De-risking and Correspondent Banking: Why Expats Lose Accounts and What to Do

Receiving a letter from your bank informing you that your account will be closed in 60 days is a deeply unsettling experience — and for internationally mobile individuals, it is far more common than most people realise. The phenomenon is known as "de-risking," and it has quietly become one of the most disruptive forces in international banking over the past decade.

Understanding why de-risking happens, which correspondent banking relationships are involved, and how to build a more resilient banking structure is essential for any expat or globally mobile professional managing money across borders.

What Is De-risking?

De-risking refers to the practice of banks — particularly large retail and commercial institutions — proactively closing or refusing to open accounts for customers they judge to represent a disproportionate compliance risk relative to the revenue they generate. This is not a new concept, but it accelerated sharply after the 2008–2012 wave of massive anti-money-laundering (AML) and sanctions fines imposed on banks including HSBC, Standard Chartered, BNP Paribas, and others.

When regulators impose multi-billion-pound penalties for failures in AML controls, compliance teams at those institutions become intensely risk-averse. The cost of maintaining a customer relationship that triggers a suspicious activity report, a regulatory inquiry, or a sanctions match — even a false positive — can vastly exceed any fee income from that account. The rational commercial response, however unfair to innocent customers, is to exit entire categories of client relationship rather than assess each one individually.

Common triggers for de-risking at the individual account level include:

• Residency in a high-risk jurisdiction: Countries on FATF (Financial Action Task Force) grey or black lists, or jurisdictions perceived as opaque, may cause a bank to flag all customers with connections there.
• Politically exposed person (PEP) status: PEPs — defined broadly to include government officials, their immediate family, and close associates — face enhanced due diligence requirements. Many banks find this economically unattractive and simply close PEP accounts.
• Complex or non-standard income sources: Cryptocurrency, freelance income from multiple jurisdictions, consulting income from emerging markets, or beneficial ownership of offshore structures can all trigger account reviews.
• Infrequent or unusual transaction patterns: Dormant accounts that suddenly receive large international transfers, or accounts used for infrequent high-value transactions, attract automated compliance flags.
• Multi-jurisdictional tax profiles: Customers subject to FATCA reporting (US persons), CRS reporting, or multiple tax residencies create additional administrative burden.

The Correspondent Banking Layer

To understand why de-risking has such a wide impact, you need to understand correspondent banking — the system through which banks settle cross-border payments with each other.

Most banks do not have direct relationships with every other bank in every country. Instead, they route payments through a network of correspondent banks — large institutions, typically in major financial centres, that hold accounts (nostro accounts) on behalf of smaller or regional banks. When a payment travels from a bank in, say, Kenya to a beneficiary at a German bank, it may pass through two or three correspondent banks en route.

The critical point: correspondent banks apply their own compliance standards to the payment flows they process on behalf of their respondent bank clients. If a correspondent bank decides that maintaining a relationship with a particular respondent bank creates unacceptable AML or sanctions risk, it terminates the correspondent relationship. The respondent bank then loses the ability to route certain international payments — affecting all of its customers, regardless of their individual risk profiles.

This has been devastating for smaller banks in developing countries, island jurisdictions, and regions with elevated financial crime risk perceptions. The World Bank and IMF have documented significant withdrawal of correspondent banking relationships from the Caribbean, Pacific island nations, sub-Saharan Africa, and parts of Central Asia.

For individual expats, the practical consequence is this: even if your bank in country X is perfectly compliant, if it loses its correspondent relationship with a major clearing bank, your ability to send and receive international payments may be severely impaired or completely blocked.

Who Is Most Affected

Expats and internationally mobile individuals face elevated de-risking risk across several scenarios:

Expats living in FATF grey-listed countries — as of early 2026, more than 20 jurisdictions remain on FATF's increased-monitoring ("grey") list, including Kenya, Lebanon, Venezuela, Vietnam, Nepal, Monaco and the British Virgin Islands (the list is revised at each FATF plenary — Nigeria, Pakistan, the Philippines and others were removed in 2024–2025, so always check the current list). Banks maintaining retail accounts for residents of grey-listed countries face additional scrutiny.

British citizens living in post-Brexit EU countries — some EU banks, particularly in France, Germany, and the Netherlands, have closed accounts held by UK residents following Brexit, citing the administrative complexity of serving non-EU customers under MiFID II and other regulations.

Customers banking through small Caribbean or Pacific offshore banks — as correspondent networks thin out, the practical utility of accounts in smaller offshore jurisdictions has declined significantly.

Non-dom and high-mobility individuals — people with multiple addresses, temporary visas, or no fixed permanent residence often struggle to satisfy banks' address verification requirements, leading to account closures.

Customers who receive money from flagged jurisdictions — even if your account is in a stable jurisdiction, regularly receiving transfers from Iran, Russia, Belarus, North Korea, or sanctioned individuals will trigger automatic closure.

Protecting Yourself: Practical Steps

1. Diversify across multiple banking relationships

Never rely on a single bank account for all your international financial activity. Maintain accounts in at least two jurisdictions, ideally including one in a major financial centre (UK, EU, Singapore, or UAE) and one specialist expat or international bank. If one account is closed, you need an immediate alternative.

2. Choose banks with explicit expat mandates

Retail banks are increasingly exiting the international client space. Private banks, dedicated expat banking services, and international divisions of major banks are better suited. HSBC Expat (Jersey), Barclays International, and specialist providers such as Butterfield Bank maintain infrastructure specifically for internationally mobile clients.

3. Maintain impeccable documentation

When a bank reviews your account for de-risking purposes, the quality and completeness of your documentation is your primary defence. Maintain current proof of address, up-to-date source-of-wealth documentation, tax residency certificates, and clear explanations for any unusual transactions. Proactively provide updated documentation annually — don't wait to be asked.

4. Understand your bank's risk appetite

Read your bank's terms carefully. Many now include clauses allowing closure on reasonable notice without specific cause. Ask your relationship manager directly about the bank's policy on serving clients in your jurisdiction — it is better to discover a restriction proactively than to find your account frozen.

5. Build a relationship, not just an account

Customers with relationship managers who know them personally are far less likely to be de-risked than anonymous account holders. If your balance or activity justifies it, move to a relationship banking tier. Your manager can advocate internally when compliance flags arise.

6. Consider regulated fintech as a complement

Providers such as Wise and Revolut operate under e-money licences and have different risk frameworks from full deposit-taking banks. While they are not substitutes for a proper bank account, they can maintain payment functionality if a bank account is closed, providing breathing room to establish a new banking relationship.

7. Seek professional advice before relocating

If you are moving to a jurisdiction that appears on FATF lists or has complex banking relationships with the UK, EU, or US, consult a specialist international financial adviser before the move. Establishing banking relationships before relocation is significantly easier than doing so afterwards.

Regulatory Responses

Regulators in several jurisdictions have begun to push back against the most egregious de-risking practices. The Financial Conduct Authority (FCA) in the UK published guidance in 2023 reminding banks that closing accounts without proper assessment of individual risk constitutes a breach of fair treatment obligations. Payment accounts — basic payment accounts under the Payment Accounts Directive — cannot be refused to EU residents without specific justification.

However, the practical impact of these interventions has been limited. Banks have become adept at citing compliance obligations in ways that are difficult to challenge, and the burden of proving discriminatory treatment falls on the customer. Regulatory pressure is a slow corrective mechanism — individual account holders cannot rely on it in the short term.

The Long-Term Outlook

The Financial Stability Board (FSB) has published multiple reports on the decline of correspondent banking relationships and its implications for financial inclusion and global payment efficiency. SWIFT has introduced tools such as the SWIFT Compliance Analytics platform to help banks make more granular, data-driven assessments rather than blanket country-level decisions.

There is also growing interest in multilateral payment platforms and central bank digital currency corridors (such as Project mBridge) that could eventually reduce dependence on the correspondent banking network for certain cross-border payments. However, these developments are likely to play out over many years rather than months.

For now, the most effective protection remains structural: build a resilient, multi-bank architecture before you need it, not after your account is closed.

How Global Investments Can Help

Global Investments' international banking team works with expats, HNW individuals, and globally mobile professionals to build robust, multi-jurisdictional banking structures that withstand regulatory change and de-risking pressure.

We can advise on appropriate banking jurisdictions and institutions for your specific profile, help you prepare and maintain source-of-wealth documentation, introduce you to international private banking relationships, and structure your financial affairs to minimise the compliance flags that trigger account reviews.

If you have received a de-risking notice or are concerned about the resilience of your current banking arrangements, contact us for a confidential consultation. With 32 years of experience supporting internationally mobile clients, we understand both the practical and regulatory dimensions of this complex landscape.

Information is provided for educational purposes as of 2026. Banking regulations and correspondent relationships change frequently. Seek professional advice before acting on any information in this guide.