Today, we want to examine situations when your bank may
choose to close your bank account out rightly without recourse to you.
According to financial and legal experts, your bank has the
right to close your account or cut you off anytime it wants. But why exactly
would it break up with you?
There are customers who often issue bounced cheques,
constantly overdraw their accounts, commit fraud or otherwise lose the bank
money. Banks are advised to easily get rid of customers of these nature.
CNNMoney.com gives reasons why some business and personal
accounts may be closed by banks.
Suspicious personal
accounts
For personal accounts, there’s a whole other set of warning
signs that banks are looking out for. These list include:
-If you have no record of current or past employment but
make frequent and large transactions
-You don’t live or work anywhere near the city or state
where you’ve opened an account but make some questionable transactions
-You have many accounts under a single name
-You have past convictions on your record, or you provide
phone numbers that are disconnected
-A sudden surge in account activity or consistently high
volumes of transaction activity
-Multiple round-number transactions like N50m (since banks
must report anything above certain limits or amounts to law enforcement
agencies)
-Constant visits to safe deposit boxes and big purchases of
valuable items like precious metals or fine art
According to expert, these are some forms of activities that
can indicate fraud like money laundering.
What it all comes down to is that your bank reserves the
right to shut your account at any time and for any reason. And because the
institution is held liable if an account ends up being connected to fraud or is
capable of damaging the reputation of the bank, it is often going to take a
“better safe than sorry” approach, said John Ulzheimer, credit expert at
CreditSesame.com.
Ulzheimersaid, “Nobody has the right to a credit card, a
bank account, a debit card or a merchant account.
“You have to earn it and the banks set the rules. If you are
what they perceive to be too risky, they’ll shut you down and you have no
recourse.”
Under business accounts, there are customers who fall into a
grey area, according to CNN.com.
Questionable accounts
Banks are urged by the Federal Government, law enforcement
agencies and regulators to close questionable accounts, or risk getting hit
with penalties. So they often end up shutting accounts even when a customer
isn’t doing anything explicitly illegal.
Highrisk and
unpopular business accounts
If a customer is merely involved in an industry considered
high risk or engaged in an unpopular or “unsavoury” line of work, a bank may
deem it safer to cut off the relationship, according to Robert Rowe, senior
counsel at the American Bankers Association, which represents the nation’s
largest banks.
“The government is putting us in a position where we’re
expected to be the judge, jury and prosecutor,” Rowe said.
In some countries, regulators often list business categories
that have been linked to “high-risk activity.” These high-risk activities
include gun selling business, home-based charities, payday loans, dating
services, escort services, fireworks suppliers, cable box de-scramblers, coin
dealers, credit card repair services, gaming and gambling websites, and
telemarketing companies.
Another category on the list is pornography. This became
popular in the United States recently after news reports that hundreds of porn
stars suddenly had their bank accounts closed by Chase (though a source close
to the matter said Chase did not have a specific policy prohibiting porn stars
from having bank accounts). We are yet to start witnessing this in Nigeria but
who knows what may happen.
When you open a business account, banks can determine if you
are in a “high-risk” industry by running a background check and continuing to
monitor the types of transactions that are made once the account is opened.
Suspicious bank
accounts
Customers who give unclear descriptions of their businesses
when opening accounts, as well as those who make multiple transactions that
don’t seem to make sense fall into this category. Although Nigerian banks have
yet to start applying very stringent rules regarding this, it is important for
every customer to know this.
PUNCH
0 comments:
Post a Comment