Banks keep shutting down your exchange? - lessons from a Ponzi scheme

[jago25_98]

 I've been investigating a ponzi scheme that was run through ordinary bank accounts.
 
One thing that surprised us was how the various banks they used didn't investigate the large payments coming in&out of the perpetrators accounts. Further, the FSA failed to act for a long time.

 Compare this to Intersango. They've gone through a ton of banks, each time the bank investigating for fraud or money laundering and each time the bank isn't allow to even tell the customer why things aren't working properly.

 What can we conclude?

 If you have a minimum transaction of £1000 and less than 2 payments per month from the same depositor you'd be acting in the same way as this guy was and there might be less problems.
 I don't know the frequency of transactions and size of deposits for the various exchanges but I expect there are plenty of people doing £50 at a time and then adding a bit more as they feel confidence. That might be the sort of thing that triggers the automatic fraud detectors.

 The other thing about the Ponzi was that being a Ponzi people tended to pay in but not take their money out. That also could be another factor in difference between the way that I have seen fraud detection work. Some people did take cash out from time to time but that volume would have been lower.

 

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[greyhawk]

Thanks for the lesson on how to run a ponzi undetectederer. I'm off to the lending forums.

[repentance]

Banks aren't required to have in place mechanisms for detecting ponzi schemes.  Their fraud detection algorithms are designed to detect people trying to defraud the bank or fraudulently using the accounts of their customers.  While their anti-fraud measures may uncover people defrauding the public if the transaction patterns of the account resemble those of money laundering, terrorism financing or other designated financial crimes, such a discovery would be incidental.

That might be the sort of thing that triggers the automatic fraud detectors.

The transaction patterns of the exchanges are much more likely to be flagged by the bank as possible money-laundering activity than possible fraud.  The exchanges themselves have algorithms meant to detect possible fraudulent activity.