What to do if you get debanked, and why it might have happened to you

Have you been debanked? Share your story, email money@telegraph.co.uk.*Imagine one day discovering, quite out of the blue, you’ve been completely blocked from your bank account. Your cards don’t work, your direct debits have stalled, and there’s no way of taking out cash. When you try to find out what’s happened, your bank won’t tell you why.This is the reality of getting “debanked” – something that affected half a million customers last year as cases soared to record levels.The impact of account closures can be huge, and they can happen with little warning and often without explanation if the bank suspects money laundering or other financial crime.Here, Telegraph Money explains exactly what debanking is and why it happens, as well as the steps you can take if you’re affected.What is ‘debanking’?Debanking is when a bank or financial provider closes a customer’s account, usually without giving a detailed explanation and often with little notice. It can affect both individuals and businesses, and can leave customers temporarily unable to access money, receive income or pay bills.Banks are required to closely monitor customer activity and check identities following the tightening of anti-money laundering rules in April 2017.If a bank believes a customer is engaging in criminal activity, it can close their account without explanation.Given the disruption this can cause, new rules being introduced in April this year will require most banks to give at least 90 days’ notice and a clearer explanation before closing an account. However, the rules only cover bank accounts opened after April 28, 2026, and exemptions will still apply.This means banks can still act immediately if they suspect financial crime.Why does debanking happen?The most common reason for debanking is where a bank believes the account is being used for money laundering or other financial crime.According to Julian Richards of Reeds Solicitors, when a suspicion arises, a bank is obliged to act, as failure to do so can create the risk of criminal liability for the bank itself.He added: “There are any number of triggers which might prompt a suspicion within a bank, even if funds are legitimate. This can stem from there being unusual levels of activity involving cash or cryptocurrency, to the transfer of funds to and from certain foreign jurisdictions.”Even if it can be proved that the funds are not the proceeds of a crime, the initial suspicion alone can cause a bank to determine the customer presents a risk profile which it is not prepared to take on.Then there are cases where the account holder is or is linked to a high profile or political figure, like a Member of Parliament, and their account might be subject to extra due diligence.Mr Richards said: “Even where there are no concerns as to the source of funds, in some extreme instances debanking can stem from a bank determining that it does not want to bear the reputational risk of being associated with a particular individual or entity. This might stem from any form of perceived negative publicity, or even that individual’s political views.”Nigel Farage was debanked by private bank Coutts in 2023, reportedly on these grounds.But other account closures are more administrative, according to Sarah Coles, of investment platform Hargreaves Lansdown.She said: “You may have accidentally broken one of the rules in the terms and conditions. Or you might not have provided the information that was asked for in the bank’s standard checks. Sometimes a bank will close an account because it has been inactive for a considerable period.”What should you do if you get debanked?Unexpected bank account closures can be very frustrating. It’s important to stay calm and act quickly.Rishi Patel, of alternative banking platform Interpolitan Money, said: “Banks can and do make mistakes, and in many cases an account closure is the result of an error, false positive or incomplete information that can be resolved.“Your first step should be to contact your bank directly to request an explanation for what has happened. While banks are not always able to provide full details, particularly where regulatory or financial crime checks are involved, you are entitled to ask for as much information as they can lawfully share.”If you don’t receive a satisfactory response and you believe the closure is unfair, your next step is to follow the bank’s formal complaints process.Your bank has eight weeks to respond, but if it does not resolve the issue, you can escalate the case to the Financial Ombudsman Service (FOS). Your case will then be independently assessed and if the FOS rules in your favour, your bank account may be reopened, or you may receive compensation.What if your bank has frozen your account?If you get debanked, your bank may return the remaining account balance to you via a cheque.But if your bank suspects criminal activity, it will freeze your account while it investigates and you may not be able to pay household bills, your mortgage or access cash. Again, you’ll need to contact your bank quickly to find out more.David Hamilton, of law firm Howard Kennedy, said: “Establish what payments are blocked, push for essential bills to be released on a ring-fenced basis, secure alternative banking immediately (if you don’t already have other accounts that can be used as alternatives) and document everything.“Don’t try to move funds without permission, and escalate early to the bank’s complaints team to set up a potential Financial Ombudsman Service complaint in due course.”You may also need to ask your employer to pay your salary elsewhere, and contact creditors to explain what’s happened.It is better to warn your creditors of the situation rather than simply miss payments.Can getting debanked make it harder to get an account elsewhere?Opening a new bank account may not always be straightforward if you have been debanked.Mr Hamilton said: “New banking providers will conduct their own due diligence and may spot previous closures and, potentially, the same underlying issues that caused the closures.”However, debanking doesn’t automatically mean you won’t be able to get another account, “particularly if you explain the circumstances and provide clear evidence that you are in fact low risk,” Mr Hamilton added.If you are struggling to open a standard bank account, a basic bank account may be an alternative option.These have less stringent eligibility requirements as they offer fewer features, such as overdrafts, but you can still carry out everyday banking transactions, including receiving payments and setting up direct debits.*Please note that by submitting your content to us, you are consenting to The Telegraph processing your personal data where required by law. 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