Peters & Peters

Firm advises client on the closure of accounts held with financial institutions in the UK and across Europe

We act for a foreign national, resident in the UK, who has assets at financial institutions in the UK and in various European jurisdictions. We were instructed to assist our client after a number of these financial institutions notified our client’s family office of their intent to close the accounts held by our client and by the businesses that our client owned.

Of note, one of these accounts was temporarily frozen with its balance transferred by the bank into an internal suspense account without prior notice. These accounts included current and savings accounts with liquid balances, as well as accounts which held investment instruments such as bonds. Notably, the possibility of having to liquidate these bonds at short notice meant that our client was at risk of losing value in these investments. In all instances, no reasons were given for these decisions and our client was asked to find alternative banking arrangements within 30 days.

To tackle this, we adopted different approaches depending on the financial institution in question. With some, we adopted a more personable approach and set up meetings with members of their legal, risk and compliance departments to discuss the matter and explain in detail the background. Subsequently, we provided these financial institutions with detailed written representations, supported with documentary evidence. The aim was to offer the institutions comfort about our client’s continued good repute and the legitimate provenance of their source of wealth.

With other banks, we made statutory subject access requests (SARs) to their relevant UK and European branches under the relevant data protection legislation, in order to obtain information which would help us to understand the reasons behind the account closures and in turn, to allow us to make written representations to the banks addressing these issues directly.

Both approaches have assisted us in identifying relevant reputational risk factors (including potentially adverse information in the possession of our client’s financial institutions). To assist this process, we have also adapted the strategy of instructing external business intelligence consultants to produce an enhanced due diligence report on our client. This has allowed us to consider what representations to put forward to the client’s existing banks, as well as identifying the particular information which our client should present to new financial institutions, during their onboarding processes, to satisfy their compliance procedures and to explain the client’s current circumstances.

We also made SARs to the main compliance data service providers, on whose information reports financial institutions rely on as part of their due diligence processes when onboarding new customers and when periodically reviewing their existing customer arrangements. With the information obtained, we were able to identify any inaccurate and / or misleading data circulated in relation to our client through their systems, resulting in successful statutory requests for that information to be rectified or removed.

As a result, we have successfully resisted the closure of some of our client’s bank accounts (and have assisted in the opening of new bank accounts with other reputable banks where appropriate), as well as successfully identifying and mitigating the risk presented by adverse information being available to financial institutions through compliance databases.

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