B. The "Customer"

AuthorM.H. Ogilvie
ProfessionLSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
Pages176-178

Page 176

Any person, including a corporate person in law, has the potential to be a "customer"2of a bank, and the absence of legal capacity to enter into contracts generally is not a bar to entering into an account contract with a bank. Section 437(1) of the Bank Act provides that a bank may without the intervention of any other person accept a deposit from any person whether or not qualified by law to enter into contracts. This provision is widely regarded as relating primarily to children below the age of legal majority, but the banking practice of requiring a parent to be a joint account holder with a child is contemplated within the permissive use of the word "may" in the section. In fact, it remains the case that banks are free in law to decide whether or not to enter into an account agreement with anyone so applying; to determine whether or not they will provide a particular service to anyone with whom they have an account agreement; and to provide a service only on the payment of some remuneration for that service.

The fundamental principle of the common law that parties are free to decide with whom they enter into contracts remains in the banking context, notwithstanding the 2001 amendments to the Bank Act requiring banks to open retail accounts for certain prescribed persons, since

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the regulations continue to permit banks to exercise their discretion in this regard. The Bank Act states that a bank shall open a retail deposit account for certain individuals3and shall not require either an initial minimum deposit or the maintenance of a minimum balance.4

In addition, low fee retail deposit accounts are authorized for such persons.5

These amendments were intended to ensure that low-income individuals would have access to banking services in Canada.

Although any person, regardless of age or financial value, may be permitted to enter into an account agreement with a bank, banks are also now required to know their customers for certain statutory purposes, in particular, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.6

The guidelines for implementing the provisions of this legislation place a duty on all financial institutions to ensure that they get and maintain accurate information records about their customers and, when required, to disclose such information to various state authorities on request.7

At common law, the definition of who may be a customer of a bank has also arisen in...

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