Bank Calls Customer Over Detected Bitcoin Transactions, Asking What They Were For

from the so-much-for-privacy dept

Wed, Oct 23rd 2013 1:35pm — Mike Masnick

One of the key reasons many people support Bitcoin is that it's supposed to be anonymous, like cash. However, Sean Percival today wrote about how he received a phone call from his bank, because "they detected Bitcoin related transactions," and they asked him if it was for personal use or business. And, no, it wasn't because of some concern about fraud. Percival clarified that it was just about Bitcoin, and said they wanted to know about "a spike in activity" with merchants like Coinbase. He later confirmed that it was not even from the fraud department. Percival does not name the bank, other than to say that it's "one of the biggies." It will be interesting to see if this becomes a regular thing, and whether or not it'll become yet another path for government officials to try to track Bitcoin usage.

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Filed Under: banks, bitcoin, sean percival

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Anonymous Coward, 23 Oct 2013 @ 1:46pm

Name the bank. They need to be called out immediately, before this spreads to other banks, and becomes en entrenched practice.
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Frankz (profile), 23 Oct 2013 @ 1:49pm

It may really be about Bitcoin. Or it really could just be about the bank checking on any activity that is outside his account's normal activity level, just the way they're supposed to do. Banks are required to file an SAR - Suspicious Activity Report, for such things. SAR is not to be confused with a CTR for $10k - Currency Transaction Report.
You can see the forms and their FAQ's here:
http://www.fincen.gov/forms/bsa_forms/
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Anonymous Coward, 23 Oct 2013 @ 1:54pm

I don't know why this is a surprise. Unlike the internet, the players in the financial ecosystem proactively guard against people abusing their system and (potentially) breaking the law. That want responsible corporate stewards are supposed to do. You people have this perverse idea that everyone should look the other way and claim it's not their problem.
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Anonymous Coward, 23 Oct 2013 @ 1:56pm

Response to: Anonymous Coward on Oct 23rd, 2013 @ 1:54pm
*That's what*
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Anonymous Coward, 23 Oct 2013 @ 2:00pm

Repeat after me: Bitcoin is not anonymous. It is loosely pseudonymous if you apply strong operational security and very few do that.
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Justus Ranvier (profile), 23 Oct 2013 @ 2:15pm

Re:
Wells Fargo does this.

I imagine it's because of fallout from Bitfloor. They probably received some regulatory flack from that so they put new policies in place to put extra scrutiny on anything remotely Bitcoin-related.
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Anonymous Coward, 23 Oct 2013 @ 2:24pm

Re:
The only question the bank should be allowed to ask is:-
'Did you make that transaction?.
Note they should not be asking what it was for. Similarly the law should not be entitled to ask what a transaction was for without some evidence it was for an illegal purpose, and they can get a warrant.
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weneedhelp (profile), 23 Oct 2013 @ 2:27pm

Alright everyone, lets practice the correct answer
NONE OF YOUR FUCKING BUSINESS.
-
"You people have this perverse" - Exactly who is "you people"? No fukwit... if I want to transfer 5k to someone to go buy a car/motorcycle/whatever its nobody's fukin business. Its absolutely priceless the hoops you have to jump through to get an actual error resolved so I don't think this is a loving protecting mother sort of thing going on.
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jimbobb (profile), 23 Oct 2013 @ 2:32pm

Bank of American
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Mike Masnick (profile), 23 Oct 2013 @ 2:36pm

Re:
I don't know why this is a surprise.

It can still be noteworthy, even if it's not a surprise.

Unlike the internet

Why make baseless insults and assumptions like that? It makes you look clueless.

the financial ecosystem proactively guard against people abusing their system and (potentially) breaking the law

Do you think that makes it okay to pry into how people spend their money?

You people

Who is "you people"?

have this perverse idea that everyone should look the other way and claim it's not their problem.

You should stop making assumptions. You know what it makes you look like. No one said that people should "look the other way."
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Anonymous Coward, 23 Oct 2013 @ 2:47pm

If it was me, I'd get my money out of that bank pronto.
What sort of bank calls their customers and asks them what they intend to do with something they bought? That's just weird.
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OldMugwump (profile), 23 Oct 2013 @ 2:54pm

I don't get it
Can somebody explain how the bank (any bank) can tell when a customer does Bitcoin transactions?

I don't mean transferring dollars/euros/yen to/from a broker (like Mt. Gox) - obviously they can see that.

But once you have Bitcoins in a wallet, how can they tell if there are transactions to/from a wallet stored in your computer/phone/whatever? I can't imagine how this is even possible. Unless the wallet itself is stored with the bank? (Who would do that?)
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Anonymous Coward, 23 Oct 2013 @ 3:09pm

Re:
I hope Rosie O'Donnell sits on your face.
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Christopher (profile), 23 Oct 2013 @ 3:13pm

Re: Alright everyone, lets practice the correct answer
The banks never seem to pull this on someone who would a) actually respond "It's for fuck you and go fuck yourself." and b) report it to Techdirt with full disclosure.

Someday the law of averages will catch up with them I guess.

-C
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PRMan, 23 Oct 2013 @ 3:17pm

Re: I don't get it
Coinbase (coinbase.com) allows you to buy and sell Bitcoins by ACH transfers from your bank account. They know the other side is Coinbase's bank address.

Because the Feds have cracked down on cash deposits into Bitcoin, Coinbase is now the easiest method to buy and sell Bitcoins.
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DandonTRJ (profile), 23 Oct 2013 @ 3:21pm

Re:
But the call wasn't inquiring into abuse - it was asking if the transaction was personal or business. It would be no less specious to call a customer who just pulled cash from an ATM asking details on where he's planning to spend it.
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Anonymous Coward, 23 Oct 2013 @ 3:24pm

And another Sheep rolls over...
hey guys nothing new here...

Just tell the bank whether it was a legit transaction or not then be about your business by telling them its none of theirs.
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Anonymous Coward, 23 Oct 2013 @ 3:39pm

Due to the laundering possibilities, drug laws have the banks reporting anything over $5000 in a single transaction. Most likely the bank called wanting some sort of answer to fill in on their stupid form.

Big government has gotten way to intrusive into what is your private business and anything they can remotely claim might have a tie to drug or terrorism is enough for them to want their nose in.
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Anonymous Coward, 23 Oct 2013 @ 3:51pm

Re:
"Or it really could just be about the bank checking on any activity that is outside his account's normal activity level, just the way they're supposed to do."

It wasn't the fraud department that called him, so... no.
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Anonymous Coward, 23 Oct 2013 @ 3:53pm

If bitcoin activity goes through a bank the feds know of it.
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Anonymous Coward, 23 Oct 2013 @ 5:32pm

Re: Re:
"I don't know why this is a surprise."

It can still be noteworthy, even if it's not a surprise.

I guess that's one of the "eye of the beholder things"

"Unlike the internet"

Why make baseless insults and assumptions like that? It makes you look clueless.

The level of responsibility enforced upon or assumed by internet players is a joke. And any attempts by those players to assume more responsibility or lawmakers to require it are met with the shill screams of grifters and freeloaders.

"the financial ecosystem proactively guard against people abusing their system and (potentially) breaking the law"

Do you think that makes it okay to pry into how people spend their money?

I don't think asking people to explain abnormal transactions is unreasonable. When I was building my own house, I used wire transfers to pay various contractors and suppliers several times per week. I was told by my bank that no further transfers would be allowed until I explained what was going on. So I did. Case closed.

"You people"

Who is "you people"?

Techdirtbags. Thanks for asking.

"have this perverse idea that everyone should look the other way and claim it's not their problem."

Please Masnick. You pretty much made your career excusing pirates and grifters claiming that any enforcement is the sole responsibility of law enforcement and the operators of these sites cannot be responsible for the misdeeds of their users. Try making that argument in the banking world. The degree of money laundering would make 1980 Miami look like a flea market by comparison.

You should stop making assumptions. You know what it makes you look like. No one said that people should "look the other way."

Willful blindness is the fig leaf that almost all of the grifters rely on. They know what is happening but look away because it would squeeze their cash flow to have to examine and act on unlawful activity going on under their very noses.
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Anonymous Coward, 23 Oct 2013 @ 5:56pm

Re: Re:
Doubtful she'd have the energy after she finished stretching your hole with her strap-on (Boogie Nights model).
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Anonymous Coward, 23 Oct 2013 @ 7:01pm

Re: I don't get it
He probably has received some bitcoins from an known bitcoin access exchange..
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Anonymous Coward, 23 Oct 2013 @ 7:02pm

Re: Re: Re:
Oh now I know who you are.
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OldMugwump (profile), 23 Oct 2013 @ 7:48pm

Re: Re: I don't get it
That at least makes sense.

So - the bank doesn't really know about _Bitcoin_ transactions - it knows about transactions between the bank account (in dollars) and a Bitcoin exchange.

That's totally different from what is implied in the original article - that banks (any bank) can detect when people exchange Bitcoins with other people.

I don't think that is practically possible. (I think it is theoretically possible, with a huge amount of computation, but not something trivial every bank can do.)
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OldMugwump (profile), 23 Oct 2013 @ 7:56pm

I think the summary is misleading
I think the summary of the article is misleading.

If a US person does any kind of international wire transfer using a personal account, the bank is going to ask about it. I think they're required to under money laundering laws.

I suspect this is all that happened here - the guy transferred dollars and got asked the usual questions (same questions he'd have been asked if he bought a house via international wire transfer).

Bank: I have to fill out paperwork about your transaction about...umm let me see...says "bitcoins". Personal or business? Etc.

Nothing out of the ordinary here.

(Personally, I don't think banks should be allowed - let alone required - to snoop this way. But I suspect this has nothing to do with Bitcoins in particular. Just the usual nosy snooping Feds, "Know Your Customer", etc.)
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Anonymous Coward, 23 Oct 2013 @ 8:59pm

Re: Re: Re:
"eye of the beholder" means something has a widely different meaning depending on who sees it. This is not an "eye of the beholder" kind of statement.

You're clueless, you always have been, and your comments on "internet players" are doubly ironic as you seem to go out of your way to post insulting misleading comments trying to convince us internet players of... something.

It isn't... when it's asked by the fraud department. If they don't think it's fraud of some fashion, they have no right to ask you how you spend your money. Suddenly making tons of wire transfers may be suspicious activity of fraud due to the sudden large expenditure. The fraud department will check with you (as they did with me when I had a sudden cash withdrawal in Las Vegas even though I'm nowhere near there.). No fraud department, no issue.

"Techdirtbags", stay classy.

You know, your argument would be alot more poignant if it didnt seem that law enforcement was willing to make up laws and break all forms of established legal procedure to go after these "grifters". It would be even better if regulatory capture didn't allow people to abuse the system in the first place, then maybe there wouldn't be so many "grifters" in the first place. Maybe you should go back to the prohibition and learn a thing or two.

Knowing something exists does not make one willfully blind. This has been debunked from you over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over.

The end.
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Anonymous Coward, 23 Oct 2013 @ 9:00pm

Re: I think the summary is misleading
Wire transfers aren't the same as buying something. They dont have to check when someone purchases drugs from a pharmacy in China or Canada.
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Anonymous Coward, 23 Oct 2013 @ 9:22pm

Re: Re: Re: Re:
"eye of the beholder" means something has a widely different meaning depending on who sees it. This is not an "eye of the beholder" kind of statement.

Whether this is noteworthy is highly debatable.

You're clueless, you always have been, and your comments on "internet players" are doubly ironic as you seem to go out of your way to post insulting misleading comments trying to convince us internet players of... something.

By internet players I mean the large companies that operate the in that ecosystem. Not you in Mom's basement. Seriously? "us" internet players? Don't make me laugh.

It isn't... when it's asked by the fraud department. If they don't think it's fraud of some fashion, they have no right to ask you how you spend your money. Suddenly making tons of wire transfers may be suspicious activity of fraud due to the sudden large expenditure. The fraud department will check with you (as they did with me when I had a sudden cash withdrawal in Las Vegas even though I'm nowhere near there.). No fraud department, no issue.

It was not the fraud department. Since you apparently have never made a wire transfer, you may be unaware that you (at least a consumer account holder) must personally go to the bank and fill out a form and identify yourself. That's because once the money is transferred, it's gone. The personal appearance part is what guards against fraud. They wanted to know what I was doing, so I told them.

"Techdirtbags", stay classy.

Obviously the shoe fits in your case.

You know, your argument would be alot more poignant if it didnt seem that law enforcement was willing to make up laws and break all forms of established legal procedure to go after these "grifters". It would be even better if regulatory capture didn't allow people to abuse the system in the first place, then maybe there wouldn't be so many "grifters" in the first place. Maybe you should go back to the prohibition and learn a thing or two.

There are grifters because the consequence of illegally monetizing the creative output of others is pitifully easy. I don't know why you mention prohibition, entertainment isn't illegal. You can entertain yourself pretty well by simply paying for it. Try it some time, you cheap fuck.

Knowing something exists does not make one willfully blind. This has been debunked from you over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over.

Oh please. If you seriously believe that Grokster, Isohunt, Kim Dotcom and others don't simply turn a blind eye to the illegal use of their services, then you're a bigger rube than I initially suspected.

The End

I somehow don't think so.
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Atkray (profile), 23 Oct 2013 @ 10:32pm

Several decades ago while a sophomore in high school I had to transfer $1500 from one bank where I had been saving it to a different bank with my free checking account. When I pulled out the cash they asked me what it was for and I naively told them the truth. Later that day when I was talking with my dad about it he said I should have told them I was going to buy dope.

Ever since, I've been waiting for a bank to ask me that question again...
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Anonymous Coward, 24 Oct 2013 @ 2:47am

Re:
I did this and when I did the teller asked me why. My answer was "When did my money become your property?"
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Ninja (profile), 24 Oct 2013 @ 2:49am

I'd simply answer "it's none of your business and for fraud control purposes I did made those purchases". Simple as that.
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Anonymous Coward, 24 Oct 2013 @ 3:32am

so, the option of telling them to mind their own business wasn't there? as long as the account didn't become over drawn, surely, what you do with the contents of that account is up to you (within the limit as far as the feds are concerned)
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Mr. Applegate, 24 Oct 2013 @ 3:42am

Re:
"If it was me, I'd get my money out of that bank pronto.
What sort of bank calls their customers and asks them what they intend to do with something they bought? That's just weird."
EVERY BANK already tracks all of your transactions. Many of them call it a "Feature" when they send you a statement that shows what you spent your money on. If you spend money using a Credit Card, Debit Card, Check, or even cash and use a "Rewards Card" you are being tracked. That information is sold to marketers, insurance companies...

While it hasn't come out yet, it wouldn't surprise me at all to learn that the NSA is slurping up transaction data too. After all it is "3rd Party" information (and it is more hay to search for needles in).

I am quite certain that the banks want to destroy Bitcoins, they are a threat to their business model.
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Faust, 24 Oct 2013 @ 9:52am

Re:
When the powers that be perceive a threat--anything that undermines their selfish interests--they typically "remedy" the situation with bullets, bombs and bloodshed.

Don't mistake your government for some caring benevolent entity. Don't confuse "law" with "ethical". That beast is not your God, it's not your father. It serves its own predatory interests and people like you are on the menu.
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Gene Cavanaugh (profile), 24 Oct 2013 @ 11:14am

Bitcoin question
Or maybe the bank merely wanted to know if it belonged in their business branch or their personal accounts branch - or is that to sinister to consider :0!
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John Fenderson (profile), 24 Oct 2013 @ 11:56am

Re: Bitcoin question
Not too sinister at all, but certainly too silly. Surely the bank -- who has enough information about the account to identify it, deposit funds to it, and knows who owns it and how to contact them -- also knows whether or not it's a business account without having to ask.
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Anonymous Coward, 24 Oct 2013 @ 12:54pm

They are just trying to comply with the law. AML (Anti Money Laundering)
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Cloudsplitter, 25 Oct 2013 @ 7:02pm

Re: Alright everyone, lets practice the correct answer
Very Well Said, None of your fucking business. If you are going from a hard money account in a bank to a bitcoin use a cut out like a prepaid card, why would you want a direct link back to your bank, really bad planning.
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Anonymous Coward, 5 Aug 2014 @ 3:20pm

the real question is - what do we say in order to keep our accounts active and not have the banks freak out? has anyone been able to answer these questions correctly to keep everyone calm and continue business as usual?
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