Bank account investigations are not common, but they happen. They usually catch you by surprise unless you did something fishy with your account and expect it to be investigated. It can be confusing if you haven’t been through the process before because you don’t know how to access your funds or how long the investigation will take.
The bank offers limited information during such periods, making you feel uncertain about the entire process. You might have many questions, like what could have triggered the investigation and what you should do going forward. Here’s some insight into bank account investigation and your options.
Why is Your Account Under Investigation?
Various factors contribute to your account being investigated. It can be as slight as a false positive alert to a breach of regulatory requirements.
The seriousness of the investigation varies, and depending on the severity of the reason for the investigation, you might have full or partial access to your account.
In more serious cases, the bank account can be frozen, meaning you lose total control or access to the account until the investigation is finalised.
Typical bank investigations can take anywhere between seven days to 3 months. Again, this depends on why the account is being investigated. Some of the reasons why your bank account might be under investigation include;
Forged or fake documentation
The fastest way to get your account investigated is by submitting fake or forged documents when signing up.
Some banks have minimal requirements when signing up but require you to provide additional documentation during the KYC onboarding or enhanced due diligence process. If you provide forged or fake documentation during this phase of the account opening, the bank will investigate your account.
Banks must conduct ongoing due diligence as per regulatory requirements. If they discover any forged or fake documents, it will lead to an investigation of the account.
Once the bank establishes that you provided a faked or forged document, there’s no way to resolve it. The account will be closed, but you might be allowed to liquidate your funds if you didn’t commit any other criminal activities while running the account.
Regardless of the outcome of the investigation, the bank is legally required to report your account to the relevant financial intelligence services based on the fake document.
The bank received a court order or subpoena
A bank account investigation isn’t always triggered by the bank. It can be part of a judicial process if the account is reported for criminal activities and the bank receives a court order.
Depending on the seriousness of the order or subpoena, the bank can put your account under investigation for one of two reasons:
- To support the ongoing investigation by the relevant authority
- To allow the bank to assess the level of risk associated with the account and by having a banking relationship with you.
A suspicious transaction is an ambiguous word. It’s a reason that most financial institutions, particularly online-based ones, used to avoid giving you the actual reason for investigating the account.
Suspicious transactions include sending funds to sanctioned or high-risk countries, individuals or regions. You might also find yourself in trouble if you frequently send money across the border without a clear economic purpose.
Victim of fraud
An account investigation can also be a way to save you from being a victim of fraud. The bank can restrict your access to the account while they investigate it for legal reasons and establish how the fraudulent transaction occurred.
In this case, applicants have their account partially or fully, but this kind of investigation typically takes a while to finalise because it’s usually not about you, and the network of fraud could be extensive. In such cases, the bank is driven to find the root cause and prevent it from occurring to other customers in the future.
When sending bank transfers, you could trigger an account investigation when you input certain words as a narrative. It’s common with online transfers.
Certain words are used by terrorists, human traffickers and other criminals. We use some of these words daily without ill intent, but they can lead to your account being investigated.
If the bank believes you have no malicious intent with your narrative note, they can silently resolve the case within 48 hours, but sometimes, it can take up to two weeks to investigate.
Expected vs. actual transaction volume
Another common reason for a bank account investigation is when there’s a significant change in your expected transaction volume, which varies from the established pattern of past transactions.
The investigation team will analyse your current situation, such as age, occupation and type of account, to determine the source of the income.
You have a high chance of getting positive feedback if you promptly provide support documents to explain the sudden surge in your transaction volume.
Transacting in some currency assets like cryptocurrency and digital currency can also trigger a bank account investigation.
If you intend to use the account to send or receive transactions between your account and entities engaged in high-risk activities like gambling, gaming and crypto-mining, you can expect to face challenges, even if these transactions are not illegal.
Most banks have a threshold for these activities, and if the banks confirm that it has been exceeded, there’s a good chance the account will be closed.
Suspected terrorist links
This is one of the most serious reasons for bank account investigation. If the bank received information that your account is being used as a front for a person with alleged terrorist links, they could limit access to the account to investigate the allegations.
It could also happen if your name appears on a list of suspected terrorists. You don’t have to be a terrorist, but if you share similar names, it could trigger an investigation. However, the bank can silently resolve this by cross-checking your information.
Sometimes, your account is being investigated if you have a debt. Sometimes, the creditor has the right to freeze some or all your money if they follow the right legal channels.
This can apply to debts like mortgage debt, car loans, student loans and others. Debts stipulated by the courts, like child support, back taxes and legal judgements, can also lead to your account being frozen. If the account is a personal account and you owe the debts personally, this could easily happen.
You might also be punished for debts another person owes if you share a joint account with them.
There’s not much recourse in such cases besides paying the debt or renegotiating it. You can start by finding out who the creditor is (the bank should be able to give you the information). You should also seek legal advice or credit counselling if you cannot pay the debt immediately.
What Happens When My Bank Account is Being Investigated?
On the front end, it is clear as day that your account is not working as it is supposed. If you’re lucky, you have partial or full access to the account, but in serious cases, you’re locked out. But what happens in the background when your account is being investigated?
Two main scenarios play out during an investigation:
If the account is being investigated for grave issues such as involvement in scams or fraudulent activity, terrorism, forged documents, or the bank has received a court order to freeze an account, you won’t have access to your funds or any functions of the account for the investigation period.
In this case, the reason for the investigation is less serious, but there’s strong evidence or reason for the bank to be concerned, such as high-risk transactions like cryptocurrency and gambling.
Sometimes, it could be that you relocated to a high-risk region or country or changed your current situation, which forces the bank to consider you high-risk.
In such cases, you still have access to your funds and partial account functionality. But it’s also important to note that every bank has a different approach.
Regardless of whether the investigation has resulted in a full or partial freeze, you should expect regular contact and communication from your bank during the investigation period. It could be to provide additional documentation or information that could be helpful in the investigation.
My Bank Account is Under Investigation… What Next?
The first step to knowing what to do next when your account is under investigation is to know the reason. Once you know the reason for the investigation, you can take several steps to support the investigation process so you can regain access to your funds and account. The sooner the investigation is completed, the sooner things return to normalcy.
Make yourself available
Once you’re aware of the investigation, state your willingness to support and cooperate with the investigation. Ensure you have all your contact details updated to make it easy for the bank to get in touch when necessary.
Provide supporting documentation
The bank or the investigators might require additional information and documentation to verify or confirm the reason for the investigation. Providing any additional information or supporting documents quickly and efficiently can hasten the process and help to conclude matters quickly.
In many instances, there’s nothing else to do, especially if you’ve already made yourself available and provided any additional documents required. You just have to wait for the bank’s decision.
If all goes well, you will receive good news that the account is cleared, and you will regain access. But it could also go the other way. If the outcome is not positive, the bank will notify you that the account is restricted. Where applicable, the bank will allow you to liquidate your funds by a given time, usually 30 days from the time you receive communication on the fate of your account.
In some extreme cases, the funds could be frozen as well. In any negative outcome, if you feel the bank made the wrong decision, either by closing or freezing your funds, you can take additional steps.
What to Do Next
if the bank decides to terminate the account and end its relationship with you, you still have options, but they are limited. Simply, the bank is saying they don’t want to pursue your business any further based on the risk assessment.
It might not be the outcome you were hoping for, but the next best step is to withdraw your funds. It is hard to tell if you’re going to win a legal battle in this case, and what matters most is your money. You can always open another account with another bank.
Even if there is a chance to win the case, you can’t force the bank to have a business relationship with you legally unless you have strong reasons why you need their banking services.
If the outcome of the investigation determines that you can’t access your account, but you can liquidate your funds, you can proceed to do just that.
It’s a whole different situation if the funds have also been frozen. This is usually the case if there’s a court order against you, you have been sanctioned, or the bank believes it has strong evidence that you have committed fraud, criminal offences, or you’re financing terrorism.
If your funds are frozen, do you have any recourse?
If you haven’t received any legal action against you and are unsure why the funds were seized or frozen, you can consider going through the legal process and hiring a solicitor to deal with the bank.
If there is a court order, you would be well aware of the situation. In such a case, there’s little you can do besides going through the legal process.
A bank account investigation can be a trying time, especially when the account is frozen, and you can’t access your funds at all. Unfortunately, before getting to this point, banks have reasonable doubt to warrant a deeper look into the account regardless of whether the process is initiated by a court process or is internal.
When faced with a bank account investigation, your best bet is to comply and provide the bank with any support they need to fast-track the process. The sooner they can absolve you of wrongdoing, the sooner you can return to your normal life.
If you’re not content with the outcome, especially if it involves withholding your funds, you can then consider taking legal recourse although it is an uphill battle but not impossible.