Bank transaction blocked as it may "violate international sanctions laws"

[J Newman]

A friend of mine who does various business/web development & marketing
gigs for online clients (usually varying in quantity from £10 - £1000)
got this message from her bank.

"We've suspended transfer 1234567890 reference "XYZ REMITTANCE" for a
sanctions review as it may potentially violate international sanctions
laws."


They asked for more details about who XYZ is, where they are located and
what the transfer is for.

At first she ignored the message because it sounded like a phishing
attempt, but upon further scrutiny she saw that it did indeed come from
her bank, and the client who was paying her said they had already done
so. So she answered their questions.

It seems like the client's name XYZ matched a red flagged entity and the
sum of a few thousand quid is clearly up there in sums involved for
international sanctions evaders to buy their ICBMs.

I had a number of questions:
1. Surely my friend's bank could have seen where the money came from and
that the origin financial institution & country also complies with
sanctions laws?

2. How did they go ballistic over just a name match and a thousand quid?

3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

4. It didn't cause damage because delays in receiving a thousand quid
for a self-employed person isn't so bad. But if it is an established
company with payrolls and other time-critical obligations, could someone
whose transactions were blocked sue the financial institution for
damages? Or would the bank just claim that it was due diligence
processes that needed to run their course?

5. There is only so much due diligence my friend can do on potential
clients. Can bona fide businesses become guilty by unwitting association
with people involved in international sanctions laws?

[Jeff Gaines]

Post by J Newman
2. How did they go ballistic over just a name match and a thousand quid?
3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

Whatever a bank may tell you its only interest is protecting itself. I
don't know what the penalty is for sanction busting but this bank clearly
has no plans to find out.

[Roger Hayter]

Post by Jeff Gaines

Post by J Newman
2. How did they go ballistic over just a name match and a thousand quid?
3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

Whatever a bank may tell you its only interest is protecting itself. I
don't know what the penalty is for sanction busting but this bank clearly
has no plans to find out.

Didn't the US fine Barclays several billion pounds for allegedly breaking
sanctions? Mind you they may be simply using these fines to reduce competition
against their banks, but you can't blame the banks for being careful.

[Pamela]

Post by Roger Hayter

Post by Jeff Gaines

Post by J Newman
2. How did they go ballistic over just a name match and a thousand quid?
3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

Whatever a bank may tell you its only interest is protecting itself.
I don't know what the penalty is for sanction busting but this bank
clearly has no plans to find out.

Didn't the US fine Barclays several billion pounds for allegedly
breaking sanctions? Mind you they may be simply using these fines to
reduce competition against their banks, but you can't blame the banks
for being careful.

Standard Chartered (and Deutsche Bank) also got into serious scrapes with
US authorities for sanctions busting and money laundering.

Some banks in the City are said to sail close to the wind which has helped
it acquire the nickname of "London laundromat".

[Jethro_uk]

Can bona fide businesses become guilty by unwitting association with
people involved in international sanctions laws?

https://en.wikipedia.org/wiki/Arms-to-Iraq_affair

[Andy Burns]

Post by J Newman
How did they go ballistic over just a name match and a thousand quid?

The potential penalty is sufficient to get their attention?

<https://www.gov.uk/government/publications/financial-sanctions-enforcement-and-monetary-penalties-guidance/financial-sanctions-enforcement-and-monetary-penalties-guidance#powers-given-to-hm-treasury-to-impose-penalties-for-financial-sanctions-breaches>

[GB]

Post by J Newman
A friend of mine who does various business/web development & marketing
gigs for online clients (usually varying in quantity from £10 - £1000)
got this message from her bank.
"We've suspended transfer 1234567890 reference "XYZ REMITTANCE" for a
sanctions review as it may potentially violate international sanctions
laws."
They asked for more details about who XYZ is, where they are located and
what the transfer is for.
At first she ignored the message because it sounded like a phishing
attempt, but upon further scrutiny she saw that it did indeed come from
her bank, and the client who was paying her said they had already done
so. So she answered their questions.
It seems like the client's name XYZ matched a red flagged entity and the
sum of a few thousand quid is clearly up there in sums involved for
international sanctions evaders to buy their ICBMs.
1. Surely my friend's bank could have seen where the money came from and
that the origin financial institution & country also complies with
sanctions laws?
2. How did they go ballistic over just a name match and a thousand quid?

The bank is given a list of sanctioned people. They are just doing what
they are required to do. There may be a de minimis limit that nobody
worries about, but evidently the sum involved exceeds it in this case.

Post by J Newman
3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

No. There is no allegation, just an enquiry. And, bearing in mind your
point 5 below, your friend *may* have broken the law.

Post by J Newman
4. It didn't cause damage because delays in receiving a thousand quid
for a self-employed person isn't so bad. But if it is an established
company with payrolls and other time-critical obligations, could someone
whose transactions were blocked sue the financial institution for
damages? Or would the bank just claim that it was due diligence
processes that needed to run their course?

Yes, it's due diligence.

Post by J Newman
5. There is only so much due diligence my friend can do on potential
clients. Can bona fide businesses become guilty by unwitting association
with people involved in international sanctions laws?

Absolutely, she could theoretically be in big trouble. I haven't heard
of lots of prosecutions, though.

Hopefully, she's in the business of designing knitting patterns, say,
rather than missile guidance software.

[J Newman]

Post by GB

Post by J Newman
A friend of mine who does various business/web development & marketing
gigs for online clients (usually varying in quantity from £10 - £1000)
got this message from her bank.
"We've suspended transfer 1234567890 reference "XYZ REMITTANCE" for a
sanctions review as it may potentially violate international sanctions
laws."
They asked for more details about who XYZ is, where they are located
and what the transfer is for.
At first she ignored the message because it sounded like a phishing
attempt, but upon further scrutiny she saw that it did indeed come
from her bank, and the client who was paying her said they had already
done so. So she answered their questions.
It seems like the client's name XYZ matched a red flagged entity and
the sum of a few thousand quid is clearly up there in sums involved
for international sanctions evaders to buy their ICBMs.
1. Surely my friend's bank could have seen where the money came from
and that the origin financial institution & country also complies with
sanctions laws?
2. How did they go ballistic over just a name match and a thousand quid?

The bank is given a list of sanctioned people. They are just doing what
they are required to do. There may be a de minimis limit that nobody
worries about, but evidently the sum involved exceeds it in this case.

For a bank to admit that there is a minimum threshold is problematic.
The law as someone else quoted doesn't make a difference between £1 and
£1M. The bank internally probably has a threshold for reasons of
practicality but for them to admit they do implies convenience factors
into legal compliance.

Post by GB

Post by J Newman
3. Should my friend get upset over the implied allegations that her
business is involved in international sanctions evasion?

No. There is no allegation, just an enquiry. And, bearing in mind your
point 5 below, your friend *may* have broken the law.

Post by J Newman
4. It didn't cause damage because delays in receiving a thousand quid
for a self-employed person isn't so bad. But if it is an established
company with payrolls and other time-critical obligations, could
someone whose transactions were blocked sue the financial institution
for damages? Or would the bank just claim that it was due diligence
processes that needed to run their course?

Yes, it's due diligence.

Post by J Newman
5. There is only so much due diligence my friend can do on potential
clients. Can bona fide businesses become guilty by unwitting
association with people involved in international sanctions laws?

Absolutely, she could theoretically be in big trouble. I haven't heard
of lots of prosecutions, though.
Hopefully, she's in the business of designing knitting patterns, say,
rather than missile guidance software.

No way, that customer in question needed help setting up a website for
online counseling sessions including a payment portal. Hardly
"interesting" stuff.

[billy bookcase]

No way, that customer in question needed help setting up a website for online
counseling sessions including a payment portal. Hardly "interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in need of
some "online counselling" ?


bb

[J Newman]

Post by billy bookcase

No way, that customer in question needed help setting up a website for online
counseling sessions including a payment portal. Hardly "interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in need of
some "online counselling" ?
bb

Surely you cannot be suggesting that someone who sets up an e-commerce
website for a counselor is responsible for the clients they counsel?

[billy bookcase]

Post by billy bookcase

No way, that customer in question needed help setting up a website for online
counseling sessions including a payment portal. Hardly "interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in need of
some "online counselling" ?
bb

Surely you cannot be suggesting that someone who sets up an e-commerce website for a
counselor is responsible for the clients they counsel?

It's the kind of counselling which might be on offer, which is the point.

More especially if its being offered by superficially benign, religious or
political extremists.

A bit of a step up from knitting patterns, IOW.



bb

[Jon Ribbens]

Post by J Newman

Post by billy bookcase

Post by J Newman
No way, that customer in question needed help setting up a website
for online counseling sessions including a payment portal. Hardly
"interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in
need of some "online counselling" ?

Surely you cannot be suggesting that someone who sets up an e-commerce
website for a counselor is responsible for the clients they counsel?

I wouldn't be surprised if terrorism legislation in theory makes
a counsellor potentially legally criminally liable if it turns out
one of their clients was a terrorist, regardless of whether they
knew or even could have known that they were.

[GB]

Post by Jon Ribbens

Post by J Newman

Post by billy bookcase

Post by J Newman
No way, that customer in question needed help setting up a website
for online counseling sessions including a payment portal. Hardly
"interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in
need of some "online counselling" ?

Surely you cannot be suggesting that someone who sets up an e-commerce
website for a counselor is responsible for the clients they counsel?

I wouldn't be surprised if terrorism legislation in theory makes
a counsellor potentially legally criminally liable if it turns out
one of their clients was a terrorist, regardless of whether they
knew or even could have known that they were.

We're going off into la-la land here, but theoretically the counsellor
could be helping to patch up troops with PTSD, so that they can be sent
back to the front line.

Anyway, hopefully, the OP can see why it might not be entirely obvious
to the bank, and why the OP's friend should not take too much umbrage
over this.

[Jethro_uk]

Post by J Newman

Post by billy bookcase

Post by J Newman
No way, that customer in question needed help setting up a website
for online counseling sessions including a payment portal. Hardly
"interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in
need of some "online counselling" ?

Surely you cannot be suggesting that someone who sets up an e-commerce
website for a counselor is responsible for the clients they counsel?

I wouldn't be surprised if terrorism legislation in theory makes a
counsellor potentially legally criminally liable if it turns out one of
their clients was a terrorist, regardless of whether they knew or even
could have known that they were.

Isn't there already an obligation on counsellors, therapists and all the
other potential recipients of inside knowledge to report anything *they
regard as credible* to "the authorities" ? Certainly there is no real
concept of privileged communication in English law. No matter what people
think should happen we know that judges rarely exclude unlawful evidence.

For some reason the US case around Samuel Mudd springs to mind. (I could
bask in the fact that knowing that makes me sound like a devout student
of historical legal cases. The reality is I saw a TV movie in the 80s
about it ...)

[Jon Ribbens]

Post by Jethro_uk

Post by J Newman

Post by billy bookcase

Post by J Newman
No way, that customer in question needed help setting up a website
for online counseling sessions including a payment portal. Hardly
"interesting" stuff.

Whereas ne'er do wells, of whatever pursuasion, might not also be in
need of some "online counselling" ?

Surely you cannot be suggesting that someone who sets up an e-commerce
website for a counselor is responsible for the clients they counsel?

I wouldn't be surprised if terrorism legislation in theory makes a
counsellor potentially legally criminally liable if it turns out one of
their clients was a terrorist, regardless of whether they knew or even
could have known that they were.

Isn't there already an obligation on counsellors, therapists and all the
other potential recipients of inside knowledge to report anything *they
regard as credible* to "the authorities" ? Certainly there is no real
concept of privileged communication in English law. No matter what people
think should happen we know that judges rarely exclude unlawful evidence.
For some reason the US case around Samuel Mudd springs to mind. (I could
bask in the fact that knowing that makes me sound like a devout student
of historical legal cases. The reality is I saw a TV movie in the 80s
about it ...)

Well certainly if a patient comes to a therapist and says "Can you help
me with the incredible stress I'm feeling due to the terrorist atrocity
I'm going to commit next week, in which hundreds of people will die?"
then I expect the therapist is supposed to tell somebody. But above
I was proposing that the patient hadn't said anything like that, and
the therapist had no way of knowing they were a terrorist.