That would be noticed. It's called "structuring" and is itself illegal. Banks watch for this stuff.
The bank typically has a rather simplistic set of rules to decide to investigate transactions (because they need to be able to explain how the rules work in a meeting with the government whenever their rules miss someone). Things like "Transaction was over $1000 to a new payee or the reference contained the word 'bitcoin'". The investigation will typically involve a human calling the customer, and sometimes asking for more evidence of what the transfer was for - for example, please send us the receipt for the car you said you bought. It's quite an expensive process for the bank.
So, when someone via the API sends tens of thousands of transfers, the bank is spending lots of human hours verifying some/all of those. "My script sent $55 to some stranger because I won a fully automated bet on the weather" is far harder to verify with documentation too. And when some slip through the cracks, they get in trouble with the regulator.
I learned the other day that the name on account means shit, because scammers often give $account_details + $catfish_name and receive the money to $bank_details + $real_name.
I don’t see how splitting to 1000 transactions and sending money to yourself helps with money laundering or undercover money sending.
Banks rely on a fixed set of rules to trigger an investigation for money laundering. One of these rules is the value of the transaction. I worked in retail whilst at Uni in the UK and we often had people who had lot's of money in their accounts unable to make large purchases due to these checks. Their payment would be automatically blocked and you would get a phone number they had to call to be able to make the payment. It was for example when buying a £5000 kitchen (I worked in the equivalent of home depot in the UK). If they could have split that transaction down to say 10 payments of £500 it wouldn't have triggered anything on the bank side.
Overall these banks process a lot of transactions and so heavily rely on these rules to keep them within the law. They don't always work as can be seen here and the bank noticed that users were able to circumvent their crappy ruleset by split big transactions down to lots of small transactions.
Not sure about sending money to yourself I suspect they mean transferring money between two accounts you control which is different in the banking for from sending money to yourself. If you are in control of both accounts you are laundering the money by transferring it to another account when you secretly control both. It's a basic way people like the mafia and such have laundered money for decades. They will do it through facade companies or suchlike. So they have one of the gang be legit and "clean" setup a shop who deposits cash into their bank account from "sales". The shop is a real place that you could technically buy stuff from. They then transfer their profits to this other account that is the gangsters account. The gangsters is part owner and they are receiving money as they "own" the shop and the shop has made money from sales. The sales though are actually the gangster giving money to his own shop and them claiming that as sales to the bank. The bank doesn't know that the money is actually from selling drugs or robbing stores or w/e illegal stuff they have done. The result is that you have taken "dirty" money i.e. money that has came from some illegal activity and with this strange process you have made it into "clean" money that's come from some legal activity.
So basically all money laundering will be transferring money to "yourself" but it will be via a third party that probably takes a small cut for helping. It's worked like this for years and is super common.
The fixed set of rules they have in bank is because it used to be that making money movements was hard so the criminals would transfer say £250k in a single transaction as sales revenue. So banks could easily spot this and take action. Making money movements easier means they can bypass this check.
Mostly, yes. But there are hundreds of those rules.
>One of these rules is the value of the transaction.
That happened, but I doubt that is the most important rule now. From what I've seen in my experience way bigger focus total value of transactions compared to various metrics.
Very large number of transactions on personal accounts is also one of those rules.
>Their payment would be automatically blocked and you would get a phone number they had to call to be able to make the payment. It was for example when buying a £5000 kitchen (I worked in the equivalent of home depot in the UK). If they could have split that transaction down to say 10 payments of £500 it wouldn't have triggered anything on the bank side.
That sounds like fraud, not money laundering rule.
> Very large number of transactions on personal accounts is also one of those rules.
Yes I suspect 1000's of trx on the accounts is what flag the whole thing to the bank.
> That sounds like fraud, not money laundering rule.
You have to take what I've said in context with the whole comment and not take a single part out of context.
As I said for money laundering you'll get consistent large transactions that don't make sense (say £250k each week from a pizza shop). Banks already know how to spot these large weird transactions so a method to hide them is to split them down into smaller transactions. My example with paying the kitchen was to show that the banks wouldn't notice the £500 transactions rather than the single £5000 transaction.
What is the source of the funds to launder and how/why is it already in the bank?
To be honest, I don't think money laundering is real, or significant. I see most money laundering rules as hidden or mislabeled sanctions on other countries, group of individuals or institutions.
It's just that you and I aren't big enough fish for the banks to look the other way, if we do it.
Gotta be a Mexican drug cartel, or a Russian oligarch to succeed in money laundering.
Heard it all now time for me to get off this site I think.
E.g. here the nonsense is why money that you already have in a bank account needs to be sent to someone else via 1000s of random small transactions. At best that would add a layer of confusion, but you still have the money laundering problems for the sending and final receiving person.
What happens is that banks are trying to cover their ass and please regulators so they don’t get fined.
Of course all regulation does is add complexity. You still have the most common way to launder money: know the top-banker and have connections inside the bank. With the right amount of money you can buy all the KYC you need.
Which means all this regulations is either malicious or plain ignorant. I think it’s malicious.
Money mules; you offer some influentiable kid some money to deposit cash into their account and send it on to someone else. Or an old lady. I'm sure part of the Nigerian prince thing is money laundering.
Second one that is very prevalent is physical stores that never seem to get any customers, e.g. in my neck of the woods there's these mobile phone companies everywhere. I'm sure they sell phones, simcards and accessories on occasion, but I can't see how it would cover the cost of rent, let alone make a profit. Unless once a month someone comes in with a few thousand in cash that then gets added to the books over time.
Oh, there actually was an article on HN about that recently, that was "american" candy shops in london: https://www.standard.co.uk/news/london/london-news-american-...
[1] https://en.wikipedia.org/wiki/Contaminated_currency
[2] https://cipherblade.com/blog/tainted-bitcoin-isnt-what-you-t...
Cops have used cocaine residue as "cause" to rob people of cash: https://www.youtube.com/watch?v=MkeS_0NQUZs
More likely scenario is increase will partner with some chartered bank and try to expose this api functionality. They will soon realise the constraints they need to be under to not allow crazy things like this.
The other type of transaction they mention in 4.16.13.4 also involves cash payments in the course of a trade or business.
Everything else is what someone might do to try to conceal structuring, but if cash isn't involved, it's not structuring, because there's no covered reporting requirement.