Are Coin Dealers Being Targeted by Banks & the FDIC ???

[TonerGuy]

Any dealers here have issues with banks and having their accounts closed or being denied third party payment processing lately ?

 

It appears that coin dealers are no different then escorts and pornographers to the government... very sad.

 

FDIC High Risk Industry List...

 

Some merchant categories that have been associated with high-risk activity include, but are not limited to:

 

Ammunition Sales

Cable Box De-scramblers

Coin Dealers

Credit Card Schemes

Credit Repair Services

Dating Services

Debt Consolidation Scams

Drug Paraphernalia

Escort Services

Firearms Sales

Fireworks Sales

Get Rich Products

Government Grants

Home-Based Charities

Life-Time Guarantees

 

Life-Time Memberships

Lottery Sales

Mailing Lists/Personal Info

Money Transfer Networks

On-line Gambling

PayDay Loans

Pharmaceutical Sales

Ponzi Schemes

Pornography

Pyramid-Type Sales

Racist Materials

Surveillance Equipment

Telemarketing

Tobacco Sales

Travel Clubs

 

[RWB]

Read the entire document....the presumption you state is not part of it.

 

Note:

"At a minimum, risk mitigation programs should result in the financial institution assessing its risk tolerance for this type of activity, verifying the legitimacy of the payment processor’s business operations, and monitoring payment processor relationships for suspicious activity."

 

The document is aimed at banks, and wants them to closely monitor activities - such as boiler room operations - that use 3rd party payments to collect funds. (3rd party payments makes it much ore difficult to trace money to the crooks or recover money stolen in various scams.)

 

As the number of attempted fraud posts suggest, coin dealers are frequent targets of criminals.

 

[EVillageProwler]

Btw, banks are obligated to perform proper due diligence with all current and potential customers. No exceptions.

[TonerGuy]

RWB - do some more research. Many businesses on that list are having their accounts closed. I didnt just find a document on a website and post it. You may want to Google "Operation Choke Point."

 

In the last couple of days its been news that pornstars have had their accounts closed. Payday loan companies have. Firearms companies have.

 

I am asking a question to see if its happening here as well.

[JIM F.]

And bankers are probably the biggest crooks of all!

[BillJones]

Big Brother is ready to come after everyone because Big Brother spends far more than he takes in and is desperate for money. It is sad, but government is out of control, and both political parties have been responsible for it.

[RWB]

"RWB - do some more research. Many businesses on that list are having their accounts closed."

 

I did some fact checking before posting. I stand by what I said.

 

FDIC has an obligation to depositors to have money available to protect YOUR deposits. If that means improving security and protecting against fraudsters -- good!

 

The accounts that haev been closed seem to all fit in the fraud category -- Am I to presume by your whining that you agree with fraud and support the crooks....?

[TonerGuy]

Wow now Im whining because Im asking a question ?

 

Very low brow of someone that is well respected on this board.

 

The FDIC is saying that coin dealers are IN the fraud category. Im just asking a simple question.

 

Is this happening in this industry... Im not supporting the decision of the FDIC

 

 

[DaveG]

TonerGuy,

 

Allow me to respond to your rather clumsy question.

 

While I'm not in the retail side of the bank I work for, I have received some of the training that the retail bankers have.

 

Over the past several years, bank regulators have focused on various illegal behaviors and have directed banks to strengthen their Know Your Customer procedures. (Bankers refer to businesses in this category as "High Risk" - not "Fraud". Customers, and even regular people, tend to be very sensitive about having their names in close proximity to the word "Fraud" for some reason.)

 

One of the results of this is that any business that deals with a lot of cash has been the subject of increased scrutiny. I'm sure you've seen some of the articles that have covered the fact that the Colorado pot businesses, even though they're now legal, have had a lot of trouble getting and keeping bank accounts, for example.

 

So, yes, coin dealers have been put on High Risk lists. Why? Presumably because they deal a lot in cash and, might, therefore be a part of money laundering.

[BillJones]

As a dealer you could be laundering money and not even know it. If you sell an item for cash to a customer at show, they could pushing off dirty money to turn it into "clean" assets.

 

About the biggest cash single transaction I ever made was for perhaps $3,000. Everything else was in checks. For a show I might collect $5,000 or $6,000 tops. I know I was a small dealer, but that was as much I usually handed.

 

If you had a guy who showed up with $10,000 multiple times, an alarm bell should go off in your head. But I suppose for some when the smell of money passes under you nose, they might become deaf to bells.

[DaveG]

Bill raises an excellent point.

 

A criminal or terrorist could go to a decent-size coin show with a briefcase full of cash and spend $3,000 each with a number of dealers. If he repeated this process, after a few shows he would have coins worth, say, $300,000 without triggering anyone's cash reporting requirements.

 

If he was smart, he'd buy liquid items (high-grade Morgans, etc.) and a mix of slab types so that the "collection" wouldn't look "new."

 

He could then take the big collection to a big dealer or two and get paid with a check that he could put into the banking system and have transferred anywhere.

 

This sort of thing is what the High Risk lists are trying to highlight.

 

edited to add: Yes, I do think this behavior is intrusive and could be considered "Big Brother" and I prefer to go about my collecting discretely and I often pay with cash because that's how I save up for and budget for my coin collecting. I also prefer not to have airplanes crashed into buildings across the street from my office, so there you go.

[Nutmeg Coin]

There are lots of drug dealers who know how to launder their $$$ in various ways, trading proceeds from marijuana, for example, for Krugs. and Eagles, etc.. Later they can get money for the gold without losing much, depending on the dealer and the price on the PMs. A major show dealer told me if I came across a Saddle Ridge style hoard to let him handle the deal on a cash basis, there are many, many dealers willing to do this. Unfortunately, Silvertowne got in trouble for allowing a drug dealer to trade cash for gold BBs. I think it was Leon who got frog-marched out of the Baltimore show.

[TonerGuy]

 

So, yes, coin dealers have been put on High Risk lists. Why? Presumably because they deal a lot in cash and, might, therefore be a part of money laundering.

 

I understand the AML/KYC approach banks are taking. Why do you believe that some of the other industries are put into high risk then ?

 

Such as Credit Repair Services or Dating Services, neither seem to be cash based. Also, how much "reputational risk" factors in ? And do you think 'Operation Choke Point" factors in as well ?

[mumu]

Arent most things technically "Get rich products"?

[DaveG]

TonerGuy,

 

As I said, I don't work in retail banking, so I have no idea where all this comes from.

 

I'm just grateful I only have to deal with the training once a year!

[Conder101]

Unfortunately, Silvertowne got in trouble for allowing a drug dealer to trade cash for gold BBs. I think it was Leon who got frog-marched out of the Baltimore show.

Leon went to prison because he reported the transactions in a way the rules said he could, but not in the way the government decided he should have. The rules said he had to report a cash transaction over $10K OR if it was a series of related transactions that totaled over $10K. Leon was approached by someone who wanted to buy $100K worth of gold a month. Leon treated it as a series of related transactions and at the end of the year totaled up the transactions and reported them. He didn't try to hide anything. (At the time the IRS was literally living with him and looking over his shoulder at everything. In a case like that why would you try to hide anything?) The government decided he should have reported each of them separately and sent him to prison.