Registration in Internal or External Reference Register of a bank? ? That's not (always) allowed!

Internal vs. external registers

When a bank suspects someone of committing fraud, it can take far-reaching measures. Sometimes the bank no longer wants to have someone as a customer and terminates the banking relationship. But a bank can also register  someone on an internal or external reference register. This can make it very difficult or even impossible to maintain or open a bank account, with all the consequences that entails.

It is important to know that there are two types of registers. There is a so-called internal (reference) register and an external register. An internal register only applies to one bank. Other banks or financial institutions cannot view that internal register. If you are placed on the internal register, the banking relationship may be terminated and you will have to rely on other banks.

The consequences are even greater when someone is placed on a so-called external reference register. Most banks have access to this external reference register. Applying for a new bank account then becomes impossible or very difficult. Let alone obtaining a mortgage.

In principle, someone can be placed on an internal or external reference register for a maximum of eight years. Of course, this is different if there is another reason to place someone on a register within those eight years.

Legal requirements and proportionality

Fortunately, a bank cannot simply place someone on a register. Excluding someone from having a bank account is a serious decision. The court has ruled that banks must exercise caution when applying this measure. Moreover, there are many authorities that can be approached to have the measure reversed.

In particular, placing someone on the external register cannot be done without good reason (link). First of all, there must be an ‘incident’. In short, such an incident is an event that results or may result in damage to the interests, integrity or safety of the bank's customers or the bank itself.

The concept of ‘incident’ is therefore very broad and will quickly be met. For example, it is not necessary for the person concerned to have been convicted of a criminal offense. On the other hand, a mere suspicion is not enough. However, case law and legislation are unclear about the standard of proof to be used. For example, sometimes reference is made to ‘a more or less well-founded suspicion’, and at other times to ‘a justified conviction’ (link). It is therefore difficult to indicate in general terms when an incident may give rise to someone being placed on a register.

Even if there is an incident that would in principle justify inclusion in a register, such inclusion can only actually take place if it is proportionate. Placement on a register is a far-reaching measure, and therefore everyone's interests must be weighed. What are the consequences of the placement for the person concerned? Do the reasons the bank has for placing someone on the register actually outweigh that person's individual interests? These are relevant questions that must be taken into account.

Placement on a register cannot therefore be done lightly. There are many authorities that a person can turn to in order to be removed from a register. If the placement is based on incorrect data, there is a so-called right to correction. You can request this from the bank itself. Everyone also has a right of objection, for example on the basis of personal circumstances. The bank will assess this objection within one month.

Finally, a person can turn to the Financial Services Complaints Institute (KiFiD), the court, or the Dutch Data Protection Authority, depending on the arguments to be put forward for removal from the register.

Legal aid is available in certain cases. This is certainly the case for proceedings before the KiFiD. Legal aid is also available for court proceedings.

Need legal assistance?

Have you been placed on an internal or external register, or has your banking relationship been terminated, and would you like specialized advice or assistance from one of our expert lawyers? Then contact us as soon as possible. We can also assist or advise you if the bank asks you questions to assess your banking relationship.