Author Topic: My LC investor's account funds held hostage due to "Anti-Money Laundering Laws"  (Read 1761 times)

Debt Free

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So having invested in LC (both notes and IPO) for several years, I have found my account now being held "hostage" due to "anti-money laundering law" according to LC.

As a sole proprietor, I have kept cash in one LC account for my business and I draw the interest out at EOY as my "Christmas Bonus".  This last Christmas  was about my fourth year of doing so with this account.  Also, I had changed the linked bank account to send the money to a different business account than what I've normally used for the withdrawal.  I then changed it back to the original account in February so that I could deposit some extra cash back in.

During this time, the bank for my business accounts (20 year relationship) I've decided to move away from due to some of their new policy changes (Third variation of the bank.  Original bank victim in the financial crisis sold to bank #2 who merged recently with bank #3).  I've established relationships with another bank (5 year personal relationship, internet bank, now getting most of my business accounts) and a credit union (20 year personal relationship, brick-and-mortar, getting the remainder).

I went to change the linked bank account in LC and see the following when I clicked on the link...

Quote
To prevent money laundering activities and to protect the identity of our investors, Lending Club limits how often investors can change their linked bank account. You are not permitted to change your linked bank account at this time. For assistance, please contact Investor Services at investing@lendingclub.com.

I have transferred 99% of the money out of the original bank (which I am linked to) to my new banks.  After a transfer from LC to that bank clears in another day or two, I will be closing it down completely.

So I contacted investor relations at LC today about it.  Phillip stated that due to the AML laws, the account cannot be changed for at least another three to four months due to the fact that I had made an account change in February.  As we all know there are ALWAYS manual override capability (supervisory level) to situations like this.  Phillip understood my situation and predicament and agreed that LC's platform is "primitive" and that they "are working on improvements such as this issue".  But come on...  We talked about how with every other financial institution we've dealt with (banks and brokerages alike) do not lock the accounts like this making it virtually impossible to move money in or out for several months.  If anything, if it were a possible ID theft situation, simply answering the 20 pages of security questions allows the rep to unlock the account within a couple minutes.  He mentioned of course the ability to wire funds ($30 fee no thanks) or by check ($15 fee plus 10 business days again no thanks).
« Last Edit: March 25, 2017, 07:08:02 AM by Debt Free »

nonattender

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Re: LC account funds held hostage due to "Anti-Money Laundering Laws"
« Reply #1 on: March 25, 2017, 06:18:12 AM »
Dude....... You owe me $100 for having read that.

Also, you should get a job at the Washington Post writing sensational, but totally inaccurate and misleading, headlines.  You'd fit right in...

A little nonsense now and then is relished by the wisest men.

Debt Free

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Lol.  Sensational headline, maybe a tad with the word "hostage" in it.  But the fact remains that they won't  update my bank information as it stands right now due to AML laws.

So what's inaccurate or misleading about it?

Thinking about your comment, did you interpret it was referring to THEIR company funds?  If so, my bad.  Not what I meant to infer.

I changed the topic to try and be less "dramatic" for those more gullible.
« Last Edit: March 25, 2017, 07:10:04 AM by Debt Free »

nonattender

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"LC Not Setup To Handle 19 Bank Account Changes --- film at 11!"

Please deposit $100 per each additional clarification you'll need...

Or I'll loan you the $30 for a wire or $15 (plus stamp) for a check - but you're not gonna like the fees I'm gonna add and the weekly vig. :)
« Last Edit: March 25, 2017, 07:12:36 AM by nonattender »
A little nonsense now and then is relished by the wisest men.

Debt Free

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FYI, it was 2 changes made over 4 months.  From account A to account B (first) and back to (A) 4 months later.  Hardly a red flag to trigger a lock on changing a linked bank account.  Especially when many institutions allow multiple linked accounts and more frequent changes.

And honestly, this wouldn't be an issue if LC would allow you to PUSH ACH transfers which is more secure for the account holders.  But no, they only allow a PULL forcing you to store your bank account information on other servers.
« Last Edit: March 25, 2017, 07:59:19 AM by Debt Free »

Fred93

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Lol.  Sensational headline, maybe a tad with the word "hostage" in it...

So what's inaccurate or misleading about it?

The word "hostage" seems incompatible with the fact that they offered to mail you a check.

Debt Free

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I'm not a big fan of paying exorbitant fees to access my money when...

a)  This shouldn't even be an issue.  If I changed accounts "19x" in a  month, different story.  Two changes 4 months apart shouldn't trigger this.

b)  ACH is designed to be much more efficient and quicker than this, just not on this platform.

c)  How would you feel if it was your $100,000 and you had changed banking institutions and found yourself unable to pull money out???

The word "hostage" seems incompatible with the fact that they offered to mail you a check.

I'm actually wanting to move money into the account after the first of the month.  ACH is quicker and more secure than sending a paper check that is held for funds to clear.  But it doesn't sit well in my stomach that a simple override cannot be accomplished over the phone with security verification.

I put this out more to find out if anyone else had a similar experience and if so, how was it resolved short of waiting for the 6 months to pass by?
« Last Edit: March 25, 2017, 07:53:03 PM by Debt Free »

nonattender

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c)  How would you feel if it was your $100,000 and you had changed banking institutions and found yourself unable to pull money out???

The word "hostage" seems incompatible with the fact that they offered to mail you a check.

I'm actually wanting to move money into the account after the first of the month.  ACH is quicker and more secure than sending a paper check that is held for funds to clear.  But it doesn't sit well in my stomach that a simple override cannot be accomplished over the phone with security verification.

Now you want to put more money into LC?  You wrote a 5 paragraph essay on how you wanted to withdraw all your money and couldn't - "hostage!" - and, now, in, what, 6 days, you want to deposit more into your LC account?  Are you kidding me?  Make up your mind, buddy - no wonder you didn't get anywhere on the phone...

You said you were a note investor as well as a stockholder, so, let me just lay it out for you, as I hold shares, too:

I want retail investors to remain able to access the platform and invest in this asset class.  I think it's long-term good, for retail investors and for LC - but it ain't "necessarily necessary" (see ninety other platforms that didn't bother to go through the trouble to cater to retails or are now just captive marketing channels for large funds) - and dealing with piddling crap like this should strike you, as a stockholder, as a tremendous waste of time.  You're an edgecase, at best - at worst, you're the worst possible expenditure of my (as a stockholder) employee's time.  Phillip should get a medal for listening to what was probably 30 minutes of you explaining all of this convoluted bullshit - that, or he should be fired for not escalating you to someone who would politely tell you "we can't - wire or check?  we'll waive the fee, this once, but from now on, here's our 1-900 customer service number that charges $10/minute and you'll be required to use that for all non-email inquiries in the future"....

But, as far as your "feelings" and your "stomach" - think like a stockholder, which you said you were:  YOU ARE A DRAG ON RESOURCES.

That is why there is a fee for someone dicking around with FedWire or playing 1950's envelope-opener/stuffer, scanning/printing, etc...

Period.  The End.  You asked for it.  Don't be the guy who finally pushes them over the line and they're like "these retail investors are all nuts - can't we just deal only with funds or HNWI or middle-people?"  Don't be that guy.

-Your Fellow Stockholder, whose time and money you have wasted.

A little nonsense now and then is relished by the wisest men.

Debt Free

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Ok schmuck, read my "essay" again.  Nowhere did I say I wanted to pull all of my money out.  At most it was a 5 minute phone call.  4 minutes of auto-attendant followed by a 1 minute conversation.  Hardly a waste of time or resources unlike your blow-hard rants.

Crawl back under your rock, start taking your anti-psychotic meds again, and take a vacation.  You need it.
« Last Edit: March 27, 2017, 07:07:09 AM by Debt Free »