US Banks Shutting Down Innocent Customers’ Accounts Without Warning

In the Brief:

  • US banks are closing accounts of innocent customers due to "unexpected activity." Only 4% of Suspicious Activity Reports lead to a follow-up
  • Naafeh Dhillon is one such victim
  • Chase has been fined $2 billion for violating the Bank Secrecy Act
  • Traders should be aware of risks associated with banking policies aimed at curbing fraud
  • Banks should differentiate accurately between illicit or lawful activity
  • Closures have potential to disrupt trading activities, causing inconvenience, and financial loss.

3 - 5 minute read

A recent report suggests that US banks are abruptly closing accounts of innocent customers without any warning. Banks are taking this step as a result of suspicious activities, leading customers to find out that something is wrong once they try to use their accounts. However, research shows that only a small percentage of Suspicious Activity Reports (SARs) submitted by banks to law enforcement result in a follow-up, indicating that there may be other reasons why the accounts are being closed.

The New York Times reports that customers of various US banks are experiencing sudden closures of their accounts, leaving them without any access to their funds. The banks are taking this step because of “unexpected activity” that is assumed to be connected to fraud or other illegal activities. However, innocent customers are also being impacted by these sudden closures, leaving them stranded without any access to their own money.

Naafeh Dhillon is one of the victims of such account closure. When he tried to pay for dinner, he was shocked to discover that Chase had closed his account without any prior notice. When he contacted Chase, he was informed that he had been let go, and a notice should be in the mail. The bank cut him a cashier’s check for his balance without any further explanation. Dhillon has been living in the US since 2013 legally, and his family in Pakistan had been sending him money regularly since he arrived in New York. It is believed that these sudden closures may be related to anti-money laundering efforts by the banks.


According to a report by Business Wire, different types of fraud have been on the rise at financial institutions across all payment types. Despite this, only 4% of Suspicious Activity Reports submitted by banks to law enforcement lead to a follow-up, and only a small number of follow-ups end in arrests and convictions. This raises questions about the actual cause of account closures.

Chase has previously been penalized with over $2 billion in fines for violating the Bank Secrecy Act and not reporting suspicious activity in relation to the Bernie Madoff Ponzi scheme. Besides, the bank has paid $36 billion in fines for financial violations, employee offenses, competition violations, toxic securities abuses, anti-money laundering deficiencies, mortgage abuses, and additional violations since 2000, according to the financial violations tracker from Good Jobs First.

Implications for Traders

Traders should be aware of the risks associated with banking policies that aim to curb money laundering and fraud. The sudden closure of bank accounts can lead to a lot of problems, mainly if you rely on online banking, wire transfers, and digital payments for trading. It is essential to understand that the bank may not give you any reason why your account has been closed, leaving you with considerably fewer options, especially in trading assets.

Furthermore, banks such as Chase need to improve their due diligence practices to differentiate between illicit or lawful activity accurately. Several innocent customers are being impacted negatively due to bank policies, which is unjust for people who have done nothing wrong.

The Bottom Line

The closure of bank accounts and restrictions on access to funds may become more severe as banks struggle to curb financial crime while being trapped by perceived tech complexity. This has the potential to disrupt trading activities for all traders, causing inconvenience and financial losses. It is critical to be aware of the possible risks associated with banking policies that could result in abrupt closures of accounts. Traders should keep track of these developments to make more informed decisions in the future.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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