This post is also available in:
The Act of 8 November 2020 inserting provisions on the basic banking service for businesses into Book VII of the Code of Economic Law was published in the Belgian Official Gazette of 24 November 2020.
Ever more refusals to open accounts and unilateral account closures
Given the risk of heavy sanctions on banks in the prevention of money laundering and terrorist financing, banks are increasingly cautious towards their clients and their activities. The requirements on banks in this area keep growing, while banks do not always have sufficient means, within their compliance departments, to analyse each client file and each operation. Increasingly, banks decide to exclude certain clients (the exit or de-risking strategy) or to refuse potential clients any possibility of starting a banking relationship, even foregoing the opportunity of a fruitful and transparent relationship with those who in fact carry on a perfectly legitimate and lawful activity. This phenomenon affects notably diamond dealers, importers and exporters of IT equipment, businesses in the hospitality sector or in so-called second-chance entrepreneurship, politically exposed persons (PEPs) and certain foreign nationals. All face refusals to open or closures of bank accounts, causing them much inconvenience: it is impossible to carry on an economic activity without a bank account. Since 1969, every business must open a current account with a bank before starting its activities, and any registration with the Crossroads Bank for Enterprises requires communicating the business’s bank account(s).
The basic banking service for businesses
In a previous article we noted that a bank’s decision to open or close an account need not be justified, subject to two reservations: abuse of right and the basic banking service. The basic banking service was until now accessible only to natural persons, under certain conditions. But businesses will soon also benefit from a similar right. On 15 October 2020 the legislature passed a text inserting provisions on the basic banking service for businesses into Book VII of the Code of Economic Law; the resulting Act of 8 November 2020 was published on 24 November 2020. The Act also aims to increase transparency in the bank-client relationship, since it includes obligations to state reasons for decisions taken by banks. It also provides an effective means of investigation against money laundering and the financing of criminal activities, as holding a bank account increases transparency and limits cash transactions. The Act entered into force on the first day of the sixth month following its publication, i.e. on 1 May 2021.
What does the basic banking service for businesses include?
It includes the execution of payment operations, including transfers of funds, the execution of direct debits, the execution of payment operations through a payment instrument and the execution of credit transfers. It also allows cash to be paid into or withdrawn from an account. Unlike the regime for individuals, the basic banking service for businesses is offered in euro and, on request, in US dollars. However, it does not give a right to obtain credit, and a credit application cannot be a condition for opening a basic banking service. In all cases, when applying for, accessing or holding a payment account with the credit institution, the business may not suffer discrimination based on nationality, place of residence or any other discriminatory ground.
How can a business apply for the right to the basic banking service?
1. Having been refused at least three times on the market. For a Belgian business to assert its right to the basic banking service, it must first show it tried to obtain those services through a normal consultation of the market, i.e. that it was refused the opening of an account and payment services by at least three different credit institutions. Any prior refusal to open a current account must be the subject of an explicit and sufficient written statement of reasons, at the latest within 10 working days of receipt of the application. Of course, where the reasons would entail communicating information contrary to the objectives of national security and public order, or to the Act of 18 September 2017 on the prevention of money laundering and terrorist financing and the limitation of the use of cash (the anti-money-laundering law), they will not be disclosed. The application must also be accompanied by a sworn statement that the applicant business does not yet hold a basic banking service or a payment account allowing it to benefit from payment services, either with a Belgian credit institution or with one established in another EU Member State.
2. Intervention of the CTIF at the initiative of the Basic Banking Service Chamber. The Act establishes a Basic Banking Service Chamber within the Federal Public Service Economy. This Chamber will designate a provider of the basic banking service for a business refused three times, on the business’s written application. Once validly seised, the Chamber will seek a confidential opinion from the Financial Intelligence Processing Unit (CTIF) about the applicant business. The requirements of the anti-money-laundering law (identification of clients, agents and beneficial owners and verification of that data) must of course be met. Where the CTIF gives a positive opinion or does not react within 60 calendar days, the Chamber will designate a credit institution (established in Belgium) as provider of the basic banking service, which will be required to offer it to the applicant business. The detailed rules for designating credit institutions will be determined later by the King.
3. Limitations, possible refusals and exclusions. The right to a basic banking service does not include the right to execute a payment operation that would create a debit balance. Moreover, the bank may refuse an application in one of the following cases: if the opening is contrary to the anti-money-laundering law; where a member of the legal administrative body of the business or a person responsible for effective management or, where applicable, a member of the management committee has been convicted of fraud, breach of trust, fraudulent bankruptcy or forgery; or where the business’s payment account has been used for illegal purposes.
4. Termination of the basic banking service. The bank providing the service may terminate its relationship with the business where: no payment operation on the account has been recorded for more than twelve consecutive months; the business provided inaccurate information to obtain the service; it holds (in Belgium or another EU Member State) another payment account allowing it to use the basic banking services; or for the same reasons that could justify a refusal to open an account. Any termination requires at least two months’ notice, except for terminations based on one of the above offences, the communication of inaccurate information, or where termination complies with the anti-money-laundering law, in which cases it takes effect immediately.
5. Possible extrajudicial appeal against a refusal or termination
The Financial Services Ombudsman referred to in article VII.216 of the Code of Economic Law must rule on the disputes submitted to it. It is authorised to annul a decision taken by a credit institution, and the decision taken is binding both on the credit institution and on the business concerned.
This article is a translation and a condensed version. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.
Leave a Reply