🇬🇧When the Bank Closes Your Account: De-Risking, Deadlines and an Orderly Exit

The notice arrives as an ordinary letter: the bank is terminating the business relationship, the account closes on a stated date, please supply settlement details for the remaining balance. No reason is given and the relationship manager is unreachable. What follows costs the client months and a slice of the portfolio — in per-position transfer fees, in forced liquidation at a moment the bank chose, and in deadlines that expire quietly. The legal framework around the exit has tightened over the past eighteen months: a new notice regime took effect in the UK on 28 April 2026, the Court of Justice of the EU outlawed automatic refusal based on third-country sanctions lists on 11 June 2026, and on 3 March 2026 the Swiss Federal Supreme Court handed down two opposite rulings on the same day about whether a bank must keep an account open and whether it must open one at all.

The concept

An account closure breaks into three independent problems, and conflating them is expensive:

• The ground — compliance, commercial unviability or a regulatory instruction. This determines whether there is anything to argue about at all
• The procedure — length of notice, any duty to explain, the route of appeal. Hard numbers exist in the UK and the EU; Switzerland and Singapore make do with “at any time” and “reasonable notice”
• Getting the assets out — in-specie transfer against liquidation, the per-position charge, and what happens to the balance if settlement details are never supplied

The EBA fixed the terminology in Opinion EBA/Op/2022/01 of 5 January 2022: de-risking is an institution's decision “to refuse to enter into, or to terminate, business relationships with individual customers or categories of customers associated with higher ML/TF risk”. On 25 February 2025 the FATF amended the Standards themselves around this problem: R.1, INR.1, INR.10 and INR.15 were revised, “commensurate” was replaced by “proportionate”, and supervisors must now take into account the risk mitigation measures an institution has adopted in order to “avoid overcompliance”. No outright prohibition on de-risking was written into the Standards; the mechanism is indirect. The CSSF put it more bluntly in its communication of 16 June 2026: “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”. A purely commercial exit remains the bank's to make.

Scale: no honest number exists

The EBA says it plainly: “The scale of de-risking cannot be quantified, as no comprehensive statistics are currently available”. Any round figure for “how many accounts have been closed worldwide” is invented. Only partial slices are measurable, and the densest is the FCA review “UK Payment Accounts: access and closures” of 19 September 2023: 34 firms, over 90% of the current account market, covering July 2022 to June 2023. The middle 50% of firms show this spread as a share of their book.

The dominant closure reasons are dormancy and financial crime concerns. On political opinion the FCA found four closures and a further four complaints, and on inspection the primary driver turned out to be customer conduct — in one example, racist language directed at staff. The review's baseline finding: UK legislation creates no universal right to a bank account. The European slice comes from the Commission report COM(2025) 485 final of 11 September 2025: roughly 1.955 million basic accounts opened in 2023 against 24,545 recorded refusals, around 1.2%.

Notice periods by jurisdiction

United Kingdom. The dividing line is 28 April 2026, the date the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 came into force. For accounts opened before it, notice of at least two months. For accounts opened on or after 28 April 2026, notice rises to 90 days and the bank must give “detailed and specific reasons explaining why you closed their account”. Shorter notice is permitted in exceptional circumstances: suspected fraud, abusive behaviour towards staff, a requirement of law.

European Union. Hard numbers exist for the payment account with basic features under Directive 2014/92/EU. The list of unilateral termination grounds is exhaustive: deliberate use of the account for illegal purposes; no transaction for more than 24 consecutive months; incorrect information provided when opening; loss of legal residence in the Union; opening a second suitable account in the same Member State. Article 19(4) splits that list unevenly: where the ground is 24 months without a transaction, loss of residence or a second account, the bank must give written notice free of charge at least two months ahead; where it is illegal use of the account or incorrect information supplied on opening, termination takes effect immediately. The notice must set out the complaints procedure and the contacts for the competent authority and the ADR body, and it falls away only where disclosure would run contrary to objectives of national security or public policy. For ordinary accounts the two-month period sits in Article 55(3) PSD2, and it bites on one condition — that the framework contract agreed such a right of termination in the first place.

Switzerland. There is no statutory period. The standard GTC formula, Swissquote Article 28.1: “Either the Bank or the Client may terminate, at any time and without stating any reasons, any business relationship”.

Singapore. The ABS Code of Consumer Banking Practice, October 2025 edition: “Your bank will not close your account without giving reasonable notice except under exceptional circumstances”. The Code fixes no number and says nothing at all about the fate of the balance.

Hong Kong. No numeric period appears in the regulatory material; the contract governs.

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 that disclosure is likely to prejudice the investigation, is the tipping-off offence under section 333A of the Proceeds of Crime Act 2002 — up to two years' imprisonment on indictment. A bank that closed an account after a SAR is physically unable to name the reason, and the UK's 2026 regime accounts for this: the duty to explain falls away where CDD cannot be applied, where a regulator or immigration law requires the closure, and where there are reasonable grounds to suspect serious crime. Silence functions as an indicator of a compliance ground, and argument at that point is close to hopeless.

Challenging a closure: where to go and what is on offer

The British route is the widest: eight weeks for the firm to respond, then six months to refer the complaint to the FOS, and the ombudsman may direct “reopening an account, if appropriate”. What it examines is the account terms, including any agreed notice period, and whether there is a clear explanation supported by evidence. Moving east, the options narrow. FIDReC expressly excludes commercial decisions from its jurisdiction, alongside pricing policy, interest rates and fees, so a decision to close an account will almost certainly not get through the scheme. Hong Kong's FDRS handles monetary disputes, so a closure without a quantified loss does not get through it, and the HKMA itself resolves no individual monetary disputes at all.

Two rulings in one day: the Swiss boundary

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

4A_454/2025 — PostFinance lost. A Russian national resident in Switzerland since 2005 on a category B permit, designated on both the US (OFAC SDN) and UK sanctions lists, with no Swiss designation against him. The Court upheld the commercial court's order requiring the bank to maintain the relationship on restricted terms: domestic Swiss payments up to CHF 15,000 a month on both credit and debit, cash deposits up to CHF 15,000 a month against QR invoices to Swiss beneficiaries, and a penalty of up to CHF 10,000 for breach. The reasoning: foreign sanctions do not of themselves create a prohibition under Swiss law, and only Swiss law and directly applicable international law can ground an exclusion. Elevated compliance costs require proven, concrete disproportionality.

4A_494/2025 — PostFinance won. A Turkish national on US sanctions lists sought to have an account opened. The appeal was dismissed: Art. 45(1)(a) VPG permits an exception where compliance with financial market, money laundering or embargo legislation causes Post “unverhältnismässig hohen Aufwand”, and that provision has an adequate basis in the delegation under Art. 32(2) PG. Court costs of CHF 3,000 and CHF 3,500 in compensation to PostFinance fell on the appellant.

Both clients sit on OFAC lists. What separated the cases was something else: the first concerned an existing relationship with a man living in Switzerland, where PostFinance failed to prove concrete disproportionate cost; the second was an application to open a new account, where the Court accepted that the Art. 45(1)(a) VPG exception applied.

The contrast with the EU is sharp. In Case C-81/24 (LH v OTP banka d.d., formerly NOVA KREDITNA BANKA MARIBOR, Fourth Chamber, 11 June 2026) the Court of Justice held that Article 16(4) of Directive 2014/92/EU does not permit Member States to require credit institutions to refuse a basic payment 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 money laundering risk assessment. For a client on a third-country list, the EU and Switzerland are separate legal universes.

Moving the portfolio: in specie against liquidation

An in-specie transfer preserves positions and creates no tax event; liquidation is faster and crystallises gains and losses across the whole portfolio at a moment the bank chose.

The United States is the only jurisdiction with numbers in the rulebook. FINRA Rule 11870: validation of the transfer instruction within one business day, completion within three business days of validation. The list of what cannot move is closed (para. (c)(1)(D)): proprietary products of the carrying member; third-party products the receiving member cannot carry; assets outside the receiving member's regulatory scope; bankrupt issues lacking proper denominations; limited partnership interests in retail accounts. For those the carrying member must contact the client and offer options.

The UK imposes a duty to offer in specie, without a deadline. COBS 6.1H requires the ceding platform to give the client the option of an in-specie transfer of units and, where needed, to request a unit class conversion; the timing is expressed as “within a reasonable time”. The FCA recommended banning exit fees in 2019 but discontinued the consultation. Large retail platforms dropped the charge anyway: Hargreaves Lansdown states plainly that it levies no exit fees to leave or transfer out. It survives where the client arrives through an adviser: the AJ Bell Investcentre tariff is £75 for a standard transfer-out to another pension scheme and £25 for each holding transferred in specie. A cash ISA to cash ISA transfer must complete within 15 business days; for a stocks and shares ISA there is no statutory period. The critical rule: transfer must go direct to the new ISA manager, because passing assets or cash to the investor counts as a withdrawal and strips the tax wrapper.

Changing custodian without changing beneficial owner does not, as a general principle, constitute a disposal, but the specific provision is worth checking in your own jurisdiction: no verified primary source could be cited on this pass.

If settlement details are never supplied

Swissquote GTC Art. 28.3 illustrates the standard Swiss construction. The bank may continue charging account maintenance fees; deliver securities to the client's address or to a custody account at another bank; or liquidate the instruments and deposit the proceeds at the place designated by a competent court, or send them to the last known address by crossed cheque with debt-discharging effect. The client bears the costs, and liquidation remains the bank's right rather than its duty.

Swiss and UK dormant-asset regimes follow different legal mechanics. Under the Swiss Bankers Association Guidelines on Dormant Assets hosted by FINMA, dormancy begins 10 years after the last documented customer contact; assets over CHF 500 must be published after 50 years of dormancy or 60 years without contact, and claims become void only after the statutory liquidation process is completed. Under the UK Reclaim Fund framework, participating institutions may transfer eligible dormant assets to Reclaim Fund Ltd; for bank and building society accounts, the framework gives 15 years without a customer-initiated transaction as the relevant dormancy period, while owners retain the right to reclaim at any time.

One clock runs against the client silently. Under the UK Money Laundering Regulations 2017 a bank keeps CDD files and transaction records for five years from the end of the business relationship, after which it must delete the personal data. A few years on there will be nothing left to evidence source of funds to a new institution — the strongest argument for taking the whole history out at once.

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