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How to get out from the bank's stop list: instructions for entrepreneurs

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3/30/2023

Have you been refused an account opening or service?

Your company may have been put on the bank's stop list.

What to do and why might this have happened?

Stop list of companies at the bank: what is it and how do companies get to the list?

The stop list is a list of companies which were refused to be served by a bank if they are suspected of violating the law. Under the law, banks are obliged to monitor the activities of clients to prevent money laundering, tax evasion, and assistance in evading sanctions imposed by the European Union and the United States of America on certain individuals and legal entities. Also, if the company is a transit company, i.e. its activities are not connected with Georgia, and the account is used only to receive and send money.

Inspections are made both before opening an account and afterward, during its service.

If the results of the inspection are not satisfactory to the bank, it may refuse to open an account, perform a transaction, or terminate the contract unilaterally.

In this case, your company will find itself on the stop list.

Some restrictions do not result in being put on the stop list. For example, if the account was blocked due to underpayment or late payment of taxes, you would not get into it.

To avoid blocking the account, it is necessary to pay taxes and fees on time and in full.

Jara Accounting has been operating in the accounting services market for more than 4 years. We will take reports, presentation, calculation of deductions, and deal with regulatory agencies upon ourselves. 

What happens if you get on the stop list?

The bank will refuse to serve you. If you decide to challenge the refusal in a court of law or the Central Bank, the bank will have to explain what the criteria were for decision–making. 

How do you know if a company has been put on the stop list? 

There is likely no way because only the bank has access to it. If you have been refused an account or service, it can be assumed that the company has been put on the list.

Refuse can be related to many other factors:

  • The appearance of a new counterparty that does not match the firm's line of business. 
  • The bank's security service considered the operation to be suspicious. This happens if the purpose of the payment is not specified or it does not correspond to the company's activity. 
  • You have withdrawn a large amount of money. 
  • There are no payments related to the company's activities: payment of wages, rent, and purchase of goods.

The bank may initiate an audit, and you will need to prove that everything is in order - for example, if you pay these expense items from an account at another bank, you have several accounts. Other banks do not have access to the transactions you make at one bank. So there may be questions concerning, for example, tax payments - be ready to provide payment demand orders.

How to get out of the bank’s stop list?

According to the law, you have the right to try to prove to the bank that you conduct legal activities, and the bank is obliged to conduct a repeated inspection.

It may review its decision if it considers the evidence to be strong.

After a refusal to carry out an operation, bank employees can request documents to clarify the situation, for example, a contract with a counterparty or payment order confirming the payment of taxes in due time and in full. If you provide the documents, the bank shall be obliged to analyse them and inform you about its decision within 10 working days.

If it becomes known that the company is not involved in anything illegal, the matter will be settled.

If the bank repeatedly denied service based on the results of the inspection and you don't agree, file a complaint with the Central Bank of Georgia.

The regulator will ask the bank for an explanation, conduct an inspection, and make a final decision. This can take up to 20 business days.

If the Central Bank also refuses, all that is left to do is the court. Are you confident of your rightness? Enlist the support of an experienced lawyer and file a lawsuit.

Giving up on the denial and approaching a bank that will agree to render service is not the best solution. The company will always remain on the stop list until the bank, which caused it, withdraws the refusal. 

Conclusions: 

Banks have the right not to open an account for you and to deny service at any time. The law obliges them to monitor customer activity and track suspicious transactions.

Companies that have been denied service are put on the stop list, which is accessed only by banks.

You can only guess whether your firm is on it, as there is no way to check the banks' stop list.

You have the right to initiate an inspection by providing the bank with documents related to the transaction. If it turns out that the company has not violated anything, the bank will revoke the denial and financial monitoring will remove you from the stop list.

If the bank repeatedly denies it and you are confident of your rightness, file a complaint to the Central Bank of Georgia. After the Central Bank's refusal, all that is left to do is the court.

If nothing is done, the company will remain on the stop list, even if another bank agreed to take it for service. To avoid being put on the stop list by banks, study the law and understand what operations you should avoid. And be sure to enlist the support of a professional accountant who will help you work safely.

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