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A.steve

A Question About Uk Building Society Accounts...

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I am interested to establish what UK regulations require of building society accounts.

In a naive way, I've assumed that "numbered accounts" (i.e. those loosely associated with tax evasion) were the preserve of those who bank in tax havens like Switzerland - and that recent developments suggest that, even here, it might soon be possible to associate balances with their owners.

How does this work with respect to UK building societies? I can pay money into a building society account by direct debit using only numeric codes... and if I talk to my bank, it can't tell me (with any more certainty than which building society) whom I'm paying. Is it illegal to hold bank accounts in false names, or the names of the deceased? If so, how is this regulated in practice? Who/what prevents people from holding effective 'numbered accounts' in the UK?

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How does this work with respect to UK building societies? I can pay money into a building society account by direct debit using only numeric codes... and if I talk to my bank, it can't tell me (with any more certainty than which building society) whom I'm paying. Is it illegal to hold bank accounts in false names, or the names of the deceased? If so, how is this regulated in practice? Who/what prevents people from holding effective 'numbered accounts' in the UK?

If you're going to hold an account in a false name I don't think it's a good idea to pay into it by direct debit from an account in your real name!

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If you're going to hold an account in a false name I don't think it's a good idea to pay into it by direct debit from an account in your real name!

Duh! Obviously. :lol::lol::lol:

I'm not looking for advice about how I could evade tax, I'm interested in an account into which rent has been paid.

Search "Money Laundering regulations".

Hmmm - I've a vague recollection about new laws about this... but I'm not sure when they came into play... or, specifically, which ones are relevant in the context of UK building society accounts.

Does anyone know the consequences that might arise from using a dodgy building society account? What would ordinarily prompt regulatory interest? Is there any kind of procedure by which someone concerned can eliminate the worry that they might have paid into a 'bent' account?

This money laundering isn't quite what I'm on about. The worst case I've considered plausible is tax evasion... I'm not imagining international drug cartels or other 'Hollywood' illegality - nothing so grand has entered my (furtive) imagination.

Edited by A.steve

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I am interested to establish what UK regulations require of building society accounts.

My buildig society required full ID processing before setting up an account.

The usual person and address verification.

Don't see how you can avoid being transparent with large sums of money these days.

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You need ID... passport etc and to be on the electoral role to open an account.

Basically they go to the credit checking agencies to make sure you are a real person.

You could open an account in someone elses name, but then, they'de have access to your money.

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Before there was the internet and automated transfers, when people used cheques, banks actually used to ensure (as far as is possible) that a cheque was only paid into an account matching the payee name on the cheque.

There is solid banking case law (via the courts) on this to do with the legality of the instrument, ownership and so on.

In the case of 3rd party cheques (i.e. a cheque payable to me, which I give to you in settlement which you pay into your account) the bank would require the cheque to be endorsed by the payee on the back to enable title to pass for it to be accepted into your account. They would only do this if they knew you well. Otherwise they probably wouldn't accept the cheque at all.

Then, sometime in the 90s, the banking system all went to sh1t. Cheques were no longer cleared via their holding branches because it wasn't cost effective to do so, nobody was taught banking law anymore, because banking was reduced to supermarket checkout status, people like Hornby and Applesh1t were put in charge and banks became little more than a front sales office.

So, I imagine there is still the same legal banking law in place, but nobody gives a t0ss any more. Banks would rather wait to be sued and perhaps pay out than actually do things by the book and the law, 'cause it's far cheaper and they don't have to train anyone.

However, if you want to ensure that money you are paying into an account goes into an account in the name of the payee, then I think you would pretty much have to go to the account holding branch, pay by cheque with the payee's name clearly on it, mark the cheque 'account payee' only and ask the girl on the counter to check that the payee's name matches exactly the account holder's name.

Then you're covered.

Edited by Red Kharma

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edited out.

Edited by PotNoodle

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No difference between opening banks or bsoc accounts...I'll do the search for you.

Ta... though these documents seem to approach things from a different direction to mine.

Looking at the MoneyMadeClear site (because I've an interest in computer security, not because I'm a criminal mastermind) I am immediately forced to wonder how hard these regulations might be for someone to subvert in practice.

As I see it, for example, a passport and a council tax letter should be easy enough to establish... passports are "lost" all the time - and those who don't regularly travel likely don't check they've still got theirs until they are due to head for the airport. Another glaring hole is that people sometimes die - what assurance can there be that the accounts of deceased will be closed?

Another striking thing about the documentation you've found is that it all appears to apply to accounts opened recently. What assurance can we have about long-standing accounts - perhaps accounts opened when regulatory requirements were even less strict?

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You need ID... passport etc and to be on the electoral role to open an account.

Basically they go to the credit checking agencies to make sure you are a real person.

I don't think you need to be on the electoral role - I opened an account when I was not on the electoral role, because I'd recently moved. (Maybe I was on it elsewhere...) Britannia seemed quite happy with just my passport.

I checked with Experian - they didn't think I was on the electoral role at that time.

You could open an account in someone elses name, but then, they'de have access to your money.

Not if the account is in the name of a dead person... or of someone who has emigrated permanently. :)

Edited by A.steve

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However, if you want to ensure that money you are paying into an account goes into an account in the name of the payee, then I think you would pretty much have to go to the account holding branch, pay by cheque with the payee's name clearly on it, mark the cheque 'account payee' only and ask the girl on the counter to check that the payee's name matches exactly the account holder's name.

Interesting take... the tenancy requires payment by direct debit. I'd never really thought about this before. Direct debit suits everyone far better from the perspective of simple automation... Interesting that it seems to undermine confidence in the financial system, however.

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I don't think you need to be on the electoral role - I opened an account when I was not on the electoral role, because I'd recently moved. (Maybe I was on it elsewhere...) Britannia seemed quite happy with just my passport.

Not if the account is in the name of a dead person... or of someone who has emigrated permanently. :)

Well, fraud is fraud. People will always commit fraud. The problem is that if you are discovered then you may find you are up before the beak and no longer have legal title to the assets.

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Well, fraud is fraud. People will always commit fraud. The problem is that if you are discovered then you may find you are up before the beak and no longer have legal title to the assets.

Of course. My question is rather practical: What mechanism is in place by which this sort of fraud would be detected?

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Interesting take... the tenancy requires payment by direct debit. I'd never really thought about this before. Direct debit suits everyone far better from the perspective of simple automation... Interesting that it seems to undermine confidence in the financial system, however.

Well, as has already been pointed out, automatic transfers leave an audit trail.

Direct debits suit the originator and the banksters because they're low cost. You are effectively signing over your bank account to someone else with an indemnity from your bank. Account holding branches used to check direct debits for authority believe it or not. Now they are so common place they don't care. Banks would rather they were abused and if the 'customer' notices or complains just give them their money back. It's cheaper than verifying the authority exists and the payment from your account is valid.

I have only 2 direct debits. I would reduce that to zero if I possibly could.

Edited by Red Kharma

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Of course. My question is rather practical: What mechanism is in place by which this sort of fraud would be detected?

Biometric ID cards. :P

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Interesting take... the tenancy requires payment by direct debit. I'd never really thought about this before. Direct debit suits everyone far better from the perspective of simple automation... Interesting that it seems to undermine confidence in the financial system, however.

I lived for a while in an HMO (sold flat and bought a BTL).

Eight large rooms were actually numbered as "flats" at the property.

Some people were paying cash weekly as rent.

The daily post was extremely interesting - a host of names, 90% of which had no relation

whatsoever to anyone living there.

The possibilities were interesting.

Whether or not I took advantage of the situation is something I am not going to comment on.

Sir Adrian Stokesby-Randall QC

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I have only 2 direct debits. I would reduce that to zero if I possible could.

Ooops - I might have lied... I think the rent is a "standing order" - since the sum and frequency of payment is fixed.

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Of course. My question is rather practical: What mechanism is in place by which this sort of fraud would be detected?

You checking your bank statement. That's it. Nothing else.

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You checking your bank statement. That's it. Nothing else.

When I check my bank statement, there's no check to see that the person I'm paying is still alive.

I asked my bank - all they can tell me is the account number and sort code for the building society and their internal reference number for their customer. Since I'm not a customer of the building society in question, I've no way to proceed - the building society will be prevented from discussing anything with me on the basis of data protection.

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Ooops - I might have lied... I think the rent is a "standing order" - since the sum and frequency of payment is fixed.

Well, it could be either. A direct debit can still be used to collect fixed payments. The difference between them is essentially that a standing order is similar to regular cheque payments. It is set up by the account holder to make specific payments on specific dates. A direct debit is a permission for the 3rd party to claim money from your account, and is usually looser. There is no indemnity for a standing order since it is assumed that if you tell a bank to make payments on your behalf to another account, that is what you intend to do. Once the payment leaves your account it's gone - the transfer to the payee is legally discharged.

Since you have given the bank the name, account details, value and dates it isn't up to them to verify them. Similarly the receiving bank won't check it at all. So long as the account details are valid they will accept the payment. They won't validate the payee name of course and there is no recourse.

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Since you have given the bank the name, account details, value and dates it isn't up to them to verify them. Similarly the receiving bank won't check it at all. So long as the account details are valid they will accept the payment. They won't validate the payee name of course and there is no recourse.

The sending bank won't even verify the recipient's name matches. They told me so.

It's all adding up to be a system of which Al Capone would be proud to have invented.

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When I check my bank statement, there's no check to see that the person I'm paying is still alive.

I asked my bank - all they can tell me is the account number and sort code for the building society and their internal reference number for their customer. Since I'm not a customer of the building society in question, I've no way to proceed - the building society will be prevented from discussing anything with me on the basis of data protection.

Yes. The reason for this is that you are making the payment. It is assumed, and not without justification, that you wouldn't instruct your bank to make a payment unless you wished to do so.

Your bank are executing your instructions. So they're in the clear. It is up to the recipient bank to have verified that their customer is valid, alive, who he says he is etc. If he isn't then that's where the possible fraud lies. You would need to go to the account holding branch, and make a payment by cheque to verify the validity of the account name and specifically request them to confirm it. If they accept the cheque then I think legally you have made a legal transfer into that account specified by the precise payee name on the account. But, as I say, since I doubt anyone in a bank would know any of this these days you may just get a blank look from them. But the payment would be valid. Again, it is assumed you intended to make the payment to the person named as the account holder else why would you do it??

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Again, it is assumed you intended to make the payment to the person named as the account holder else why would you do it??

I'm not sure if you're intentionally playing devil's advocate here... When it comes to considering possible fraud, one has to assume that not everyone tells the truth. A valid reason to pay money into an account might include that a letting agent tells you that this is what is required for rent payments. A letting agent who (as far as I can tell) is not regulated by the FSA and, frankly, is so inept that they'd be a trivial target for any fraudster with half a clue. The letting agent won't care as long as they get paid - they won't care if they're paid by a non-existent person, it makes no difference to them.

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The sending bank won't even verify the recipient's name matches. They told me so.

It's all adding up to be a system of which Al Capone would be proud to have invented.

No they don't. So long as it is a valid account number at a valid branch number the transfer takes place. Neither bank will check anything.

As I say, the thinking is that it is cheaper to resolve problems if they are brought to their attention after the event as an exception rather than to check each transaction for legality, validity, timeliness and so on. It's no different with debit cards. If your card is used fraudulently and you don't notice that's tough on you. It's cheaper than the banks/retailers actually checking that the signature on the back of the card is valid, matches the signature on the cheque (cause they're trying to remove all cheques) and that the person who signed the cheque/card is who they claim to be (For transactions over a certain value cheques often used to require secondary verification with a passport for instance). It is actually incredible how fast this has all changed. Who knows where we'll be in another 10-20 years, but it's pointing towards bio-metrics I think.

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I'm not sure if you're intentionally playing devil's advocate here... When it comes to considering possible fraud, one has to assume that not everyone tells the truth. A valid reason to pay money into an account might include that a letting agent tells you that this is what is required for rent payments. A letting agent who (as far as I can tell) is not regulated by the FSA and, frankly, is so inept that they'd be a trivial target for any fraudster with half a clue. The letting agent won't care as long as they get paid - they won't care if they're paid by a non-existent person, it makes no difference to them.

Legal cases require someone to make a complaint, that person to have an issue fairly tracable to the matter at hand etc etc

All banking is fraud - but no one complains and hardly anyone knows so nothing is done.

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So long as it is a valid account number at a valid branch number the transfer takes place. Neither bank will check anything.

So what you are saying is that unless the Police or the Inland Revenue etc are

interested, everything proceeds quietly because nobody cares.

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