The Government Enlists Banks in its Immigration-Based Policy Drive

This short post reacts to the news today that banks and building societies are being enlisted by the British Government to check the immigration status of millions of people and take the appropriate action – essentially putting banks on the front-line in the push to reduce the levels of people living in this country without the appropriate leave to do so. The obvious question to be raised by this move is whether the banking system is the appropriate vehicle to meet this objective, and what may be the connotations for it doing so.

It was declared in the Autumn (via the Immigration Act 2016) that banks and building societies would be given a list by the anti-fraud organisation Cifas that contained the details of people who are officially liable to be removed or deported from the U.K., or who have absconded from immigration control, with the Home Office stating that the new system would be ‘fair but firm’. The design of the new system would be that banks (and building societies) would have to check almost 70 million accounts against the database on a quarterly basis, and people who are found to be matched to the database would need to have their accounts frozen and their details relayed to the Home Office for further decision. However, at the time, a former Board member of TSB, and a former Home Office employee, raised concern about this, simply stating that ‘this is in the hands of the Home Office and the banks, neither of which are exactly known for flawless execution’. The criticism continued in the ensuing months, with lawyers warning that in almost 10% of cases where an individual had been unable to open a bank account because of their immigration status, that decision had been wrong and, as another lawyer affirmed, there is a real risk that, based upon incorrect figures being included within the database, there was a real risk that innocent people would be left destitute owing the minimal avenues of recourse available; clearly, those who fall into this category will likely not have the legal funds or wherewithal to challenge these decisions in a timely enough manner. Further criticism centred on the continued outsourcing of responsibility by the Conservative Government, with the Liberal Democrat Home Affairs spokesperson suggesting that this move was nothing more than a ‘passing of the buck’. Nonetheless, the plans have developed, and today the regulatory framework that will accompany the roll-out in January was described.

Banks and Building Societies will be tasked with this mammoth undertaking, and overseeing it all will be the Financial Conduct Authority. The initial suggestion by the government were that the institutions will be checking as many as 76 million accounts, with 6000 matches being projected in the first year and then 900 a year in following years, a process which would see fines and penalties appropriated for non-compliance or poor execution. Whilst one law firm discussed today the challenge that would emerge in relation to high net-worth individuals who often have complex citizenship arrangements, fears remain over just how this plan will be executed. However, there are larger issues at hand.

The first of these issues is that for poorer people who may fall into this category, even if incorrectly, there will be very little protection offered. There will be very little legal assistance available to those incorrectly caught by this system, with complaints likely to be resolved in a less than timely manner. Secondly, this system again demonstrates the Government’s commitment to outsourcing key policies to the private sector, with banks being forced into the role of gatekeeper in a new manner; the fundamental relationship that exists between a for-profit organisation and society is being constantly reimagined, with little regards for the mechanics that lay underneath – is it really appropriate to expect a for-profit organisation to devote adequate resources to performing this task, especially when the likelihood is that not doing so and receiving financial penalties will likely be much more profitable then actually allocating the necessary resources; this extra role on top of anti-money laundering tasks mean that it will be more prudent, technically speaking, for banks to effectively blacklist more people than it needs to, rather than taking the chance of falling foul of the regulations. If there is very little recourse available to blacklisted individuals who may be blacklisted incorrectly, then the dynamic that has been put in place in relation to checks and balances, and associated penalties, will need to be thoroughly examined. Ultimately, it is likely that this new policy will cause a lot of upset and, once again, see the public pay the price for the public-private partnership that is being consistently developed.

Keywords – Banks, Immigration, Financial Conduct Authority, politics, public-private partnerships, gatekeepers, @finregmatters