Using a separate bank account for Bitcoin income

[TheFootMan]

A friend of mine had his bank account shut down, and had to move his own and his wife's account and the mortgage too, the bank essentially said they did not want his business.

Interesting about the mortgage.  I'm assuming the bank was just servicing the mortgage and sold it off long ago to Fannie or Freddie.  You would think there would be some sort of contract language where they can't just stop servicing the account without cause.  I don't think another bank would just pick it up like that as they probably don't make much if anything off doing so.

I've learned that contracts basically means nothing. The major player can essentially do whatever they want and break any rule and regulation at a whim. They know most people will not fight them through the legal system.

If a bank shuts down your account and don't want to service you whatsoever, do you move everything to a new banks, or do you start a legal process that could take years? Most normal folks don't have the desire to waste resources on such processes.

What the contract says has next to no value, big companies and state entities always do whatever the hell they want to do. You could always point to the contract and said they've breached their promise, but at that point, if they're not cooperative, what else could you do ?

You could sue, and perhaps you'd even win, but the process would take a lot of time, and take a lot of resources from you, that you could spend on other more constructive things.

[Phil21]

For all those that state their "bank manager doesn't care" or "loves them" etc...  Watch out.

I've been peripherally involved with high-risk banking for quite some time now, and this is *always* the case.  A small time manager, VP level maybe, loves your business since it means great numbers and high margin for him.  He'll try to get more of it even.

Until his higher ups tell him to shut it down.  At that point, your bank manager who you thought was your best bud who had your back won't last an instant protecting you (he might push back once since he doesn't want to lose the numbers, but that will last a couple days at most).  Doesn't matter how he explains your business, how you've been a loyal customer on the up-and-up - you're gone either way and you have zero say in the matter.

And when they shut down accounts, they generally don't do it "nicely".  They'll make you fight for any dollars left in the account, and you'll be lucky to actually get any of it back.  Get a lawyer, and expect to be without those funds for up to a year.

So yes, if you run a bitcoin related business I highly suggest getting a completely unrelated account for those transactions at a completely unrelated bank in case the worst happens.

Remember - in the US when it comes to banking, you have almost zero rights.  The bank will be able to freeze assets at a whim, and you will need substantial legal services to retrieve any of those funds in some cases.  I've seen companies ruined over a bank deciding they no longer wanted to service a merchant account due to the high-risk (politically or financially), and freezing millions of dollars of assets long enough so the company could not make vendor payments.

[super3]

Are their any banks US based or worldwide that are Bitcoin friendly by policy?

[CurbsideProphet]

A friend of mine had his bank account shut down, and had to move his own and his wife's account and the mortgage too, the bank essentially said they did not want his business.

Interesting about the mortgage.  I'm assuming the bank was just servicing the mortgage and sold it off long ago to Fannie or Freddie.  You would think there would be some sort of contract language where they can't just stop servicing the account without cause.  I don't think another bank would just pick it up like that as they probably don't make much if anything off doing so.

I've learned that contracts basically means nothing. The major player can essentially do whatever they want and break any rule and regulation at a whim. They know most people will not fight them through the legal system.

If a bank shuts down your account and don't want to service you whatsoever, do you move everything to a new banks, or do you start a legal process that could take years? Most normal folks don't have the desire to waste resources on such processes.

What the contract says has next to no value, big companies and state entities always do whatever the hell they want to do. You could always point to the contract and said they've breached their promise, but at that point, if they're not cooperative, what else could you do ?

You could sue, and perhaps you'd even win, but the process would take a lot of time, and take a lot of resources from you, that you could spend on other more constructive things.

I can understand this for a demand deposit account, it's relatively easy to transfer this to another bank but for a mortgage (which if conforming is sold after booked) is a bit different.  The bank is basically out of the loan so to speak and has sold it off and is just acting as a payment processor.  I don't know what type of benefits they receive for this but it seems like another bank wouldn't be all that enthusiastic to take that responsibility on.

[BCB]

https://bitcointalk.org/index.php?topic=189917.msg1968419#msg1968419

[TheFootMan]

What if you make two accounts:

Account A with bank 1.
Account B with bank 2.

Both are unrelated to your personal accounts with personal funds.

If you do exchange business and have funds sent to Account A with bank 1, then once the balance of that account reaches say 2K USD, transfer the remaining funds to account B with bank 2. In the event you receive a fradulent transaction, or there is a problem, there would be enough money in account A with bank 1 to cover it (reversal or whatever), and even if they froze your money, you would still have the majority of your assets in Account B with bank 2.

Would that work? I guess if there was a couple of illegitimate transfers of say 300 and 450 USD at account A bank 1, bank 1 would want to reverse those transactions, and since they didn't like such transactions, they would probably also close the account, or would they also give a message to bank 2 to freeze your funds?

If you make a business account or personal account in a bank, and this account gets frozen, if you have too many eggs in that basket, you might get a hard time as most/all of your capital is tied up!

Thoughts?

[luv2drnkbr]

I just use a brain wallet.

In all seriousness though, this is a good example of the need for a USD coin.  Something that is somehow generated at about the same rate the Fed prints dollars, and everybody, or at least one large entity like Gox or somebody, agrees to always buy/sell at a dollar.  Or I guess you could just use ukash or something.  But there needs to be a digital equivalent of fiat that is protected from seizure, for exactly this type of situation.

[Roy Badami]

Unfortunately, at least in the UK, if you are suspected of money laundering, the banks will freeze and then close your accounts.  You will be unable to open an account with any bank.  You will not be told what evidence there is against you and will not be able to appeal against the decision.

The issue (not relating to Bitcoin) has been in the news a bit recently.

http://www.thisismoney.co.uk/money/experts/article-2272545/Hell-NatWest-shuts-account-wont-talk.html
http://www.bbc.co.uk/programmes/b006mg74/features/banks-freezing-out-innocent-customers

[Roy Badami]

And here's another one - resulting in someone's accounts being closed for fraud (all accounts, with all banks) due to an error by their bank!  At least this one was finally resolved, but it seems a fair amount of luck was involved in resolving it.

http://www.bbc.co.uk/news/business-18540832

[coqui33]

For all those that state their "bank manager doesn't care" or "loves them" etc...  Watch out.

I've been peripherally involved with high-risk banking for quite some time now, and this is *always* the case.  A small time manager, VP level maybe, loves your business since it means great numbers and high margin for him.  He'll try to get more of it even.

Until his higher ups tell him to shut it down.  At that point, your bank manager who you thought was your best bud who had your back won't last an instant protecting you (he might push back once since he doesn't want to lose the numbers, but that will last a couple days at most).  Doesn't matter how he explains your business, how you've been a loyal customer on the up-and-up - you're gone either way and you have zero say in the matter.

And when they shut down accounts, they generally don't do it "nicely".  They'll make you fight for any dollars left in the account, and you'll be lucky to actually get any of it back.  Get a lawyer, and expect to be without those funds for up to a year.

So yes, if you run a bitcoin related business I highly suggest getting a completely unrelated account for those transactions at a completely unrelated bank in case the worst happens.

Remember - in the US when it comes to banking, you have almost zero rights.  The bank will be able to freeze assets at a whim, and you will need substantial legal services to retrieve any of those funds in some cases.  I've seen companies ruined over a bank deciding they no longer wanted to service a merchant account due to the high-risk (politically or financially), and freezing millions of dollars of assets long enough so the company could not make vendor payments.

Truer words were never spoken. Listen to Phil21. He knows. I have been there.

[btceic]

What exactly are these btc users doing that the banks are deeming it high risk?
High risk what?
If I buy/sell btc through say coinbase which is linked directly to one of my accounts, does the bank consider that high risk?

[tinus42]

Unfortunately, at least in the UK, if you are suspected of money laundering, the banks will freeze and then close your accounts.  You will be unable to open an account with any bank.  You will not be told what evidence there is against you and will not be able to appeal against the decision.

The issue (not relating to Bitcoin) has been in the news a bit recently.

http://www.thisismoney.co.uk/money/experts/article-2272545/Hell-NatWest-shuts-account-wont-talk.html
http://www.bbc.co.uk/programmes/b006mg74/features/banks-freezing-out-innocent-customers

In the Netherland's everyone may have at least a basic account (with no credit limit). Because you can't exist in modern society without a bank account.

You can't receive income or pay taxes without one.

I guess this is another reason why Bitcoin is needed.

[Roy Badami]

In the Netherland's everyone may have at least a basic account (with no credit limit). Because you can't exist in modern society without a bank account.

You can't receive income or pay taxes without one.

I guess this is another reason why Bitcoin is needed.

They've been talking about this here for the last three years, but with little action so far.

[TheFootMan]

What exactly are these btc users doing that the banks are deeming it high risk?
High risk what?
If I buy/sell btc through say coinbase which is linked directly to one of my accounts, does the bank consider that high risk?

If the banks don't like what you do, or you could be a 'troublesome' customer, they just throw you out, and giving your activity the lable 'high risk' is something they just do.

It doesn't help to explain, it doesn't help to try to talk reason with them, or try to explain to them what it's all about.

Perhaps it would help if you were a good looking woman and actually slept with an exec. That's about the only way I can think of that might help. And of course, you could start hiring lawyers, and working on 'good relationships' with the important people in the bank.

For most small merchants and users, these options are not present, so the bank effectively says: Go fuck yourself.

It's a beautiful world!

[colinistheman]

I've been seeing so many stories of people who had their bank accounts frozen or shut down because a bank wasn't prepared to take the risk regarding AML
If this happened to be your main account where you receive money, this could be a big problem. Therefor, wouldn't it be a smart idea to advice people to create a separate bank-account to receive money made through Bitcoin-channels? Either receive the transfers from your exchange account or BitPay account. In that case only you Bitcoin-income will be affected and the rest of your business can still operate.

Good idea. Thank you. I hadn't thought of this. When it comes time to liquidate some of my BTC, I will do it on a new bank account with a different bank!

[yayayo]

In the Netherland's everyone may have at least a basic account (with no credit limit). Because you can't exist in modern society without a bank account.

You can't receive income or pay taxes without one.

I guess this is another reason why Bitcoin is needed.

I hope this will change with Bitcoin.

Buyers and sellers of Bitcoin should meet personally if possible - no banks involved, no spying, no problems.


ya.ya.yo!

[yayayo]

https://bitcointalk.org/index.php?topic=189917.msg1968419#msg1968419

This seems to be a more recent version:

https://bitcointalk.org/index.php?topic=264679.new#new


Good to have this list!

ya.ya.yo!

[madmadmax]

I've been seeing so many stories of people who had their bank accounts frozen or shut down because a bank wasn't prepared to take the risk regarding AML
If this happened to be your main account where you receive money, this could be a big problem. Therefor, wouldn't it be a smart idea to advice people to create a separate bank-account to receive money made through Bitcoin-channels? Either receive the transfers from your exchange account or BitPay account. In that case only you Bitcoin-income will be affected and the rest of your business can still operate.

The only banks that close accounts that deal with BTC are banks like Chase bank and other small american ones and for that I applaud them and encourage them, every bank has assets and liabilities, if the bank has safe and healthy liabilities then your savings in that bank are safe, the ratio is called the bank's capital ratio and it represents the banks margin of safety in the event of a crisis, unfortunately banks such as Chase will usually hold about 2% like any other western bank, on the other hand the central bank in Singapore holds 7.2% and Norway's holds 23.3%.

Move your assets from thieving tools and realize that storing large amounts in fiat is bad to begin with, it's like buying into the stock of a company when the SEO is a drug addicted pedophile that murders people systematically.

[ImI]

I've been seeing so many stories of people who had their bank accounts frozen or shut down because a bank wasn't prepared to take the risk regarding AML
If this happened to be your main account where you receive money, this could be a big problem. Therefor, wouldn't it be a smart idea to advice people to create a separate bank-account to receive money made through Bitcoin-channels? Either receive the transfers from your exchange account or BitPay account. In that case only you Bitcoin-income will be affected and the rest of your business can still operate.

Thats how i am handling this.

[BittBurger]

Business Idea:

Start a Bitcoin friendly bank .............

If you make millions please PM me for my address as a thank you for the idea.   

-Burger-