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Thursday, 23 April 2015

Bonds against the Scammers

Representatives from EHD and London City Bond (LCB) met with me on Tuesday 21st April in Central London to discuss launching a new initiative – Bonds against the Scammers. In particular they will now be sharing information with each other and investdrinks about scam wine investment companies. 

Although in competition with each other, EHD and LCB are committed to making life difficult for wine investment scammers. This is certainly business that they do not want.

It is not wanted because wine should be enjoyable and they do not want to see their customers being ripped off. It is also not wanted because when things go wrong and the scam company goes bust or disappears, then it is usually the bonded warehouse that is left to pick up the pieces. Left to deal with understandably upset and irate investors, who may often have sunk a significant proportion of their life savings into wine they either doesn’t exist or for which they have been charged far too much.

Although the bonded warehouses are not in any way part of these scams, it is not surprising that some defrauded investors unfortunately assume that the bonded warehouses are somehow part of the scam.

HMRC (HM Revenue & Customs) and the money laundering regulations require bonded warehouses to carry out due diligence on customers wishing to open accounts. It is clear that these regulations put the emphasis on those wanting to open accounts to prove that they are legitimate.

LCB and EHD already do refuse to open accounts for companies they consider dubious as well as closing or freezing accounts of companies or individuals whose accounts arouse suspicion.

Often scammers refused an account at one bonded warehouse will apply to another bonded warehouse in the hope of slipping through. EHD and LCB agreeing to share information on companies and individuals refused an account or who arouse suspicion will make life more difficult for the scammers.

The bonds will also exchange information on their due diligence procedures and see how far these can be coordinated.  

We hope that other bonds especially other third party warehouses like Octavian will join in this initiative. 


  1. But who acts as judge?

    1. Anon. Current legislation requires bonded warehouses to do their due diligence on applications. Just as when applying for a bank account, it is down to the applicant to show that they are legitimate.

      The message is clear EHD and LCB do not want the scammers business.

  2. Anon. Current legislation requires bonded warehouses to do their due diligence on applications. Just as when applying for a bank account, it is down to the applicant to show that they are legitimate.

  3. I think what the good gentleman at the top is saying is, do you Jim have any influence on who is accepted for accounts at either bonded warehouse and if so based on what factors would the applicant be deemed worthy of an account. If you do not have any influence on the proceedings, what were you doing there in the first place?

    By the way some cute photos on your Twitter page, jollying it up with prominent EX Bordeaux UK staff..

  4. Anon. Thank you for your elliptical comment. Pity you haven't read the post with due care and attention. The clear message is that EHD and London City Bond do not want the scammers business. No apology if you find this inconvenient.

    1. Find what inconvenient? Your thanks for my ellipsis or that the bonds will pass on the scammers business? I apologise and will pay more attention to the clear messages in your posts James, simplified, will you be consulted by a bonded warehouse on receipt of a storage application? as I cant think of any other reason why a bond would consult with you or investdrinks. The other Anon however has read my mind and just blurted it out - you cant is the answer, judge those who might perpetrate a scam that is, this isn't minority report now is it?, even if someone had been a naughty boy or girl in the past or even if they had been associated with naughty boys or girls, are they "naughty?" and thus cast aside, if they have paid their dues one way or another are they welcomed with cautionary open arms? or will "sharing information" with investdrinks put the kibosh on the application? if acceptance is simply the bonds prerogative or as Anon beautifully put it "a funny feeling" then this article is, well, rubbish and there would be no point in bothering our exhausted host would there? Come on James, you knew what I meant all along, see if you can answer any or all of these questions without throwing a linguistic diversion. No apology if deciphering my hazy use of the English language is, somewhat inconvenient..

  5. Anon, that's not my point at all. Jim would be as good a judge as any. But I query whether anyone can do It. Bonded warehouses can and must help with checks on true identity, money laundering, stolen goods, etc. But judging those who 'might' perpetrate a scam? How does that work in practice? A 'funny feeling'?

    My concern is that this will act as a barrier to entry into the market and therefore competition. New businesses must be able to freely enter the space and a warehouse account is an essential part. These businesses may look very different to those already operating, but that's evolution which should be applauded, not discriminated against.

    I love, in principal, the idea that the warehouses might somehow be able to help with the awful problems that plague wine investment. But I would deplore the day that you could get a warehouse account if daddy worked atblay and wheeler for 30 years, but not if you mispronounced leoville poyferre on the day (or if you were sporting a suspicious Bromley accent, or your suit was too shiny etc etc)

    So my 'whos the judge' question is born from genuine interest. I would really like to know how Jim sees this unfolding in practical terms.

  6. Anons. Your comments here are based on a complete misunderstanding. The management of EHD and LCB will continue as they have always done make their own decision as to whose business they accept. HMRC and money laundering regulations require that they carry out due diligence on new account applications.

    The new initiative is about sharing information related to 'the awful problems that plague wine investment'. The bonded warehouse naturally will want to encourage and accept legitimate new business. What they don't want are the all too numerous scam companies.

  7. Anon don't take it personally Jim refuses to acknowledge questions sometimes and sidesteps an answer just as good as the brokers do these days. I don't understand how these businesses can operate like this. surely this is against DPA ( data protection act) which permits companies from sharing personal information received via application unless for the benefit of HMRC, I agree something needs to change but sharing peoples info isn't the way. Also why do you come into play with this Jim, why would they meet with you? looks like this is a panic reaction. Why on earth do these so called huge bonded warehouses need to consult and meet with you seeing as this is just a blog??? suspicions are growing on the market as a whole who can you trust. In the past LCB have offered financial custodian services (holding MONEY for one party till exchange of goods is made) yet aren't regulated to do so and while I agree it is better to do this, they are NOT regulated to OFFER or PROVIDE this service. Can you explain why this is ok?

  8. Anon. I have answered your questions, though I realise that these answers may not fit your agenda.