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Why are US Banks on a Sudden Account Closing Spree?
In recent times, many customers of various banks across the United States have been receiving unsettling news — their accounts are being closed abruptly, with little to no explanation provided.
This phenomenon, known in the banking industry as “exiting” or “de-risking,” has left individuals, families, and small-business owners puzzled and frustrated. But what lies behind this seemingly drastic measure?
The Regulatory Crackdown
Banks are tightening their security measures in response to regulatory pressures from Washington. The aim is to combat a range of illicit activities, including fraud, terrorism, money laundering, and human trafficking. This has led to a heightened level of scrutiny on customer accounts.
Suspicious Activity Reports (SARs)
Federal law mandates banks to file Suspicious Activity Reports (SARs) when they detect transactions or behavior that could potentially violate the law. These include large cash transactions or wire transfers to high-risk countries. In 2022, banks filed over 1.8 million SARs, indicating a 50% increase in just two years. This trend is expected to continue, with nearly 2 million SARs projected for the current year.
