Banks and building societies face fines and public sanction by the City regulator if they fail to conduct thorough immigration checks on current account holders from January.
From the start of 2018, banks will be required to scrutinise the immigration status of their 76 million current account customers against a government database of individuals without leave to remain in the UK.
The checks must be conducted every quarter starting in January and put the onus on the financial providers to inform the Home Office of any matches.
The process will be regulated by the Financial Conduct Authority, which has powers to fine any firms that fail to comply with rules or issue public sanctions.
The Home Office will tell the banks whether they need to close the accounts or if a freezing order will be sought in the courts.
When the government first revealed the new duties for banks, immigration welfare campaigners warned that the Home Office’s recent record meant it could not be trusted to implement this new system without errors. Migrants with every right to be in Britain were likely to be affected by mistakes in the imposition of the checks, they said.
The rules came into force on 30 October through the Immigration Act 2016 and the first quarterly checks are due for the quarter that begins on 1 January. That legislation amended a 2014 Act, which required banks and building societies to check the immigration status of customers when opening accounts.
When the government assessed the changes in 2015, it assumed that as many as 76 million current accounts would be checked and around 6,000 matches with its database would be expected in the first year. After a year, the number of matches would fall to 900 a year.
Lawyers at Fladgate have issued advice for clients, including high net worth individuals, saying the status of “these individuals can be complex and understanding visa endorsements can be difficult, particularly as immigration law is ever changing”.
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