Decision on refusal of banking services. What to do?

In Ukrainian banking practice, decisions to refuse services to a client are not uncommon. Banks act on the basis of the Law of Ukraine “On Banks and Banking Activities”, the Law “On Prevention and Counteraction to Legalisation (Laundering) of the Proceeds of Crime, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction” (hereinafter – the Law on Financial Monitoring) and regulations of the National Bank of Ukraine (NBU).​

The most common grounds for refusal are as follows:

• impossibility to conduct identification or verification of the client;
• existence of indications of risky activities of the client (for example, fictitious transactions, inconsistency of the sources of funds);
• insufficient documentary confirmation of the sources of income or business activity;
• inclusion of the client in lists of persons related to terrorism or subject to sanctions;​
• refusal of the client to provide information or documents requested by the bank.

The bank must have documentary grounds, and its decision must be based on internal policies adopted to comply with NBU requirements. Vague wording such as “the transaction is of a risky nature” without further explanation does not meet the principle of transparency and may be challenged.​

Typical refusal situations

1. Refusal to open an account. The bank may decide not to enter into a banking services agreement if the results of risk assessment indicate a threat of involving the institution in money laundering.​
2. Blocking or closing an existing account. This often occurs during transaction monitoring if the bank considers the operations “risky”.​
3. Refusal to execute a transfer or payment transaction. As a rule, this is accompanied by a request to provide additional documents confirming the economic substance of the transaction.
4. Termination of relations within a compliance programme. Some banks introduce internal “zero tolerance” policies regarding certain industries or counterparties, which may also affect bona fide clients.

Client’s rights

Ukrainian legislation provides that a bank may not act arbitrarily. The client has the right to:

• receive a written notice of refusal indicating the grounds (Article 64 of the Law on Banks and Banking Activities);​
• demand justification of the decision and a copy of the internal document on which it is based;
• challenge the bank’s actions before the NBU or in court;​
• apply to the Business Ombudsman Council or the NBU with a statement about violation of the principles of fair servicing.

If the bank refuses without sufficient justification or fails to respond to a written request, such conduct may be qualified as a violation of the rights of a consumer of financial services.​

How a client should act in case of refusal

1. Request a written decision. The bank is obliged to provide a document clearly setting out the grounds. Oral explanations or letters without reference to legal provisions or internal procedures are not sufficient.
2. Analyse the stated reasons. Check whether the grounds actually comply with the Law on Financial Monitoring or NBU Regulation No. 65. For example, the statement “it is impossible to establish the origin of funds” presupposes that the bank has previously requested supporting documents.​
3. Prepare explanations and additional documents. These may include contracts, tax returns, bank statements, invoices. Documentary confirmation of the economic substance of transactions often resolves the bank’s concerns.
4. File a complaint with the NBU. The complaint should indicate: the date of receipt of the refusal, a brief description of the situation, copies of correspondence and documents supporting your position. The National Bank may verify the bank’s compliance with financial legislation.​
5. Consider judicial protection. If the refusal has caused actual losses – for example, working capital of an enterprise has been blocked – it is advisable to file a claim for damages or for recognition of the bank’s actions as unlawful. Recent case law contains positive examples where clients have successfully restored their rights.​
6. In parallel, open an account with another bank. Ukrainian law does not limit the number of accounts, so refusal by one bank does not deprive you of the possibility to cooperate with another.

Court practice

Courts increasingly take the side of clients in disputes with banks. Commercial courts, for example, recognise closure of accounts without documented risk assessment as unlawful. In its decisions, the Supreme Court emphasises that a refusal must be not only formal but also reasoned, with indication of factual circumstances.​

In cases where banks restricted access to funds for reasons not supported by evidence, courts obliged them to resume servicing and compensate losses. This forms a legal benchmark: the client is not the weaker party and is fully entitled to demand observance of legality and equality of the parties.​

Role of the NBU and supervision

The National Bank does not interfere with business decisions of banks but monitors compliance with the principles of financial monitoring, transparency and non‑discrimination of clients. If the supervisory authority identifies violations, it may impose sanctions ranging from a written warning to a fine or even revocation of the banking licence.​

Clients who lodge complaints supported by clear evidence (copies of letters, statements, bank notifications) help the NBU identify systemic problems in the financial sector. Therefore, an active legal position is an important element in protecting one’s interests.​

How to prevent refusal

Problems can be avoided by following “compliance literacy” principles in advance:

• Regularly update information about the company with the bank: incorporation documents, ultimate beneficial owners, type of activity.
• Respond promptly to requests from the compliance department. Ignoring a request often automatically raises the risk rating.
• Ensure real cash flow consistent with the company’s business activities. Mass transit or dubious transactions without economic substance are the most frequent reason for blocking.
• Ensure transparency of accounting and tax records, which reduces suspicions of money laundering.

Conclusion and contact information

A bank’s decision to refuse servicing is not a final verdict. Ukrainian legislation guarantees every client the right to a reasoned response, the possibility to challenge the decision and to restore justice. Timely reaction, proper evidence and professional legal support are the best strategy in such situations.​

Author – Yuliia Popadyn, attorney of the tax and customs law practice at the law firm “WINNER”.

If you have questions or problems related to a bank’s refusal to open an account, blocking transactions or terminating services, contact WINNER’s lawyers – they will help restore your rights and ensure uninterrupted financial operations.