Banks can and do get into hot water if they’re found to have handled – inadvertently or not – funds which ends up with banned entities, like DPRK or terrorist groups, or are the product of fraud AND that they ignored reasonable suspicions.

The classic example is the so-called “703 account” of fraudster Bernie Madoff, held at JP Morgan Chase bank. Although a humble checking account, it saw huge money inflows and outflows, with one reference showing a single withdrawal of $1.3 billion. For their wilful disregard of the obvious red flags, the bank was fined $461 million of their own money, separate from the seizure of the account to pay the victims.

And perfectly normal people have had their accounts “closed due to fraud”, meaning the bank got suspicious and decided to unilaterally close the account, just in case. They do give the balance back to the owners, since it’s to avoid an ongoing fraud. It’s still annoying though, but banks won’t carry more liability than they’re comfortable with, at least when the regulators still bared their teeth from time to time.