“The escalation team just reached out to me. They told me that the account was being shut down, and they wouldn’t give me a reason. I asked them if they would ever give me a reason. They said no.”
This eerily Kafkaesque account is from California-based writer, activist, and social and political commentator Elad Nehorai. At the beginning of this week, he learnt that his bank of many years, Bank of America, had closed his account with no warning or explanation. He couldn’t touch his funds and he had no idea why. Nehorai posted a thread on Twitter that went viral and ultimately prompted the TBTF lender to partially back down. As Nehorai has come to realise through this ordeal, he is not the only person to have suffered this fate (h/t to Lambert for bringing this to my attention):
I am with my wife & daughter in a @BankofAmerica office. They shut down my account with any notice or explanation, and we won’t be able to feed our family or pay medical expenses.
We are staying here until it’s fixed. So far they have refused to even explain why they did this. pic.twitter.com/yQ8717kjof
— Elad Nehorai (@EladNehorai) July 11, 2023
For the record this is relatively common, and they apparently purposefully refuse to let you find out any information at all. The process can drag out for months while people wait for money to feed their families. https://t.co/bvsvlyVXX7
— Elad Nehorai (@EladNehorai) July 11, 2023
In the end, Bank of America removed the hold on Nehorai’s account, though it is, to all intents and purposes, still closed. As Nehorai notes, many other people who do not have his public reach or social capital have not been so lucky:
In the meantime, the account itself is still shut down without explanation. Nothing was actually resolved on a technical level. I just got lucky that the pressure caused them to remove the hold.
Sending love to anyone struggling financially. What a horror show.
— Elad Nehorai (@EladNehorai) July 11, 2023
The responses to Nehorai’s twitter thread suggest that this “horror show” is anything but a freak occurrence. And it is not new: CBS published an article in June 2022 about a woman who was shut out of her 17-year account with Bank of America just before undergoing surgery for thyroid cancer, and for certain minority groups, in particular Muslims, this sort of thing has been happening for over a decade. Nor is it exclusive to the US.
At the end of June, as many readers no doubt know, the retired British politician Nigel Farage went public with the new that Coutts, one of the UK’s oldest private banks, had closed his account without warning. While Farage said the bank had given no reason for the action, he believed it was because of his former designation as a “politically exposed person” (PEP). As the BBC notes, PEPs generally pose a greater risk for financial institutions as they are considered to be more exposed to potential involvement in corrupt practices due to their position and the influence they may wield.
The story quickly went viral. Many of Farage’s fiercest detractors celebrated the fact that “Mr Brexit” was finally paying a price for the damage he is believed to have caused. Others were more attuned to the broader risks and dangers posed by the spectre of politically motivated bank account closures:
I oppose @Nigel_Farage on many issues but it's outrageous that his bank accounts have been closed on ‘political grounds’
Banks are out of control & unaccountable
They are policing people's thoughts
Defend free speech & banking without discriminationhttps://t.co/i8pJ7xGrLu
— Peter Tatchell (@PeterTatchell) July 4, 2023
In the resulting furore, Coutts told the BBC that the real reason for its decision was that Farage’s account didn’t have enough money in it — an allegation that Farage roundly denies. This prompted a flurry of calls to the broadcaster from other Coutts customers who said that their accounts are also below the necessary threshold yet they have not been threatened with account closure. As BBC reporter Simon Jack noted, the bank clearly has “a lot of discretion” when it comes to these sorts of actions and decisions:
Thank you to the Coutts customers who have been in touch saying they fall below financial thresholds but unlike Farage have not been threatened with account closure. Clearly a lot of discretion available to the bank.
— Simon Jack (@BBCSimonJack) July 4, 2023
In an article for the Daily Telegraph, the former Brexit Party leader says he was also rejected by seven other banks when he approached them about becoming a customer. Natwest, Coutts’ parent bank, apparently offered him a standard account, but according to Farage only after he went public with his story. Also, Farage claims that several family members have apparently had their accounts shut after Chris Bryant, a Labour MP, “falsely” accused Farage of taking money from Russia.
In the wake of the Farage furore, the UK government has launched a probe into whether banks are closing accounts of people who are “politically exposed.” But the focus appears to be exclusively on elected officials and their families.
An even more bizarre story surfaced just over a week ago about an Anglican minister whose account with the Yorkshire Building Society, the UK’s third largest building society, had also been closed, just days after he had raised concerns about his local branch’s promotion of transgenderism. Speaking to the London Times, Rev Richard Fothergill said:
“They are a financial house – they are not there to do social engineering. I think they should concentrate their efforts on managing money, instead of promoting LGBT ideology.
The Yorkshire Building Society said it does “not close savings accounts based on different opinions regarding beliefs.” But it added (emphasis my own): “We would only make the difficult decision to close a savings account if a customer is rude, abusive, violent or discriminates in any way, based on the specific facts and behaviour in each case.”
In other words, if a customer’s opinions or behaviour are deemed by the bank to be discriminatory in any way, it can close their account. As in the US, the reasons for an account closure are often a mystery to the customers affected, though political or ideological motivations appear to play a part in some cases.
A Clear-Cut Example
The most clear-cut example of this was the Canadian government’s decision, in February 2022, to invoke the emergencies act to compel banks to seize the accounts of the freedom convoy protesters who had blocked several key border crossings. According to the minutes of a meeting between Canada’s Economy Minister, Vice President and WEF board member Chrystia Freeland and senior bank executives the day before the act was invoked, one CEO flagged concerns that if banks were forced to close accounts, it could be seen as the sector “being used as an arm of the government” or even “a political weapon.”
In the past year, Paypal has banned the accounts of the UK-based Free Speech Union, its founder Toby Young and his online publication, the Daily Sceptic, for purportedly breaching its policies against hate speech. It also closed the account of UsForThem, which campaigned against school closures during the UK’s COVID-19 lockdowns. Worse still, the fintech giant surreptitiously slipped a line into its terms of service granting itself the right to fine customers $2,500 for spreading misinformation. When the news got out, provoking a huge public backlash, PayPal claimed it had all been a big mistake.
Of course, as NC readers EssCetera and Rev Kev point out below, Paypal has a long, storied history of doing this sort of thing, going all the way back to its freezing of Wikileaks’ account in 2010. And banks in the US have been closing down the accounts of workers in the porn industry since at least 2014 (h/t Michaelmas).
It is hard not to see this issue becoming a bigger problem if/when central banks begin launching central bank digital currencies (CBDCs), as I warn in my book Scanned:
Combining digital currencies with digital IDs while phasing out, or even banning, the use of cash would grant governments and central banks the ability not only to track every purchase we make (and made in the past) but also to determine what we can and cannot spend our money on. They could also prevent certain “undesirable” people from buying anything. Anyone with a blocking notice attached to their digital identity would “thus be unable to do many of the most basic things independently,” says [German financial journalist Norbert] Häring.
In a CBDC-based economy [some] commercial banks will preserve some of their functions while no doubt carving out new ones. As envisaged for Britcoin and the digital euro, commercial banks will essentially administer CBDC accounts for their customers, which will essentially function like a trust or securities account. And they will continue in their role as executors of the financial regulators’ Know Your Customer (KYC) protocols.
All Incentives “Are Toward Closing Accounts”
There are, of course, other purely non-political reasons why banks are closing more and more of their customers’ accounts. In some cases, the accounts have been inactive for too long. Also, failure to provide personal, business, fiscal or financial information requested by your account can lead to account closure. KYC rules and regulations, many of them well-intended, have proliferated over the past decade and a half and banks have little choice but to comply. There has also been an explosion in financial fraud since the pandemic-induced lockdowns and work-from-home orders triggered a surge in digital payments, as the New York Times reported in April:
With fraudulent activity on the rise and exploding during the pandemic, some banks are taking an even harder look at their customers’ transactions — and closing their accounts when they feel that it’s necessary.
Because financial institutions have a front-row seat for watching the country’s cash flow, financial institutions are obligated to alert regulators and law enforcement through a Suspicious Activity Report if there’s irregular behavior that they cannot easily explain.
Not all reports lead to account closures, and not all closures lead to reports. But if banks fail to report suspicious activity and regulators discover problematic transactions later, banks and their compliance employees are potentially on the hook for all manner of penalties.
“So all their incentives are toward closing accounts,” according to an explanation of SARs on the website of the Bank Policy Institute, a research and advocacy organization that represents mid- and large-size banks.
Financial institutions filed 1.4 million of these SARs in 2021, according to a bureau of the Treasury Department. That was nearly 70 percent higher than the 839,314 filed in 2014.
It’s a similar story in the UK. As the Telegraph reports, high street banks rely on “vast online databases that scrutinise millions of transactions around the globe,” including World-Check Risk Intelligence, which is owned by Refinitiv, a member of the London Stock Exchange Group, to determine which accounts to close:
A bank can close anyone’s person’s account if it suspects they have committed, or been involved in fraudulent or illegal activity. But also if they violate the terms of the account, leave it dormant, or even for no specified reason.
Many banks use third-party databases and credit reference groups to gather information on people they suspect of illegal activities such as fraud or terrorism. The databases also detail those who could be under sanctions, or “politically exposed” people who are vulnerable to bribery.
These databases monitor British customers and hand information to banks so they can decide whether to close an account if someone is deemed to be too much of a risk to the bank and its reputation – or who has a bad credit rating.
The problem is that these databases are far from infallible. In fact, most of the customers identified “are probably innocent”, according to the article in the New York Times:
A 2018 study from the Bank Policy Institute found that a median of just 4 percent of 640,000 suspicious activity reports from a sample of large banks warranted a follow-up from law enforcement, according to the research, which examined 16 million alerts.
The Canary in the Coal Mine
As I mentioned before, this is not a new trend. In fact, individual Muslims and Muslim groups in the UK have been losing access to their bank accounts for over a decade. The media’s response has been total silence and disinterest, reports veteran journalist Peter Oborne for Middle East Eye:
Every major British media outlet has reported the revelation from British populist politician Nigel Farage that his bank accounts are to be closed without notice or explanation.
The Times, Financial Times, Guardian, Telegraph, Independent. Mail, Express, Evening Standard, Spectator and others have awarded Farage ample space. He’s compared modern Britain to communist China – and claimed that without a bank account: “I won’t be able to exist or function”.
This is more than empty hyperbole.
In the modern world, a bank account matters as much as electricity or running water. Without one you cannot travel overseas, you feel like a criminal and normal life becomes impossible.
I know this because, over the last decade, I have spoken at great length to dozens of people who have had their bank accounts removed without explanation – the same fate as Farage.
One lost his job, another saw his life’s work, a charity, wiped away. Yet another, a proud man, broke down in tears as he described the humiliation inflicted upon him and his family…
I have written up many of these stories in Middle East Eye. Not one of them has been followed up in the British media, or taken up as a cause by politicians.
No prizes for guessing why not. The individuals concerned, though mainly British citizens, were Muslims.
The victims included the World Uyghur Congress, which raises awareness about the plight of Chinese Muslims; Interpal, one of the most prominent British charities providing relief and development aid to Palestinians in the occupied West Bank and Gaza; Anas Altikriti, chief executive of the Cordoba Foundation; and the Palestinian Solidarity Foundation, which received letters from their bank cancelling their bank accounts, with no reason or right of appeal.
When it comes to financial deplatforming, says Oborne, “politically engaged Muslims” were the “canary in the coal mine”. And since nobody spoke up in their defence, the financial deplatforming has continued to grow:
Ever since Tony Blair joined George Bush’s so-called “war on terror”, British Muslims have been the testing ground for sinister authoritarianism.
As I demonstrated in my book, The Fate of Abraham, politically engaged Muslims were the first to suffer from cancel culture, having been systematically excluded from British life for many years.
They were the first to suffer from financial attack in the shape of bank account closures. Nobody protested. Muslims are, in short, the canary in the coal mine.
Now, it seems that we are all fair game.