DEPOSIT ACCOUNT OPENING RULES UNDER BANGLADESH BANK: A COMPREHENSIVE LEGAL ANALYSIS

Abstract

The opening of deposit accounts in Bangladesh is governed by a combination of banking legislation, regulatory directions issued by Bangladesh Bank, anti-money-laundering requirements, customer identification procedures, and contractual principles governing the relationship between banks and their customers. The regulatory framework aims to ensure that deposit accounts are opened for genuine customers, that customer identities and beneficial ownership are appropriately verified, that financial crime is prevented, and that depositors' legitimate interests are protected.

This paper examines the principal legal requirements for opening savings, current, fixed-deposit, business, joint, minor, and other deposit accounts in Bangladesh. It discusses customer due diligence (CDD), Know Your Customer (KYC) procedures, electronic Know Your Customer (e-KYC), identification documents, source-of-funds verification, beneficial ownership, politically exposed persons, recordkeeping, suspicious transaction reporting, and the circumstances in which an account application may lawfully be refused or an existing account restricted.

The paper also compares the Bangladeshi framework with Indian banking law and international standards established by the Financial Action Task Force (FATF). Seven judicial decisions are analysed to explain the principles of banker-customer relationships, reasonable care, authentication, confidentiality, and liability for unauthorised transactions. Because foreign judgments are not binding on Bangladeshi courts merely by virtue of their foreign origin, their relevance must be assessed according to Bangladeshi law and the circumstances of each case.

Keywords: Bangladesh Bank, deposit account, KYC, customer due diligence, anti-money laundering, e-KYC, banking law, beneficial ownership, Indian banking law, FATF.

1. Introduction

A deposit account is a financial arrangement through which a customer places money with a bank under agreed terms. Depending on the type of account, the customer may receive interest or profit, obtain payment services, withdraw money on demand, or access the funds after a specified period.

Opening a deposit account is not merely an administrative activity. It establishes a legal and financial relationship between a bank and its customer and creates obligations concerning identity verification, the acceptance and repayment of deposits, confidentiality, transaction monitoring, and regulatory compliance.

In Bangladesh, Bangladesh Bank acts as the central bank and exercises regulatory and supervisory authority over scheduled banks and relevant financial service providers. Its powers arise principally from the Bangladesh Bank Order, 1972, the Bank Company Act, 1991, and other applicable legislation and regulations.

Bangladesh Bank's regulatory framework must be read together with instructions issued by the Bangladesh Financial Intelligence Unit (BFIU), particularly those concerning money laundering, terrorist financing, customer identification, and electronic onboarding.

The BFIU's instructions for scheduled banks include Circular No. 26, dated 16 June 2020, concerning the prevention of money laundering, terrorist financing, and proliferation financing. The BFIU has also issued e-KYC guidelines, initially through Circular No. 25 dated 8 January 2020, with subsequent regulatory developments, including revised e-KYC guidance published by Bangladesh Bank in March 2026.

Accordingly, account-opening procedures must be assessed against the applicable version of the legislation, circulars, and guidelines in force at the relevant time.

2. Objectives of the Study

The principal objectives of this paper are:

1. To explain the statutory and regulatory framework governing deposit account opening in Bangladesh.
2. To identify the principal documents and information required from individual and institutional customers.
3. To examine the legal significance of KYC, CDD, enhanced due diligence, and electronic customer verification.
4. To explain the special requirements applicable to joint accounts, minors, companies, non-residents, and other categories of customers.
5. To analyse seven judicial decisions relevant to banking relationships and the legal duties associated with account opening and operation.
6. To compare Bangladeshi law with Indian legislation and international regulatory standards.
7. To identify practical compliance challenges and recommend measures for effective implementation.

3. Meaning and Types of Deposit Accounts

3.1 Savings account

A savings account is generally intended for individuals who wish to maintain deposits for personal savings and routine financial transactions. Banks ordinarily require the customer's identity, address, occupation, contact details, expected account activity, and source of funds to be established according to applicable requirements.

Interest, profit, minimum-balance conditions, withdrawal limits, and service charges depend on the particular bank's product terms and applicable law.

3.2 Current account

A current account is commonly used by businesses, traders, professionals, and other customers requiring frequent transactions.

In addition to ordinary customer identification, the bank may need to examine business registration, trade licences, tax identification, business addresses, ownership and control, authorised signatories, and the expected nature and volume of transactions.

The documents required depend on the legal form of the business and any special regulatory conditions applicable to its activities.

3.3 Fixed-deposit account

A fixed-deposit account, also known as a term deposit, involves placing money with a bank for an agreed period under specified repayment and interest or profit conditions.

The bank must establish the depositor's identity and comply with applicable customer due diligence requirements. A fixed-deposit product does not, by itself, exempt the bank from KYC or anti-money-laundering obligations.

3.4 Joint account

A joint account is maintained in the names of two or more persons. The bank should identify the account holders and establish the authorised operating instructions, including whether the account may be operated jointly or by any one holder.

Where relevant, the bank should also establish the rights of survivorship, nomination arrangements, and the consequences of a holder's death or loss of legal capacity in accordance with the account mandate and applicable law.

3.5 Minor's account

A minor's account is subject to the rules governing legal capacity, guardianship, and the particular banking product.

The bank should establish the minor's identity and age, verify the identity and authority of the parent or lawful guardian where required, and record the applicable operating restrictions.

The ability of a minor to enter into enforceable contractual obligations must be assessed under the governing law. A bank's internal policy cannot override statutory rules relating to capacity.

3.6 Business and institutional accounts

Companies, partnerships, trusts, associations, non-governmental organisations, and other institutions may open accounts subject to their legal status and applicable regulatory requirements.

The bank should establish:

• The legal existence and registration of the entity, where applicable.
• Its registered or principal business address.
• The identity and authority of persons acting for it.
• The ownership and control structure.
• The identity of relevant beneficial owners.
• The purpose of the account and expected transactions.
• The source of funds and, where warranted, source of wealth.
• Any licences, approvals, or registrations required for its activities.

The bank should not assume that identifying an entity's authorised signatory is sufficient to identify the individuals who ultimately own or control the entity.

4. Principal Legal and Regulatory Framework in Bangladesh

4.1 Bangladesh Bank Order, 1972

The Bangladesh Bank Order, 1972, establishes the institutional and statutory foundation of Bangladesh Bank.

It provides the broader framework for the central bank's responsibilities concerning monetary and banking regulation. It should be read alongside subsequent banking legislation and regulatory instruments when determining the legal basis of a particular account-opening requirement.

4.2 Bank Company Act, 1991

The Bank Company Act, 1991, as amended, is a principal statute regulating banking companies in Bangladesh.

Its relevance to deposit accounts arises from the regulation and supervision of banking companies, the conduct of banking business, and the statutory obligations imposed on regulated institutions.

Banks must exercise their account-opening powers consistently with applicable legislation and Bangladesh Bank's valid regulatory directions. A bank's internal policy cannot override a binding statutory requirement.

4.3 Money Laundering Prevention Act, 2012

The Money Laundering Prevention Act, 2012, is a central component of Bangladesh's anti-money-laundering framework.

Section 25 establishes important responsibilities for reporting organisations, including financial institutions. These responsibilities include maintaining complete and accurate information concerning customer identity, preserving relevant transaction records for at least five years after account closure, providing information to Bangladesh Bank when required, and reporting suspicious transactions or attempted suspicious transactions.

The Act therefore makes customer identification a continuing compliance obligation rather than a formality completed only when an account is opened.

The statutory obligations must be read together with the applicable Money Laundering Prevention Rules, 2019, and subsequent amendments or instructions.

4.4 Anti-Terrorism Act, 2009

The Anti-Terrorism Act, 2009, as amended, forms part of Bangladesh's framework for preventing terrorist financing.

Banks must comply with applicable prohibitions, freezing requirements, and regulatory instructions concerning designated persons, prohibited entities, and relevant financial transactions.

Where a legal freezing obligation applies, the bank must follow the relevant statutory or regulatory process. A customer cannot require a bank to disregard a binding legal restriction merely because the customer has submitted ordinary account-opening documents.

4.5 BFIU Circular No. 26 of 2020

BFIU Circular No. 26, dated 16 June 2020, sets out instructions for scheduled banks concerning the prevention of money laundering, terrorist financing, and proliferation financing.

Its account-opening provisions address customer selection, identification, customer due diligence, beneficial ownership, risk assessment, and related monitoring responsibilities.

Important principles include:

1. Accounts must not be opened in fictitious or anonymous names.
2. Banks must obtain sufficient and accurate customer-identification information.
3. Customer identity must be verified through appropriate and reliable means.
4. The purpose and intended nature of the banking relationship must be understood.
5. Beneficial owners must be identified where applicable.
6. Higher-risk customers require enhanced due diligence.
7. Customer information and transaction activity must be reviewed in accordance with the bank's risk-based procedures.
8. Suspicious transactions must be reported under applicable law and instructions.

The circular should be consulted in its operative form, together with later amendments and any superseding instructions, before determining the precise requirements applicable to a particular account.

4.6 Uniform Account-Opening Form and KYC Profile

Bangladesh Bank and BFIU have issued instructions relating to standardised account-opening and KYC documentation.

BFIU Circular Letter No. 1 of 2017 addressed the introduction of a uniform account-opening form and KYC profile form for banks. Bangladesh Bank subsequently issued further instructions concerning account-opening documentation, including BRPD Circular Letter No. 40 dated 30 July 2020.

The applicable form and any permitted electronic equivalent should be used according to the current instructions.

Standardisation improves consistency and helps banks collect comparable information about customers. Nevertheless, completion of a form does not automatically establish compliance. The bank must also assess whether the information is reliable, adequate, and consistent with the customer's risk profile.

4.7 Electronic Know Your Customer

Electronic KYC allows customer identification and verification through authorised digital processes.

BFIU Circular No. 25 of 2020 introduced e-KYC guidelines. Bangladesh Bank's revised e-KYC guidance published in March 2026 reflects subsequent developments in digital identity verification and risk-based onboarding.

The principal considerations include:

• Verification of digital identity using authorised and reliable sources.
• Appropriate use of national identity information and biometric verification where permitted.
• Protection of personal and biometric information.
• Authentication of the person seeking to open the account.
• Assessment of the risk associated with the product and customer.
• Additional verification where identity data are inadequate or inconsistent.
• Appropriate records of the verification process.

The absence of a national identity card should not automatically result in the denial of every banking service. The applicable 2026 e-KYC guidance recognises that alternative reliable identification and appropriate customer due diligence measures may be used in relevant circumstances.

The precise alternative documents and verification steps must, however, be determined under the current applicable rules.

5. Detailed Procedure for Opening a Deposit Account

5.1 Step One: Receipt of the application

The applicant submits the relevant account-opening form or completes the bank's authorised digital onboarding procedure.

The application should specify the proposed account type, customer details, intended purpose, and other information required by the bank.

The bank should explain the material terms of the product, including applicable fees, interest or profit conditions, withdrawal restrictions, and minimum-balance requirements.

5.2 Step Two: Customer identification

The bank establishes the identity of the applicant using documents and information permitted by applicable rules.

For an individual, the information may include:

• Full legal name.
• Date of birth.
• Nationality.
• Current and permanent addresses.
• Contact details.
• National identity or other permitted identity documentation.
• Occupation and employment or business information.

A bank may require additional documents where the customer's risk profile, residence, nationality, legal status, or proposed activity warrants further verification.

A photocopy of an identity document should not be treated as conclusive where there are reasonable doubts about its authenticity or the identity of the person presenting it.

5.3 Step Three: Verification of address and contact information

The bank should verify the customer's address and contact information in accordance with applicable requirements and internal procedures.

Verification may involve documentary evidence, authorised digital checks, or other reliable methods.

The extent of verification should be proportionate to the applicable legal requirements and the risks associated with the customer.

5.4 Step Four: Collection of KYC information

KYC information helps the bank understand the customer's background and anticipated banking activity.

The information ordinarily covers occupation, business activity, purpose of the account, expected deposits and withdrawals, anticipated transaction volume, and source of funds.

Where necessary, the bank may request supporting documents to establish the credibility of the information provided.

The bank should avoid collecting irrelevant or excessive personal information. Collection and use of personal information must be consistent with applicable law, regulatory instructions, and legitimate banking purposes.

5.5 Step Five: Customer due diligence

Customer due diligence is broader than identity verification.

It requires the bank to establish who the customer is, understand the purpose of the relationship, identify relevant beneficial owners, and assess the risk of money laundering or terrorist financing.

CDD should be performed when establishing the relationship and repeated when required by applicable law, regulatory instructions, or material changes in the customer's circumstances.

Where identification information is incomplete, unreliable, or inconsistent, the bank should take appropriate steps before proceeding with the relationship or allowing transactions, subject to any expressly permitted risk-based exceptions.

5.6 Step Six: Source of funds and source of wealth

Source of funds concerns the origin of the money to be deposited or used in particular transactions.

Source of wealth concerns how a customer accumulated their overall wealth.

For an ordinary, low-risk customer, the bank may be able to establish the source of funds through proportionate documentation and information.

For higher-risk customers, substantial deposits, complex ownership structures, unusual business activities, or transactions inconsistent with the customer's profile, the bank may require additional evidence.

Depending on the circumstances, evidence may include salary documents, business records, tax documents, sale agreements, inheritance documents, audited financial statements, or other reliable records.

There is no sound basis for treating every deposit account as subject to an identical evidentiary threshold irrespective of risk and applicable law.

5.7 Step Seven: Risk classification

The bank assesses the customer's money-laundering and terrorist-financing risk.

Factors may include the nature of the customer's business, geographical exposure, ownership structure, transaction expectations, delivery channel, and relevant public information.

The bank should assign the appropriate risk classification under its approved procedures.

Risk classification must not be used as an excuse for arbitrary discrimination. It should be based on legitimate risk factors and applied consistently with law.

5.8 Step Eight: Sanctions and politically exposed person screening

The bank must carry out applicable sanctions and prohibited-person screening.

It should also identify politically exposed persons (PEPs) and other higher-risk customers according to the operative legal definitions and regulatory instructions.

A PEP is not automatically a criminal or prohibited customer. The PEP classification generally triggers additional risk assessment and due diligence, rather than an automatic prohibition on opening an account.

Where enhanced due diligence is required, the bank may need additional information about the source of funds or wealth, approval from the appropriate senior official, and more intensive monitoring.

5.9 Step Nine: Verification of authority and beneficial ownership

Where a customer acts on behalf of another person or an entity, the bank should establish the representative's authority and identify the relevant beneficial owner.

For companies, this may require examination of incorporation documents, constitutional documents, ownership records, board resolutions, and authorised-signatory mandates.

For partnerships, the bank may need the partnership deed and evidence identifying the persons authorised to operate the account.

For trusts and comparable arrangements, the relevant legal roles and beneficial ownership must be identified according to applicable law and the arrangement's structure.

The bank should not rely solely on the name appearing on the application where another person ultimately owns or controls the account or the funds.

5.10 Step Ten: Approval and account activation

The application should be reviewed by the responsible bank personnel under the institution's approval procedures.

The bank should ensure that mandatory identification, verification, risk assessment, and documentation requirements have been satisfied before activating the account or permitting transactions, subject to any specifically authorised exceptions.

The bank should retain the required records and provide the customer with the applicable account details and terms.

5.11 Step Eleven: Continuing monitoring

Account opening does not terminate the bank's compliance responsibilities.

The bank should monitor activity against the customer's stated profile and investigate material inconsistencies where warranted.

Where the customer's circumstances change significantly, the bank may need to update KYC information and reassess risk.

Suspicious activity must be handled under the applicable reporting framework. The bank should not disclose confidential suspicious-reporting information to a customer where disclosure would violate the law or applicable anti-tipping-off requirements.

6. Documents Commonly Required

The following table provides a general guide. It is not an exhaustive or universally mandatory checklist; the precise documents depend on the account, customer category, and operative Bangladesh Bank and BFIU instructions.

6.1 Individual accounts

Typical documentation may include:

• Completed account-opening form.
• Valid national identity document or another legally accepted identity document.
• Address and contact information.
• Occupation and source-of-funds information.
• Specimen signature or approved digital authentication.
• Nomination information where applicable.
• Additional supporting documents where required by risk or product rules.

Photographs, introducer information, or other traditional requirements should be included where required by the applicable rules or the bank's lawful procedures, rather than assumed to be universally mandatory in every onboarding channel.

6.2 Business accounts

Depending on the legal form of the applicant, the bank may request:

• Trade licence or other applicable business registration.
• Certificate of incorporation and constitutional documents.
• Partnership deed, where applicable.
• Tax identification or other relevant tax documents.
• Board resolution or equivalent authority document.
• Identification documents for authorised signatories.
• Ownership and beneficial-ownership information.
• Business address and contact information.
• Expected transaction profile and source-of-funds evidence.
• Relevant regulatory licences or permissions.

6.3 Non-resident and foreign customers

Additional requirements may apply to non-resident Bangladeshis, foreign nationals, and customers seeking foreign-currency or specialised accounts.

These requirements may arise under foreign-exchange legislation, Bangladesh Bank instructions, immigration or identity documentation requirements, and product-specific rules.

The bank should verify the customer's legal status, permitted account category, source of funds, and any applicable foreign-exchange restrictions.

A foreign customer should not be assumed to qualify for every domestic or foreign-currency deposit product merely because the person possesses a passport.

7. Legal Principles Governing Refusal of an Application

A bank is entitled and, in certain circumstances, legally required to refuse an application that does not satisfy mandatory regulatory requirements.

Examples include:

1. Failure to establish identity to the standard required by applicable law.
2. Materially false or inconsistent information.
3. Inability to establish beneficial ownership where required.
4. Failure to satisfy legally applicable sanctions or prohibition requirements.
5. Unresolved legal restrictions affecting the proposed account.
6. An unacceptable risk that cannot be mitigated under the applicable framework.
7. Failure to provide information required for a lawful and adequately documented customer assessment.

However, a bank should distinguish between a genuine regulatory obstacle and a merely administrative inconvenience.

The absence of one preferred document does not necessarily establish that an applicant can never be identified through any legally permitted alternative method.

Similarly, a bank should not treat nationality, occupation, political exposure, or another characteristic as a substitute for the individualised risk assessment required by the applicable rules.

Where the law permits a risk-based alternative, the bank should consider whether that alternative is available. Where the law imposes an absolute prohibition, the bank must comply with it.

8. Seven Judicial Decisions Relevant to Deposit Accounts and Banking Duties

Preliminary note on the case law

The seven decisions below are selected for their relevance to the legal principles underlying deposit-account relationships, verification, payment authority, confidentiality, and banking responsibility.

They are not seven Bangladesh-specific judgments establishing a single exhaustive account-opening code. Several are English or Indian authorities dealing with related banking questions. Their value in Bangladesh is comparative and persuasive, where appropriate; they do not displace Bangladesh's statutes or Bangladesh Bank's binding instructions.

The cases should therefore be applied carefully and should not be cited as though every court directly decided the modern KYC requirements applicable to Bangladeshi banks.

Case 1: Foley v Hill (1848) 2 HLC 28; 9 ER 1002

Court: House of Lords, United Kingdom.

Legal principle: The ordinary relationship between a bank and a depositor is that of debtor and creditor.

Facts and decision: The case concerned the legal character of money deposited with a banker. The court recognised that money deposited in an ordinary banking account generally becomes the bank's money, while the bank incurs a corresponding obligation to repay the depositor in accordance with the account's terms and applicable law.

Relevance to deposit account opening: The decision explains why account opening is legally significant. The bank is not merely holding a specific bundle of currency for the customer. It is entering into a contractual relationship that carries obligations concerning repayment, account operation, and compliance with the governing mandate.

Before establishing the relationship, the bank must identify the person with whom it proposes to contract and ensure that the account is opened under lawful terms.