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Closing a Customer's Account
by Mary Beth Guard and John Burnett
Guru Bios
Question: What are the guidelines for a banking institution regarding closing a customer’s account? Can a bank terminate
its relationship with a customer/member, and if so, what steps must be taken, and what regulations govern the behavior of a financial institution?
Answer: Except in cases of fraud, Treasury regulations require a financial institution receiving ACH recurring federal payments for a customer to provide that customer
30 days’ notice before fully closing an account. The purpose is to allow the customer time to make other arrangements for receipt of those benefits. You
can close the account and permit the customer unrestricted access to the next 30 days’ direct deposits if you wish.
Otherwise, there is no regulation or rule of which I am aware that affects your practice in this area. I recommend that you check your deposit contract for
any agreement that you have made as to notifying your customer. You owe him, her or it no explanation for the closure.
The original version appeared in the September/October 2004 edition of the Oklahoma Bankers Association Compliance Informer.
First published on BankersOnline.com 7/25/05
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