Paypal anti-money laundering compliance request

[Nutmeg Coin]

Paypal emailed me today a request for documents to address whatever their anti-money laundering requirements may mandate. Has anyone else here got one of these?

 

PayPal is committed to complying with its regulatory obligations, which

includes ensuring that our customers are also in compliance with applicable

regulations, such as Anti-Money Laundering (AML) regulations.

 

Upon review of your PayPal account, we have found that you are operating or

intend to operate as a retailer or dealer in jewels, precious metals, or

precious stones. In order to determine whether your business meets dealer

requirements for complying with Anti-Money Laundering (AML) laws and

regulations, we need additional information from you.

 

Here's what we need:

 

1. The names of individuals who have a controlling interest in your

business.

2. Your business documents, such as your Articles of Incorporation.

3. Your membership in any industry-specific organization or

association (if applicable).

4. A list of your suppliers along with their locations.

5. Invoice samples from your suppliers for the purchase of your

inventory.

 

Also, please answer the following questions about your business:

 

1. Are your goods sold primarily to the general public?

2. Do you purchase your goods from dealers or retailers in the United

States, from suppliers outside the United States, or from the general

public?

3. Are you considered a dealer in jewels, precious metals, or precious

stones according to the guidance found on the Treasury Department's

Financial Crimes Enforcement Network website (http://www.fincen.gov/) or do

you fall within the retailer exemption? Please provide a detailed

explanation.

 

Please log in to your account and go to the Resolution Center to find out

what you need to do. If we don't hear from you by 05/31/2016, we will limit

what you can do with your account until the issue is resolved.

 

You can upload or fax the requested information to us.

 

 

A friend said this may have been the consequence of someone reporting me as "suspicious" or something. Is this routine?

 

I have documents going back many years and have nothing hidden or shady in my business dealings, just a little surprised I got the query out of the blue.

[AHFreak]

It is routine, and done at random suppossedly. From what I understand this is equivalent to any bank, regulated by the governing agency that enforces the Patriot act and the likes (forgot which agency that is, homeland? dep. Of the treasury?) Anyways, banks have to have compliance processes, pocedures, entire departments dedicated to making sure compliance... the issue is that the governing agency isn't clear on what exactly the banks are supposed to do exactly, meaning there are no clearcut rules for banks (PayPal is a bank at this point) on what they are doing. Just that there is an actual process to ensure compliance is happening. So the guy who told me all this was one of the recipients of the email u r talking about, he gave them everything they requested during the first week of their request, when that deadline passed, they froze his account and disabled all the funds in it. I talked to him 2 weeks ago and it had been over 30 days since his account was froze. It still was froze. He told me that if he were a dealer selling solely on Ebay, he would be in serious trouble not having access to his funds, or being able to sell on ebay (because buyers can't pay with PP).

He told me some very disturbing things about his conversations with PayPal mainly about resolving whatever the issue is, things that were motivation for me to make sone changes... he said that if it's in your actual back account, the one that is linked to PP, that as far as all this goes it's the same thing. So for everyone who deals heavily or relies heavily on collecting payment via PayPal and also has their main business account linked to their PP, that essentially if they do decide to freeze funds, it will affect whatever money is in your physical business bank account too.

 

All that said, my understanding is based on a 30 minute conversation I had with a dealer who got the same notice, complied by sending all they asked for, and had is account suspended, funds froze anyways. He said he had spent countless hours on with PP, and nobody could identify what the issue is, what is missing, or what needs to happen to clear it up. I have no idea how correct my understanding was other than I know his account was for sure suspended cause I couldn't pay for a coin PP like I had before with him.

 

We can thank the PATRIOT ACT.

 

-But at least it's keeping us safe... right?

 

if I get that notice, the precautions I will take are going to involve making sure PP has nothing, or very very little to freeze in the account, including the bank account associated with it so that my money is safe in the event they decide to do to me what this guy claims they did to him. Better to be safe than sorry. It's very unfortunate that in todays day and age, with everything small business's are up against, that this type of thing is even possible, Let alone happening right under our noses.

 

Im glad you asked, I'd love any additional insight. Good luck with it.

[e1cnr]

What kind of volume are you churning through PAYPAL? more than $10K/mo $50K/ $100K/ ?

[Nutmeg Coin]

Most months less than $5K. All gold is usually certified.

[RWB]

The message asks for personal/business information. I suggest you demand their request in writing on company letterhead. An email can be easily faked.

[Nutmeg Coin]

I called them and it looked like their inquiry was legit.; so went to the paypal page and uploaded my business license, two dealer invoices of purchased material over $7K and an NGC invoice of certified coins. That should satisfy them; but weird that they only give customers 5 days to rectify the matter.

[Mr.Mcknowitall]

I would have ignored it and let them force the issue.

[RWB]

An email message is not official communication.

[Nutmeg Coin]

This cropped up again this week as they froze me out of my paypal account even after providing them with lots of documents some months ago and answering their questions. I spoke with a NY dealer who has had his paypal account shut down for a while now due to their "anti-money laundering" rules, he didn't upload enough documents. It seems like they are discriminating against certain ebay sellers as I have not heard others who do more having trouble.

 

I am confident I can get it resolved; what it means also is that you can't ship in ebay, but have to go to the post office and manually pay for postage then upload the tracking number manually.

[MJ]

Many dealers were discussing this on the bourse at LB.

 

mark

[Nutmeg Coin]

This type of trouble benefits the big boys on ebay, etc. like Apmex which no doubt has a department dedicated to legal compliance. And they do huge volume on ebay with sweetheart deals at low percentages to benefit the sales volume figures that ebay reports to its stock holders. If they want to shut you down there isn't much you can do about it.

[RWB]

Why do Papal Authorities care if you are laundering money....Didn't they do that, too? Is someone trying for a quickie sainthood?

[Nutmeg Coin]

This may have triggered it? http://www.wsj.com/articles/paypal-to-pay-7-7-million-to-u-s-over-alleged-sanctions-violations-1427312161

 

Though paypal has gotten sued for millions over improperly freezing accounts. http://www.doctorofcredit.com/paypal-class-action-lawsuit-for-frozen-or-suspended-accounts-up-to-4-mil-settlement/

[coinman_23885]

It is routine, and done at random suppossedly. From what I understand this is equivalent to any bank, regulated by the governing agency that enforces the Patriot act and the likes (forgot which agency that is, homeland? dep. Of the treasury?) Anyways, banks have to have compliance processes, pocedures, entire departments dedicated to making sure compliance... the issue is that the governing agency isn't clear on what exactly the banks are supposed to do exactly, meaning there are no clearcut rules for banks (PayPal is a bank at this point) on what they are doing. Just that there is an actual process to ensure compliance is happening. So the guy who told me all this was one of the recipients of the email u r talking about, he gave them everything they requested during the first week of their request, when that deadline passed, they froze his account and disabled all the funds in it. I talked to him 2 weeks ago and it had been over 30 days since his account was froze. It still was froze. He told me that if he were a dealer selling solely on Ebay, he would be in serious trouble not having access to his funds, or being able to sell on ebay (because buyers can't pay with PP).

He told me some very disturbing things about his conversations with PayPal mainly about resolving whatever the issue is, things that were motivation for me to make sone changes... he said that if it's in your actual back account, the one that is linked to PP, that as far as all this goes it's the same thing. So for everyone who deals heavily or relies heavily on collecting payment via PayPal and also has their main business account linked to their PP, that essentially if they do decide to freeze funds, it will affect whatever money is in your physical business bank account too.

 

All that said, my understanding is based on a 30 minute conversation I had with a dealer who got the same notice, complied by sending all they asked for, and had is account suspended, funds froze anyways. He said he had spent countless hours on with PP, and nobody could identify what the issue is, what is missing, or what needs to happen to clear it up. I have no idea how correct my understanding was other than I know his account was for sure suspended cause I couldn't pay for a coin PP like I had before with him.

 

We can thank the PATRIOT ACT.

 

-But at least it's keeping us safe... right?

 

if I get that notice, the precautions I will take are going to involve making sure PP has nothing, or very very little to freeze in the account, including the bank account associated with it so that my money is safe in the event they decide to do to me what this guy claims they did to him. Better to be safe than sorry. It's very unfortunate that in todays day and age, with everything small business's are up against, that this type of thing is even possible, Let alone happening right under our noses.

 

Im glad you asked, I'd love any additional insight. Good luck with it.

 

As an interesting side note (and one that has always annoyed me), PayPal claims not to be a bank, and it even convinced the FDIC of this in the early 2000s to avoid regulations including those regulating account holds and freezes that apply to traditional banks. Very convenient on their part. Corporate corruption and lobbying at its finest.

 

I agree with you that it is likely because of a provision in the Patriot Act that requires dealers to report certain bullion transactions for fear that it could be used by terrorist groups or other criminal enterprises. Also, whenever you have transactions above $10,000 each, other reporting laws are also triggered for IRS tax purposes.

 

I would comply and provide whatever documents PP seeks. This is also why (1) I never leave a balance in my PayPal account when I can avoid it; (2) never link PayPal to your normal bank accounts - have a PayPal only account that you can transfer funds away from as soon as it hits your account into one out side of PayPal's reach.

[coinman_23885]

Why do Papal Authorities care if you are laundering money....Didn't they do that, too? Is someone trying for a quickie sainthood?

 

PayPal is notorious for freezes of larger balances even without requesting information to comply with government regulations. Look at the chart from Nutmeg's links for the payouts from the class action suit. Being the cynic I am, I wouldn't be surprised if they do it for low interest loans under the guise of "regulatory compliance" or "protection of customers."

 

If I did the math correctly, they could borrow - er I mean freeze - $10,000 for 30 days and pay an effective interest rate of less than 0.5% after being sued for it. Even factoring in legal fees, as wide spread as this is, the actual cost to PayPal is offset by extra cash on its books.

 

[comicdonna]

Why do Papal Authorities care if you are laundering money....Didn't they do that, too? Is someone trying for a quickie sainthood?

Someone sent me 3 10K payments once. Paypal limited my account. Even after speaking to me and the buyer on the phone, I had to prove I owned the merchandise, before they would unlock my account.

[ThothAmon]

Wonder if comic books can lead to a similar inquiry? I collect both.

[comicdonna]

The purchase was for comics.

[Nutmeg Coin]

I uploaded a bunch of documents yesterday and they unfroze my account. I'm not sure what the issue was, maybe that I listed a platinum oz. piece earlier in the week from a club? Actually Apmex offered me more on that than I would have netted on ebay.

[RWB]

Maybe they just wanted to feel loved, and your documents made them happy -- someone paid attention to them!

[bstrauss3]

More likely than anything is that they are stepping up the percentage of accounts that get random audits trying to show they care so the feds don't make them go to 100% audits.

 

So you won the lottery. Congrats.

[RWB]

100% flagging of transfers exceeding $10,000 is a couple of lines of code.

[bstrauss3]

Or less... but dealing with the incoming paperwork is a lot more people time.

[RWB]

"....but dealing with the incoming paperwork is a lot more people time."

 

However, IRS and most states have automated reporting systems that require no manual intervention until an initial assessment is made. Banks have been part of this for a long time, and companies that deal in high-value transactions have access to a parallel system.