesn't most countries have some kind of legislation that governs how financial institutions deals with customers, or is this completely inregulated, so they can act like gorillas and block anyone they don't like from entering the door ?

The problem lies not in the rejection itself, but in an unjust rejection that is not explained fully. I think that's extremely arrogant and unprofessional. Now, if the bank said: "Look, we have some objections to the kind of businesses you're running because [fill in reason], then this could be discussed, and the company trying to open the bank account could either accept this, or try to convince the bank that they should accept our business anyway."

I lolled.

It depends on how your business relates to Bitcoin, and more importantly on whether you will store other people's money on their behalf.

Again, it depends on your particular business. As with anything, telling the truth is usually the safest.

Not really, I'd suggest picking a bank branch that's physically close. It always help to be able to just walk in.

@davout

You obviously have a great experience with the bitcoin-central success and the whole interaction with the banks,
so can you please share your insights about what people should tell banks when trying to open a business account for a bitcoin related business?

What is the safest thing to tell as a reason for opening the account without falling into technical details or the usual misunderstandings

Any European banks you would suggest maybe?

You might want to get your facts straight.

The judge telling the CIC to keep the account open was only before the court could actually settle the matter by hearing both side's argumentation, which basically went like this :

CIC : We want to close their account because they're operating a business for which European and French regulations make a license mandatory.
MTGOX : We don't need a license for keeping people's funds on deposit.
JUDGE (to mtgox) : are you fucking kidding me ?

The case had *nothing* to do with Bitcoin, it had to do with operating an unlicensed wannabe fiat bank, it would have been the same if mtgox was operating a trading platform for say... magic the gathering playing cards.

And just because they managed to open a bank account in Poland doesn't make them compliant with European regulations, it's only a matter of time before that account gets closed, for the exact same reasons.

Yes, but companies in France are required by law to have a bank account, so the judge also said that bank has to re-open the account.
Unlicensed fin. business is different story.

Also, try banks in Poland. They are usually more bitcoin-friendly.

They got bitchslapped by the judge for running an unlicensed financial business.

The thing with MtGox was a totally different story, they actually had an account opened and had bunches of money in it, and they had to sue to get all their money back when the account was closed on suspicion of money laundering.

MtGox had the same troubles with that French bank back in 2011. They sued and Idk how that evolved. YOu could learn more if you did some research in that direction.

Cheers and good luck

Yeah, we had the same problems with three different banks. Because bitcoin and tor and drugs and anonymous.

Until my business takes off, I'm just going to do any current financial transactions through my personal account.

For how long You expect Bitcoin to remain legal or only a niche geek thing that no one uses? The legal system are well known to goatse people running businesses that were legal, than change something in laws and make a show trial of the business owners. eGold, scat porn (lol!), some guy printing silver coins whatever he was called, operators of hosting services, security researchers, the list is endless.

Might be ok for personal use from time to time if one wants to remain anonymous but I wouldn't risk it for a legitimate business.

Just ask some homeless person or drug addict to open bank account for you and dont tell the bank for what you are going to use the acc. Works every single time.

Mentioning Bitcoin as a currency is a bad idea - for the sake of safety & simplicity just say it is a mean of payment like Paypal or Western Union.

A lot of financial institutions are unlikely to trust a relatively unknown currency like BitCoin. Also, you mentioned you were in Europe? I'll bet most banks are on an even higher alert now due to the recent concerns with UBS and Wegelin & Co.

Generally speaking, unless you live in a country where your right to a bank account is legally guaranteed, your only option is to try another bank.  All banks are going to make a risk assessment of your business (they're required to do so both initially and on a continuing basis) but some may have a higher risk tolerance than others.  Banks don't really want customers who require a lot of maintenance (including enhanced due diligence) unless they're extremely profitable customers for the bank.  For the most part, general banks want high-value, low-maintenance customers rather than "every customer they can get".  Remember that to their idea of a "big" customer and yours are likely very different.

Don't lie to them about the nature of your business - it's not worth the possible repercussions and you'll probably end up under all sorts of AML-type scrutiny which you don't need.

It might be worth paying a financial advisor to recommend boutique banks which are less risk averse if you find yourself getting rejected by "name" banks.

You're best option is to try a smaller branch or bank. I know I could easily get approved by a smaller bank rather than a larger national bank.

And definitely say virtual currency, token or virtual coins. Bitcoin has gained a bad rep from those using it to buy illegal items and money laundering.

Although it would feel good to name and shame, I'm not sure if there's any point to that here. Those interested in knowing which bank it is, please send me a pm, and I'll let you know. I have already received a lot of good advice, also on pm, so thank you to everyone that contributed.

I'd like to know the name of the bank, these is a small chanse I have an account in it. Should this be the case I will definetley swap over to another bank.
[edit] ..and obviously tell them why I am leaving.

Thanks for your advice. Yes, what you say all makes sense.

Thank you.

I have found (here in Uk) that banks vary enormously even within the same bank from branch to branch on the answer to a simple question like please may I open an account or have a loan.

In general my advice would be do not waste your time with the bank that has said no, but pick another branch preferably in a well-to-do area. Where I live, the bank is down at heel, under staffed and has many not so well of customers queueing all the time. In such an area, the bank is probably just kept so they can say they have a branch, probably on average the less actual business they do the better!!

Go to a well-off area and to do well the bank wants to do as much business as fast as possible. You'll probably be seen even without making an appointment and they will be keen to give you an account.

Do not mention bitcoins: the bank will not understand. You can talk about internet tokens of value and differential rates. Of course you will comply with any money laundering regulations, but you do not want to be discussing that before you even start!!

 

Which bank was it ?

Are you located in the same country as the bank you want to open an account with ?

Yes. They have no obligation to start a business relationship with you, neither do they have an obligation to motivate or discuss this fact.
Worse, they are legally required to not discuss any suspicion of ML when they make a suspicions reports to their overseeing body.

Yup.

Find another bank, present the business under a different light that doesn't put all the focus on Bitcoin perhaps.

To achieve what exactly ?

Why would they lose their time if they have already made a decision. They have a business to run after all.

Work harder, go knock on more doors.

None. Because your definition of "sense" is not the same as theirs

In the US race is a protected class, "Bitcoiner" is not.

The banks actions are likely legal.  They don't guarantee they will open an account for all people at all times.  It would be like asking if getting denied for a loan is legal.  
It sucks but aside from paying a lot for lawyer for a case you are almost certain to lose your only option is to try another bank.

BTW: the law has nothing to do with common sense.  Nothing.  Common sense says what the bank did was stupid and arrogant.  That doesn't make it against the law though.  If being stupid and arrogant was against the law banks would have been deemed illegal a long time ago.

Obviously I am not a lawyer, so I have nothing but common sense to work on.

The facts:

1. Legitimate business (Company) run by legitimate individuals. Both business and individuals have clean sheets in regards to any run in with the law.
2. Being honest and upfront about dealing with bitcoins as an integrated part of the business model.
3. Willing to work with the bank, and to explain in detail any part of the business, or being willing to provide any auditing necessary, and to comply with the demands they'd put forth.

The action:

Company applied for a bank account with an European bank. Application rejected, and company was told that the rejection could not be discussed in detail.

End result:

Bank is unwilling to discuss the matter, but it has surfaced that there are fears of 'money laundering' that's the reason for the rejection. Company has told the bank that
it is willing to provide full disclosure in regards to the flow of funds, and that any bitcoins purchased are obtained through legitimate bitcoin exchanges after wiring money
to said exchanges through the ordinary banking system.

Seeing at the same time how the same bank willingly cooperates with a lot of the banks that has recently been in the press for very serious cases of money laundering and
other ways of mischief, it's odd that they see a small Company as a threat, and reject to do business with it.


Is this at all legal ? As long as the bank can't prove that the Company has done anything wrong, and apparently has no reason to be of this opinion, as long as the Company is willing
to cooperate, can the bank just reject a customer like this ? The most annoying part is that the bank will not discuss the matter with the Company.

In old america, some stores used to have signs saying: "No blacks allowed". It seems some banks have signs these days saying: "No bitcoiners allowed".

What can a small Company do about something like this. Obviously launching expensive lawyers at the bank is not an option.

What bugs me, is the fact that they won't even listen to what the Company has to say, they just made their decision, and that's that. Yet they happily accept the business of other
banks that defraud for millions of euros..

The end question will be, what can be done about the issue, and is there any point in trying to hammer any 'sense' into them ?