Money transfer services – closure of accounts

We have acted for Money Transfer Services (“MTS”) who have had difficulties arising from the closure of their bank account.

Over the last few years, an increasing number of MTS have had their bank accounts closed. Although the banks concerned have not provided reasons, it seems that they are withdrawing generally from this sector because of the high regulatory obligations required relating to anti-money laundering protections. In at least one case, the MTS has successfully challenged the bank and obtained a stay on the closure of their account using the competition law argument that the bank was abusing its dominant position in the market (Dahabshiil Transfer Services Ltd v Barclays Bank plc).

The closure of accounts has been brought to the attention of the FCA and they have issued guidance to banks saying that they should not close MTS accounts without considering the individual circumstances of each case. The concern of the FCA is partly due to the fact that the relevance of MTS’s continue to trade notwithstanding the fact that they have no bank account. This lack of transparency is completely contrary to the objectives of the anti-money laundering regulations.

Additional information