Can your bank block a transfer order for purchasing cryptocurrency?

07/04/2022

You may find that you are unable to purchase cryptocurrencies on an investment platform by means of a transfer from your bank because the bank has blocked the transfer of money to that platform. Why does this happen? Let us explain.

First, remember that Spanish and European financial supervisors have recently published a warning about the risks of investing in crypto-assets, noting that they are not appropriate for most retail customers, nor as a means of payment or exchange.

A transfer may be blocked because the bank suspects that identity theft, with credentials being stolen, is occurring. As explained in other blogpostsAbre en ventana nueva, customers’ bank accounts are often accessed fraudulently after their credentials are stolen, resulting in a transfer being made to purchase cryptocurrencies.

Banks may also classify this type of transaction as high-risk and decide to carry out additional controls, such as calling you or asking you to go to the branch. Among numerous other regulations, financial institutions are subject to the Law on the prevention of money laundering and terrorist financing, under which they are required to carry out certain actions with their customers, who in turn must cooperate therewith.

As indicated in one of our best practice criteriaAbre en ventana nueva, when a bank decides to adopt a measure to comply with the regulations on the prevention of money laundering which entails restricting a customer’s operations, it must inform the customer. In principle, it must at least explain why the measure is adopted, expressly quoting Law 10/2020, unless the bank considers that in that specific case there are special confidentiality-related reasons for not doing so.

In addition, measures restricting operations should be implemented with some degree of flexibility, assessing the special circumstances of each specific case, such as the customer’s health situation or distance from his/her place of residence.