Termination of banking relationship
Category: Financial law
In 2018 a large fine was handed out to ING on account of its structurally flawed approach to combat money laundering. Other banks are also obliged to improve their approach. For example, ABN AMRO has to screen all 5 million retail customers for criminal activities. The checks that banks are required to carry out are required under the Wwft. Because of this stricter approach, banks are required to keep a close eye on their customers. In practice, we have noticed an increase in the number of cancellations. The question is whether banks can simply terminate the banking relationship with a client.
Termination of a banking relationship?
A bank can make use of its contractually stipulated power of termination, unless such termination is unacceptable according to standards of reasonableness and fairness (Section 6:248(2) of the Dutch Civil Code), taking into account all circumstances of the case. The duty of care (Article 2 GTC) plays an important role in this assessment. Art. 2 FGTB works both ways. The bank must exercise due care in its dealings with the client, taking the client’s interests into account to the best of its ability. This duty of care also applies the other way around: the client may not misuse (the services) of the Bank and must cooperate to ensure that the Bank is able to meet its obligations towards regulators.
Wwft – client survey (KYC/AML)
In this context, a bank is obliged under Section 3 of the Wwft to conduct (continuous) customer due diligence. This customer due diligence also means that ING must know who the customer is, where the money comes from and what is done with it in order to mitigate the risk of money laundering. After all, banks act as gatekeepers and are expected to know who their customers are, on the basis of, among other things, the Wwft.
Some clients – such as sauna clubs – have an inherently increased risk, but having an inherently high risk does not mean that this type of client should be categorically refused (which is indicated in the Guideline Wwft and Sw, version December 2019, DNB). After all, every company, and in particular a private client, must be able to participate in public life.
In practice, I notice that more and more clients are receiving questions about the transactions in their bank accounts from their bank. It is important to answer these questions as carefully as possible. In some cases, banks have to ask questions and they also want answers. These questions should therefore not simply be put aside. In fact, if these questions are not or not sufficiently answered, the bank may be entitled to terminate the banking relationship. So be warned!