We have a long time customer who has wired close to $200k to various cryptocurrency exchanges, including Coinbase, Inc. and Payward Ventures, Inc., over the past 4 months. These are funds the customer received from life insurance policies, so there are no issues about the legitimacy of those funds. This is not the type of customer who I would envision investing or dealing with cryptocurrency, so I have a strong suspicion that he is being scammed in one way or the other. As best I can tell Coinbase and Payward are legitimate outfits, so the scam is not happening at the level. The concern I have for this customer is what is happening to those funds after we wire them to Coinbase or Payward. I spoke with him the other day about my concerns and he assured me that these are "investments" that he is making and that he should be getting a "return" in a few days.

What are my fellow bankers' thoughts on this issue? Obviously, it is his money and he should be able to do what he wants with it. I just hate to see people get scammed and I suspect that is happening or will happen here one way or the other. Should I consider refusing to do these wires in the future or closing his account and telling him to go bank elsewhere? I don't think a SAR is warranted here because he is wiring legitimate funds to legitimate crypto exchanges. Just wondering what others would do under these circumstances. Appreciate the feedback in advance.

Hopefully you've ID'd the customer each time he initiated a wire so there's no question as to whether they were authorized. This sounds very similar to a scam we've seen where the scammer works with the customer to open a crypto account (in one case it was with Coinbase) and the customer has access to that account. They think their crypto investment is growing but what they don't know is that the scammer was using the OLB credentials that the customer gave them to transfer additional funds (from savings accounts, etc.) to the coinbase account. Then the scammer ultimately drained the coinbase account leaving the customer with nothing.

Well, as part of the discussion with yourself, take out the crypto currency aspect of the issue and replace the crypto dealers with well-known investment companies or brokerage houses. Would you now say, "this is not the type of customer who I would envision investing or dealing with stocks or bonds" and wonder if you should stop doing the wires? While crypto isn't everyone's idea of an investment, neither are stocks or bonds.

We're a small bank in a small community, and he has personally come in and authorized each wire transfer in writing. We had another customer come in yesterday and request a wire to Payward Ventures for an investment. That wire was only $800. I am 80-90% sure that this guy is getting scammed in some form or fashion, but I don't think I can do much beyond what I have already done in talking to him. A fool and his money are soon parted....

Coinbase is a US publicly traded company and Payward Ventures is the real name of Kraken. These are two of the biggest players in Crypto, and both are required to have AML Compliance Programs. I am no fan of crypto, but many others see it as a legitimate investment opportunity.

If you think your customer is being scammed, all you can to is speak with the customer and see if you can gather additional information. You can of course, close the account as well.

One other possible route; is there a second signer on the account, a spouse or a child? Someone that you might be able to relay your concerns to? It may upset your customer, but isn't the potential of losing $200K more upsetting?

Close the account and send them a check.

Another anon here: Thought of this thread again when Kraken was in the news this week!

https://www.reuters.com/business/fi...platform-without-registering-2023-11-20/

To the original poster, I'm with you 100%. I would deny the outgoing wire request and close the account. (We have no real basis for denying money transfer requests on an account we are keeping open.) I think that in spotting scams, your gut feeling is extremely important.

I would bet money that if pressed for details about this "investment," the customer would say that it was something he learned about online, through email, or possibly through a phone call. Customer is going to lose all this money. But that's just my gut feeling, and if this was at my shop I'd be in the process of closing.

I think you may want to consider if you have SAR filing obligations. You suspect, based on what you know about your customer and how the transactions are occurring/where they are going, that the customer is being victimized by a scammer (i.e. illegal activity- scamming someone). The transactions are occurring through your bank, you don't have a suspect but have met the over $25,000 threshold. Additionally, have you considered 314b information sharing with Coinbase or Payward Ventures? They maybe able to provide you with additional information to build your SAR case, or determine that it is not suspicious.

"I don't think I can do much beyond what I've already done".....you could refuse to do the wire.