Anger as banks shut accounts in money laundering panic 

Bank customers are having their accounts closed or frozen over payments as low as £50.

Accounts are normally shut or blocked on money-laundering or fraud grounds when a large or suspicious payment has triggered a bank’s security systems.

The complaints website Resolver says that in the past year, more than one complaint in four about an account issue involved such closures or freezes — yet customers typically said their accounts were blocked after they received a payment of less than £500, with some falling below £100. 

One person’s account was suspended after a friend paid them £40.

Deposits from benefits or Universal Credit and tax rebates from HMRC were also reportedly flagged. 

Other examples included salary payments cutting people off from access to their accounts and innocent gifts from friends or relatives to a loved one. 

Many people said they were told their account would be closed without warning.  

Why is it happening?

All banks are inclined to freeze accounts if there is suspected fraud or money laundering. 

According to Resolver’s analysis it’s been more commonplace for the customers of newer digital banks to have problems with frozen accounts.

Almost three-quarters of complaints were directed towards these organisations.

But with a quarter also aimed at more traditional banks, including some of the UK’s best-known brands, the issue is still widespread. 

There is a suspicion that banks are increasingly relying on artificial intelligence to spot potential fraud and money laundering cases and this may be exacerbating the problem.

Resolver state: ‘From the cases we are seeing, accounts are likely being frozen or blocked because banks have developed more automation into their money laundering procedures.

‘This means that it’s probably computers ‘watching’ for suspicious transactions, particularly as scams have become an unwelcome mainstay.

‘All that’s needed is enough staff with common sense and the power to correct clear errors quickly.

‘Technology and automation does have its place and there is clear evidence that it improves lives for the better, but in situations such as having your bank account frozen without warning the importance of human interaction cannot be overstated.’

How long before customers regain access?

One in 10 people claimed their account was frozen for at least two weeks at the time they raised their complaint using Resolver – often after trying repeatedly to sort the issue with their bank directly.

But there were examples of cases that had lasted between three and six months, and a handful beyond that.

Many of those raising complaints experienced not being able to get hold of a person to speak to, waiting hours on a phone line or even having to retry day after day.

One customer said they had to make four calls to their bank’s fraud department, each one with at least a 60-minute wait with one taking up to four and a half hours.

Many complaints made to digital banks told of accounts being blocked whilst ‘under review.’

In these specific cases it can take weeks before you can regain access to your bank account, meaning some people will go without access to their money for a long time.

What can you do if your bank freezes your account?

The first logical step is to contact your back to ask them why your account has been frozen.

You will need to speak with the fraud team to try and establish whether a certain transaction has caused a problem for example.

If the bank refuses to divulge any information then you are within your own right to make an official complaint and failing that, you can complain to the Financial Ombudsman Service.

You should also be able to switch your current account using the current account switching service, which typically takes seven days to take effect.

Just check with your new current account provider that any standing orders and direct debits have also moved across when you do so.

a.murray@dailymail.co.uk