Between 2018 and 2022, the Financial Consumer Agency of Canada received over 800 complaints related to account closures. Even individuals and business owners with decades-long relationships with their banks have been 'debanked', and these cases are becoming increasingly common — but why?

Banks are under increasing pressure to detect and prevent financial crimes, such as money laundering and fraud, and ordinary Canadians are getting caught in the crossfire.

In this article, we'll explain:

• The reasons behind bank account closures in Canada
• How to avoid bank account closures
• How the big five banks handle account closures
• What to do if your bank account has been closed

Let's begin.

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Why are Canadian banks closing accounts?

Let’s start with some context:

• Canadian banks are under intense pressure to combat financial crime, particularly ahead of international reviews of Canada’s anti-money laundering (AML) regime.
• TD Bank was hit with a record US$3B fine in the U.S. for AML failures, and others are scrambling to avoid similar penalties.
• Suspicious transaction reports (STRs) filed with FinTRAC have surged 63% in five years (386,000 in 2019 to 631,000 in 2024), but federal prosecutions for money laundering have dropped.

All this culminates in an increased focus on preventing, flagging, and fighting financial crimes, often through the closure of suspicious bank accounts. How are they doing this?

Here’s what happens at a technical level:

• Banks use internal monitoring systems to flag patterns, such as large transfers, cash-heavy activity, cryptocurrency usage, and ties to 'high-risk' countries.
• If a customer’s transactions trigger enough flags, an STR is filed with FinTRAC.
• Sometimes, a bank calls the customer in for questions, but they'll often skip that step and move straight to termination through written notice.
• The customer receives a vague letter citing 'unacceptable risk,' typically with a 30- to 90-day notice to move accounts.
• Banks are not legally required to explain why, and in many cases are prohibited from doing so to avoid tipping off suspects.
• Once debanked, it becomes harder to open accounts elsewhere, especially if STRs are shared across institutions.

The fallout hasn’t been pretty:

• A Nigerian-Canadian entrepreneur lost accounts at four major banks despite no criminal charges; he suspects anti-Black bias and spent $20K fighting the case.
• Crypto exec Adam O’Brien saw every major bank cut ties—some even debanked his wife, forcing the family to scramble to pay bills.
• A Halifax retiree lost his 30-year banking relationship, possibly due to mistaken identity, and was never told why.
• Even a Calgary-based AML consultant was debanked, likely due to a client’s links to a hacked crypto exchange.

For banks, the stakes are high when dealing with criminal financial activity: reputational damage, fines, and executive firings are all on the table.

But for clients? A single flagged transaction can upend your financial life without warning, explanation, or a clear path back.

Do this to ensure your bank account doesn't get closed

To reduce the risk of having your account closed by a Canadian bank, consider the following recommendations:

1. Keep your records updated: Ensure your personal and business information, such as your address, phone number, and identification documents, are accurate and up to date with your bank.
2. Be transparent: If you are engaging in activities that may trigger scrutiny, such as high-value transactions or international money transfers, clearly explain the purpose to your bank and provide supporting documentation if requested.
3. Monitor account activity: Regularly check your account for unusual transactions. Immediately report any suspicious activity to your bank to demonstrate proactive behaviour.
4. Avoid suspicious activities: Stay away from transactions or clients that may be linked to illicit activities, even if only indirectly. Conduct due diligence if you run a business to ensure compliance with anti-money laundering (AML) regulations.
5. Maintain good communication: Openly communicate with your banking institution and respond promptly to any requests for documents or clarifications. Delays or evasive communication can escalate issues.
6. Follow regulatory requirements: If you operate a business, implement robust AML and Know Your Customer (KYC) practices to show your commitment to legal and ethical compliance.

Taking these steps can help safeguard your bank account and prevent sudden disruptions to your financial stability.

Other best practices

1. Use your account regularly: To avoid inactivity fees or potential account closures, make regular transactions such as deposits, withdrawals, or bill payments.
2. Maintain a positive balance: Avoid overdrafts or negative balances by monitoring your spending and ensuring sufficient funds are in your account to cover all transactions.
3. Be aware of fees and charges: Understand your bank’s fee structure, including monthly account fees, transaction limits, and penalties. Choose the type of account that best suits your financial habits.
4. Stay compliant with tax requirements: Ensure that all necessary tax documentation, such as T4 slips for income reporting, is accurately submitted. This is especially important for non-residents or individuals with multiple accounts.
5. Establish good credit practices: If your account is linked to credit products, such as a line of credit or credit card, make timely repayments to avoid penalties and maintain a strong credit score.
6. Use online and mobile banking services: Take advantage of digital banking tools to easily manage your account, transfer funds, and set up payment reminders, ensuring seamless financial management.

By adopting these best practices, you can effectively manage and maintain your Canadian bank account.

Steps to take if your Canadian bank account has been closed

Reopening a closed Canadian bank account could involve the following steps and requirements:

1. Contact the bank: Reach out to the bank where your account was closed to inquire about their specific policies and procedures for reopening an account. This can often be done in person, over the phone, or online.
2. Provide identification: Be prepared to present valid identification, such as a passport, driver's license, or other government-issued ID, to verify your identity.
3. Proof of address: Some banks may require proof of your residential address, such as a utility bill, rental agreement, or similar document.
4. Review account history: If the account was closed due to unpaid fees or overdrafts, you may need to settle any outstanding balances before the account can be reopened.
5. Meet eligibility criteria: Ensure you still meet the bank's criteria for holding an account. This may include credit checks or demonstrating a stable financial history.
6. Application form: Complete any necessary paperwork or online forms to formally request reopening — or opening a new account if the original cannot be reinstated.
7. Deposit requirements: Some banks may require you to make a minimum deposit to reactivate the account or open a new one.

By fulfilling these requirements, you may be able to restore access to banking services and ensure smooth financial management moving forward. It’s essential to verify specific details with your bank, as policies may vary across institutions. We'll cover procedures at the Big 5 in the next section:

How the different banks handle account closures

Royal Bank of Canada (RBC)

Fees:

• $15 charged for closures 16-90 days post-opening unless transferring to another RBC account
• No fees for closures within 15 days or after 90 days

Timelines:

• Electronic statement access terminates immediately post-closure

Dispute Resolution:

1. Internal escalation to RBC Client Complaints Appeal Office (90-day review window)
2. External referral to Ombudsman for Banking Services & Investments (OBSI) within 180 days of final RBC response

Toronto-Dominion Bank (TD)

Fees:

• $3.50-$5 ATM withdrawal fees during the closure process

Timelines:

• Immediate closure upon in-person request
• 30-day removal from online banking interfaces

Dispute Resolution:

1. TD Ombudsman Office review (90-day maximum)
2. ADR Chambers Banking Ombuds Office for unresolved cases

Bank of Nova Scotia (Scotiabank)

Fees:

• $20 penalty for closures within 90 days of opening
• $20 annual inactive account fee after 2+ years of dormancy

Timelines:

• Same-day processing at branches
• AutoPay/PAC cancellations require a 5-day advance notice

Dispute Resolution:

1. Escalated Customer Concerns Office (ECCO) initial review
2. Scotiabank Customer Complaints Appeals Office secondary escalation
3. OBSI referral after a 56-day unresolved period

Bank of Montreal (BMO)

Fees:

• $20 early closure fee (<90 days)
• $45 minimum balance violation fee during closure

Timelines:

• 48-hour hold on cheque deposits before closure
• Immediate cash disbursement available

Dispute Resolution:

1. Branch manager mediation
2. BMO Ombudsman Office escalation
3. OBSI intervention after a 56-day internal process

Canadian Imperial Bank of Commerce (CIBC)

Fees:

• $19.50 Balance of Account transfer fee
• $20 early closure fee (<90 days)

Timelines:

• 72-hour hold on foreign currency accounts
• Draft issuance within 24 hours

Dispute Resolution:

1. Client Complaint Appeals Office (CCAO) review
2. OBSI referral within 6 months of the CCAO decision

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Reduce financial stress with Lotly

Let's quickly recap what we've covered here:

• Canadian banks are closing accounts more frequently due to increased AML scrutiny, sometimes without warning or a clear explanation. Even long-time clients are being debanked after flagged transactions, and suspicion alone can lead to account termination.
• To avoid closures, keep your information updated, monitor account activity, and proactively communicate with your bank. Transparency, documentation, and compliance with AML rules — especially for business or crypto users — are your best protection.
• If your account is closed, each bank has a unique process and timeline for resolution. However, reopening can require providing ID, proof of address, and settling any outstanding balances. Filing complaints may involve internal appeals and, if unresolved, escalation to the Ombudsman for Banking Services and Investments (OBSI).

Concerned about unexpected bank closures? Lotly offers secure home equity loans, providing essential funds — no surprises, no stress. Our straightforward approach assesses your complete financial picture (including unconventional income sources) to ensure you’re never left stranded financially. See how we can help by booking a free consultation today.

FAQs

What happens to my money if a bank closes in Canada?

In Canada, banks are required to have deposit insurance through the Canada Deposit Insurance Corporation (CDIC). This means that in the event of a bank closure, your eligible deposits will be protected up to a maximum of $100,000. However, note that not all financial institutions are covered by CDIC. Credit unions and caisses populaires may have alternative deposit insurance options.

Are any Canadian banks in financial trouble?

Currently, there are no Canadian banks in financial trouble,, and the banking system in Canada is generally stable. The Office of the Superintendent of Financial Institutions (OSFI) regulates and monitors Canadian banks to ensure their financial soundness. Additionally, the CDIC regularly conducts risk assessments on member institutions to identify potential issues.

What is the safest bank in Canada?

All banks are subject to strict regulations and oversight by government agencies. However, it is generally recommended to choose a bank that is a member of the CDIC, as this provides an additional layer of protection for depositors in the event of financial difficulties.

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