Schedule 7 of the Immigration Act 2016 (‘the 2016 Act’) will soon be in force. It requires banks and building societies (‘banks’) to carry out additional checks regarding the immigration status of account holders. Since 12 December 2014, under Section 40 of the Immigration Act 2014 (‘the 2014 Act’), banks may not open a ‘current account’ for a ‘disqualified person’. Under the 2016 Act, banks will also need to carry out quarterly checks to identify whether an existing account holder has become a ‘disqualified person’.
A ‘disqualified person’ is a person residing in the UK who does not have permission to be here (for example, overstayers, failed applicants, absconders etc). To identify whether someone is a disqualified person, banks must complete checks using the Credit Industry Fraud Avoidance System (‘CIFAS’).
If the CIFAS check reveals that the individual is a disqualified person, then the bank must inform the Home Office. In the case of an application for a new account, the account cannot be opened. For existing account holders, the Home Office may require that the account is frozen or closed.
For the purposes of both the 2016 Act and the 2014 Act, ‘account’ is likely to include joint accounts, credit card accounts, savings accounts, loans, mortgages and investment products. Business accounts are excluded.
These changes will come into effect on 30 October 2017. The first quarterly check must be carried out between 1 January 2018 and 31 March 2018.
Breach of the obligations may result in fines, restrictions on deposit-taking and/or criminal sanctions.
An estimated 70 million accounts will be checked. The Home Office is hopeful that during the first year, 6,000 disqualified persons will be revealed.
Banks should implement compliance procedures, including:
- Notifying customers that they are using their personal information to carry out immigration checks;
- Appointing staff to deal specifically with this issue; and
- Keeping records for at least five years.
We would be delighted to hear from you if you would like further guidance.