We have a savings account that is currently under investigation. We are concerned of possible loss. Can we close this account, and if so, do we have to give them a notice before closing the account? I know if we close an account for repeat overdrafts we give a notice to the customer, but I wasn't sure about this issue. Any help greatly appreciated.

Start by looking at your deposit account agreement/ disclosure. If you have a clause in there that states that you may close the account at any time for any reason, that is all you need. If you are concerned about a potential loss, don't expose yourself to unnecessary risk by waiting. Also, watch your wording, especially if you do not want to tip your hand to the customer.

On our signature card it does state that we will give a notice within reasonable time of closing. However, this is an investigation, and the customer is not aware of the investigation. How can you send a notice without telling them the reason for the closure? I am really concerned on the right route to take. We have a hold on the funds in the savings account, but we are concerned of possible loss, due to what he is being investigated on.

The classic 'we no longer wish to service your account' letter could work here. If you feel the need to isclose some sort of reason, keep it general, such as 'irregular account activity' or some similar statement.

If you state that you will give the customer notice, you need to consult your attorney in this case to protect the interests of the bank. This also might be good time to reconsider that language of giving notice. On a personal note: I have never understood why banks would feel the need to give a repeat overdrafter advance notice that they will close his account in 10 days! We state in our contract as John said above, that we may close the account at any time for any reason with or without notice to you (customer). It's helped in situations like yours.

You didn't mention if you worked for a bank or "gasp" a Credit Union. Under many credit union charters, you can't just expell a member. Often a special vote of all membership is required to withdraw membership, although you can and should restrict services.

Thank you for the comments. We are a bank. I will contact our attorney.