B2B Payments

HSBC Business Accounts Frozen After AML Misstep

HSBC U.K. has reportedly frozen some small business (SMB) bank accounts, according to news reports from Reuters.

The frozen bank accounts, which have occurred in the last two months, are a result of the broader effort to crack down on money laundering. HSBC was hit with an $1.9 billion fine in 2012, reports noted, after failing to catch money laundering activity in which criminals were using HSBC services.

Now, dozens of SMBs have reportedly been closed out from their accounts after answering questions from HSBC U.K. in its customer review initiative, reports said. Those questionnaires were sent in 2015.

The bank told Reuters there could be “an issue with how we’ve been communicating,” but assured it would correct any cases in which bank accounts had been frozen incorrectly. The publication noted that at least three company bank accounts were unfrozen after Reuters brought them to HSBC’s attention.

“Inhibiting an account is always a last resort, so to get to that stage we will have done everything we can to contact the customer and get the information we need,” said HSBC U.K. Head of Commercial Banking Amanda Murphy.

A total of 14 SMBs spoke with the publication, noting that they have lost access to their bank accounts, but, citing unnamed sources, reports said more than 30 have issued complaints with the financial institution about their accounts being frozen.

In one instance, David Johnston, whose company imports frozen avocados, said he received a letter from the bank earlier this month warning him that his foreign accounts would be frozen the next day. That meant Johnston could not pay his international suppliers. The business owner said the bank had not given him a set timeline for when the issue would be resolved until Reuters spoke with HSBC. The matter left Johnston’s company unable to make cross-border payments for several weeks.

In another U.K. case, Martyn Fisher owns a company that does business across Asia that also saw its account frozen by HSBC. In an interview with the publication, he said, “I should be the ideal business post-Brexit. I do nothing within the EU. I’m doing deals with all these countries that are supposed to be our trade partners after Brexit.”

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LATEST PYMNTS REPORT: MARCH 2020 B2B API TRACKER  

B2B APIs aren’t just for large enterprises anymore — middle-market firms and SMBs now realize their potential for enabling low-cost access to real-time payments and account data. But those capabilities are only the tip of the API iceberg, says HSBC global head of liquidity and cash management Diane Reyes. In this month’s B2B API Tracker, Reyes explains how the next wave of banking APIs could fight payments fraud and proactively alert middle-market treasurers to investment opportunities.

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