Proposed law will stop French banks from closing accounts for no reason 

Banks should no longer be able to close customer accounts without a reason, according to proposed law passing through the French parliament.

At the moment banks can close accounts at any time, without giving reasons, as long as their clients have the option of at least one current account in France – usually with the state-owned La Banque Postale.

The rule is part of a very different retail banking culture in France compared to many anglophone countries. 

Until recently, for example, it was not uncommon for French banks to move money from savings accounts to current accounts without asking, if current accounts risked being overdrawn.

However, after years of complaints regarding account closures, French senators approved a bill in April 2024, which was then passed by MPs in March this year.

It must now have a second reading in the Senate and a final vote in the lower house before becoming law. 

In theory this could be done before the summer break, but it will likely take longer to come into force – especially as the main banking trade body claims the bill as it now stands is unconstitutional and flies in the face of laws against money laundering and financing terrorism.

Under the proposed law, banks will not be able to close accounts because:

• they deem them to be unprofitable;
• clients refuse to accept changes to the contract they signed when they opened the accounts;
• because they think clients are making too many withdrawals.

In addition, banks will have to give their reason for closing the account in writing within 15 days of a client asking for it.

Several Connexion readers have complained about account closures by French banks with no reason.

One reader, who received a closure letter from Crédit Agricole in Pas-de-Calais, successfully challenged the decision.

“I think the problem stems from regional control of the banks and their individual interpretation of Brexit rules.” she wrote.

“The letter wasn’t unpleasant but just said that they were closing the account and gave no reason for doing so. I found it infuriating, alarming and high-handed.” 

She added that it appeared the bank acted as it did because she and her partner have no income in France.

“As a result we don’t have a French income tax reference. This probably instigates a ‘red flag’ of possible money laundering.”

Common reasons for account closures

Consumer rights association UFC-Que Choisir said its investigations showed that some banks were closing accounts of less well-off people and some were also systematically closing accounts of people who refused to accept new terms and conditions.

Other account closures came when people refused to answer what they saw as intrusive questions, which banks said were necessary under new European directives against money laundering.

Fédération Bancaire Française (FBF), the main banking trade group which has been reported as lobbying against the bill, told The Connexion: “We have been kept aware of the passage of the bill and note that the original, from the Senate, has been profoundly changed by the Assemblée nationale.

“Before it enters the parliamentary shuttle we are appealing for parliament to stop and consider the text, which goes far beyond the initial objectives outlined in the bill, some of which fly in the face of the constitution, the requirements banks face in the fight against money laundering and financing terrorism, and the risks faced by bank employees.

“We note that much of the debate has centred around MPs’ individual relations with their banks, and also that we have been asking the government for a dialogue to simplify the laws and regulations surrounding politically exposed people.”

Targeting suspicious activity

The FBF lobbyists argue that banks will be left in an impossible position when they want to close an account and suspect the client is using it for money laundering, or financing terrorism.

Banks are obliged to report clients they suspect to a special investigative body called Tracfin. Managers who do not risk fines, or even jail.

At the same time they have to keep the fact they have made a report to Tracfin confidential for the whole period it is investigating – which can be years.

Parliamentarians said that in such cases no reason for closing an account need be given.

However, the banks said this, in itself, may alert clients that they were being investigated by Tracfin.

Banks also seem to have regulators on their side, which means the law could be contested if it comes into force.

At the start of the year the mediator for the main banking regulator, Autorité des Marchés Financiers, gave the banks a green light to close the accounts of clients who did not give relevant information when asked for it.

And another regulator, Autorité de contrôle prudentiel et de resolution, said banks have a duty to investigate anything which might indicate money laundering or terrorist financing – such as the movement of large amounts of cash.

Even the Commission nationale de l'informatique et des libertés (CNIL), normally seen as being very restrictive on data use in France, says banks can ask clients “for any information which can help them estimate your resources” and “any element which gives a good idea of your wealth”.

CNIL and similar agencies from other EU countries wrote in 2023 to the European Parliament, the European Commission and the EU Council (the body for heads of government) asking that data collected by banks be shared only with government authorities and not with third parties.

So far there has been no reply to the letter.

What can a bank ask you for?

Banks have a duty of ongoing vigilance, and must comply with strict KYC (Know Your Customer) obligations to establish your profile, better manage risks and process your money in a secure environment.

To this end, they can ask clients for the following information: 

ID such as national identity card, passport, residence permit.

Proof of domicile such as utility bills or rental contract

Details of your business and professional activity including your tax residence, the amount and source of your income, the composition and extent of your assets. Supporting documents could include tax assessment, your most recent pay slips, a property deed, your securities portfolio statement, etc.

This information could be requested at various times, including opening an account, when periodically updating its customer database, or when a transaction is deemed suspicious or unusual.

Read more: French bank set to charge clients who do not respond to request for information

In addition, for certain transactions your bank will need to ascertain the identity of the person it is dealing with, as in the case of cash withdrawals at the counter or when issuing means of payment (eg. delivery of a cheque book).

Refusal to provide the requested information can see the bank refuse to open an account for you, suspend or close your account and report any suspected fraud or illegal activity to the authorities.

La Banque Postale also announced that it is introducing a €15 ‘customer file update fee’ (frais d'actualisation de dossier client) if clients do not respond to certain information requests. The arrangement is expected to start from the summer with potential charges being levied from that point onwards.

Have you had an account in France closed by the bank without reason? Tell us about it at feedback@connexionfrance.com