Detail oriented

Ed Fine's blog.

How BofA Froze My Account for Supporting My Children

My open Dear Jane letter to Bank of America

Dear Bank of America,

Your MSB department believes I am a wicked money launderer or something, so you froze my personal account. If I hadn’t been paying attention, it could have been very nasty indeed, but I drained my accounts and left you only $27.08 in the one you subsequently froze. Don’t spend it all at once.

Apparently, my evil scheme was sending monthly child support to my kids in South Africa through XETrade. (By the way, I’ve been doing that since 2005. Oh! The humanity! This is an act that will live in infamy.)

I tried to tell you. I wrote, I called, but you simply ignored the facts.

So, goodbye. I’m breaking it off with you after 17 years. I’ve closed all my accounts with you, not just my personal one. Don’t call, don’t write. I’m not angry or hurt, I just can’t leave my money with you because I can’t trust you any more.

Regards, Me.

The sinister Operation Choke Point

How, you may ask, were my nefarious activities (pfft!) finally exposed after a decade or so?

A new Bank of America computer system, I was told. And I learned about the strong arm tactics of the United States Department of Justice. And the sinister Operation Choke Point.

And… well, if you have the time and interest, here’s the back story.

The back story

I develop software for a living. Have done for 30 years or so, and I love it. In 1997 my dream of living and working in the USA came true, and I left South Africa together with my wife and child.

One of the first things I did when I got here was open a checking account with Bank of America. What a great name - it’s America’s Bank, right? My heart swelled with pride.

Fast-forward to late 2003. We all get our permanent residence cards, but my marriage is sadly over (amongst other things, immigration is hard on families). My wife and I negotiate a marital separation agreement in which I commit to sending monthly child support payments, helping with medical expenses, and so on. She heads back to South Africa with our two children. It is a sad time.

Wire transfers tedious in 2003

Initially I pay using wire transfers, but to do this, I need to go into my Bank of America branch every month and fill out a form. It also costs more than I think reasonable.

But the Internet quickly matures and in mid-2005, I sign up for XETrade. Now I can send my child support payments online at any time, for less money, at my convenience. I get better forex rates, which is good for my kids. XETrade gets paid via direct debit from my Bank of America personal checking account.

From 2005 to 2015 I send payments through XETrade every month. I also send extra money for things like birthdays and Christmas; to pay for nursing care for my late mother; and for my elder son’s college costs.

Everything is copacetic. And then it isn’t.

The bank loses its mind

In November 2015 I get a form letter from Bank of America. My personal account activities apparently include some that are “consistent with activity commonly associated with that of a Money Services Business (MSB).”

I don’t know about you, but I’d never even heard the term “Money Services Business” until then.

The letter goes on to warn that unless the innocuously-named 8-page Customer Data Form for MSBs is filled in and returned within 30 days, my account will be frozen and closed.

I lose my mind

At that instant, I take the letter seriously. Actually, I kind of lose my shit. For good reason, as it turns out.

The Customer Data Form for MSBs makes no sense to me. It asks questions about “the business” which, of course, I cannot answer, because “the business” does not exist.

I call MSB Customer Service and speak to a “Kim”. I explain that I have no clue what they are talking about and can’t fill in the form, and why are they targeting me like this?

Kim tells me that my account has transactions with Custom House, which apparently raises flags.

“Custom House…?” I rack my brains. Then it hits me: XETrade is a DBA of Custom House. No problem! I can explain everything, and it will All Be Ok(tm).

I describe how I use XETrade to pay child support to my boys in South Africa. I ask how I am supposed to fill in a form to which there are no answers, and she instructs me exactly which boxes to fill in and what to put in there.

I write a covering letter and fax the whole 10-page shebang to the MSB Fax Line. I fax it at least 3 times to make sure it doesn’t get lost.

Whisky Tango Foxtrot, Extended Edition

I get a letter from Bank of America dated November 17 2015, thanking me for the documentation and inexplicably, mind-numbingly, stupefyingly, jaw-droppingly concluding that: “your business activities qualify, under federal guidelines, as a Money Services Business”. Did they literally not get the memo?

It includes a page from my completed data form, advising that I need to provide some extra information, failing which they will freeze my account.

I mean, wtf, right? Wtf,f,f,f,f?!!

At this point I realize that I have already lost the battle. Nothing I say or do that doesn’t involve an army of high-priced lawyers and Scrooge McDuck’s bank vault full of $$$ is going to make any difference.

I go into damage control mode.

I immediately open personal and business accounts at a local credit union and transfer most of my money from Bank of America to the new accounts. I leave only enough to pay outstanding bills and upcoming ACH transactions, and start the tedious process of changing all the ACH details, bill payments, and so on, to use my new accounts.

Now I wait to see what Bank of America does. I fully expect it will freeze my account without further notice.

It doesn’t disappoint me.

Baby, it’s cold in my account!

On Friday, December 18, I get notified via email that my Bill Pay on my personal account has been suspended. I assume this is because my account has been frozen, as threatened. There is no other notice that my account is frozen. Nothing.

The next day, I call Bank of America customer service. The representative confirms that my account is frozen until I return the required documentation. I politely and calmly tell the representative that it will stay frozen until the end of time, because I am never sending in the documentation. I explain the situation and decline all offers to “fix” it - it’s just blowing smoke up my ass, anyway.

I close all my Bank of America accounts and agree to let them mail me cashier’s checks for anything left in the accounts. I don’t care even if they take it all; it’s worth the remaining $100 to me to have the satisfaction of ending the relationship on my terms. I know Bank of America doesn’t really care about my tiny little account, compared to the impending wrath of the mighty US Department of Justice should they not kick me to the kerb.

The Mighty US Department of Justice Flexes Its Muscles

Why did it take Bank of America more than 10 years to catch me in the unforgivable act of paying my child support every month? And why is it doing this in the first place?

It turns out that Bank of America recently installed a new computer system that flags “suspicious activities” in customer’s accounts. According to what I read, it was effectively strong-armed into doing this by the US Department of Justice (and FinCEN).

Which brings me to the sinister Operation Choke Point.

Operation Choke Point

Operation Choke Point is

…the U.S. Department of Justice using pressure on the financial system to conduct “a massive government overreach into private businesses that are operating within the law.” bizzyblog

Let’s not mince words: a program that was built upon the goals of stopping financial fraud has devolved into a massive government overreach into private businesses that are operating within the law. … The intention of the government, it would seem, is to make the banks unwilling to deal with the government harassment and simply cut anyone in those industries off from the financial institutions. Nobody is happy about this. techdirt

Which legal private businesses are targeted? Those in “high-risk merchant categories”.

“High-risk” merchant categories

This is the DOJ’s shit list. Where do you think I fit in to this?

  • Ammunition Sales
  • Cable Box De-scramblers
  • Coin Dealers
  • Credit Card Schemes
  • Credit Repair Services
  • Dating Services
  • Debt Consolidation Scams
  • Drug Paraphernalia
  • Escort Services
  • Firearms Sales
  • Fireworks Sales
  • Get Rich Products
  • Government Grants
  • Home-Based Charities
  • Life-Time Guarantees
  • Life-Time Memberships
  • Lottery Sales
  • Mailing Lists/Personal Info
  • Money Transfer Networks
  • On-line Gambling
  • PayDay Loans
  • Pharmaceutical Sales
  • Ponzi Schemes
  • Pornography
  • Pyramid-Type Sales
  • Racist Materials
  • Surveillance Equipment
  • Telemarketing
  • Tobacco Sales
  • Travel Clubs

Money transfer networks considered harmful (by DOJ)

Yep - Money Transfer Networks. I committed the cardinal sin of using a Money Transfer Network to send support payments to South Africa, namely Custom House (DBA XETrade), a Canadian company. It seems that Custom House’s operations in the USA are handled by Western Union.

But… but… so what??

According to an informed source, it’s guilt by assocation. I was told that shady underworld types linger around Money Transfer Networks, such as Western Union (Custom House’s US partner). Hey, I’m not knocking Western Union, just passing on what I was told.

Steaming pile of crap

What should I have done? According to the same informed source, what other “respectable” people do: send money using the bank’s own wire transfer services. So that’s what I am doing now via my new credit union. I have to phone the credit union and give the details of my ex-wife’s bank account number, SWIFT code, and so on, every time. What - can’t they just save the information? Isn’t that why we have, you know, computers? The response was that it’s policy to have me call in and repeat all that data, every time, and have the phone call recorded.

Isn’t this a steaming pile of crap?

A cautionary conclusion

Who knew about all this? I certainly didn’t. But even so, I should be able to send my (legitimate) money to my (legitimate) family overseas any way I like, right? The land of the free and all that?

But if I do it again, the same crap will come down on me, so I dare not.

I have been warned, and hopefully, so have you, dear reader.

Bank of America MSB Customer Service: 1 (800) 213-0236