Tim Enneking is the managing director of Crypto Asset Management in San Diego, California.
My daughter is 3 years old. Bank of America is closing her bank account on May 4 because of her “risk profile” and, it would appear, her “connection” with the crypto space.
Please let me explain. My management company manages a hedge fund which does indeed routinely invest in the crypto space. Importantly, the management company itself does not trade crypto.
The fund has an account with a bank other than BoA; the management company, my wife and I, and our daughter all have our bank accounts with Bank of America. This has led to some rather curious consequences.
My wife and I opened our joint checking and savings accounts with Bank of America (in La Jolla, CA) about four years ago, well before I founded the management company. We opened a Uniform Transfers to Minors Act (UTMA) account there for our daughter shortly after she was born. We have fifty dollars a month transferred into that account automatically to kick-start her college fund; that is pretty much the extent of the activity in the account.
There have never been any transfers into or out of my daughter’s account other than with the joint account my wife and I have in the same BoA branch. There certainly has not been any activity even vaguely related to crypto assets in it.
On April 4 of this year, we received notices dated two days prior that Bank of America would restrict our accounts in 21 days and close them in 30.
The management company received three such notices (one for each of its two bank accounts and one for its BoA credit card); my wife and I received three such notices (for each bank account and for my wife’s BoA credit card); and our three-year-old daughter received one notice for her account.
Other than saying that these decisions were “final and won’t be reconsidered,” only the notice canceling the management company’s credit card had any explanation: “because your risk profile no longer aligns with the bank’s risk tolerance” – for a card linked to an account which has had an average six-figure balance since it was opened and for a company which has never had any debt whatsoever and has an eight-figure balance sheet.
It gets better.
Are you now, or have you ever been?
Just prior to our receiving these letters, on March 28, 2018, the Bank of America Money Services Business Control Center sent the management company a Customer Data Form for Money Services Businesses (MSBs), with numerous questions regarding what the management company does.
All of the questions were related to specific monetary transactions (transfers, exchanging currencies, issuing travelers checks), except the last one: “Does the Business engage in virtual/digital/crypto currency activity?”
To such a broad question, we answered yes – and duly completed the entire questionnaire and sent it back the same day.
When the cancellation notices arrived less than a week later, we were very impressed with the alacrity with which BoA operated.
Let me emphasize: the management company doesn’t deal in cryptocurrency. It doesn’t act as an exchange. It doesn’t act as a money handler. Its primary role is processing payroll for management company employees.
However, the word “crypto” does appear in its name. That apparently is a mortal sin in the eyes of BoA.
Two days after we received the notices of all of these closings of various accounts, I received a call from a woman who introduced herself as an employee of the Bank of America MSB Control Center.
She wanted to discuss some queries she had regarding our replies to certain questions on the Customer Data Form. I politely explained to her that her company had already told us that it was closing all of our accounts irrevocably, to which she blithely replied, “Oh, does that mean you don’t want to answer my questions?”
Somewhat nonplussed, I said, “What would be the point? Is there a chance that BoA then won’t close our accounts?”
To which she replied: “Oh, I have no idea about that. Are you sure that BoA is closing your accounts? If so, we’ll still close them, but if you answer my questions, we'll have the information necessary to complete our records.”
I declined as politely as I could at that point and that was the end of the conversation.
So, aside from the fact that the right hand of Bank of America clearly does not know what the left hand is doing, it would seem to me that BoA has gone a bit far in what is clearly a knee-jerk reaction to all things “crypto” and all things related – no matter how indirectly – to crypto.
My three-year-old daughter has a risk profile which does not align with the risk tolerance of Bank of America? In that case, I’m amazed BoA has any clients at all.
Dear fiat-centric people: Please stop being so paranoid.
Please stop trying to swat a fly with a sledgehammer (if you must treat crypto assets like a fly). Using a firehose to put out a match (sorry to mix metaphors) is simply bad business. The crypto space is expanding faster than any other segment of the financial sector.
Beware: One day, you will need it more than it needs you and you will regret such un-nuanced behavior.
In the meantime, the management company, my wife, daughter and I have all opened two new sets of accounts – with different banks, just in case.
I have, however, realized what the motto of Bank of America should be:
“Ready, fire, aim!”
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