Market Conduct and You: Opening Accounts and Account Closures

Financial inclusion begins with access to financial services. That’s why the Central Bank of Barbados’ recently issued Market Conduct Guideline, which codifies the practices and behaviours it expects from the entities it regulates, namely commercial banks and finance companies (hereafter called finance companies), goes into detail about the process for onboarding new customers and for closing customer accounts.

Opening Accounts

Let’s begin with what the guideline, which went into effect on July 12, 2024, says about opening accounts.

Regulated financial institutions must adhere to anti-money laundering and combatting the financing of terrorism (AML/CFT) rules, which include know your customer (KYC) requirements. However, some would-be customers have reported having difficulty supplying some of the KYC-related documentation they have been asked to provide when they apply to open an account. 

The new market conduct guideline addresses this by instructing banks and finance companies to “utilise the risk-based approach to customer onboarding as permitted in the Bank’s AML/CFT Guideline.” In practice, this means that if they consider you low risk, you will need to provide less documentation than someone deemed high risk.

The guideline goes on to say that financial institutions should process your application to open an account within three to five business days, and if that is not possible, they must notify you, explain the reason for the delay, and give you an estimated timeline for completing the process. 

Should the commercial bank or finance company deny your application, you should receive an explanation as to why. 

Account Closures

When it comes to account closures, the guideline says that banks and finance companies must explain the circumstances under which they may close your account, and that reason cannot be based solely on factors such as your age, race, gender, or economic status. 

Should your financial institutions decide to close your account, it must notify you in writing at least 30 days before it intends to do so, and that notification must explain both the reason it plans to close your account and what, if anything, you can do to prevent it. 

If it does close your account, it must transfer your money as per your instructions.

It’s important to note, however, that as with account openings, commercial banks and finance companies must abide by AML/CFT rules, which include record-keeping and tipping off, when it comes to closing customer accounts. These obligations supersede anything in the Market Conduct Guideline. As such, there are circumstances under which commercial banks and finance companies cannot disclose their reasons for denying an application to open an account or to explain their reasons for closing one.

Download the full guideline to read everything it says not only about account openings and closures, but also about fees and charges, accessibility for vulnerable groups, and customer complaints.