The company states that although the bank has the right to terminate an account, it does not mean the bank has no obligation towards its clients. The bank can not knowingly act irresponsibly and force a company into bankruptcy, which will happen because an account is needed to maintain transactions within Finland primarily for paying rent, invoices, tax, receiving Foodora, Wolt and cardpayments etc. The company has also been involved in importation, wholesale of process food and packaging products from abroad, but is ready to put these on hold if it helps.
The company states, that it has almost 30 years history and has never violated any law and all their business transactions are legal and supported by documents, which will be gladly explained more if necessary. Nowadays it is also almost impossible to open a company account for SMEs in Finland even the owners´ have clean background and thus besides in this case the termination may also be seen having discriminatory features under the pretext of KYC, just because the company has got a foreign name and foreign owners having though Finnish citizenships. An additional time is needed atleast until 31.12.2022 to be able to prepare bookkeeping report etc.
The company´s business account has been signed 4.4.2019 and has been valid until further notice. The bank has with a written notice of termination 2022 terminated the account agreement and thereto related services as per 23.6.2022, whic has been later postponed until 30.9.2022
In accordance with the general terms and conditions, the bank is entitled to close the account when the period of notice has expired. The bank does not have an obligation to maintain a customer relationship with corporate customers. According to the account agreement, the bank does not need give any specific grounds for termination. However the bank has not used its termination right without a reason, because there have been several significant cross-border payments to and from the company´s account during the last past years. Many of the payments have been marked as loan or repayment of loan. The bank has encountered difficulties in establishing the origin and purpose of funds paid into the account. The bank has been in contact with the customer and asked for additional know your customer related information, but the bank has in its opinion not received sufficient customer due diligence information in order for the bank to maintain the customer relationship. The bank states that the company´s business activities are outside the bank´s low risk tolerance and that the bank is therefore no longer able to continue the customer relationship. The termination is based on the legislation regarding prevention of financial crime and the bank´s low risk tolerance.
In addition to the communications between the parties, the Banking Complaints Board was provided with the following documents:
- account agreement with general terms
- corporate online banking agreement with general terms
- notice of change regarding outgoing and incoming payments general terms
- application of payments to/from countries with elevated risk
- bank´s know your customer request letter
- receipts of payments
- commercial invoices of the company
- Finnish and foreign Customs documents
- company owners´ certificates and diplomas
- company´s securities and bank statements
- companys´s VAT calculations
- bank´s account termination letter
- letters and emails from other banks rejecting the company
- emails between the bank and the customer
Formulation of question
In order to resolve the dispute between the parties, the Banking Complaints Board must assess whether the bank had the right to terminate the company's banking services.
The applicable norms of law and policy terms
Chapter 15 § 1 of the Act on Credit Institutions (610/2014) states the following regarding good banking practice:
"In addition to what is stipulated elsewhere in this law, the credit institution must follow good banking practice."
The following is stated in the bank´s general business account termst:
"The account agreement is valid until further notice, unless otherwise agreed.
The account holder and the Bank have the right to terminate the account agreement with one (1) month’s notice, unless otherwise specified in the account agreement.- -
The Bank sends a notification of the termination or cancellation to the account holder in writing or electronically.
The Bank is entitled to close the account when the period of notice has expired or the account agreement has been cancelled in the manner described above. - -"
Evaluation of the case
The Board states that according to the terms of the contracts, the bank has the right to terminate the banking services. The contract does not set any conditions for termination. The board has previously stated in its recommendations FINE-043831 and FINE-025891 that the bank cannot, contrary to good banking practice, abuse its rights by terminating banking services for an improper reason, such as with the intention of bullying or harming.
In the present case, the bank has stated that the reason for the termination has been KYC difficulties. According to the customer's understanding, the contracts regarding banking services may have been terminated only because of the company's representatives are foreigners althoug having Finnish citizenships.
According to the contract terms accepted by the customer, the bank does not have to justify the termination of banking services. The Banking Complaints Board considers that there are no facts presented in the case, based on which it could be considered that the bank terminated the customers' banking services for an improper reason. The board therefore considers that the bank has the right to terminate the company's banking services.
The Banking Complaints Board does not recommend the bank to cancel the termination of corporate banking services.
The Banking Complaints Board’s decision was unanimous.
BANKING COMPLAINTS BOARD
Members: Ahlroth, Atrila, Piilo, Tervonen