Banks are increasingly asking customers to update information about their income and place of employment. Such checks are related to financial monitoring requirements and the fight against money laundering. If the data is outdated or transactions seem atypical to the bank, the customer may face payment restrictions, account blocking, or even termination of the service agreement. In a comment to UNN, Yulia Popadyn, a lawyer at the WINNER law firm, explained why banks are tightening control, which transactions may arouse suspicion, and how to avoid problems with financial monitoring.
Why is it necessary to update activity and income information at the bank?
As Popadyn notes, banks are obliged to carry out financial monitoring of customers in accordance with the requirements of legislation on preventing money laundering and the financing of terrorism.
To do this, the bank must understand:
- the source of the customer's funds;
- the nature of their activity;
- the approximate level of income;
- the customer's typical financial transactions.
"Updating information helps the bank assess whether the customer's transactions correspond to their financial profile," Popadyn notes.
Why do banks require updates on income and type of activity?
The lawyer notes that banks require updates on income and type of activity because it is a requirement of the law and the bank's internal financial monitoring rules.
If the information is outdated or the bank sees atypical transactions, it may request:
- a certificate of income;
- information about the place of work;
- FOP (sole proprietorship) tax returns;
- explanations regarding transfers;
- documents on the origin of funds.
This happens especially often during:
- high turnovers;
- regular transfers between cards;
- receiving funds from many individuals;
- transactions uncharacteristic of previous activity.
How often do banks make inquiries about income and type of activity?
According to Popadyn, there is no single timeframe; usually, it is a planned update every 1-3 years, or it can be unplanned in the case of suspicious or atypical transactions.
"Some banks may automatically send requests via the app or email," she notes.
What happens if you don't update activity and income, or if you provide incorrect data?
The lawyer emphasizes that in case of failure to update data, the bank may:
- impose restrictions on transactions;
- temporarily block the card or account;
- refuse to process payments;
- terminate the banking service agreement.
"It all depends on the risk level the bank assigns to the customer," the lawyer adds.
She also notes that providing false information can lead to:
- intensified financial monitoring;
- blocking of accounts;
- requirements to provide supporting documents;
- the bank's refusal to provide services.
"If the bank determines that income does not correspond to actual turnovers, this may be regarded as risky activity," Yulia Popadyn notes.
How do banks verify the accuracy of stated income and place of work?
The lawyer notes that banks use:
- official documents of the customer;
- data from state registers;
- information from tax reporting;
- analysis of the movement of funds in accounts;
- information on tax payments;
- open registers of FOPs and companies.
"The bank also assesses whether financial transactions correspond to the declared type of activity," the lawyer adds.
If the bank does block the card, how can it be unblocked?
In the event that the bank does block the card, then, according to her, it is usually necessary to: contact the bank; provide explanations regarding transactions; submit documents on income or the origin of funds, for example:
- OK5/OK7 certificates;
- tax declaration;
- agreement;
- certificates of completion of work;
- statements;
- documents on the sale of property, etc.
"After verification, the bank may lift the restrictions," Popadyn notes.
If a person is officially employed and simultaneously has an FOP — what income should be indicated?
She emphasizes that it is recommended to indicate the total income from all legal sources, which will allow the bank to correctly assess the customer's financial profile and avoid questions about the origin of funds. This can be:
- salary;
- FOP income;
- other official receipts.
Answering the question of what to do if an FOP has different monthly income, she notes that usually the average monthly income or an approximate income range is indicated. For example, "average income of 25–30 thousand UAH per month."
"The main thing is that the information generally corresponds to real turnovers," Popadyn adds.
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Can such checks affect transfers between cards or financial monitoring?
The lawyer emphasizes that these checks can affect transfers between cards or financial monitoring; if the bank does not understand the nature of the transactions or they do not correspond to the customer's financial profile, the transfers may fall under financial monitoring.
Banks pay special attention to:
- regular transfers from a large number of individuals;
- significant amounts of cash deposits;
- frequent transfers between individuals;
- using a personal card for business.
In what cases can a bank recognize transactions as "suspicious"?
She emphasizes that a bank may recognize transactions as suspicious, for example, if turnovers significantly exceed official income; there are many identical transfers; funds are quickly "run through the account"; payment purposes look atypical; a personal card is used for entrepreneurial activity; the customer cannot explain the origin of funds; transactions show signs of splitting amounts or bypassing financial monitoring.
In such cases, the bank may request additional documents or temporarily restrict transactions until the verification is completed.
"Financial monitoring today is a standard part of the banking system's operation, so customers should be careful about updating information on income, type of activity, and origin of funds. Discrepancy between financial transactions and the declared customer profile, use of personal cards for business, or inability to confirm the source of funds can lead not only to temporary blocking of transactions but also to the bank terminating the service agreement. In practice, such cases are becoming more frequent, and restoring service or appealing the bank's actions is often possible only through court proceedings," Popadyn concluded.