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Chequemate: U.S. banks hold onto Finns' money for weeks

Getting a cheque cashed from across the Atlantic takes an age and costs a pretty penny


Chequemate: U.S. banks hold onto Finns' money for weeks
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By Jyri Raivio
     
      Case one: It was a splendid wedding, the bride looked gorgeous and the groom was dashing.
      An uncle across the water in the U.S. of A. also came through and gave the happy couple a cheque drawn on a U.S. bank as a wedding present.
      Only, basically... it would have been better if he hadn't.
      Turning the bit of paper into digits on a Finnish bank statement took weeks and cost the earth.
     
Case two: Finnish citizen Mr. J. (initial not changed) had worked for years in the United States and had left some savings on deposit in an account over there with Bank of America (BofA).
      Last spring, J. decided to repatriate the savings to Finland.
      He wrote a cheque drawn on his American bank and on April 15th, he placed it in the hands of a Nordea branch to be claimed.
      The friendly Nordea teller warned that the operation in question could take "quite some time" and that it might end up costing a fair bit into the bargain.
     
The customer sat back to watch the process unfold through the lens of his access codes to his online BofA account, and he noticed that a sum in dollars equivalent to that written on the cheque had been withdrawn from his Stateside account exactly one week after his visit to Nordea, on April 22nd.
      Hence he prepared himself for the moment when the jolly greenbacks would appear on the foreign exchange account with Nordea that he had opened for the purpose.
      They should be there any day now, he thought as he waited.
      And waited.
      And waited and waited.
     
The money bubbled to the surface in the Nordea account only three weeks later, on May 14th.
      The operation really did take a while, a month in all.
      And just as had been promised, it also cost an arm and a leg.
      Nordea charged USD 123.43 for the transfer, and the foreign bank a further 15 bucks.
      At the current rate of exchange, the exercise involved costs to Mr. J of EUR 92.75.
     
After an experience like this, one question inevitably springs to mind.
      Where was the money - already withdrawn from the U.S. account - hanging out for the three weeks before it made its reappearance, somewhat reduced?
      "It certainly wasn't with us", said a shocked Merja Nieminen, from Nordea's International Private Banking.
      She reports that the American banks involved in the process have stated that the cashing of a cheque and the transfer of funds takes four to six weeks.
      According to Nieminen, the money is collected by the clearing bank used by Nordea in the States, namely Wachovia, a wholly owned financial services subsidiary of the familiar Wells Fargo, whose history in turn dates back to those famous Western movie stagecoaches.
     
Wachovia announces the day on which the money is electronically wired to Nordea, and Nieminen says that when it is, it will be on the client's account here the same day.
      According to Nieminen, Nordea's own transcation charges arise out of the handwork required in facilitating the transfer. Letters are written and the cheque is sent by courier to the United States to be cashed.
     
So... the BofA money was hanging around on theWachovia account for three weeks and doing its bit to produce interest for Wachovia, and not for the money's rightful owner, Mr. J.
      In addition ,the ESD 15.00 fee to the foreign bank went to Wachovia.
      In spite of repeated urging from Nieminen at Nordea, Wachovia has in no shape or form justified to its partner Nordea exactly why the money needs to rest up in its account for such a long time.
     
The Financial Supervisory Authority (Finanssivalvonta), which is responsible for the supervision of Finland's financial and insurance sectors, does not interfere in any way in this kind of banking transaction, or certainly not if the party requiring oversight happens to be other than a bank operating in Finland.
      "We do not have that kind of jurisdication over American banks", says risk specialist Markku Koponen from the FSA.
      In Europe such hogging of other people's money should not happen, at least not after the launch of the Single Euro Payments Area (SEPA).
     
The banks in the United States enjoy a nice little earner from the transfers of money, including that belonging to Finnish clients.
      according to Merja Nieminen at Nordea, such transactions, involving cheques come into Nordea on a daily basis, one or two each banking day.
      This antiquated and expensive means of repatriating money has to be used even in the business world, because many of the companies' American business partners still rely on cheques, which we abandoned as museum-pieces or put up in gilt frames in the wall years ago.
     
Helsingin Sanomat / First published in print 26.10.2009

More on this subject:
 COMMENT: Like "borrowing" a bike

JYRI RAIVIO / Helsingin Sanomat
jyri.raivio@hs.fi


  27.10.2009 - THIS WEEK
 Chequemate: U.S. banks hold onto Finns' money for weeks

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