A Systemic Problem
A new report is calling out JPMorgan Chase, Citibank and the US banking system at large for kicking loyal customers to the curb in a systemic “exiting” process. Nearly 200 former Chase customers have sent complaints to the New York Times stating their account was wrongfully terminated, triggering financial chaos and confusion.
The account terminations are due, in part, to a sweeping bureaucratic security process that’s supposed to thwart criminals and stop fraud, terrorism, money laundering and human trafficking. But the closures are placing honest people and businesses in dire financial straits, with banks often taking weeks to send account balances after termination.
A Lack of Transparency
And although abrupt account closures appear to be on the rise, banks are not required to report details on how many accounts are being shut down – or how often they make a mistake. JPMorgan Chase spokesperson Jerry Dubrowski says the bank is following the law and so-called “de-risking” shutdowns are typically justified. The vast majority of closures are correct, consistent with the regulatory obligations we are required to follow.
Allegations of Discrimination
JPMorgan is also accused of exiling customers due to their religious or political beliefs. Back in May, attorneys general in 19 states sent a letter to the bank’s CEO Jamie Dimon, stating that the financial giant has violated its own policies on equality when shuttering accounts. The Times also calls out Citibank and interviews Caroline Potter, a former customer whose account was abruptly closed for no apparent reason.
Potter suspects it happened because her husband’s company was acquired by an organization in the cannabis industry, but to this day the bank will not give her an explanation. Citibank says it will not comment on the case.
Rising Suspicious Activity Reports
A sweeping report from Reuters shows banks are submitting suspicious activity reports (SARs) to the government at a rising rate. The number of submissions jumped from 2.5 million in 2020, to 3.0 million in 2021, to 3.6 million in 2022. Banks are not required to tell customers if they’ve filed an SAR.
According to the Banking Policy Institute, only 4% of SARs submitted by banks to law enforcement result in a follow-up, and an extremely small fraction of the follow-ups result in arrests and convictions.
Hot Take: Questionable Practices Lead to Chaos
The abrupt termination of accounts by major banks like JPMorgan Chase and Citibank has raised questions about transparency and fairness within banking practices. Customers who have had their accounts suddenly closed have faced significant financial hardship without clear explanations for why these actions were taken. Additionally, rising numbers of suspicious activity reports (SARs) submitted by banks without adequate follow-up have raised concerns about privacy and due process for individuals affected by these reports.
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