Bank Account Closures & How to Protect Your Accounts

Ask any business owner and they’ll tell you that cash is the fuel that keeps a business alive. Without it, you can’t purchase supplies or pay employees. But a lot of the time, the most important consideration about your cash goes unnoticed. And that’s how you actually access it. Bank account closures have a serious impact on business. But we’ll tell you how to protect yourself below.

Bank accounts provide businesses with the ability to send and receive cash. It allows business owners to pay their employees and suppliers. And more than that, it allows businesses and individuals to actually receive payment. After all, in order to pay your people, you need to get paid as well.

A lot of people that become GlobalBanks Insiders want to get their first international bank account open. And that’s a valid concern. But this article is a bit more advanced. It focuses on the needs of people who are already banking overseas and need information on bank account closures.

If you’re looking to open your first bank account, there are better articles to start with. Check out either one of the following articles to find the right banks and the right country to bank in:

  1. Where To Bank Overseas – How To Find The Best Country For Your Banking Needs
  2. Open An International Bank Account – The Smart & Easy Way

If you already have an account, then this article is for you.

Let’s start off with a few questions about bank account closures:

  1. Have you ever considered what would happen if you experienced a bank account closure?
  2. What is your backup plan in place if a bank account closure happens?
  3. How you would pay your people if you had an account closed?
  4. Where would you ask clients to send payments?

Just because you’ve managed to setup an account for your business doesn’t mean that you are out of the woods just yet. The truth is that the bank account you have today, might not be available to you next week or next month.

Account closures happen a lot more frequently than you might expect. It’s something that happens every day.

The question is, what will you do when it happens to you?

The fact is, a bank can shut down your account for whatever reason they want. But in practice, there are only a handful of reasons why a bank account closure can happen.

In the following section, we will cover some of the main reasons banks close accounts. This will include strategies that you can use to make sure this doesn’t happen to you.

Why Do Bank Account Closures Happen?

Your bank is a business. And to continue operating they need to protect two important relationships. That’s why bank account closures happen.

Hint: These two groups do not include their clients.

The first of these groups are the bank regulators that govern them. And the second are the correspondent banks that grant access to global markets.

Your bank’s future can be radically changed by the decisions of its bank regulators. That’s how much power these two groups have.

In other words, if your bank upsets either the regulator or their correspondent banks, they could be in trouble. In bank terms, this means getting fined, shut down, or drastically impaired. Anything (or anyone) that could potentially damage a bank’s relationship with either of these two groups is a risk. That’s why bank account closures happen.

How Do Banks Protect Themselves?

To put things into perspective, the bank’s duty is not to serve you as a client. Their duty is to serve their shareholders. So they need to protect those relationships that allow them to do business.

One way that banks keep bank regulators and correspondents happy is by  “de-risking” their client accounts. And another word for de-risking is bank account closure, but we’ll get to that in a moment.

Banks can de-risk client accounts in one of two ways. First, they can avoid risk altogether by simply not accepting new clients. So they especially avoid those that bank regulators or correspondents might view as risky. Their second option is to execute bank account closures of current clients as soon as they find something that raises flags with compliance.

This heightened sensitivity and extreme aversion to perceived risks is happening because the laws and regulations governing banks are increasingly strict and very vague. Additionally, there is very little guidance on bank account closure procedures, even in the United States.

If a bank thinks you or your business could be a problem for them, you are a risk. And, they’d prefer to move forward with a bank account closure than deal with headaches.

What Your Bank Is Looking For?

With this in mind, your bank is keeping a close eye on activity that could be reflective of criminal activity, money laundering, or someone participating in illicit activities. All of your banking activities are constantly scrutinized.

Similarly, your bank’s correspondent bank has the same concerns. They tend to be in a different jurisdiction than your own bank. For example, a bank in Panama will have a correspondent bank in the United States to settle accounts in USD.

In the same way that your Panama bank doesn’t want to upset their bank regulators or their correspondent bank in the United States, the correspondent bank in the United States doesn’t want to upset their regulators either.

As you can see, it all comes down to making sure that banks, whether your local bank or the correspondent banks that they clear through, can continue operating profitably. And for that to happen, they need to stay on the right side of regulation by enforcing the policies and procedures that authorities impose on them. And that means bank account closures if you don’t fall in line.

To understand more about how banking regulations can impact you and hurt your business, read our recent article that discusses how regulation is making banking difficult for all of us.

Why Your Bank Takes Action

To recap, your bank will shut down your account because they don’t want to damage their relationships with correspondent banks or bank regulators. So a bank account closure is less about you and your business and more about the bank’s own activities.

For this to happen, all it takes is one overexcited compliance officer to flag a $647 payment to a contractor that appears “high-risk”, for the bank to move forward with a bank account closure.

The cost of a bank account closure, or even having your accounts frozen, can be extremely high. If you don’t have a backup plan in place, you could find yourself unable to pay contractors, yourself, or even receive payment.

But, if instead, you have a backup plan, you can always have access to your money and never lose the ability to withdraw funds.

How to Avoid Bank Account Closure?

This header is intentionally misleading. You see, the real question isn’t how to avoid having your account shut down, it’s what are you going to do if it does get shut down?

Don’t get us wrong, there are things that you can do to de-risk your own client profile and make yourself more attractive to banks.

GlobalBanks Insiders get de-risking strategies and recommendations from our client profile reports and from specific information in our country reports. We will also list specific tactics for you below.

But more than de-risking your own profile, you need to manage your expectations and realize that there will always be a risk that your bank may shut down or freeze your account.

With the above in mind, you should prepare yourself and your business by having additional backup bank accounts.

Finding alternative accounts is the only way that you are going to be able to protect your business, increase your wealth, and ensure that you can always access to funds.

It’s always smart to have a few backup bank accounts for you and your business. And, when done correctly, it won’t cost you a thing.

How Can You De-Risk Your Banking Profile?

The first thing that you should know is that there is a lot of information out there that claim to help you open international bank accounts.

A lot of that information focuses on how to obfuscate your information, lie, or generally do things that are ethically and morally wrong, or downright illegal.

You won’t get any of that from GlobalBanks.

The strategies and tactics that we share are 100% legal, help you navigate the offshore banking world, and focus on finding the right bank account for your situation.

We’ll also arm you with the information you need to avoid expensive pitfalls and traps that dishonest service providers will set for you, so you save money and solve your banking problems faster.

We help GlobalBanks Insiders access the banking solutions they desperately need. By making account opening easy, we help you find and open great accounts at banks that actually want to bank with you.

But, as mentioned, there are strategies that you can use to increase your chances of opening (and keeping) accounts.

As a GlobalBanks Insider, you will learn how to effectively open accounts on your own.

What Does This Mean For GlobalBanks Insiders

Just because you have an account doesn’t mean your money is safe and your account won’t get shut down. In fact, your account can get shut down for any small number of flags that you throw up in the bank – even a complete misunderstanding.

In order to protect your money and your business, you need to make sure that you have backups and to make sure that you are doing everything to speak to your bankers in a language that they understand!

You can do everything yourself by using global banks to identify the banks that you actually want to bank with, determine whether or not they meet your personal and/or business needs, and then apply for the bank using the information and the tactics that we express in our reports based on your specific client report.

Are You Ready to Get Started?

If you’re ready to take action and start opening international accounts now, you can access GlobalBanks IQ, our dedicated international banking intelligence platform.

GlobalBanks IQ gives you everything you need to start finding and opening accounts for you or your business today.

When you join GlobalBanks IQ, you immediately unlock the GlobalBanks Database of international banks — home to 250+ banks in 50+ countries. 

And, you get access to our library of premium (members-only) reports, including proven account opening strategies, country-specific banking options, and lists of banks for specific client types.

Plus, you unlock our account opening checklists, dedicated account opening alerts, and much more. 

To get started, click here to see if GlobalBanks IQ is the right choice for you to start accessing the benefits of international banking today.

You can also view all of the account opening solutions offered by GlobalBanks on our products page.

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