🇬🇧Bank Account Closure: De-Risking, Notice Periods and Exit Process

The notice arrives as an ordinary letter: the bank is ending the business relationship, the account will close on a given date, please supply details for transferring the balance. No reason is given and the relationship manager has gone quiet. From there the client loses time and part of the portfolio — to transfer fees on securities, to forced liquidation at a moment the bank chooses, and to deadlines that run out silently.

The legal ground for exiting has become much firmer over the past eighteen months. On 28 April 2026 the United Kingdom brought in a 90-day notice regime with a duty to explain the reason; on 11 June 2026 the Court of Justice of the EU held that a Member State may not require a bank to refuse a basic account solely because of a third-country sanctions list, without an individual risk assessment; on 3 March 2026 the Swiss Federal Supreme Court handed down two opposite rulings against PostFinance on the same day; and since 9 June 2026 US federal regulators may no longer lean on banks through "reputation risk". An account closure has two sides: the client who needs to leave without losses, and the bank or licensed firm that must end the relationship by the rules.

Concept

An account closure breaks down into three separate questions, and mixing them up is expensive:

• Grounds — compliance, commercial unprofitability, or a requirement of law or a regulator. This decides whether there is anything to dispute at all
• Procedure — the length of notice, the duty to give reasons, the route of challenge. Numbers exist in the UK, the EU, Hong Kong and the UAE; Switzerland leaves it to the contract and Singapore relies on "reasonable notice"
• Moving the assets — in specie transfer against liquidation, the fate of a frozen balance, and what happens to the money if no settlement details are ever supplied

The EBA fixed the term de-risking in Opinion EBA/Op/2022/01 of 5 January 2022: a decision by an institution "to refuse to enter into, or to terminate, business relationships with individual customers or categories of customers associated with higher ML/TF risk". The same Opinion draws the line: an individual decision to refuse or terminate may be in line with Article 14(4) AMLD, whereas refusing whole categories of customers without regard to individual risk profiles "can be unwarranted and a sign of ineffective ML/TF risk management".

On 25 February 2025 the FATF amended the Standards themselves: R.1, INR.1, INR.10 and INR.15 were revised, "commensurate" was replaced by "proportionate", and supervisors must take account of the risk-mitigation measures an institution has put in place so as not to push the market into overcompliance. The Standards contain no outright ban on de-risking; the mechanism is indirect. The CSSF, in its communiqué of 16 June 2026, is blunter: "the existence of a higher level of ML/FT risk exposure does not as such justify a refusal to establish or maintain a business relationship". The CSSF leaves a commercial exit from an unprofitable segment to the bank, but does not allow whole categories of customers to be excluded without a legal requirement.

Why banks close accounts

Risk appetite and client economics

Every bank runs a board-approved risk appetite: which countries, sectors, customer types and products it serves, and at what price. A client whose profile calls for EDD, an annual file refresh, manual payment review and handling in sanctions screening costs the bank noticeably more than an ordinary one. If the income from the relationship does not cover that cost, exiting is a normal commercial decision.

In the same Opinion the EBA lists the categories hit hardest by de-risking: payment and e-money institutions (PIs, EMIs), non-profit organisations, asylum seekers from high-risk jurisdictions, virtual asset service providers, respondent banks, diamond traders and gaming operators. For a private client the lesson is simple: risk is assessed on the combination of features, and one new feature — a change of residence, large crypto income, a position that makes the client a PEP — can push the client outside the risk appetite through no fault of their own.

Typical triggers

Banks rarely close an account "out of the blue". The decision is usually preceded by one of five scenarios, and the early signs make it recognisable in advance.

The client's own conduct is a separate matter. The UK regime of 2026 singles out threats and harassment of bank staff and false information at account opening as grounds for closure without the 90-day period. In its 2023 review the FCA looked at eight cases (four closures and four complaints) connected with the expression of political views. In none of them were the views themselves the primary reason; in most it was the customer's behaviour, such as racist language directed at staff.

Tipping off: why the bank stays silent

The bank's silence has a legal cause. Disclosing that a suspicious activity report has been made, or that an investigation is under way, where this is likely to prejudice the investigation, is the offence of tipping off under section 333A of the Proceeds of Crime Act 2002: up to three months' imprisonment on summary conviction and up to two years on indictment. In the EU the same prohibition sits in Article 39(1) of Directive 2015/849: the institution and its staff do not disclose to the customer that information has been passed to the FIU or that a money-laundering analysis is being carried out. In the United States, 31 CFR 1020.320(e) bars a bank from disclosing a SAR or any information that would reveal its existence.

The practical conclusion follows. A bank closing an account after a SAR cannot state the reason, and the 2026 UK regime allows for this: the duty to give 90 days and an explanation falls away entirely where the bank cannot complete CDD, acts on a regulator's direction or on immigration grounds, or has reasonable grounds to suspect involvement in serious crime. Silence is an indicator of compliance grounds, and a dispute on the merits is then almost hopeless. The time is better spent on the exit.

Scale: no honest number exists

The EBA puts it plainly: "The scale of de-risking cannot be quantified, as no comprehensive statistics are currently available". Any round figure for "accounts closed worldwide" is invented. What can be measured are partial snapshots, and the densest is the FCA review "UK Payment Accounts: access & closures" of September 2023: 34 firms covering over 90% of the current-account market, July 2022 to June 2023. The middle 50% of firms (25th to 75th percentile) show these ranges: declines as a share of applications, suspensions and closures as a share of accounts.

The main reasons for closure were financial-crime suspicions, due-diligence concerns and inactive accounts. The FCA's baseline finding: UK law does not create a universal right to a bank account for either individuals or businesses. The European snapshot comes from the Commission report COM(2025) 485 final of 11 September 2025: 1,955,125 basic accounts were opened in 2023 against 24,545 refusals, about 1.2%. The Commission proposes no amendments to the Directive in the report.

The law by jurisdiction

United Kingdom: 90 days and an explanation

The watershed is 28 April 2026, the commencement date of the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025, made on 12 June 2025. They rewrote the termination rules in the Payment Services Regulations 2017 and the Payment Accounts Regulations 2015, so they cover framework contracts for payment services — current and payment accounts. Brokerage and custody agreements follow their own terms. One more boundary: where the client is not a consumer, a micro-enterprise or a charity, the parties may agree under PSRs reg. 40(7) to disapply any provision of Part 6, including the termination rules, so for mid-sized and large businesses the 90 days are a matter of contract.

The new PSRs regs 51A–51D work as follows:

1. Contracts before 28 April 2026 (reg. 51A) — the old regime: at least two months' notice, if the contract so provides.
2. Contracts from 28 April 2026 (reg. 51B) — at least 90 days' notice, an explanation of the reasons "sufficiently detailed and specific to enable the payment service user to understand why", and information on the complaints procedure and the right to go to the ombudsman. Where this conflicts with another legal requirement, the other requirement prevails.
3. Full exception (reg. 51C) — the duty to give notice with reasons does not apply where the provider cannot complete CDD under the MLRs, must close the account under the Immigration Act 2014, has reasonable grounds to suspect involvement in serious crime, acts on a direction from the FCA, the Treasury or the Secretary of State, or reasonably believes that the user, in supplying goods or services to third parties, has committed an offence and used the payment service in connection with that conduct.
4. Accelerated notice (reg. 51D) — where the user has threatened or harassed staff, or gave incorrect information when the contract was made, the 90-day period falls away, but the notice with its explanation must still be sent without delay.

The Financial Ombudsman Service, when looking at a closure, considers the rules in force, industry codes and the Consumer Duty, whether the notice period was respected, and whether the bank has a clear explanation backed by evidence. The ombudsman may award compensation for losses, a separate payment for distress or inconvenience, and direct the firm to "reopen an account, if appropriate". The limits from 1 April 2026 are £455,000 for acts by firms on or after 1 April 2019 and £205,000 for earlier ones. Under DISP 2.8.1R and 2.8.2R the firm has eight weeks for its final response (15 business days for certain payment complaints), after which the client has six months to refer the complaint to the FOS.

European Union: the basic account, PSD2 and C-81/24

Hard numbers exist for the basic account (payment account with basic features) under Directive 2014/92/EU. Article 16 gives a right to such an account to all consumers legally resident in the Union, including asylum seekers. The bank must decide within 10 business days of receiving a complete application, may refuse only on a closed list (chiefly AML grounds and an existing account in the same Member State), and gives the reason in writing unless that would be contrary to national security or public policy.

The grounds for unilateral termination in Article 19(2) are also a closed list: deliberate use of the account for illegal purposes; no transaction for more than 24 consecutive months; incorrect information given to obtain the account; the consumer no longer being legally resident in the Union; a second suitable account opened in the same Member State. Article 19(4) splits the list unevenly: for inactivity, loss of residence and a second account the bank must give written notice free of charge at least two months in advance, while for illegal use and incorrect information termination takes effect immediately. The notice must set out the complaints procedure and the contact details of the competent authority and ADR body. For ordinary accounts the two-month period is written into Article 55(3) PSD2 and applies if the framework contract provides for such termination.

EBA/GL/2023/04 of 31 March 2023 layered supervisory expectations on top. Before refusing or exiting, the institution must satisfy itself that it has considered and rejected all available mitigating measures — enhanced monitoring, restricting products and functions (paragraph 12). The decision to refuse or terminate and its reason are documented and made available to the supervisor on request (paragraph 14). The customer is told of the right to contact the competent authority or ADR body (paragraph 22), and automated rejections of basic accounts are not acceptable.

The Court of Justice in Case C-81/24 (LH v OTP banka d.d., Fourth Chamber, 11 June 2026) held that Article 16(4) of Directive 2014/92/EU does not permit Member States to require banks to refuse a basic account "for the sole reason that that consumer is included on a list of persons subject to restrictive measures imposed by a third country" without an individual assessment of the money-laundering risk. The protection is narrow: it covers the basic account and foreign, non-EU, lists.

From 10 July 2027 the AMLR (Regulation 2024/1624) applies, and the duty to exit where CDD cannot be completed moves from the Directive into the directly applicable Article 21(1): refrain from the transaction or relationship, terminate it and consider filing a suspicious activity report. More in the article on the EU AML package.

United States: no "politicized debanking" and the end of reputational risk

Executive Order 14331 "Guaranteeing Fair Banking for All Americans" was signed on 7 August 2025 (90 FR 38925). It defines "politicized or unlawful debanking" as restricting access to accounts, loans or other banking products on the basis of a customer's political or religious beliefs or lawful business activities the provider disagrees with. Regulators were given 180 days to remove reputation risk and equivalent concepts from supervisory materials and to identify institutions with such practices.

The regulators delivered in two steps. On 23 June 2025 the Federal Reserve removed reputational risk from its examination programmes. On 10 April 2026 the OCC and the FDIC published the final rule "Prohibition on the Use of Reputation Risk by Regulators", effective 9 June 2026: a regulator may not criticise or take action against a bank on the basis of reputation risk, and may not push a bank to close accounts because of a customer's political, social, cultural or religious views, constitutionally protected speech or lawful but disfavoured business.

The boundary matters for clients. Both the Fed and the OCC/FDIC rule state expressly that what is constrained is supervisory conduct. The bank's own right to weigh reputational risk and close accounts under contract remains. The US regime creates no individual right to an account. The BSA logic is unchanged: a SAR is confidential, and after filing one the bank will not disclose the reason for a closure. The particular difficulties of US persons abroad are covered in the article on banking for US citizens abroad.

Hong Kong: 30 days, a reason and a review

The Code of Banking Practice — a non-statutory code issued by the HKAB and the DTC Association and endorsed by the HKMA, December 2023 edition — gives clients a markedly stronger regime than Singapore's. Section 20.1 keeps each party's right to end the relationship at any time subject to the account terms, and section 20.2 adds a procedure:

• at least 30 days' notice; on the customer's request, longer where practicable;
• a duty to give the customer the reason for closing the account;
• a mechanism to review the decision at the customer's request;
• written notification after the account has been closed.

The exception is "exceptional circumstances", for example where the account is being used, or is suspected of being used, for illegal activities. The supervisory stance is set out in the HKMA circular "De-risking and Financial Inclusion" of 8 September 2016: the risk-based approach "does not require or expect a 'zero failure' outcome", de-risking is defined as declining customers to avoid rather than manage risk, and the HKMA expects banks to refrain from practices that result in financial exclusion. The circular of 27 April 2023 warned against cutting off corporate customers on shared characteristics such as nationality or a new industry.

Singapore: "reasonable notice"

The ABS Code of Consumer Banking Practice, October 2025 edition, states in section 10.c.iii: "Your bank will not close your account without giving reasonable notice except under exceptional circumstances". Section 10.c.ii lists the grounds for closure — a regulatory requirement, suspected illegal activity, misuse of limited-purpose accounts, other valid unresolved concerns. The Code sets neither a number of days nor a duty to give reasons, and does not deal with the balance.

Switzerland: the contract and 40 working days

There is no statutory notice period. The giro (payment-services) contract follows the rules on simple mandate, and under Art. 404 of the Code of Obligations either party may terminate it at any time; a party that does so at an inopportune juncture must compensate the other for the resulting damage. The bank's general terms set the procedure. The law places a duty to maintain an account only on PostFinance: the universal service in payment transactions — opening and maintaining a payment account, transfers, and cash deposits and withdrawals in Swiss francs — rests on Art. 32 of the Postal Act and Arts. 43–45 of the Postal Ordinance.

The Swiss specificity lies in the link between closure and a suspicious activity report. Under Article 9b AMLA, in force since 1 January 2023, a financial intermediary that has reported to MROS may end the relationship after 40 working days if it has not been told by then that the report was passed to the prosecuting authorities. The MROS annual report shows the scale: 21,087 reports were received in 2025, 39.3% more than a year earlier, along with 7,770 notifications of relationships terminated under Article 9b. A closure two or three months after an unusual payment may therefore be the outcome of exactly such a report.

UAE and Serbia

The UAE gives the longest fixed period among the jurisdictions covered here. Standard 2.1.2.12 of the Central Bank of the UAE Consumer Protection Standards requires a bank to inform the consumer of a decision to close the account 60 calendar days in advance and to give the reasons in writing. The exception is wide: where there are reasonable grounds to believe there may be financial-crime risks and potential fraud, the bank may close or block the account immediately, without notice or reasons.

Serbia follows the European payment-services model: under Article 21(1) of the Law on Payment Services, a provider may terminate an open-ended framework contract with at least two months' notice, if the contract so provides.

Notice periods at a glance

Two rulings in one day: the Swiss boundary

On 3 March 2026 the Swiss Federal Supreme Court decided two disputes with PostFinance with opposite outcomes.

Case 4A_454/2025 — PostFinance lost. A Russian citizen living in Switzerland is on the US and UK sanctions lists; there are no Swiss sanctions against him. PostFinance opened an account for him in 2022 and closed it a few days later, citing US sanctions. The Court upheld the decision requiring the bank to maintain the relationship on restricted terms: a Swiss-franc account for domestic payments only, up to CHF 15,000 a month in credits and debits, cash deposits of up to CHF 15,000 via QR-bills in favour of recipients in Switzerland. Foreign sanctions in themselves created no direct conflict with Swiss regulatory provisions. Nor did PostFinance prove "unverhältnismässig hohen Aufwand".

Case 4A_494/2025 — PostFinance won. A Turkish citizen with refugee status in Switzerland, designated by OFAC as an SDN in 2009, asked to open an account in July 2023 and was refused on 1 November 2023. The Court held that the disproportionate-effort exception in Art. 45 para. 1 lit. a VPG has a sufficient basis in the delegation under Art. 32 para. 2 PG, and dismissed the appeal; the appellant was ordered to pay CHF 3,000 in costs and CHF 3,500 in compensation to PostFinance.

Both clients are on US lists. What separated the cases was something else: the first concerned an existing relationship with a person living in Switzerland, and PostFinance failed to prove specific disproportionality; in the second the applicant sought a new account, and the Court found the exception applicable.

The process: from decision to zero balance

A closure is a sequence of steps, each with its own legal logic:

1. Decision and file. The bank records the grounds and documents them. In the EU this is a direct EBA/GL/2023/04 expectation and, from 2027, part of the AMLR regime.
2. Notice. Length and content depend on the jurisdiction and the contract date. Where a financial-crime exception applies, there may be no notice at all.
3. Notice period. The account usually keeps working, with restrictions; where CDD cannot be completed, UK MLR reg. 31 bars transactions on the account altogether.
4. Balance. The client supplies details of an account in their own name. A transfer to a third party on closure is a classic trigger for further checks.
5. Securities. In specie transfer to a new custodian, or liquidation.
6. Credit and collateral. A loan agreement runs on its own terms; closing the current account does not end it automatically. A pledged portfolio will not move until the pledge is released.
7. Archive. The bank keeps the file for the period set by AML law and then deletes personal data.

The balance, SARs and frozen funds

If the bank filed a suspicious activity report before closure, the balance can get stuck. The UK consent regime works like this: a bank that has made a defence against money laundering (DAML) request waits for NCA consent for the notice period — seven working days starting with the first working day after the disclosure, under POCA s. 335. If the NCA refuses, a moratorium period of 31 days begins, and the court may extend it under s. 336A in steps of up to 31 days, by no more than 186 days in total. MLR 2017 reg. 31(2) allows deposited money to be repaid to a customer whose CDD cannot be completed only once such consent has been obtained.

In Switzerland a report to MROS does not by itself freeze the balance: while the analysis runs, the intermediary continues to execute the client's instructions in a way that leaves a paper trail (Article 9a AMLA). A five-working-day freeze applies only if MROS reports that the case has been passed to the prosecuting authorities (Article 10 AMLA), and the intermediary may exit the relationship after 40 working days under Article 9b. The funds of a person listed under the bank's "own" sanctions regime cannot be returned at all: a UK asset freeze, per OFSI's general guidance, prohibits dealing with frozen funds, and they can be released only under an OFSI licence or an exception written into the regulations. Interest and third-party payments may be credited to a frozen account, but they are frozen too. Neither refusing to supply details nor threatening litigation will speed up payment: the bank is bound by law, and the only things worth arguing about are timing and the licence.

Securities: in specie against liquidation

An in specie transfer keeps the positions and generally triggers no tax event; liquidation is faster but crystallises gains and losses across the portfolio at a moment the bank chooses.

• United States — the only jurisdiction with numbers in the rules. FINRA Rule 11870: one business day to validate the instruction, three business days to complete after validation. For non-transferable assets — proprietary products, securities the receiving firm cannot carry, limited partnership interests in retail accounts — the carrying firm must offer the client options, including liquidation with disclosed fees.
• United Kingdom — a duty to offer in specie, with no fixed period. COBS 6.1H requires a platform to offer in specie transfer of units and, where needed, to request a unit-class conversion; the timing is "within a reasonable time".
• ISA. A Cash ISA to Cash ISA transfer must complete within 15 business days. The critical rule: the transfer must go directly to the new ISA manager, because passing the assets or cash to the investor counts as a withdrawal and removes the tax wrapper.

A change of custodian without a change of beneficial owner usually is not a disposal for tax purposes, but the specific rule depends on the owner's tax residence.

If settlement details are never supplied

The Swiss and UK regimes for dormant assets work differently. Under the Swiss Bankers Association Guidelines on dormant assets, in force since 1 July 2022, contact is lost when the client does not get in touch and the bank cannot reach the client (for savings passbooks, safe-deposit boxes and poste restante only after 10 years), and an asset becomes dormant 10 years after the last contact (Art. 45 of the Banking Ordinance). Assets above CHF 500 are published after 50 years of dormancy or 60 years without contact, then liquidated under Art. 37m of the Banking Act, and claims lapse once the proceeds have been transferred to the Federal Finance Administration. In the UK, participating banks may transfer accounts with no customer-initiated activity for 15 years to Reclaim Fund Ltd, and the owner keeps the right to reclaim the money at any time.

How to exit: the order for the client

The notice period is the client's only resource, and it is spent in a set order:

1. The receiving institution — before any dispute. Onboarding a private client with full source-of-wealth work, especially through private banking, takes weeks. A second working bank in another jurisdiction, opened in advance, turns a closure from a crisis into a transfer. The choice is best made using the matrix of accounts abroad and the overview of banks, with an eye on which profile features triggered the closure.
2. Moving the assets. Securities in specie and fixed-term deposits first, then cash. Instructions only to an account in the client's own name.
3. Statements and KYC history. Under MLR 2017 reg. 40 the bank keeps CDD records and transaction records for five years from the end of the relationship, after which it must delete personal data. A few years on there will be nothing left to prove source of funds to a new institution, so statements for the whole period, confirmations of large inflows and tax certificates are collected at once.
4. Subject access request. Under Articles 12(3) and 15 GDPR a bank in the EU must respond without undue delay and within one month at the latest (extendable by two further months for complex requests) and provide a copy of the data free of charge. In the UK, the ICO keeps the same deadline after the Data (Use and Access) Act 2025 reform. A SAR will not reveal a closure reason tied to an investigation: the crime and taxation exemption lets the bank withhold what would prejudice the investigation, but it must still provide the rest of the data.
5. Checking Cifas. A record on the National Fraud Database appears when a member organisation considers the client a fraud or money-laundering risk, and can be held for up to six years. Its existence is checked through a DSAR to Cifas and challenged through the organisation that filed it and a complaint to the ICO. A closure in itself does not mean a record exists, and conclusions are drawn only from Cifas's reply.
6. Complaint and ombudsman. First to the bank, asking for the reason and for the notice period to be respected; then to the dispute-resolution scheme.

The UK route is the widest: only the FOS can direct that an account be reopened. FIDReC excludes commercial decisions together with pricing policies, interest rates and fees, so a decision to close an account will almost certainly not get through. Hong Kong's FDRS deals only with monetary disputes. In Hong Kong the first step is the review mechanism under section 20.2 of the Code.

A closure on sanctions or compliance grounds in the UAE falls under the financial-crime exception and may happen without the 60 days, while in the EU C-81/24 protects only where a refusal rests on third-country lists.

Businesses and licensed firms: when the operating account closes

For a company, losing its operating account is a business-continuity event. The bank looks at the same beneficial owners, directors and structure as at onboarding, and a new shareholder, a change of jurisdiction or a new product restarts the assessment. Sensible practice for a company with cross-border payments is at least two independent banks in different groups, so that one exit does not stop payroll and supplier payments. The UK 90-day period may not protect a mid-sized company at all: PSRs reg. 40(7) allows it to be disapplied by contract.

For a payment or e-money institution the stakes are higher: the safeguarding account is a condition of the licence itself. Under PSRs 2017 reg. 105 a credit institution must give payment service providers access to payment account services on an objective, non-discriminatory and proportionate basis, and must notify the FCA of any refusal or withdrawal with "duly motivated reasons". The rule gives the licensed firm no right to a particular bank. Losing the safeguarding bank without a replacement leaves the firm unable to accept client money and triggers an orderly licence wind-down scenario. How relationships with partner and correspondent banks work is covered in banking for MSBs and correspondent banking and safeguarding.

A licensed firm is sometimes the closing party, and then it has four duties that pull in different directions:

1. Exit if CDD is not complete — MLR reg. 31, Article 14(4) AMLD, from 2027 Article 21(1) AMLR.
2. Document the decision and consider alternatives — EBA/GL/2023/04, paragraphs 12 and 14.
3. Give notice with reasons where the regime requires it (the UK from 2026, the EU basic account, the Hong Kong Code, the UAE) — without tipping off if a SAR was filed.
4. Hold funds until the FIU consents, where a suspicious activity report has been made, and keep the file for five years after exit.

The tension between the third duty and the rest is resolved by the rules themselves: UK regs 51B and 51C, the Hong Kong Code and the CBUAE standard all carry financial-crime exceptions. The typical licensee error is the mirror image: explaining the reason to a client who is the subject of a SAR, or staying silent towards a client closed for commercial reasons where an explanation is required. Entry controls are covered in the article on AML/KYC for private clients.

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