Can a bank block a company's account without a warning?

A company whose account was blocked by the bank without an announcement or a warning because one of the company’s founders had changed the ID card and hadn’t notified the bank of it has contacted the eKapija portal. Luckily, the owner was not on an annual vacation in Tunisia, and the ID card in an empty Belgrade apartment, inside a work desk – the document was submitted to the bank that same day, so the company could soon continue with its regular operations. Whether this kind of practice is allowed we have tried to learn from the National Bank of Serbia, but also tax advisers. The answer is – the banks have the right to do it, but blocking an account without a warning is not an example of good business practice.

To clarify, the operations of banks in Serbia are regulated, among other things, by the Law on Prevention of Money Laundering and Financing of Terrorism. In line with the stipulations of this law, banks are obliged to determine and check the identity of the beneficial owner of the legal entity and the foreign legal entity by collecting data such as the name, last name, the date and place of birth and the place of residence of the beneficial owner of the client. The beneficial owner of the client is defined as a natural person who directly or indirectly owns or controls the client.

The National Bank of Serbia explains for our portal that the banks determine these data when establishing a business relation and over the course of its duration, through an insight into the original documentation or an authorized copy of it from the register run by the competent organ of the country where the client’s seat is located, which may not be older than six months. The data can also be obtained through a direct insight into the official public register. Also, the bank can obtain a copy of the personal document of the beneficial owner of the client.

Considering the legal stipulations, the NBS adds, a personal document is a valid document with a photograph that is issued by the competent state organ. The banks, in line with the estimated risk and the internal acts, determine the frequency of checking the validity of the personal documents of the beneficial owner of the client. The collected data about the client, including the date of the issuing and the date of the expiration of the personal document, are entered into the information systems of the banks, which notify of the date of the expiration of the documents.

As the NBS points out, the banks then usually notify the client and request the submission of a valid personal document.

– In case the requested data are not provided, the banks can internally block the accounts until the data are provided. If they are not able to carry out the proscribed activities and measures, the banks are obliged to terminate the contract with the client – the NBS says.

According to Aleksandar Vasic, a member of the Management Board of the Association of Tax Advisers of Serbia, the business relation between the bank and the client is a matter of agreement, and the clients are obliged to comply with the rules envisaged by the bank.

– The banks, as subjects to the Law on Prevention of Money Laundering, have to adapt their procedures and rules. Identifying the founder or legal representatives is the clients’ obligation – our interviewee says.

Vasic notes that it rarely happens that a bank blocks an account without a prior warning. The banks usually contact the client and notify them about the necessity of updating the data.

– From my experience, it doesn’t happen often that a bank blocks an account without a prior warning. As a rule, the bank contacts the client, notifies them about having learned that the ID card has been changed and that the data need to be updated. It is in the banks’ interest to have good relations with the clients, so I see no reason for a bank to take any steps that would harm the relations with the client. It’s not impossible for it to happen, though, because the banks are also facing a lack of workforce, so mistakes are possible – says Vasic.

The client, he adds, can change the bank, but the same rules await them in another bank too. In addition to the bank, the director should also notify the accountant of the change of the ID card.

– If the company’s director changes the ID card, they should notify the accountant of it too, if running the books is entrusted to a provider of accounting services, because they are also subjects to the change of the Law on Prevention of Money Laundering, so, just like the banks, they have certain obligations which the Law imposes on them – concludes Vasic.

Ivana Zikic

Narodna banka Srbije Beograd

Udruženje poreskih savetnika Srbije Beograd

National Bank of Serbia

Association of Tax Advisers of Serbia

Aleksandar Vasić

Law on Prevention of Money Laundering

account blocking

change of ID card