Friday, 07 August 2020

Why won't HSBC allow me to buy medicinal cannabis online from a dealer who only accepts Bitcoin as payment?

S.M. writes: I tried to buy Bitcoin using my online account with First Direct, which is part of HSBC.

Not only was the transaction declined, but the bank froze all my online payments and insisted I had to phone them instead.

I was then told I could make online payments again, but only to previously existing accounts. So, is it illegal to buy Bitcoin?

No, it is not illegal to buy Bitcoin. You were told more than once by First Direct that it would not make the payment you requested and that this was for your own protection. But as you have told me and the bank, you have more than £3 million in assets and were only switching £1,000 into Bitcoin, so you hardly needed protecting.

What then was the reason for First Direct's refusal to let you spend your own money as you wish? When I discussed this with you and the bank, the answer gradually became clear.

The account to which you were sending your £1,000 was flagged as suspicious on the bank's systems, which is why the transfer was blocked and you were questioned. You explained that you are in your 60s and your wife is in her 70s and ill.

Here is the problem. You were honest enough to explain that you were going to buy medicinal cannabis online from a dealer who would only accept Bitcoin as payment, presumably because it would be hard for the authorities to trace.

You let matters lie for a week and then tried again, giving a different reason for the deal. But the bank again turned you down, repeating that this was for your own protection. Frankly, I think it was more for the bank's protection. Without intending it, you had put the bank in the position of being a potential money launderer, handling funds for your drug deal. I am not making any judgment on the uses or misuses of cannabis, but I can understand completely that if your cannabis was intercepted in the post, and you told the police that HSBC knew all about the deal, then that would cause the bank more than a little embarrassment.

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