Accounts may be closed when they are no longer required or when operational or compliance conditions require closure.

Account Closure Process

Initiate closure with a POST to the Close Account API. When a closure request is initiated, the account transitions to the CLOSURE_INITIATED status.

During this period:

• No new outbound transactions should be initiated.
• Existing transactions are allowed to complete.
• Any remaining balance must be transferred out of the account.

After the system-defined waiting period and completion of all pending transactions, the account automatically transitions to CLOSED.

Common Reasons for Account Closure

Scenarios

stateDiagram-v2
    [*] --> ACTIVE
    ACTIVE --> BLOCKED: Compliance / Risk hold
    BLOCKED --> CLOSURE_INITIATED: Resolve + initiate closure
    ACTIVE --> CLOSURE_INITIATED: Initiate closure
    CLOSURE_INITIATED --> CLOSED: Waiting period complete,<br/>all transactions settled
    note right of CLOSURE_INITIATED: No new outbound transactions.<br/>Existing transactions settle.<br/>Remaining balance must be transferred.
    CLOSED --> [*]

Scenario 1: Close a deposit account after offboarding a customer

A neobank offboards a customer who has cancelled their banking services. The platform needs to close the customer's deposit account after ensuring all pending transactions are settled and the remaining balance is transferred out.

Steps:

1. Verify the account has no pending or in-flight transactions.
2. Transfer any remaining balance to the customer's linked external bank account using Pay via ACH or Pay via Wire.
3. Initiate account closure. The account transitions to CLOSURE_INITIATED.
4. The system waits for the defined holding period to allow any remaining transactions to settle.
5. Once all activity is complete, the account automatically transitions to CLOSED.

No new outbound transactions can be initiated after the account enters CLOSURE_INITIATED status.

Scenario 2: Handle a blocked account before closure

A compliance review flags suspicious activity on a customer's account. The account is blocked while the investigation is in progress. After the review concludes, the Program Manager decides to close the account.

Steps:

1. The account is moved to BLOCKED status during the compliance investigation.
2. All outbound transactions are restricted while the account is blocked.
3. After the investigation, the compliance team determines the account should be closed.
4. Any remaining balance is transferred out to a designated account.
5. Account closure is initiated, transitioning the account to CLOSURE_INITIATED and eventually to CLOSED.

Scenario 3: Close an unused clearing (FBO) account

A lending platform decommissions a product line and no longer needs the clearing account that was used to hold funds in transit. The Program Manager initiates closure of the FBO account after confirming all settlement activity is complete.

Steps:

1. Confirm no pending or in-flight transactions reference this clearing account.
2. Sweep any remaining balance to the platform's primary operating account using Transfer funds (BOOK).
3. Initiate account closure. The account transitions to CLOSURE_INITIATED.
4. After the system-defined waiting period, the account moves to CLOSED.

See also

• Account Lifecycle: every status and how to resolve it
• Open an Account: create and activate an account
• Account Error codes: resolve a failed transition