New immigration rules will force UK banks to search bank accounts for illegal migrants


Author: Sarah Gogan


Since the introduction of the Immigration Act 2014, banks and building societies have been prohibited from opening current accounts for individuals who are in the UK illegally. The Immigration Act 2016 goes one step further, with the introduction of multiple measures to prevent illegal migrants from continuing to operate existing current accounts. The Act gives the important responsibility of identifying these migrants to banks and building societies, which must, upon establishing that a client is an illegal migrant, contact the Home Office which will take further action.

These developments have been introduced with the intention of making it harder to live a settled life unlawfully in the UK and to incentivise voluntary departure from the UK.

New responsibilities

Under the Immigration Act 2016, banks and building societies will be required to regularly check the immigration status of its current account holders. Notably, this must be done for all current accounts, even those that were opened before the 2014 Act prohibition came into force.

It will be the responsibility of the bank or building society to make arrangements with specified anti-fraud organisations or specified data-matching authorities for the purpose of carrying out the immigration checks and the bank or building society will be responsible for paying the costs for conducting these checks.

The immigration checks need to be carried out each successive quarter of each year, beginning with the quarter commencing on 1 January 2018.

Where the bank or building society believes that a current account is being operated by an illegal migrant, it is the duty of the bank or building society to report this to the Home Office and take further action against the illegal migrants consistent with Home Office communications.

Home Office action

The Home Office will run its own checks to confirm that the current account holder is indeed in the UK unlawfully. The Home Office will then have the power to:

  • require the bank or building society to close the account as soon as reasonably practicable; or
  • apply to the courts for a freezing order in respect of one or more of the accounts operated by the confirmed illegal migrant.

In the majority of cases, the first option will be exercised so as to disrupt the illegal migrant’s ability to remain in the UK and to encourage them to depart the UK voluntarily.

The use of the second option will be focused on difficult cases where there is little cooperation between the illegal migrant and the authorities and where it is necessary to leverage satisfactory cooperation.

Effects of the Act

The new requirements of the Act will be supervised by the Financial Conduct Authority (FCA).

As long as the bank or building society conducts the checks as required by the 2016 Act, taking all reasonable steps to check the immigration status of existing clients, there will be no negative repercussions for the banks. However, there are widespread concerns that the Home Office’s records are not always accurate and migrants with every right to be in the UK may be affected by these errors.

A large number of High Net Worth foreign individuals travel to the UK regularly or reside here on a more long term or permanent basis. The immigration status of many of these individuals can be complex and understanding visa endorsements can be difficult, particularly as immigration law is ever changing.

We are advising any clients who might be affected by these new measures to keep their bankers updated in respect of their UK immigration status.  In addition, if there are any changes to their UK visa status (including an extension or renewal of their immigration status), we are also encouraging our clients to ensure that their private banker or relationship manager has sight of their original passport, visa or biometric residence permit.  If either our clients or the relevant financial institution has any concerns about the interpretation of a visa status, we are able to assist in providing advice and/or giving a legal opinion.

Fladgate continues to monitor the impact of the 2016 Act and will keep you informed of any further developments.  If you require specific advice on how your particular bank will be affected, our dedicated immigration team is well-placed to assist.

Sarah Gogan, Partner, Fladgate LLP (sgogan@fladgate.com)

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