US bank's treatment of a Russian depositor

[Larry1]

I came across this article in the New York Times recounting a disturbing incident regarding a US bank's treatment of a depositor whose funds originated in Russia:

Banking While Russian

It was the quintessential immigrant moment. Two weeks after my family and I had arrived in New York, a friend drove me to Costco. Half an hour later, at the cash register, I was hidden from view by the pyramid of diapers, napkins and other paper products in the shopping cart. My friend laughed and snapped a picture, promising to post it online with the caption, “Masha comes to America.”

And then my debit card did not work.

This wasn’t just any card; it was a Citibank gold card, the kind that warrants a special line at the bank’s offices and obsequiousness from the tellers. And it was linked to the account that, for the moment, held all my money: We had sold our apartment in Moscow, jumped through an assortment of Russian tax hoops and transferred the proceeds to the United States, where we now lived.

It made me nervous to have all that money sitting in one virtual clump in the bank — but not nearly as nervous as having the card connected to it not work. The experience was also humiliating. In one moment, I had gone from being a Citigold client to a deadbeat immigrant who couldn’t pay for her son’s diapers.

I called Citibank as soon as I got home. “Your account has been closed,” a woman informed me, without a hint of that special precious-metal politeness.

“When? Who closed it?” I was working hard not to sound belligerent. “And where is my money?” I could hear the woman tapping on her keyboard indifferently, as she was figuring out where all the money I had in the world was.

I whispered to my partner that the account had been closed and the money was gone. “It’s the Russian tax police,” she whispered back.

That made perfect sense. As a journalist I had investigated similar scams perpetrated by the Russian tax police on a far grander scale. And I had reported this transfer, including the amount and all the account details, to the Russian tax authorities. Except that it wasn’t the Russian tax police that had closed my accounts (there were two). It was Citibank.

“I see that because your transactions indicated there may be an attempt to avoid complying with currency regulations, Citibank has closed your account,” the woman informed me. There was now a distinct note of steel in her voice.

“But why did no one contact me? If they had, I would have submitted the documents showing that the money came from the sale of an apartment, and all tax obligations have been met.” I was babbling, and the details were no longer important. “Where is my money?”

“A cashier’s check for the full amount of money contained in your accounts has been sent,” the woman said. “Why wasn’t I notified?”

“The cashier’s check will serve as your notice.” Citibank had fired me as a client.

For several nerve-racking days my nest egg, my children’s future college tuition — every penny I had — resided in a cashier’s check that was wending its way through the United States Postal Service. It finally arrived with a terse note informing me that I had been told “in a previous letter” that Citibank could no longer have me as a client. I had gotten no previous letter, and this one came from the Client Escalation Unit — about as far from the grace of gold-card status as a customer can fall.

I wasn’t entirely surprised. This had happened to other Russian-Americans I know, including one of my closest friends and my father. My friend had opened her account at a local bank in the United States when she got her first job, at age 13. Her accounts were summarily closed in 2008, while she was working in Russia. The bank, which had been bought by Sovereign in the meantime, would not state a reason for firing a client of 27 years.

My father, who immigrated to the United States in 1981, had his accounts closed by BankBoston in 2000, when he was a partner in a Moscow-based business. His lawyers pressed the bank on the issue and were eventually told that because Russians had been known to launder money, the bank applied “heightened scrutiny” to accounts that had a Russia connection. It had closed “many” accounts because of what it considered suspicious activity.

Like other kinds of ethnic profiling, these policies of weeding out Russian-Americans who have money are hardly efficient. Russians who launder money don’t do it by transferring large amounts between personal accounts opened in the same name and in plain view of all the relevant authorities. They channel the money through businesses registered in offshore zones, usually under names culled from pop songs or romantic comedies.

When I took my cashier’s check to a new bank, I felt trepidation and made sure to say nothing about Russia. I got a platinum card.

http://www.nytimes.com/2014/02/12/opinion/gessen-the-checks-in-the-mail.html?ref=world

What are your thoughts?

[JayH]

Typical bank stupidity and ignorance--not unique to US banks !!

[jone]

First, this is not the only time I have heard of this.  Second, if he lives in New York, Citibank, in particular, caters to Russians.  If you go anywhere on Staten Island, Nassau or Suffolk, the ATMs are even in Cyrillic.  This has to be an international thing, because the locals are treated as gold.

[Anotherkiwi]

First, this is not the only time I have heard of this.  Second, if he lives in New York, Citibank, in particular, caters to Russians.

Masha (Maria) Gessen is female.
 
The comments on the web-page article itself are a mixture of eye-opening and depressing.

[jone]

Thank you for the catch.  Of course, Masha is the nickname for Maria.

[Belvis]

After seeing her name, Masha Gessen, I'm not supprised. She is a person who attracts scandals and one of those journalists who created the bad reputation for Russia as a center for money laundering. Nevertheless she should work more closely with an  anti-money laundering compliance officer in her bank.