A change of address led to our Wise accounts being shut down

Story as old as time. Fintechs may be cheaper or have a cooler app, but if you ever stray off the happy path, you can kiss your account and/or money goodbye.

What’s the difference between that and traditional banking?

Been party to more than a couple situations with large banks who decided that you violated some hidden AML related policy and with zero recourse. You are lucky to even get your money out of those accounts without lengthy litigation.

Might happen more with fintech, but traditional banking does not remotely make you immune to this. Start doing anything interesting not “normal” and you’ll find out the hard way.

Banks usually have government oversight and legal obligations to customers. A fintech might have neither, it may also be doing business from some other country where it is not possible for you to make use of the government guarantees, or it may be hard to sue the fintech.

When it comes to AML/KYC you get effectively zero government guarantees. It’s almost the opposite.

I agree in the sense of FDIC insurance and being nominally operating under the banking regulatory system - but those typically offer exactly zero protection to a whole category of not-crimes.

A bank can decide you are suspicious and simply freeze your accounts indefinitely - and stonewall you at the customer service level. It’s not like they are required by any law to respond to you or anything like that.

There is likely more recourse if you have enough funds worth perusing legal action to its final conclusion - if you win then you can be more assured the bank will exist six years later when your judgement finally hits. Enjoy paying those legal bills though.

Having witnessed this happen and seen six figure losses due to absolutely zero crime being committed, I basically operate under the mental model that any money within a bank or financial institution is their money and not yours.

With a traditional bank you can walk into a branch and explain the situation to a human. I've had to do this several times with my large US bank, one time when traveling but thankfully to a place where they had a branch. In the end things got fixed up but not without much time and hassle expended.

I get the impression these institutions run ML software that was written by people who knew it would generate false positives but is now run by people who have been told that it is always correct. I say this having seen a bank manager call the group responsible on an internal phone line and them tell the manager that they suspect they (the branch manager) is a fraudster.

In many places fintechs are just financial sector companies and operate by the same rules. You do need to check what regulation one is subject to (or not subject to) in your country though.

A lot of banks are now fintechs - no branches, everything in an app, with a website if you are lucky. The rest would like to be like them to cut costs.

Wise is straightforward in the UK, where it is regulated by the same regulator as banks but subject to different rules (the big difference being customer fund ringfencing rather than a deposit guarantee). It varies in other countries but is locally regulated in a good many.

Reputable financial businesses follow regulations in countries in which they do not operate (e.g. by not opening accounts in countries where they are not authorised).

The big British banks are closing all their branches so that is becoming a thing of the past for us.

The legislation requires you to send any suspicious transactions to the regulator and requires you not to tell the customer.

So, from an ML perspective you want to maximize recall, precision be damned.

Doubt that true. Pretty sure that if you assign the case to a powerful lawyers, you’ll Get your funds back. Now for the account, I can’t tell … but do you want to?