What’s With Banks Unexpectedly Closing Down Small Business Accounts?
Small business owners learn early on to roll with the punches. Your shipment of crab meat didn’t come in today? Sell lobster rolls and call it a house special. Your French fry cook didn’t show up today? Put on your hair net and your apron and get to frying? The cash register doesn’t have change for a 20? Open your wallet and make change for the customer in front of you and then send an employee to the store next door or to the bank to exchange some big bills for small ones. Business was slow this month because of the pandemic, inflation, or whatever the crisis du jour happens to be? That’s what home equity lines of credit are for, mixed with the optimism that business will pick up. A worrisome trend has been happening to small businesses, though, namely banks shutting down their business bank accounts unexpectedly and for reasons that business owners cannot fathom and banks won’t explain. For help bouncing back from a financial setback that has left your business reeling, contact a Washington, D.C. small business lawyer.
One Day, Joe’s Crab Cake Shack Woke Up and Discovered That It Had Been Transformed Into a Monstrous Vermin
A recent article in the New York Times tells the stories of individuals and small businesses that received unexpected notices that the banks where they held accounts had suddenly and irrevocably closed down their accounts. When they called the banks to find out why, they did not get any clear answers, except that the banks had previously filed suspicious activity reports (SARs) about the accounts with the federal government. These reports are, by nature, confidential, so the banks could not tell the customers about the contents of the reports.
The New York Times posited, however, that these reports were about transactions that raised suspicions about fraud, money laundering, or other financial crimes. These are some types of transactions that raised red flags:
- Cash deposits just below the federal reporting threshold of $10,000
- Wire transfers to and from foreign countries
- Accounts belonging to people with criminal records
If you have a criminal record, you know it. You also know about the transactions your account has made. What takes the account holders by surprise is that the criminal conviction took place years before they opened the account, and they have been selling products to overseas customers for years. Of all the people who fit this description, why us? After all of these transactions, why now? It is as cruel and inexplicable as when mild-mannered Gregor mysteriously turned into a cockroach at the beginning of Kafka’s Metamorphosis, but as with everything else in small business, you just have to roll with the punches.
Contact Tobin O’Connor Ewing About Bouncing Back Quickly From the Unexpected
It isn’t fair when banks shut down your small business bank account, but the show must go on. A Washington, D.C. small business attorney can help your small business land on its feet after inexplicable financial setbacks. Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.
Source:
nytimes.com/2023/11/05/business/banks-accounts-close-suddenly.html
