Confessions of a former employee at a financial institution - why you should not make transactions of exactly $10 000 USD (or equivalent) in USA
Context: Follow up on BitGold - they still have my 10,000USD and have stopped responding since I provided all the requested documents 13 days ago.
Used to work in compliance, specifically AML/BSA. Sorry, ton of words coming...
There's a pretty blurry line between informing the client of a delay regarding a compliance investigation and what's known as "tipping off".
If a financial institution is found to have tipped off, the penalties are stiff. Jail time and big fines to the person who did it, and potential loss of MSB licensure for the business.
Again, that line boils down to interpretation. Most FIs won't say anything other than, "sorry for the delay," and nothing about compliance.
This is especially true if the investigator has found something they find to be suspicious. What's suspicious is also muddy. Could be that the amount is the "magic number" of 10,000.
Despite the rule that all cash deposits "larger than $10,000" must be reported, most suspicious activities like fraud, account takeover, etc are exactly $10,000, even if they aren't in the form of cash.
If you get an overzealous AML officer or investigator, any transaction using that magic number is enough to set off a full investigation of the client. If that investigator also finds your Facebook has pictures/posts of weed, gambling, etc... you're going to be the subject of a Suspicious Activity Report (SAR). Regardless of how legitimate the activity actually is, it's all about how it appears to their AML people.
The red flags the investigator sees could be as nonsensical as an ID that was just a blurry picture that didn't look as crisp as the comparison from the book. Or maybe the client's identity has been compromised (is an ID theft VICTIM) and the investigator can't tell which person they're dealing with. Or even as stupid as "the client is uncooperative", which I've seen used by investigators that were pissed that the client was upset about all of the questions and requests for their firstborn.
Say again, it's all open to the interpretation of the investigator.
Once it is determined that a SAR will be filed, there's a wall of silence that goes up, and it's a tremendous pain to get your money back from the institution because they have no incentive to hurry. The client might not get a response AT ALL to their calls or emails. This is up to the policies of the company, and it's pretty fucked.
So glad I don't do that shit anymore.