Caught between the European Court of Justice and the US Treasury Department: What strategies do you have to avoid getting caught in the crossfire regarding basic bank accounts?

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I. Introduction: The 2026 Normative Update – Protection against personal liability risks Management Briefing: The ECJ ruling C-81/24 [Jenec] and its far-reaching consequences for compliance , anti-money laundering and directors' liability Caught between the European Court of Justice and the US Treasury Department Managing global sanctions risks while simultaneously complying with European consumer protection laws increasingly presents credit institutions with a regulatory dilemma. Until now, the immediate rejection of customers listed on third-country sanctions lists, such as that of the US Office of Foreign Assets Control (OFAC) , was standard de-risking practice within compliance and anti-money laundering (AML) processes , in order to avoid draconian secondary sanctions from the US. However, the landmark ruling of the European Court of Justice (ECJ) of June 11, 2026, in case C-81/24 [Jenec], has now removed the legal basis for this blanket practice. In the underlying case, a Slovenian bank refused to open a basic bank account for a consumer legally resident in the EU, citing national anti-money laundering regulations, because the consumer was listed on an OFAC sanctions list – even though the consumer had neither a criminal conviction nor was subject to sanctions by the UN, the EU, or Slovenia. The CJEU clarified that the right to a payment account with basic functions, enshrined in the Payment Accounts Directive (Directive 2014/92/EU), cannot be undermined simply by the automatic listing of a third-country account. Rather, the relevant regulations – in particular the EU Anti-Money Laundering Directive (Directive (EU) 2015/849) – require institutions to conduct a specific, risk-based case-by-case assessment . An OFAC entry may only be considered as one relevant risk factor; a refusal is only compliant with EU law if the bank demonstrates that the risk of money laundering or terrorist financing cannot be effectively managed even through proportionate safeguards. For C-level executives, this ruling significantly intensifies the tension between international sanctions pressure and European law. Board members and managing directors are now obligated to immediately revise internal onboarding and control processes, as the previous "better safe than sorry" approach of rejecting OFAC cases now constitutes a direct violation of EU law. Since deficiencies in the compliance organization and systematic disregard for consumer rights or AML regulations have immediate civil and regulatory consequences, the personal liability of management (corporate liability) in cases of flawed risk assessment is now dramatically in focus. Management must ensure operationally that the required case-by-case reviews are properly documented and legally sound in order to protect the institution from both claims for damages by rejected customers and fines from regulatory authorities. II. Key deadlines and fixed points in time Time window For C-level executives, anti-money laundering (AML) teams, and compliance departments, the clock is now ticking. Because this is a ruling by the European Court of Justice (ECJ) in a preliminary ruling procedure, there is no statutory "transition period" as with a new EU regulation. The ruling definitively establishes how the existing law (the 2014 and 2015 directives) should always have been interpreted. Therefore, primarily procedural, regulatory and liability-related deadlines apply , which derive from the pressure to act: 1. Immediate obligation to act (Immediately / "Day 0") Re: Compliance, AML Officer, C-Level Time-bound nature: Ad-hoc obligation to minimize risk (liability of corporate bodies) Background: The ruling was announced on June 11, 2026 , and is therefore binding on all national courts and authorities in the EU from now on. Specific deadline: If an institution rejects a client today (or in the coming days) solely because of an OFAC entry without documented case-by-case review, it is knowingly committing a legal violation. The C-level executives are immediately exposed to a direct risk of personal liability for organizational and selection issues (e.g., under Section 43 of the German Limited Liability Companies Act (GmbHG) and Section 93 of the German Stock Corporation Act (AktG)) if they do not stop these processes. 2. Adaptation of workflows & IT systems (Short term: 2 to 4 weeks) Betrifft: Compliance, AML (KYC-Teams), IT-Operations Deadline: Operational implementation deadline Specific deadline: The onboarding systems must be adapted within the next few weeks. The "hard stop" logic must be eliminated: Many screening tools automatically block applications when an OFAC match is detected. This technical block must be reprogrammed into a controlled escalation process (manual review) . Until this is implemented on the IT side, temporary workarounds must be issued to employees. 3. Processing times for applications (Ongoing: Usually 10 working days) Subject: AML Department / KYC Analysts Time limits: Statutory time limits from the Payment Accounts Directive (Directive 2014/92/EU) Specific deadline: The directive (and the respective national laws, such as the ZKG in Germany) stipulates strict deadlines within which a bank must decide on the application for a basic bank account (usually no later than 10 business days after receipt of the complete application). The problem: The "concrete case-by-case assessment" required by the ECJ (obtaining information on why the person is on the OFAC list, reviewing UN/EU convictions, and weighing risk mitigation measures) must be completed within this strict statutory deadline. Any delay beyond this deadline without a valid reason also constitutes a regulatory violation. 4. Review of old cases / "de-risking" clean-ups (Medium-term: 1 to 3 months) Subject: C-Level (Legal Counsel), Compliance Time-limit nature: Limitation periods and periods for damages Specific deadline: Customers who were recently (taking into account national statutes of limitations, often 3 years) summarily rejected or whose basic accounts were terminated due to OFAC sanctions could now assert claims for damages or in-kind benefits (account opening). The C-level executives, together with the legal department, must define a strategy for handling any existing claims or pending dispute resolution proceedings to prevent a wave of litigation. III. Obligations of the groups of people Code of duties Here are the specific, legally and operationally derivable obligations for the three groups of people, divided according to your specifications: 1. Duties for the C-level (Board of Directors, Management, Chief Risk/Legal Officer) Utilize ad-hoc instruction authority (immediate obligation): Issue an immediate instruction to the operational units to suspend blanket, automated rejections ("hard stops") for basic accounts in the event of OFAC hits, with immediate effect. Adaptation of the Risk Appetite Strategy (Risk Appetite Statement): Strategic realignment of the institution in the tension between EU consumer protection law and US secondary sanctions. Management must define which proportionate safeguards (e.g., revenue limits, enhanced monitoring) are financially and operationally feasible. Fulfillment of organizational and supervisory duties (liability of corporate bodies): Ensuring that sufficient personnel and financial resources are provided in the AML and compliance department to handle the complex individual case reviews in a timely manner. Ensure documentation of discharge: Establish an audit-proof escalation process in which final rejection decisions of basic accounts are submitted to the board or a specialized committee for approval in order to minimize personal civil liability (corporate liability). 2. Responsibilities for the Compliance Department (including Legal & Risk Management) Revision of internal policies: Adaptation of the bank's onboarding and sanctions policies. The rigid rule "OFAC listing = automatic rejection reason" must be deleted and replaced by a flexible scoring model. Process-related adjustment of IT screening systems: Instruction of the IT department to redirect automatic system blocks in the event of OFAC hits for basic accounts to a manual review workflow (escalation level). Introduction of a proportionate control matrix: Definition of specific security and monitoring measures for affected customers (e.g., restricting online banking to domestic transactions, stricter transaction limits) to effectively limit the risk of money laundering or terrorist financing. Create a damages and legacy case script: Analyze recently rejected customer cases and prepare legal arguments for subsequent consumer lawsuits or complaints to arbitration boards. 3. Anti-money laundering obligations (AML / KYC teams) Conducting the mandatory case-by-case review: A complete, individual risk assessment for every OFAC match. The analyst must not close the case but must conduct a comprehensive overall review of the individual. Comparison with primary sanctions lists: Mandatory check to see if the applicant has any legally binding convictions or is listed on sanctions lists of the UN, the EU or the respective country of origin (e.g. Federal Gazette in Germany). Compliance with the statutory processing time: Ensuring that the investigations, the gathering of additional information and the final decision are completed within the statutory period for basic accounts (usually a maximum of 10 business days). Audit-proof and qualified documentation: Complete and legally sound written documentation of the risk analysis. If an account is rejected, the system must provide a precise explanation and proof as to why the specific risk of money laundering or terrorist financing could not be controlled even with proportionate countermeasures. IV. Analysis of the problem areas Implementing this ruling places banks in a regulatory minefield. The biggest challenge is that mitigating one risk almost automatically leads to a legal violation on another. Problem areas The following pain points must be considered by the three groups of people – directly linked to the respective liability standards that may apply : 1. Pain Points for the C-Level The “sanctions dilemma” (Catch-22): If the bank opens the account, it faces draconian US secondary sanctions (exclusion from US dollar payments, fines by OFAC). If the bank rejects the customer outright, it is deliberately violating EU law. Liability standard: Civil liability of company officers (e.g., Section 93 of the German Stock Corporation Act (AktG), Section 43 of the German Limited Liability Companies Act (GmbHG)) due to breach of their duty of care . In the worst case, management is personally and fully liable with their private assets if a million-dollar loss (e.g., through US fines or EU penalties) occurs due to faulty risk assessment or organizational negligence. Resource and cost explosion: The requirement for individual case review transforms a previously automated, instantaneous IT process into a complex, manual legal review. This costs time, ties up highly qualified personnel, and massively increases operating expenses . 2. Pain Points for the Compliance Department The balancing act between consumer protection and money laundering prevention: Compliance must reconcile two completely contradictory EU directives: The right to participate in economic life (Payment Accounts Directive) versus the obligation to take firm action in cases of suspicion (Money Laundering Directive). Liability standard: Supervisory fines (e.g., Section 60 of the German Money Laundering Act (GwG) in conjunction with Directive (EU) 2015/849) . Systematic de-risking (blanket rejection) is increasingly considered by national supervisory authorities (such as BaFin or FMA) to be a violation of the acceptance obligation and can be punished with substantial fines against the institution. Finding legal certainty regarding "proportionality": Compliance must define what constitutes a "proportionate safeguard" (e.g., blocking international transfers). Allowing too much freedom risks money laundering; restricting the account too severely leads to customer complaints that it is no longer a genuine basic bank account. 3. Pain Points for Anti-Money Laundering (AML / KYC) The 10-day deadline trap: An analyst often has only 10 business days from receipt of a request (stipulated in national laws on the Payment Accounts Directive, e.g., Section 34 of the Payment Accounts Act in Germany). Within this extremely short timeframe, international research must be conducted, the customer interviewed, and a watertight justification written. This is virtually impossible to achieve in day-to-day operations. Liability standard: Civil law claims for damages by the customer (e.g., Section 50 of the Payment Accounts Act in conjunction with Section 823 of the German Civil Code) . If the bank wrongfully delays or refuses to open a basic bank account, the affected consumer can sue for its opening and claim damages (e.g., for lost business, legal fees). Reversal of the burden of proof and increased documentation requirements: The ECJ demands that the bank prove why it cannot control the risk. AML analysts must produce reports that will withstand judicial review. Liability standard: Criminal liability in cases of negligence (e.g., Section 261 of the German Criminal Code - money laundering) . If the AML officer misjudges the risk in a specific case, opens the account, and the person then uses the account for terrorist financing, the AML management is at risk of imprisonment for negligent money laundering. V. Solutions & Recommendations To escape this regulatory dilemma – the balancing act between US sanctions pressure (OFAC) and EU consumer law – banks must rely on a combination of procedural, technical and legal solutions . Possible solutions Here are the four most promising strategies, divided according to their short- and medium-term feasibility: 1. The process-oriented approach: "Two-pillar model" in onboarding Banks must move away from the binary system ("accept" or "reject") and establish a three-stage process: Pillar 1 – Automated Screening: The IT system verifies the identity. In the event of an OFAC match, there is no automatic termination (hard stop), but rather an automatic redirection to a separate verification loop. Pillar 2 – Standardized case review: A specialized AML/compliance team takes over the case. It reviews the case using a defined matrix: Is this a case of mistaken identity ( false positive )? What specific act is the person accused of by OFAC (e.g., political ties to Iran vs. specific terrorist financing)? Are there EU/UN equivalents or criminal judgments? The escalation step: The final decision regarding a refusal is not made by the analyst, but rather, following the four-eyes principle, passes to the C-level executives or a risk committee. This serves to relieve the personal liability of the company's officers (§ 93 AktG / § 43 GmbHG) through complete documentation of due diligence. 2. The technical approach: "Encapsulated account management" (product-level controls) In its ruling, the ECJ explicitly emphasizes that the limited uses of a basic bank account inherently reduce the risk. Banks can technically restrict the account in such a way that the risk of money laundering is effectively "managed away," while the customer's right to participate in banking activities is preserved. Strict transaction limits: Setting daily or monthly maximum limits for deposits and withdrawals (e.g. a maximum of €2,000 per month). Geographic geofencing: Technical blocking of international transfers. The account only allows domestic transfers (e.g., for rent, utilities, salary) and SEPA direct debits. Transfers to third countries or even the USA are blocked by the system. Ban on cash transactions / checks: Deposits may only be made via traceable transfer (e.g. from a government agency or an employer) to keep the origin of the funds transparent. Real-time monitoring (transaction monitoring): The account will be placed on a "blacklist" for enhanced, AI-powered real-time monitoring. Any unusual transaction will result in immediate temporary suspension. 3. The organizational approach: Deadline management through "pre-sifting" In order to comply with the critical 10-day deadline (e.g. according to § 34 ZKG) , the investigations must be accelerated. Immediate obligation of the customer to cooperate: In the event of an OFAC hit, the applicant is given a standardized questionnaire on day one. They must prove that they are not using funds for sanctioned purposes. If the customer fails to submit the documents on time, the bank can justify the rejection with a breach of the statutory obligation to cooperate (§§ 11, 15 GwG) – an absolutely legitimate reason for rejection within the EU. Task Force "Sanctions Onboarding": Establishment of a small, rotating team of experts that is exclusively responsible for the legal formulation and documentation of basic bank account rejections, so that the reports are legally sound in the event of a lawsuit (§ 50 ZKG). 4. The strategic approach: Safeguarding through regulatory authorities (Safe Harbor) The C-level executives should not place the entire burden of risk on the bank's shoulders. Reporting to the FIU / Supervisory Authority: In unclear borderline cases where a massive OFAC conflict is imminent, the bank should submit a suspicious activity report to the Financial Intelligence Unit (FIU) or seek direct dialogue with the national supervisory authority (e.g. BaFin). Protection against unauthorized disposal: If the supervisory authority or the public prosecutor's office orders measures following a report from the bank, the bank is legally protected. It then acts on state orders, which eliminates the risk of customer claims for damages against the bank. Practical conclusion The best approach lies in method 2 (Encapsulated Account Management) : The customer is opened a basic legal account, but with such strict, automated safeguards that the US authorities (OFAC) see no reason to penalize the bank for facilitating sanctions evasion. This allows the bank to comply with EU law, minimizes the risk of money laundering, and protects C-level executives from personal liability. VI. Summary Conclusion: A Turning Point in Sanctions Compliance Previously: Banks used "de-risking" as a shield. In the event of a US OFAC hit, IT systems immediately and categorically blocked applications to avoid US penalties – European consumer law was therefore often ignored. Now: The ECJ ruling (C-81/24) breaks with this automatic process. From now on, a listing by a third country requires a complex, risk-based case-by-case assessment within strict deadlines. Blanket rejections without proof of uncontrollable money laundering risks are unlawful and establish personal liability for C-level executives. Future: Banks must design hybrid onboarding processes. The solution lies in technically "encapsulated basic accounts" with strict transaction limits and domestic geofencing. This will enable institutions to successfully navigate the legally compliant balancing act between international sanctions pressure and EU law. Author: Emma Collins Emma Collins drives the topics of leadership, governance, and strategic transformation at the S+P Leadership Hub. Her goal: to translate innovative approaches into tangible tools so that leaders remain capable of acting and strategically confident, even in complex scenarios. S+P Fachredaktion VII. List of Sources Court of Justice of the European Union, Press Release No. 84/26 of 11 June 2026: Judgment of the Court in Case C-81/24 | [Jenec]: https://curia.europa.eu , accessed on 11 June 2026.

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