Inadequate response to bank’s information requests justified closure of customer’s accounts

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Inadequate response to bank’s information requests justified closure of customer’s accounts

Categories:

Closing accounts,

Summary:

In mid-2023, Landon's bank emailed him seeking information about his accounts, his companies and his income sources. It said it was seeking the information in order to comply with its obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Landon supplied the information, which included financial statements for his companies, but the bank replied that what he had provided was not sufficient. The bank asked for further information, which he supplied, and the bank asked for yet more documents. In total, the bank made five requests over a four-month period, at which point Landon complained to us that the requests were entirely unreasonable. He also complained that the tone of the emails was inappropriate and threatening. Specifically, the bank threatened to close his accounts unless he complied with its requests.

Published:

August 2024

Our investigation

We looked into Landon’s banking transactions around the time the bank began asking for information, and it turned out he had recently started trading significant amounts of cryptocurrency through his companies. This did not, in itself, suggest improper conduct, but it was enough to prompt the bank to ask for information about his accounts and companies. Regulations require banks to make more detailed inquiries into the source of a customer's income if the customer's transactions involve the use of technology that makes it difficult to trace the source of funds. The bank's subsequent requests for information were all about trying to verify the source of his funds, and specifically, whether any income from cryptocurrency assets was the result of investment or of receiving payments from third parties. The information he gave the bank was not enough for the bank to establish the source of his trading profits. In these circumstances, we found the bank's requests for information were reasonable.

As for Landon's complaint that the tone of the bank's correspondence was threatening and inappropriate, we did not agree. The bank had said it would close his accounts if he did not provide the information it requested. This was not a threat, merely a statement of fact. The bank was required to close his accounts if it could not comply with its legal obligations to assure itself about the source of his funds.