Multi Currency Banking Problem

by | Apr 21, 2008 | Archives

Multi Currency Banking Problems Are Growing…Globally!

Recent messages looked at the problem that fewer and fewer overseas banks are willing to accept Americans as clients. US investors are slowly being locked into the US dollar which is losing purchasing power at an ever increasing pace.

I have been warning about this problem for many years.

Yet there is a bigger multi currency banking problem growing..all over the world.

One way  to protect against this problem is to own property overseas like this house.


There is more on this below but first  let’s look at this even bigger, ever grwing problem, that is happening now.

The anti terrorism laws are becoming so complex that global trade is being stifled….and I am not sure that there is a darn thing we can do about it.

A mess I have right now exemplifies the concern. I am sharing this personal dilemma so if it strikes you, you’ll be prepared.

I am buying condos in Ecuador and instructed my bank last Friday (nine days ago) to transfer a payment.

This is one of the houses I have purchased to rent.


and the kitchen

multi-currency-investment kitchen

and the art.


More on this in a moment…First back to the problem.

On late Monday (three days after I sent the instructions to send money) I received this note.

“Dear Gary, I confirm receipt of the transfer instructions, but new compliance rules requests a ‘reason for transfer’, therefore I kindly ask you to inform me about same? Kind regards.”

I was miffed. My banker of over 20 years was sitting on my money waiting for me to tell him what the payment was for. This was the second such payment. I had informed the banker earlier what I was doing.  The money was being transfered to the same lawyer as before…a very normal regular transaction.

That was bad enough.  I could have written this off as just bad service but I know the banker and the bank well. They are as good as banks get.

I recognized that part of the problem was mine…sending an instruction on Friday afternoon (remember this)…but still if the bank had some new compliance rules they shoud have informed me…in advance…not as a surprise.

I wrote back to the banker and he sent the money…no problem.

I wish.

Then, my attorney in Ecuador then sent this note on Thursday (now six days have passed):

“Good morning Gary, Yes, the money you wired arrived, but my bank is holding the money in the headquarters office in Quito and will credit the amount in my account  after we justify the source of the money.  I am very sorry about this.  My bank tells me that they need to know if the money comes from a loan, a retirement pension, a job, etc.  I believe a certification from your bank stating this will be enough.
Thanks.  Kind regards,”

At first I thought this was an American problem, with banks being especially careful with US clients, until I received this real shocker.

I apologized to the seller for the delay in his receiving funds.

He wrote back:

“Gary, thanks again..sorry about the problems with the transfer..we have the same problems.”

This businessman is a European…transferring money from Europe to American involvement at all.

This is a global concern and you should prepare.

I am lucky…this transfer was not urgent.  But if I had a contractual obligation this could have been disaster…for an honest businessman…dealing in a normal way with banks who have known me for decades.

It is now nine days since I asked my bank to send the seller money.   None  has been paid yet.

The anti terror laws are so onerous that banks are creating systems that are interrupting the flow of  business.

This is not all the bank’s fault. They have to follow the laws and often the laws are not practical.  Many regulations place an ufair burden on the banks.

Yet they must act as well.  In the end banks have to assure their clients that they can get their money when it is needed.  That is a bank’s job.

Yet we as investors and business people are going to have to help the banks.

Expect delays.  Check with your bank in advance about comliance regulations.

My bank did not give me adequate warning. Shame on them. Now that I know the problem, if I let this happen again, shame on me.

Nor did my attorney in Ecuador expect this hang up.Shame on her bank for not telling her in advance.
Yet this is the business world now.  I do not know that we can change it.  Your money could get stuck due to a stupid internal bank regulation or an over diligent compliance officer.

Nine days have passed.  My seller still does not have his money. I am not even sure at this stage what to do.

I hope this does not happen to you, but suspect that this will be a growing problem that we as business people will have to increasingly deal with.

Be prepared!


Join me with Thomas Fischer at Jyske Bank May 23-25 International Investing & Business Made EZ North Carolina.

Learn more here about how to really learn about multi currency opportunities in Ecuador at a low cost with Cotacachi  Ecuador House rentals

This is one house rental available now. More pictures are at Cotacachi  Ecuador House rentals

multi-currency-investment-botanical art