As part of the Government’s strategy to create a “hostile environment” for “illegal immigrants” in the UK, the Immigration Act 2014 requires banks and building societies to carry out immigration checks before opening new bank accounts and not to open accounts for those persons considered to be “disqualified”.
From 31st of October 2017, in addition to the checks carried out at the time of opening an account, banks and building societies are required to carry out immigration checks on all existing accounts with the objective of identifying which accounts should be closed and, in some circumstances, freeze those accounts preventing the account holder from accessing their funds. From 1st of January 2018, banks will have to carry out immigration checks on a quarterly basis.
The government estimates that the new scheme will identify in the first year an additional 6,000 individuals who have no right to reside in the UK and that this measure will encourage “illegal immigrants” to leave the UK voluntarily or risk losing their savings.
Serious concerns about this new scheme has been expressed. A report published in 2016 by the Chief Inspector of Borders and Immigration identified that banks had made an error in 10% of cases when carrying out immigration checks before opening accounts. If the same happens when the new system is in place, people's accounts could be wrongly closed/frozen which may result in people failing to pay their rent on time or having money to pay for food or transportation, etc. By the time the mistake is corrected a person could lose his/her property and not be able to access to his/her wages.
The Home Office has published some guidance for those who have been refused an account or whose accounts have been closed however there is not an emergency process in place to handle errors and people could wait weeks before the problem is resolved, if it is resolved at all. See guidance below:
If you believe you could be affected by this new scheme or your money has already been frozen or account closed, please do not hesitate to contact us.