‘Good question’: Aussies are frozen out of their money—and banks have no answers

Katie McMaster thought she had escaped one nightmare when she left ING, only to find herself in another with HSBC.

Her attempt to log in ended in silence—no access, no warning, no explanation.

What followed was the second time in months she had been locked out of her own money.

The 36-year-old Melbourne personal assistant said she was stunned that it happened again so soon after her ordeal with ING.

She explained that HSBC gave her no answers, only a referral to the fraud department and instructions to visit a branch with 100 points of ID.

‘I just can't believe how soon it's happened again,’ McMaster told Yahoo Finance. ‘They won't even tell me what's caused the block in this scenario.’

The silence is not unique to her—it reflects the new reality of Australian banking.

Between 2018 and 2020, AUSTRAC cracked down on major compliance failures by institutions including Tabcorp, Commonwealth Bank, and Westpac.

These actions cost banks billions in penalties and pushed them into hyper-caution mode.

Now, everyday customers like McMaster are paying the price.

Her story followed the same pattern many Australians are now experiencing—blocked accounts, no clear explanation, and limited ways to resolve it.

‘So I can't even confirm or verify anything,’ she said. ‘If it is my salary, I can show you all my payslips, but they won't even tell me what it is.’

The rise in account suspensions

The rise in account suspensions is tied to looming changes in anti-money laundering laws.

On 4 July 2025, AUSTRAC CEO Brendan Thomas set out expectations for banks ahead of reforms that will formally take effect in 2026.

Tranche 2 legislation, expected this year, will widen AUSTRAC’s oversight and make penalties for non-compliance even harsher.

The result is a climate where banks suspend first and investigate later, no matter the inconvenience to customers.

McMaster’s first ordeal was earlier this year, when ING flagged her salary and a $300 concert ticket payment as suspicious.

The bank later admitted confusion and restored her access within two days, but the damage to her trust was already done.

When she shared her HSBC story on social media, she quickly discovered she was far from alone.

‘HSBC just did something very similar to me. I am moving all my accounts from them this week,’ one person responded.

‘Same thing happened to me THREE times in the space of 7 months! Westpac!’ another claimed.

‘I had CBA do this to me last month and then ING did the same thing to me 2 weeks ago,’ a third wrote.

The frustration for customers is not just the block—it is the lack of transparency.

While banks must run KYC and identity checks under AML/CTF rules, they are not required to reveal what specifically triggered a suspension.

This leaves people like McMaster in a Kafka-esque loop where they cannot even correct an issue because they are not told what it is.

She had been in the same job for three years, with no irregular payments or unusual transactions, making her a low-risk customer by any standard.

When she asked what she should do without access to her funds during the review period, a teller simply replied: ‘good question.’

The issue carries even greater weight for older Australians, whose steady and predictable banking patterns should mean low risk.

Instead, pension payments, regular bill payments, and small online transactions can still trip automated alerts.

For seniors in rural areas, being told to produce 100 points of ID in a branch can be a serious obstacle.

Customers do have rights, but many are not aware of them.

If an account is suspended, people can request a written explanation, ask for a timeline to resolution, and take complaints to the Australian Financial Complaints Authority if banks fail to act.

The bigger picture

The bigger picture is one of compliance overreach, where AUSTRAC’s mission to fight money laundering is clashing with customer needs.

While stronger intelligence and oversight are vital to combat financial crime, the burden of proof is falling unfairly on ordinary Australians.

The current model treats people as guilty until proven innocent, with banks offering little empathy or clarity.

McMaster said she would change banks again once HSBC unblocked her account, highlighting the erosion of trust spreading through the industry.

New obligations starting 1 July 2026 will only heighten this risk unless banks balance compliance with customer service.

‘It's all just been a little bit confusing and a bit frustrating to be honest,’ she said.

The issue of frozen accounts highlights just how much the financial sector is changing under new rules and compliance pressures.

But beyond account suspensions, there are even bigger shifts happening behind the scenes that will shape how people access and manage their money in the future.

One recent story looks at what a major bank chief had to say about these changes and what they could mean for everyday banking.

Read more: Are Australia's banking services changing soon? Bank chief reveals monumental changes ahead

Have you ever found yourself locked out of your own money without warning?