A bank client finds that his account has been blocked and, when he asks, the bank gives no reason. An anti-money laundering analysis is often behind this, and the law forbids the bank to say so. This article explains what a bank must examine, when it reports to the Financial Intelligence Processing Unit (CTIF-CFI) and what the client can do.
My bank account is blocked and the bank does not say why
The client sees that he can no longer freely use his account and asks the bank for the reason, but receives no answer. If the account is closed later, the reason remains just as unknown.
This silence often has a statutory cause in the anti-money laundering legislation, specifically the Act of 18 September 2017 on the prevention of money laundering and terrorist financing and on the restriction of the use of cash (hereinafter: the AML Act). The Act places two obligations on the bank that together explain what the client experiences: examine and report. It also forbids the bank to inform the client of either.
What must a bank examine?
A bank must continuously examine its clients’ transactions and, where necessary, the origin of the funds. It verifies whether the transactions are consistent with the client’s characteristics and risk profile and, where relevant, with the purpose and nature of the business relationship (art. 35, § 1, 1° AML Act). Transactions that do not fit are atypical and must be analysed in depth.
In that analysis the bank examines, as far as reasonably possible, the background and purpose of every transaction that is complex, unusually large, follows an unusual pattern or has no apparent economic or lawful purpose (art. 45, § 1 AML Act). It records the analysis in a written report (art. 45, § 2 AML Act).
If the bank has reason to believe that it will not be able to meet its vigilance obligation, it may not carry out any transaction for the client. If it cannot meet the obligation for an existing client, it ends the business relationship or applies alternative restrictive measures (art. 35, § 2 AML Act). It then also examines whether the reasons for this give rise to a suspicion of money laundering or terrorist financing and whether a report to the CTIF-CFI is required (art. 46 AML Act). An account can therefore be restricted or closed while that examination is still under way.
When does the bank report to the CTIF-CFI?
The bank reports to the CTIF-CFI when it knows, suspects or has reasonable grounds to suspect that funds, regardless of the amount, are linked to money laundering or terrorist financing. The same applies to transactions and attempted transactions, including where the client decides not to carry out the intended transaction, and to facts of which the bank is aware (art. 47, § 1 AML Act).
The bank does not have to identify the underlying criminal activity. A client can therefore be reported without anyone having established which offence might lie behind the funds: a reasonable suspicion is enough.
Why can the bank not give the reason?
Article 55, § 1 of the AML Act forbids the bank, its directors and its staff to tell the client concerned or third parties that information has been, is being or will be provided to the CTIF-CFI. The ban also covers telling them that an analysis into money laundering or terrorist financing is under way or might be opened. In practice this is known as the ban on ‘tipping off’.
The bank can therefore neither confirm a report nor say that it is carrying out an analysis. A blocked account does not prove that a report was made either, since an ongoing analysis falls under the ban too. For the termination, the bank therefore often refers only to its general terms and conditions for transactions (the ‘algemeen reglement van verrichtingen’), without stating the real reason.
What can the client do?
The client can give the bank the elements on which its analysis rests: the origin of the funds, the purpose of the transactions and how they fit his profile. In practice:
- ask for an explanation in writing, keep every reply and note when a reply does not come;
- gather the documents that show the origin of the funds and the purpose of the transactions concerned;
- answer every request for information or for updated details fully and promptly, because the bank must keep its data on the client up to date (art. 35, § 1, 2° AML Act);
- have the situation reviewed legally as soon as the bank closes the account or the balance stays unavailable.
How can you avoid a termination?
A bank that cannot place atypical transactions must act on them under the AML Act. A client who explains unusual transactions in advance and supports them with documents gives the bank the elements it needs to understand the transaction. For large or unusual transactions it is therefore worth informing the bank beforehand, preferably through the private banker.
In an opinion piece in De Standaard of 25 September 2020, Stijn De Meulenaer already drew attention to clients who are wrongly shown the door.
We have extensive experience in this field: we advise and guide financial institutions on their anti-money laundering obligations, guide bank clients referred by their private banking to avoid a termination and assist clients who are closed all the same. Would you like more information or an appointment? Contact us without obligation through our contact form.