Bank Negara Tightens Rules On Bank Account Closures To Protect Consumers

Samuel Chua

24th October 2025 - 4 min read

Bank Negara Malaysia (BNM) has introduced new measures to improve transparency and fairness in how financial institutions handle bank account closures. Under the updated framework, banks must now provide written notices explaining why an account was closed and clearly outline the account holder’s right to appeal.

According to Deputy Finance Minister Lim Hui Ying, this step is part of efforts to ensure that legitimate customers are protected while maintaining strong safeguards against financial crimes such as money laundering and terrorism financing.

Written Notice And Right To Appeal

Speaking in the Dewan Rakyat, Lim said that every written notice must include the reason for the account closure, without revealing sensitive information that could compromise ongoing investigations.

“The notice must also explain the account holder’s right to lodge an appeal, including the appeal channels available, the time period allocated, and the process to be followed to lodge an appeal,” she said.

This measure aims to ensure that individuals affected by account closures are not left without information or recourse, and that banks maintain transparency in handling such cases.

Standardising How Banks Handle Suspicious Accounts

Lim explained that BNM is working closely with financial institutions to issue an industry-wide reference protocol to ensure consistent handling of suspected mule accounts. The protocol, scheduled to take effect from 1 July 2024, requires all banks to follow uniform procedures when reporting, reviewing, and managing accounts flagged under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

The guidelines also ensure that banks coordinate with the Royal Malaysian Police before taking further action, such as restoring, delisting, or permanently closing an account. This integrated process is meant to balance law enforcement needs with consumer protection.

“Through this approach, BNM can balance the need to prevent money laundering with the right of account holders to be treated fairly,” Lim said.

She added that BNM regularly monitors how financial institutions manage complaints to ensure consumers are treated with fairness and transparency.

Addressing Public Concerns Over Wrongful Closures

The issue of wrongful or unclear account closures has gained public attention in recent months following cases shared online. In one widely discussed incident, a Malaysian woman claimed that a mistaken RM10.44 e-wallet refund led to her accounts being closed by two banks after she was wrongly flagged as a mule account holder.

She said the closure prevented her from opening new accounts or applying for loans, severely disrupting her financial life. The e-wallet provider later admitted to reporting the transaction error to authorities but allegedly failed to issue official clearance documents.

Situations like these highlight how important it is for customers to have a clear right to appeal and access transparent communication from banks. Under the new framework, affected individuals will be informed of their appeal options in writing, providing a fairer process to resolve disputes directly with banks or escalate cases to Bank Negara Malaysia for review.

Protecting Consumers While Strengthening The Financial System

Lim stressed that while Malaysia must remain firm in tackling illegal financial activity, the rights of consumers should not be overlooked. All enforcement actions under AMLA, including those involving foreign entities, will be conducted in accordance with the law and handled transparently.

She also assured that the government will not bow to external pressure in enforcing Malaysia’s financial laws, reaffirming that the integrity of the country’s financial system remains a top priority.

The new appeal process and uniform industry protocol mark an important step toward protecting ordinary Malaysians from unintended harm while preserving trust in the financial system. Clear communication, fair recourse, and BNM’s oversight together create a more transparent and accountable banking environment for everyone.

Why This Matters For Consumers

For everyday Malaysians, the new rules mean greater transparency and fairness if their accounts are ever closed unexpectedly. Consumers will now receive written explanations and know how to appeal directly through regulated channels.

This clarity could have made a major difference for individuals like the woman who faced financial exclusion over a small refund error. With BNM’s oversight, such cases can now be reviewed more fairly, ensuring that honest account holders have a right to be heard and to rebuild trust in the banking system.

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