Bank can close your account due to any of these reasons

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. 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

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

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. 

Share on Google Plus

About Brandinfo

BrandInfo is an online newspaper that has been specially packaged to dish out exclusive, robust and current information about brands. For inquiries, please call +234 708 967 2875
    Blogger Comment
    Facebook Comment


Post a comment