Can a bank freeze your account whenever?
After the bank account of Star Alliance in Hong Kong got frozen months ago, there is a new wave of bank accounts freeze happening in Hong Kong. The latest round including HSBC Hong Kong frozen accounts of some church officials including pastors (the church had been helping frontline protesters), family of an exiled Hong Kong politician Ted Hui, and a fundraising account associated with a social worker. The sparks some of my clients wonder how can a bank just go ahead and freeze customers’ accounts? And how long can they have the account frozen without any proof or explanation?
As a financial advisor, I understand that everyone working in the financial sector has an obligation to report any suspicious transactions. In Canada, I had seen even little amount can be “suspicious”, see this article from the CTV. But then, the question comes down to: if there was no suspicious transactions, can the bank still freeze your account?
The answer, unfortunately, is YES.
The bank can freeze your account whenever it thinks it is “appropriate”. in the two cases above, to the account holders’ disadvantage, the police is involved and the bank has an obligation to fulfill the authorities’ requests. The bank cannot even tell you WHY your account is being frozen if it was involved in an investigation according to this article.
There was also a ruling in Hong Kong that the court had rejected an application of a bank account holder to un-freeze its account. As stated in the article, it “illustrates the hurdles that an account holder will face in trying to force the release of funds frozen by a bank due to allegations that the account is implicated in a fraud, at least without going to full trial.
While each application turns on its facts, it appears that a bank can argue that it has a credible defence relatively easily where it can point to the potential implication in a fraud being investigated by authorities (not only the Hong Kong authorities).”
At the end of the day, the account operating terms are what all customers can go back to and read on, but I doubt that will help the customer in any shape or form. After all, no businesses would want to get into the way of any “investigations”.
I want to remind you that, as a consumer, you always have choice who to deal with and which bank you want to bank with. I also, tell my clients that they want to bank with two banks to maximize the CDIC coverage you can get, and at times, certain banks can offer better rates on your savings.
Maybe it’s time for you to review your finances and who you want to deal with.
