[engendered]

Banks have a strong incentive to avoid money laundering activities

Most banks have automated systems that flag on certain automated conditions (I know because I built one). Contrary to some of the posts in here, they do not want to flag accounts, and most do the absolutely minimal mandated under AML legislation.

We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else".

As always everyone is operating under very incomplete information.

[desdiv]

We have no idea why his account was closed, but it is extremely unlikely it was due to suspected money laundering. If they suspect money laundering, they legally must report it (this is the case in the US, Canada, and the UK, at a minimum) to the appropriate government agency, where it will be investigated. They can't simply say "looks like money laundering, go somewhere else".

"Fill out AML suspicious activities report" and "close his account" are mutually exclusive courses of actions. Just because one happened doesn't mean the other ones didn't happen.

Like you said, we're operating under very incomplete information, so let's not assume "fill out AML suspicious activities report" didn't happen here.

[engendered]

They usually are mutually exclusive, at least in the US and Canada. If an AML flag is triggered, or there is reasonable suspicion, they have to report it and are barred from telling you that you've been reported. Kick you out as a customer would be a great way to undermine the whole AML thing.

It is entirely possible that if he simply had transfers to or from known Bitcoin entities, that would have triggered it. Not because he did anything illegal -- Bitcoin isn't currently illegal in most places, and they have zero onus to report anything in that case -- but that the bank is hedging that there will be issues that come up in the future and they don't want the hassle. That they have determined that Bitcoin is going to be a regulation hassle in the future so they simply want to have nothing to do with it. This is in no way money laundering, or suspicion of it, and they needn't report anything -- just tell him to get lost so in a year or two when this becomes a big thing they have limited their exposure.

[desdiv]

>If an AML flag is triggered, or there is reasonable suspicion, they have to report it and are barred from telling you that you've been reported.

Completely agreed.

>Kick you out as a customer would be a great way to undermine the whole AML thing.

This is where I think you're overreaching. Do you have a source on this? AFAIK closing an account isn't against any AML legislations. There's no onus on the bank keep a suspicious account (whether it's AML related, Bitcoin related, or just because the bank manager didn't feel like serving this account was profitable proposition anymore) open even when it's against their financial interest to do so.