Banks shutting down accounts: A popular headliner around the world.
If you have a business that crosses borders, like retail, consulting, digital marketing, or any other international trade your chances of the bank closing your bank account are even higher.
Having an account shut down (or frozen) when the bank is shutting down bank accounts can be disastrous for a business.
- Banks are shutting down bank accounts without any reasons given to the account holder
- When a bank closes your account, your account becomes frozen, losing access to your funds
- It’s important to open backup bank accounts in safe banking jurisdictions in case you experience a closed account
- It is possible to avoid having your account closed
One day, you wake up and find that you can no longer send or receive payments. You can’t pay your staff or your credit cards. You can’t receive money from clients. You’re money, in and out, is frozen.
If you’re a business owner or entrepreneur, just thinking about the threat of losing access to your money is enough to make your palms start sweating.
And it’s no wonder, businesses can fail and reputations can be destroyed. All because financial institutions are choosing to have their banking client’s bank accounts closed. Leaving them with no access to their money.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Why Do Banks Close Checkings and Savings Accounts?
- How Do I Stop the Bank From Shutting Down My Bank Account?
- Frequently Asked Banking Questions
- Do You Want Help Opening Bank Accounts?
Why Do Banks Close Checkings and Savings Accounts?
If you think account closures and freezes can’t happen to you, think again.
This isn’t something that only happens to people from high-risk industries or illegal activities anymore.
The fact is, financial institutions are shutting down bank accounts for any reason, to anyone, and any business from any industry. It doesn’t matter if you’re selling soap or software.
It also doesn’t matter where your company is from or where you send money to. Although these factors can red-flag you faster.
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You see, in many instances, the reasons financial institutions are shutting down checking and savings accounts are because they need to “tick boxes” and ensure that their algorithmic compliance procedures are working.
If they don’t, the banks get hefty fines or risk being closed themselves.
That means, if you accidentally red-flag your bank account because you did something that the bank’s computer-generated algorithm didn’t like and deems to be abnormal for your account, you could be on a fast track to getting closed and having your funds frozen.
In some cases, financial institutions will approach you to ask about the transaction. This is your chance to explain away the perceived infraction, calm their nerves, and give them confidence that you’re a good customer before the bank closes your account.
But, that’s changing.
Today, banks are closing savings accounts and checking accounts, and freezing access to their banking client’s personal loans. They are even doing this without giving a courtesy call.
It’s true, you won’t even know that your account is closed until you receive a check in the mail with your remaining balance or when you can no longer log in to your online banking.
We’ve seen this happen countless times. Sometimes closed bank accounts come in waves. Or when a bank implements new internal protocols. Other times, it’s when certain banking jurisdictions go on a watch list and banks have to stop serving customers with specific traits.
This might mean people with certain citizenship or residencies. Businesses registered in specific countries. Or customers with certain types of transaction activity or behaviors.
In fact, some of our members have received six and seven-figure checks in the mail when the banks closed their bank accounts. They were sent checks from their private bank accounts in Hong Kong and Singapore. But why? It happened either because of their citizenship or the industry they work in.
How Do I Stop the Bank From Shutting Down My Account?
With so much ambiguity around closed savings accounts and checking accounts, how can innocent people protect themselves? The same is true for people with legitimate businesses. They need to make sure their bank accounts don’t get closed.
And the answer is, you can’t.
But you can prepare. And you do that by ensuring you a) don’t accidentally red-flag yourself, b) open another backup account, and c) stay away from financial institutions shutting down bank accounts.
Having a Plan B for your money and banking life means having a backup plan. And, that means making sure you don’t keep all your eggs (money) in one basket. And if you find that banks are shutting down savings and checking accounts, this can be a lifesaver.
Frequently Asked Banking Questions
Below are three of the most common questions we receive from people exploring banks shutting down accounts. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Why Are Banks Closing Accounts?
Banks are choosing to close account holders’ bank accounts for many different reasons. These reasons may include suspicious activity, your citizenship, the industry you operate in, or even a lack of activity on the account. As you can see, a closed account can be a result of many different factors.
Can a Bank Close Your Account and Keep Your Money?
Banks do have to return your money when they choose to close your account. That said, if you do owe the bank any outstanding fees or charges on your account or credit cards, the bank will withdraw funds from your account to pay those account charges before returning the remaining account balance to you.
Is It Bad If a Bank Closed Your Account?
Yes, it can be bad if a bank closes your account. This is especially true if you do not have a backup account. In this case, you should advise the individuals and companies (i.e. life insurance, car insurance, mortgage lenders, credit cards, etc) you have automatic payments set up with that the bank has closed your account. This way, you can arrange a different payment schedule until you open a new account elsewhere.
Do You Want Help Opening Bank Accounts?
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