p2p transactions within same bank and between different banks -- scrutiny?

[Samman Kaseeb Sleiman]

I want to confirm my assumption:
all being equal, when 2 parties make transactions:
a) within same bank
b) between different banks

the amount and probability of scrutiny in the case (a) is -- scrutiny?

bloody editor

the amount or probability of scrutiny in the case (a) will always be less. Correct?

***the same bank in the same country

 

[Sols]

No, not always. That assumption is not correct.

 

[Samman Kaseeb Sleiman]

No, not always. That assumption is not correct.

You mean, *all being equal*, it's incorrect?

The only variable in my question is "within same / between different bank(s)"

 

[icecold]

WTF !! where are you from, planet of the apes ?

 

[Sols]

You mean, *all being equal*, it's incorrect?

I understand what you want out of this question. But you're taking a highly logical, almost binary approach to something that is much more complicated.

If we take "all else being equal" to also mean the same country (i.e. domestic bank transfer from another bank vs. internal transfer), there is indeed generally no difference between external and internal transactions in most cases. Banks generally do not configure their transactions monitoring systems to ignore the kind of warning signs they have configured for external transactions. That's not always the case, though. I have seen some financial institutions reprimanded by regulators for being too relaxed about internal transactions, so it can and does happen.

A suspicious transaction is suspicious regardless of origin and destination. If you receive a large sum of money from a counterparty that is not in line with your transactions and risk profile, in most cases it will not make a difference if the transaction came from the counterparty's account with the same bank or another bank.

If "all else being equal" does not limit us to domestic transactions (i.e. we're now comparing internal transaction vs. international transaction), there is a probability that monitoring tools will treat international as higher risk than internal. Depends on the relevant jurisdictions. For example, Denmark to Sweden is practically the same as Sweden to Sweden, but UAE to Sweden is different.

 

[Samman Kaseeb Sleiman]

Alright.

* within a country
* not a big amount, let's say $1-5k

Such a transaction, whether it's sent (a) within the same bank, or (b) between 2 different banks -- in terms of potential scrutiny it won't make a difference.


But isn't in the case (a) a bank is more sure that a transaction is legit? Because it's this very bank that's done KYC on both of its customers itself.

Whereas in the (b) -- bank A can't completely trust the KYC process of the bank B, hence more likelyhood of an alarm bell. "Who knows what the protocols of the bank B in regards to KYC. They may be of very low requirements"

 

[Sols]

But isn't in the case (a) a bank is more sure that a transaction is legit? Because it's this very bank that's done KYC on both of its customers itself.

As I wrote:

A suspicious transaction is suspicious regardless of origin and destination. If you receive a large sum of money from a counterparty that is not in line with your transactions and risk profile, in most cases it will not make a difference if the transaction came from the counterparty's account with the same bank or another bank.

Of course, there are edge cases where a specific local bank might have a reputation for doing poor due diligence, and/or is currently undergoing a publicly known compliance audit. That could change how an external domestic transaction is perceived.

Whereas in the (b) -- bank A can't completely trust the KYC process of the bank B, hence more likelyhood of an alarm bell. "Who knows what the protocols of the bank B in regards to KYC. They may be of very low requirements"

As I wrote:

If we take "all else being equal" to also mean the same country (i.e. domestic bank transfer from another bank vs. internal transfer), there is indeed generally no difference between external and internal transactions in most cases. Banks generally do not configure their transactions monitoring systems to ignore the kind of warning signs they have configured for external transactions. That's not always the case, though. I have seen some financial institutions reprimanded by regulators for being too relaxed about internal transactions, so it can and does happen.

So there is a possibility that internal are incorrectly treated as lower risk but it's not common enough to be relied on.

It depends on why the transaction could be considered suspicious. You mention a P2P transaction. Whether Bob sends money to Alice within the same bank or from another bank within the same country, the same regulations apply and as such the same effective degree of screening should take place. If either party is a PEP or sanctions, that's knowable to either bank so no difference between internal vs. external domestic.

Internal might be at higher risk of review if either party is known to the bank to have an unpaid/overdue debt with the bank or otherwise known to the bank to be problematic, which the bank might not know if it came from an external source. Depends on availability of central registers in the relevant jurisdiction.

 

[Samman Kaseeb Sleiman]

I see.

Thanks