Customers can fight unfair account freezes or closures - Expert

KUALA LUMPUR – Customers whose bank accounts are frozen or terminated are not without recourse, despite the broad discretion banks hold to manage risks and comply with regulatory obligations, said financial forensics expert Raymon Ram.

Account freezes and closures; often linked to anti-money laundering (AML) compliance, can have immediate and severe consequences for individuals and businesses.

These include disrupted cash flow, delayed payments and significant operational difficulties.

“Banks are entitled to protect themselves from regulatory exposure, but such actions must still observe the basic principles of fairness.

“While freezes are often justified on compliance grounds, banks must still ensure procedural fairness,” he told Sinar Daily.

He stressed that customers are entitled to clear notice, proportionate action and a meaningful opportunity to respond, particularly regarding long-standing accounts.

Raymon, who has extensive experience in combating financial crime, stated that banks generally act under contractual terms when restricting accounts and are expected to notify customers in writing.

* Seek Clarification: Affected customers should first engage the bank’s internal review or complaints process.

* Formal Documentation: If informal engagement fails, a formal written complaint is essential to create an official record and mandate a substantive response.

* Identify Red Flags: Sudden action without reasonable notice, vague explanations, or inconsistent reasoning may indicate that proper procedures were not followed.

If disputes remain unresolved, Raymon said customers can escalate the matter to Bank Negara Malaysia (BNM). As the regulator, BNM assesses whether financial institutions have treated customers fairly and applied risk-based controls proportionately.

“Heightened AML scrutiny does not give banks a blank cheque to act arbitrarily.

“Legal action remains an option, but it is generally a last resort. While courts recognise a bank's contractual right to manage risk, judicial relief may be considered where there is evidence of bad faith or procedural unfairness,” he added.

To further protect consumers, BNM recently mandated that banks provide written explanations and clear appeal procedures for account closures.

These notices must now state the specific reason for the closure, without disclosing sensitive details that could compromise ongoing investigations and provide clear instructions on how to file an appeal, including available channels, timelines and the necessary steps to follow.