From 1 January 2018, banks and building societies will be required to undertake quarterly immigration status checks on all existing customer current accounts.
The Immigration Act 2014 has been amended by the Immigration Act 2016. The amendments to the 2014 Act come into force on 30 October 2017. There will be a number of additional requirements on banks and building societies, outlined below.
Banks and building societies will be required to carry out a quarterly ‘immigration check’ for existing current accounts operated by a disqualified person. The first immigration check is required to be carried out for the quarter beginning on 1 January 2018.
According to the Financial Conduct Authority, a disqualified person is a person who is in the UK, who does not have the required leave to enter or remain in the UK, and whom the Home Secretary considers should not be permitted to open a current account.
If such an account is identified, the bank or building society must notify the Home Office. The Home Office will then check if the person is a disqualified person and, in certain circumstances, will notify the bank or building society of their duty to close the account as soon as reasonably practicable. The bank or building society is required to inform the Home Office of the resulting action taken through a website operated by the Home Office.
The FCA’s role
The Immigration Act 2014 (Bank Accounts) Regulations currently place a duty on the FCA to monitor and enforce compliance with the existing prohibition. These regulations have been amended to extend the FCA’s duty to monitor and enforce compliance with the new requirements once they come into force.
The FCA says on their website “We are currently consulting on our approach to the amended Immigration Act and regulations, including reporting, monitoring and enforcement”
Following this, the Home Office may then require the bank (or building society) to close any accounts or products operated by or for a person who does not have leave to remain in the UK.
Those subject to the requirements should act now to ensure that they have appropriate systems in place to conduct these checks and also to ensure they have taken sufficient steps to manage the consequences of regulatory or contractual risks that might arise where accounts need to be closed.
To ensure they are complying with the Act, banks and building societies can carry out an immigration ‘status’ check with a specified anti-fraud organisation or data-matching authority (CIFAS).
This can be done before opening a new current account operated by:
• a consumer
• a micro-enterprise, or
• a charity (with an annual income under £1 million)
Where the check identifies that the applicant is a disqualified person, the firm must refuse to open the account.
This prohibition includes:
• opening joint current accounts for any disqualified persons
• opening a current account where the disqualified person is a signatory or is identified as a beneficiary
• adding any disqualified person as a current account holder, signatory or identified beneficiary in relation to an existing current account
Banks and building societies that refuse to open a current account for someone who is disqualified must tell that person the reason for the refusal. This is as long as doing so does not conflict with their duties under other legislation.
The Home Office has produced information, including a particular form of words, for firms to provide to individuals who are refused an account in those circumstances.
The current prohibition does not apply to existing current accounts unless a new account holder, signatory or identified beneficiary is being added.