BNM Rules on Bank Account Closures

What does BNM’s Fair Treatment policy require?

Bank Negara Malaysia (BNM), the central bank, requires every bank to treat customers fairly. ^[f1] That duty does not stop when the bank decides to close your account. The Fair Treatment of Financial Consumers policy covers the whole relationship, from opening to closing.

Under this policy, the bank must give you clear and accurate information about its decisions. It must give you reasonable notice before closing your account. It cannot just cut off your access without explaining why.

If your bank is not answering you, our guide on what to do when the bank calls about a freeze explains how to deal with the bank.

How much notice must the bank give?

The bank must give you reasonable notice before closing your account. ^[f1] What counts as reasonable depends on the situation, but it should give you enough time to set up banking elsewhere.

The notice should say that the account will close and when. It should also tell you how to get your remaining balance. A bank that closes your account with no notice at all has not followed proper procedure.

If you got little or no notice, you have grounds for a complaint to BNM. Write down the date the account stopped working, when you first heard about the closure, and every message from the bank.

You are entitled to your balance

A closure does not let the bank keep your money. ^[f2] You are entitled to your remaining balance, and the bank must give you a way to withdraw or transfer it.

The bank can issue a cashier’s order for the balance or transfer it to another account you name. If the bank refuses to release your money after the closure, you can raise that with BNM as a separate complaint.

A freeze is different. If a law enforcement agency has frozen your account, the bank cannot release that money, whether or not it closes the account. Our guide to understanding account freezes explains when the law holds funds back.

What is de-risking, and what limits does BNM set?

De-risking is when a bank closes accounts it sees as high-risk. ^[f3] BNM lets banks manage risk, but not by closing whole groups of accounts at once. Each account must be looked at on its own facts.

The bank may have closed your account only because of your background or job. Or your account may have been flagged but you were never charged. Either way, this may breach BNM’s de-risking guidelines, because the bank must weigh your own situation before deciding.

What BNM’s mule account circular tells banks

BNM has given banks specific guidance on handling mule accounts (accounts used to pass on scam money). ^[f4] The circular covers when closing a flagged account is appropriate and when it is not.

It accepts that not every flagged account belongs to someone who knowingly took part in crime. Some account holders were tricked or pressured, or had their accounts taken over. Banks are expected to consider this before acting.

Knowing how banks flag accounts can help you see why your account was closed. If you think the bank decided on incomplete information, a lawyer can help you challenge the decision.

Closure or freeze: why the difference matters

A freeze keeps the account open but blocks transactions, usually under a police, enforcement agency or Public Prosecutor order. A closure ends your relationship with the bank for good. Different rules apply to each.

When the bank closes your account by its own choice, not under a freeze order, BNM’s Fair Treatment policy applies in full. That can give you stronger grounds to challenge it, because the decision was the bank’s, not a law enforcement agency’s.

If your account was frozen first and then closed, deal with each one separately. The freeze may need to be challenged through the courts, while the closure can be taken to BNM. Our guide to your rights as an account holder covers both.

What to do if your account was closed

1. Ask the bank in writing for a formal explanation. Ask why the account was closed, under which policy, and when the decision was made. Keep a copy of your letter and any reply.
2. Complain to BNM if the answer falls short. If the bank’s reply is unclear or it does not reply, file a BNM complaint. BNM will look into the bank’s conduct and decide whether it followed proper procedure. ^[f5]
3. Deal with any problem opening a new account. If other banks turn you down, our guide on what to do when you cannot open a new account explains the Semak Mule system and how to clear a flag.

A lawyer who handles banking matters can take on the closure complaint and the new account problem at the same time.

Sources

1. Bank Negara Malaysia, Fair Treatment of Financial Consumers Policy (bnm.gov.my)
2. Bank Negara Malaysia, Financial Stability and De-risking Guidelines (bnm.gov.my)
3. Financial Services Act 2013, consumer protection provisions
4. Bank Negara Malaysia, Mule Account Guidance Circular
5. Financial Markets Ombudsman Service (FMOS), Consumer Guide (fmos.org.my)