Bank exits in this sector almost never follow a scandal. They follow a review. A relationship manager runs the periodic refresh, the file no longer matches the account activity, questions go unanswered for three weeks because the person who knew the answer left, and the file goes to a committee that has no reason to keep it. The firm finds out by letter.
Getting banked is covered elsewhere, in banking for trading firms and in why banks refuse brokers. Staying banked is a different discipline, and it is mostly about one thing: keeping the bank's file on you accurate, current and boring.
The periodic review is the moment of risk
Regulated banks refresh customer due diligence on a cycle, and higher risk customers get refreshed more often. Trading firms are higher risk by category, which means the review comes round faster and asks for more. The requests are predictable: current ownership and control, updated licence status, latest financials, a description of the business model, expected volumes and counterparties, the AML policy, and the identity of the compliance officer. Nothing there should take a week to produce. Keep a current copy of the whole pack in one place with a review date on it, and refresh it before the bank asks rather than after.
The single most common cause of an exit is not a bad answer. It is a slow one. From the bank's side, a customer that takes a month to evidence its own ownership structure is a customer whose file cannot be defended internally, and de-risking is what happens to files that cannot be defended.
Your account has to behave like the description
When you opened the account you told the bank what would flow through it: how much, from where, in which currencies, from what kind of counterparties. The monitoring system compares reality with that description every day. A firm that described retail client deposits from three European markets and then starts receiving payments from a payment institution in a fourth region, in a currency it never mentioned, has not done anything wrong. It has invalidated its own file, and the alert that generates is expensive for everyone.
Tell the bank first. A short note ahead of a change in volume, a new market, a new payment provider or a new revenue line costs you nothing and converts a future alert into a logged, approved fact. Firms that do this find their source of funds queries get shorter every year, because the bank already has the context.
Banking policy is set by each institution and by its correspondents, and nothing here is legal or compliance advice. A firm should take its own advice on its structure, its documentation and its obligations in each jurisdiction.
Client money is the line that ends relationships fastest
Mixing client funds with operating funds is the fastest way to lose an account and, depending on the licence, the fastest way to lose the licence. Banks look for it. The signals are simple: withdrawals to clients leaving an account that also pays salaries and marketing invoices, or transfers between the two that have no documented basis. Run segregated accounts with a written reconciliation performed on a schedule, and be able to produce the reconciliation on request. Where the licence requires it, the bank will often want written acknowledgement of the account's status as a client money account, and getting that in place at opening is far easier than retrofitting it during a review.
The correspondent behind your bank has an opinion too
Your bank may be comfortable with you and still be unable to keep you, because the bank that clears its settlement currency has withdrawn from your sector or your country. That mechanism, described in correspondent banking de-risking, is invisible from your side until the notice arrives. It is a strong argument for holding accounts in more than one banking group and more than one country, and for asking, at onboarding, which correspondent chain your payments actually run through. Firms operating out of hubs with deep local banking, whether that is Dubai, Singapore or London, tend to have more options when one chain closes.
The relationship manager is a human file, keep it warm
The person who defends your account in a committee meeting is the relationship manager, and they defend what they understand. Two short meetings a year, with numbers, a plain description of what changed and an honest note about anything that went wrong, does more for account stability than any document. Send the annual accounts without being asked. Tell them about a regulatory examination before they read about it. Name a single person at your firm who answers bank queries, and make sure that person is not the only one who knows where the documents are.
Practical hygiene matters as well. Keep payment references meaningful so the bank can see what a transfer is for. Avoid round number transfers between related entities with no invoice behind them. Do not let a dormant account sit with a token balance, because dormancy triggers its own review. And keep the registered details current at the company registry, because a mismatch between the register and the bank's file is one of the cheapest ways to fail a refresh.
Have the next account open before you need it
The worst time to apply for a bank account is the week after you received a closure notice, because the application form asks whether you have been exited by a financial institution and the honest answer starts the conversation badly. Open a secondary account while you are healthy, keep real activity running through it, and treat it as insurance with a monthly cost rather than as a spare. That is the same logic that applies to payment providers, and for a firm handling client money it is not optional.
"Your bank is not testing whether you are honest. It is testing whether your account behaves the way you said it would when you opened it."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- Exits usually follow a periodic review, and slow answers kill more accounts than bad ones.
- Monitoring compares your live activity with the business description you gave at opening, so notify the bank before you change markets, rails or volumes.
- Segregated client money with a documented, scheduled reconciliation is the line banks watch hardest.
- Open a second banking relationship while you are healthy, because applying after a closure notice starts the file badly.
Frequently Asked Questions
Why do banks close accounts for trading firms without a reason?
Most jurisdictions allow an institution to end a relationship on notice without stating a reason, and disclosure is often restricted where a suspicion report is involved. The usual driver is risk appetite: the file cannot be defended internally, or the correspondent chain behind the bank has withdrawn from the sector or the country.
How often will a bank review a trading firm's account?
Regulated banks refresh due diligence on a risk based cycle, and firms in higher risk categories are refreshed more frequently. Rather than waiting to be asked, keep a current pack with ownership, licence status, financials, the AML policy and expected activity, and refresh it on your own schedule.
Does holding a licence guarantee a bank account?
No. A licence from a supervisor with client money and AML obligations improves the file considerably, but banks apply their own risk appetite, and country risk, correspondent policy and transaction patterns can outweigh the licence. Firms should take their own advice on structure and documentation.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.