Strict banking laws in Finland leave refugees without bank accounts and discourage foreign investment

by , under Enrique Tessieri

Stateless refugees cannot still open bank accounts in regions like Etelä-Savo in Eastern Finland, according to Länsi-Savo, a Mikkeli-based daily. Not only are stateless persons affected but different municipalities that want to attract foreign investment. Some small- and medium-sized companies that want to relocate in Finland from Russia have a difficult time opening bank account as well. 

Migrant Tales understands that there is no standard procedure for opening a bank account in Finland for stateless persons, who cannot confirm their original identity. Some branch offices not only permit stateless persons to open bank accounts but have access to online banking.

According to Länsi-Savo, opening a bank account in Mikkeli has become more difficult, if not impossible.

If a stateless person cannot open a bank account, it effectively means that he or she cannot be paid assistance by the state. In order to avoid such a problem, municipalities like Mikkeli cannot accept refugees from Syria, according to a municipal employee who works with refugees.

The most outrageous aspect of this policy is that there aren’t any standard rule but instead allows bank to treat people on a one-to-one basis. Some stateless refugees in cities like Kouvola and Tampere haven’t had problems in opening bank accounts and even getting online banking services.

Last year I encountered this problem head on when I went to Nordea bank in Mikkeli with a stateless person.  After a few questions, the bank employee said that the person needs a valid passport to open an account at that bank. But if on that passport it reads ”his/her identity cannot be confirmed,” the person can never open an account at Nordea.

I asked the Nordea employee what could be done.

“Why don’t you go to OP bank,” she said. “I’ve read in Länsi-Savo [the local paper] that such persons can open accounts at that bank.”

Surprised by what I was hearing, I asked the bank employee if she was serious.

“Why do they [OP bank] have one set of rules and you have another?” I asked. “Don’t you think it is pretty incredible that you are sending a potential client to the competition?”

The bank employee didn’t answer my question.

Let’s say that the person is lucky and is able to open a bank account but cannot get online banking services. That’s how Finns did their banking over two decades ago. They stood in lines and asked the bank teller to pay their bills.

Even in getting banking services, some immigrants are second-class members of this society.

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  1. PS voter

    The most obvious approach to this problem is to report an infringement of section 11 of chapter 11 of the Finnish Penal Code and see which senior banking official wishes to be answerable for this policy.

    Again, you seem to “forget” certain things I have already reminded you before:

    1. The law you are referring to, allows discrimination if there is an acceptable reason for the discrimination.

    2. There are laws that force banks to verify the identity of the customers, in order to prevent money laundering and financing of terrorism (for example: Laki rahanpesun ja terrorismin rahoittamisen estämisestä ja selvittämisestä).

    I would argue that the laws against money laundering give banks an acceptable reason to deny service for a person, who cannot prove reliably his/her identity. And if bank infringes anti-money laundering laws, the consequences for the bank, can be quite heavy. For example, HSBC had to pay 1.9 billion dollars for infringing anti-money laundering laws.

    • Mark

      From what I understand of the EU legislation (Directive 2001/97/EC) that covers this issue of money laundering, the banks are allowed as part of their due diligence to establish the identity of the entity involved and to also establish the purpose and nature of the ‘business relationship’. This involves obtaining supportive evidence, and does not specifically establish what these documents must be, thus giving some freedom to institutions to establish their own practices.

      This Enrique is probably the key reason that different banks are applying different practices. Also, imprisonment and fine are typical penalties attached to these regulations in member states, though I don’t know the specifics of Finland. This may be another reason for the inflexibility of some banking institutions.

      However, in applying those practices, it’s worth exploring the EU Directive in more detail to see exactly who and what this Directive is aimed against:

      The further stipulations of the legislation are particularly informative:

      1) It sets out in part 2 of Article 3 a benchmark requirement on identification also on the transfer of funds of €15 000 or more.
      2) It then goes on to point out that institutions can, where there is doubt about whether the account is being used on their own behalf, can take reasonable measures to ascertain the real identity of those on whom they are acting.
      3) It goes on to state (part 11) that Member States can take measures deemed necessary to establish the identity of persons particularly when not present face-to-face. The Directive specifically mentions the implications for ‘online commerce’ involved in this part.

      So, the issue of money laundering typically involves larger sums of money that would normally be irrelevant to processing social security payments or even salaries. It also establishes that non-face-to-face transactions and those involving individuals working on behalf of other individuals (i.e. lawyers, accountants) as being the key target of the Directive. I.e. stateless persons as understood as ‘refugees’ are nowhere mentioned as a particular ‘target group’ for these money laundering requirements, PS Voter, and of course, why would they be?

      The other key issue here is that this objective of minimising possibilities for money laundering also have to be balanced against the need to avoid financial exclusion. This is where interpretation of these requirements would of course allow individuals whose circumstances make ID incomplete to acquire basic banking services.

      Guidance on this matter for banking institutions in the UK is provided by the Joint Money Laundering Steering Group (JMLSG). It is worth providing the key elements of this guidance in summary:

      Access to basic banking facilities and other financial services is a necessary requirement for most adults. It is important therefore that the socially/financially disadvantaged should not be precluded from opening accounts or obtaining other financial services merely because they do not possess evidence of their identity in circumstances where they cannot reasonably be expected to do so. Internal procedures must allow for such instances and must provide appropriate advice to staff on how identity can be confirmed under these exceptional circumstances and what local checks can be made.

      M3.1.5G states that the exceptions to guard against financial exclusion aim to help relevant firms ensure that where people cannot reasonably be expected to produce detailed evidence of identity, they are not denied access to financial services. Although a relevant firm must always take reasonable steps to check who its client is, relevant firms will sometimes be approached by clients who are at a disadvantage, or who otherwise cannot reasonably be expected to produce detailed evidence that helps to confirm identity. Examples could be where a person does not have a passport or driving licence, or whose name does not appear on utility bills.

      ML 3.1.6G states that where a relevant firm has reasonable grounds to conclude that an individual client is not able to produce the detailed evidence of his or her identity and cannot reasonably be expected to do so, the relevant firm may accept as identification evidence a letter or statement from a person in a position of responsibility who knows the client, that tends to show that the client is who s/he says s/he is, and to confirm his/her permanent address if s/he has one.

      4.110. ML 3.1.7G provides that examples of persons in a position of responsibility who know the client include solicitors, doctors, ministers of religion, teachers, hostel managers and social workers.

      4.111. The list is not exhaustive and other examples might include, for example, district nurses or midwives who have visited the client in their homes, care home managers, prison governors, probation officers, police officers and civil servants, Members of Parliament, members of the Scottish Parliament or the Northern Ireland Assembly, a Justice of the Peace, a local or county councillor, or the staff in the registry of a higher education or further education institution

      I’m sure there should be similar guidance available to Finnish banking institutions from a relevant central government agency dealing with money laundering? If not, then why not? Financial exclusion is not a priority or issue for the Finnish government?

      In the UK, the advice also goes further in stating that a bank branch will typically have a ‘money laundering reporting officer’, whose responsibility it is to oversee these policies at branch level, and that a direct meeting with this individual in problematic cases will more easily lead to a solution, as they can make decisions in regard to ‘non-standard’ cases.

      It should now be quite clear to you PS Voter that this issue of ‘money laundering’ cannot be offered as an excuse for continuing an inflexible practice of financial exclusion!