HSBC Squeezing Small Businesses for Cash and Transfers

The HSBC scandal continues as small business owners scramble to get their cash out of the bank. Since HSBC closed small business accounts this month, and to many people apparently without warning, employers have been hounding the bank to get their cash out in order to pay employees and bills. Not to mention if people elected for paperless bank statements and needed to access statements at tax time, but the bank would not or could not release them.

The trickle effect continues, as many businesses use PayPal to process orders online and take credit cards from clients over the phone or via a payment button or link. The cash that sits in PayPal that is normally transferred to a bank account needs a business bank account in order to be transferred. If the bank account for that small business was at HSBC, then the funds are frozen in PayPal as well.

Brett King, founder of Moven, speculated in a comment on our earlier blog post that he suspects something grander is going on at HSBC, since closing accounts at Holiday time is so...extremely uncouth and hurtful to pocketbooks and thus moral.

Could it be that HSBC has bigger problems? Since they violated the Trading with the Enemy Act? And a slew of other money laundering acts as reported by Rolling Stone in their article "Too Big to Go To Jail" published in February 2013?

According to the article: "Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks' profit – but they didn't extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses."

Also according to the article, HSBC's American subsidiary was served a cease-and-desist letter for operating in the United States in 2003 unless they cleaned up their act.

Alrighty then. Where best to keep business money these days? Even when we need money in digital forms to zip over to vendors or employees or pay bills?

Watching small businesses lose access to their money is quite unsettling, and makes the account itself feel like what HSBC is required to warn about with regard its investment accounts, from a screenshot taken from their website:

Too small to read? Its warnings for investments include:

• MAY LOSE VALUE
   
• ARE NOT GUARANTEED BY THE BANK OR ANY OF ITS AFFILIATES
   
• ARE NOT A BANK DEPOSIT OR OBLIGATION OF THE BANK OR ANY OF ITS AFFILIATES

Sadly, bank deposits made by small business owners are feeling as if they just got screwed, were not protected, had no guarantee of a reliable bank account, and lost value when they haven't been able to access their cash for weeks. Especially when the business bank account is connected to another money holding account which depends on the former to make a withdraw.

Shocking.