The bank cannot simply recognize a client as high-risk and close their accounts: The Supreme Court on the obligations of financial institutions

On July 23, 2026, the Supreme Court, composed of the panel of judges of the First Judicial Chamber of the Cassation Civil Court, in case No. 757/5609/24, confirmed that a bank cannot unilaterally terminate business relations with a client solely by formally referring to the requirements of financial monitoring legislation.

The ruling has important practical significance for disputes between banks and clients regarding account blocking and termination of services.

Case circumstances

The plaintiff was a client of JSC CB "PrivatBank" and used bank accounts and payment cards. At the beginning of January 2024, the bank, through the Privat24 app, offered him to update information about his income and provide documents regarding the sources of funds.

The plaintiff submitted a tax declaration of an individual entrepreneur, an extract from the single tax payer register, and corresponding receipts from the State Tax Service, after which he received a notification that the documents had successfully passed verification.

However, on January 23, 2024, the bank decided to refuse to maintain business relations, terminate banking service agreements, and close accounts, citing the establishment of an unacceptably high level of risk. As a result, the plaintiff lost the ability to use the Privat24 app and manage funds in the accounts.

The court of first instance denied the claim, but the Kyiv Court of Appeal overturned this decision and declared the bank’s unilateral act of terminating business relations invalid. The bank appealed the ruling in cassation.

Supreme Court’s position

The Supreme Court indicated that according to Article 15 of the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism, and Financing the Proliferation of Weapons of Mass Destruction," the bank has the right to refuse to maintain business relations with a client, including by terminating the contract and closing the account, if an unacceptably high risk is established for the client or if the necessary documents for proper verification are not provided.

At the same time, the bank’s right as a subject of primary financial monitoring is not unlimited, and courts must examine the grounds and reasonableness of assigning such a risk category to the client in each case.

The court noted that the provisions of Article 15 authorize the bank to unilaterally refuse business relations with a client, but the bank is obliged to confirm the existence of legal grounds for establishing an unacceptably high risk.

The Supreme Court agreed with the appellate court’s conclusion that the defendant did not provide sufficient justification and proper evidence regarding which specific financial transactions of the plaintiff were suspicious, what the suspicion consisted of, and on what evidence it was based.

The case materials also lack evidence that the bank documented the process of applying the risk-oriented approach to the plaintiff, the decisions made during its application, and their justification.

The court noted that by stating in its decision the doubtful nature of financial transactions, unclear sources of funds, and unknown further use, the bank did not exercise its right to request from the client information and documents necessary for proper verification, including explanations about the origin of funds and the purposes of the transactions. At the same time, the case materials do not contain information that the plaintiff refused to communicate with the bank on these issues.

The Supreme Court emphasized that after examining all available evidence and applying civil procedural standards of proof, the appellate court reasonably concluded that the bank did not prove the legality of the decision to refuse to maintain business relations, terminate contracts, close accounts, and block the plaintiff’s funds.

At the same time, the Supreme Court drew attention to the fact that the appellate court’s decision does not deprive the bank of the right, within the limits and procedure defined by law and contract, to conduct appropriate checks on the client and apply measures provided by financial monitoring legislation.

Thus, the Supreme Court dismissed PrivatBank’s cassation appeal and left the Kyiv Court of Appeal’s ruling unchanged.

The court confirmed that the bank’s mere reference to establishing an unacceptably high risk is not sufficient grounds for unilaterally terminating client service. Such a decision must be supported by proper evidence, and the grounds for its adoption must be clearly justified in accordance with the requirements of financial monitoring legislation.

Additionally, you can read about another court case in which the Supreme Court obliged the bank to return 40 thousand euros to a woman whose deposit was terminated by fraudsters through "Privat24" while she was abroad.

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