Can I open a new bank account if mine was closed for fraud?

A crackdown on so-called money mules and behavior banks deem suspicious has led to This is Money being contacted by hundreds of readers whose checking accounts have been closed without warning.

Often, banks will provide little or no explanation to those involved.

Some customers say they were caught off guard by banks who decided their innocent transactions might be money laundering, but the complaints fell on deaf ears.

Among others are those who were stupid and lured into becoming a financial mule, leaving a marker of fraud by name.

Young workers and students are among those targeted as mules, not realizing that what they think is harmless – moving around to earn a little extra cash – actually facilitates fraud and crime.

There has been an increase in the number of under 21s being used as mules, but many are unaware that it is illegal

A reader was tempted to become a financial mule and then threatened by criminals who used him after saying he wanted to quit.

He now has a Cifas marker in his name which will remain there for six years and is unable to obtain another bank account. He is deemed too risky to have as a client.

Other readers maintain their innocence and have contacted us to say that their accounts have been closed without notice – possibly because they regularly transfer money between accounts or overseas.

So what if you can’t get a checking account? And how easy is it to remove cheat markers? This is Money reveals all…

The Rise of the Silver Mules

There are a number of people who found themselves “without a bank” because they had a marker in their name.

For a growing number of young people, it is because they have, often unknowingly, helped criminals transfer stolen money and acted as a ‘financial mule’.

Cifas, an organization that aims to reduce and prevent fraud and financial crime, says there has been a 26% increase in under-21s acting as financial mules over the past year.

Money mules allow criminals to use their bank account to store illegally obtained cash before sending it to another account. The mule is promised payment for its services.

Many young people who have acted as mules often don’t even know that what they are doing is illegal and are persuaded by professional scam artists to give them access to their bank accounts.

If caught, the money mules will likely have a fraud marker put against their name by their bank, which means their current bank account will be closed and it will be unlikely they will be able to open a bank account, contract a loan or get a mortgage. .

Many young people who acted like mules often don’t even know what they are doing is illegal

Not only will getting caught impact their ability to open a bank account, but it could also have more serious implications as the act can be punishable by up to 14 years in prison.

Another big worry for those who have a marker against their name is that it can stay there for up to six years, which has a serious impact on their future prospects.

So what can you do if you are unable to open a bank account or find out that you have a tag against your name or want it removed?

A Cifas representative said: “We operate a clear complaints procedure and will investigate complaints on behalf of individuals to verify that there are grounds in our rules for their case to be filed and we will help individuals to address to the Financial Ombudsman Service or other appropriate regulator if necessary.

‘If an individual is aware or believes that Cifas data has had an impact on a decision, they can request a copy of any data held by visiting our website, completing and returning a subject access request form to the topic downloadable from our website, along with payment and appropriate proof of identity and address.

What to do if you think a marker has been unfairly placed against your name

Cifas is the non-profit organization that aims to reduce and prevent fraud and financial crime

Cifas is the non-profit organization that aims to reduce and prevent fraud and financial crime

If you believe you have been unjustly refused for a financial service, it is possible to appeal to Cifas, which maintains a database of people who have carried out fraudulent activity.

They receive information about the fraudulent activities of their members, who are financial service providers, such as banks and credit card companies.

Cifas has stated that the steps to be taken, in the event of fraudulent data recorded in the individual’s details, are as follows:

1. When the data held by Cifas is disputed, the organization that recorded the information must be contacted first, specifying the reasons for which the recorded information is disputed. It can be a bank, a credit company or any other financial service provider.

If they confirm your complaint, they may remove the entry and it will be removed from our system.

2. Once the declaring Cifas member has reviewed the case, they will issue a “final response letter” and, if necessary, modify or delete the data held. A final response letter is sent by the financial institution, detailing its complete response to the complaint.

If a consumer remains dissatisfied and takes their complaint to the Financial Ombudsman Service, they will use your final response as a starting point when reviewing the case.

3. If the member does not uphold the complaint, Cifas may carry out its own examination of the file.

4. If a person disagrees with Cifas’ response, the Financial Ombudsman Service may be contacted for further investigation.

To visit Cifas website here if you believe the data held by the service impacts your ability to open a bank account.

What other financial markers could affect you?

The most common way people get downgraded due to their financial situation is when they have bad credit.

You can have a bad credit score if you haven’t done something you promised to do, such as paying your credit card bills, loan, or mortgage on time. If you fail to repay a loan or credit, you will suffer a severe downgrade.

If you are eventually declared bankrupt or have an Individual Voluntary Arrangement against your name, you will have a very low credit score and it will be difficult for you to obtain credit in the future.

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This means that ultimately many banks may refuse to open an account in your name because they don’t think you would be a suitable candidate.

In the event of a credit cut, you must contact credit reference agencies, which are used by financial companies to obtain reports on potential customers. They will allow you to check your file and you can consult our guide to checking and improving your credit file here.

This is different from the Cifas markers, which is a fraud database. However, there have been a number of people who have found themselves with fraud markers against their name for no apparent reason or added by mistake.

Significantly, if you are denied a financial service, there is no legal obligation to tell you why.

This can confuse many people and understandably most people, if they are denied financial service, would like to know why. It might therefore be worth checking with Cifas as well.

Cifas says: “To find out if you have been registered in our database, you must make a data subject access request – this will not appear on your credit file.”

What if you can’t get a bank account?

Unfortunately, many businesses will charge a customer more if they cannot pay a direct debit or standing order and it is often essential to have a bank account for payment of wages.

If you cannot open a standard bank account, you must apply to your bank for a basic account.

You can use them to receive money and pay bills, but they won’t allow you to use an overdraft.

People can often get basic bank accounts if they can’t get a standard bank account, but if they’ve been suspected of fraud or money laundering they can still be turned down.

Other options available to those without access to a bank account include prepaid cards which are basically recharge cards where the user pays cash to transfer money to a card. This person can then use this card to pay for services.

It’s also worth checking to see if your local credit union could help. Community-run nonprofits are known to act in the interests of their members. They may be more open to allowing a member to join who has been declined by other banks.

If you’re really struggling and need help, talk to Citizens Advice.

How to keep young adults from becoming financial mules

Fraud experts have warned of an increase in money mules to transfer money to their account.

Financial mules are usually teenagers or people in their early twenties – students often being targeted – who are easily tempted by the idea of ​​making money quickly and easily.

The problem is so bad that Lloyds has formed a “mule-hunting squad” and plans to share its secrets with rivals.

Those caught acting like money mules have their bank accounts closed and will find it difficult to open one for years to come – and to obtain products such as mortgages and credit cards.

Find out more and how to protect young people from scams in the This is Money podcast.

Hit play to listen to the show above, or listen (and subscribe if you like the podcast) on Apple podcast, A casting and audioboom or visit our This is the Money Podcast page.

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