Debanked: Canada's banks are increasingly closing accounts without explanation as they fight financial crime

By Erica Alini, Alexandra Posadzki and Stefanie Marotta

Your bank can cut you off and never tell you exactly why.

A letter in the mail succinctly announces that all of your financial accounts will be shuttered. Usually, you have up to three months to make alternate arrangements. The official explanation, if there is one, is as ominous as it is vague: “Our decision is a result of the unacceptable risk that we have identified with regard to the operation of your accounts.”

The consequences can be dire. You may have to rely on high-interest loans while you scramble to transfer your mortgage or lines of credit. If you have a business, you may have to explain to clients and creditors why you no longer have access to your bank account. Worse, once one financial institution has given you the boot, others may follow suit, making it hard to have a bank account at all.

The process is called debanking or derisking. Often, a bank detects and flags unusual transactions that indicate a customer may be linked to money laundering, terrorist financing, fraud or other crimes. In some cases, the institution will call in the client for a conversation and an opportunity to explain the financial activity. Often, though, it will simply shut down the account without saying why. The bank is not required to provide an explanation and, in some cases, it is prohibited from doing so.

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Published by the Globe and Mail.