Bankers are rejecting transfers from Ukrainians who failed financial monitoring checks, leaving people without money

Ukrainian banks are blocking access to clients’ funds after forcibly closing their accounts due to financial monitoring procedures. As a result, people cannot withdraw their own money and are left stranded without access to funds.

A typical recent scenario unfolds when a customer is accused of violating financial monitoring rules — the details of which are not disclosed and usually unclear to clients. The bank then forcibly closes the account, leaving the person with only three options:

1. Donate the money to a special charitable account of the National Bank of Ukraine (NBU);

2. Withdraw a limited amount of cash; or

3. Transfer the funds to an account at another bank.

However, many banks — with the backing of the NBU — refuse to issue the full amount in cash or deny withdrawals altogether, even though Ukrainian law guarantees individuals the right to access their own money. Consequently, many customers opt for a non-cash transfer to another bank, hoping the funds will not be frozen again.

Yet recently these transfers have started bouncing back. Receiving banks, upon noticing that the payment originates from a forcibly closed account, refuse to credit the money to the client’s new account. The funds are “kicked back” like a football — returned to the sending bank. But since that bank has already closed the client’s account, the money never reaches them and instead becomes stuck on the bank’s transit account.

“Funds can sit on that transit account for a long time along with other unallocated payments or contract-related transfers awaiting verification documents. It’s a temporary holding account, not meant for active transactions. Due to tightened financial monitoring, many banks’ transit accounts have swelled recently,” a banking source explained.

The affected customer is left trapped — without access to their money. Their limited options are: forget about the funds and effectively forfeit them to the bank; file a lawsuit to challenge the bank’s decision and demand the return of funds in cash; attempt new transfers to different banks, opening new accounts each time, until one accepts the payment.

“Blocking transfers from forcibly closed accounts is a new phenomenon. There’s no reliable list of ‘friendly’ banks that will accept such payments. It’s a shot in the dark — you might get lucky, and the funds will go through. But even then, it’s best to withdraw the money immediately because the receiving bank can still freeze your account later,” advised the treasury director of a major Ukrainian bank.

While such cases are not yet widespread, banks warn the practice could quickly become more common due to intensified financial monitoring rules imposed under pressure from the National Bank of Ukraine this year.