A handful of Scotiabank (BVI) Limited customers were forced to scramble for alternative banking options after the Canada-based bank launched a wave of sudden account closures at the end of June.
The practice of shuttering bank accounts en bloc has been dubbed “de-risking” by organisations such as the World Bank and the Caribbean Development Bank, which say that many international banks are taking such actions over fears of “high risk” customers who might be engaging in money laundering and other criminal activity.
Some recently impacted Scotia customers, however, argue that they are not “high risk” at all, and that the bank was merely taking a hamfisted approach to managing its due diligence burdens. In effect, they believe, the bank chose to shutter the accounts of anyone with a tangential connection to a sanctions-affected country instead of examining whether they actually posed any risk.
Zimbabwe connection
A VI lawyer who requested anonymity for fear of similar actions from other financial institutions said she was likely asked to close her account simply because she was born in Zimbabwe, a country where certain individuals and entities — but not the jurisdiction as a whole — are sanctioned by Western states.
This happened even though she is not a Zimbabwe citizen, hasn’t transferred any money into the country, and hasn’t visited since 2003, she said.
“Scotia’s just trying to reduce their risk, which I understand, but at the same time I was just saying to them, ‘Look, the basis on which you’re closing it — if I’d done suspicious transactions I could understand it — but the basis on which you’re closing it — i.e. that I was born [in Zimbabwe] 30-something years ago — is ridiculous, because there’s no legal basis,” the lawyer said.
The VI resident, who has a Portuguese passport, said she received an e-mail from Scotia on Thursday, June 28, giving notice that her account would be closed the following Tuesday. Given that Monday was a public holiday, she was given only one day of legal notice, she said.
Russia-born client
Another lawyer who was born in Russia but has a British passport said she was forced to shutter her account in a similar fashion, despite moving away from Russia more than two decades ago and not transferring any assets back into the country.
“You either have a connection or you don’t, and they’re just not willing to look at any shade of grey in between,” she said. “The way it was dealt with was shockingly unprofessional.”
Two other impacted customers in the VI also spoke with the Beacon: an accountant from Zimbabwe who was not on that country’s sanctions list and a corporate administrator from Russia who was born in Moldova. Both were also given short notice, though they were eventually granted extensions to find other banking solutions.
They said they knew of about 10 people in total who had been impacted, including others from Zimbabwe and someone from Cuba.
Complaint to FSC
After receiving the account closure notice, the Zimbabwe-born lawyer submitted a complaint to the Financial Services Commission, expressing worries about the bank’s capacity.
“If a reputable bank like Scotia is not able to understand the limited nature of the sanctions in question, then it raises broader concerns about their ability to understand and interpret properly the laws within this area,” she told the Beacon.
The FSC reached out to Scotiabank immediately, and Scotiabank officials responded by saying they were working to find a “mutually agreeable solution,” according to the lawyer.
Scotiabank representatives declined to comment on the complaints.
“Scotiabank is not in a position to disclose details regarding existing or former clients, as this information is confidential,” wrote Hope McMillan Canaan, the bank’s public and corporate affairs manager, in an e-mail to the Beacon.