PayPal money-laundering nonsense

I’ve had several PayPal moments over the last few days. Here’s the first. Having sold a few items on eBay, PayPal informed me by email:

PayPal is required by law to comply with European Union Anti-Money Laundering regulations to collect information from customers when they receive more than the set limit in total payments. Please log into your account, go to the Account Overview page, and follow the instructions there about how to provide the required information. These steps need to be completed as soon as possible to comply with this regulation.

 Ok, so I went on the website which then stated:

In the past 12 months, you have received £650.00 GBP or more into your PayPal account.

This means you are on your way to approaching the £1,700.00 GBP annual receiving limit. This limit is put in place to allow us to comply with our applicable Anti-Money Laundering regulations.

If you do reach the annual receiving limit of £1,700.00 GBP you will no longer be able to withdraw or send money, fund transactions or close your account until you complete certain steps to lift your limit.

It is simple to complete the steps to lift your limit

Guess what…it’s not simple. Try as I might I could not get the PayPal website to recognise that I was not a company,  just an individual, and so there was no date when the company was established.

Needless to say, it didn’t let me complete the form without completing the date field for when the company was established. After several minutes of shouting expletives to arguably the world’s worst automated voice response system, I finally got through to a PayPal agent. He wasn’t particularly helpful, and could not explain why the seeming arbitrary amount of £650 had flagged my account. Anyway, after a bit of a heated debate, he explained how to fill in the offending date field. FYI: you can use the date you set up your PayPal account (but why oh why doesn’t it say that on the bloody website?).

Now let’s put this in perspective. PayPal issued the email alert to me when my account hit 38% of the supposed £1700 limit for compliance with anti-money laundering legislation. That does seem a somewhat overzealous risk assessment, so much so that I have quickly looked up PayPal’s anti-money laundering compliance on Google. What I have found is most interesting.

This article relates to the case of a company called Vortex Centrum, which received a similar PayPal email after its account was credited by £4,500. According to this article, there is nothing in EU, UK or Irish law that places any additional due diligence burden in relation to payments which, in aggregate, reach £4,500. The author states: Whilst PayPal is free to set any trigger figure it wishes, it is completely false to suggest that that figure is set by any law.

I think PayPal has failed on several counts here. The anti-money laundering alert email seems somewhat arbitrary; there is no detailed explanation of why the customer has been targeted nor a link to the appropriate legisation; the PayPal web form for verifying the customer only reflects certain types of business user and its automated voice response system at its call centre defies logic and puts too many barriers in the way to prevent you from speaking to an agent, when you have a legitimate query.

Have you had a PayPal experience? Please get in touch.