Asylum seekers at risk of financial exclusion, EBA warns

The European Banking Authority (EBA) has called on Europe's competent authorities to ensure asylum seekers are not excluded from financial services, arguing that some countries had made more progress than others.

Regulations on anti-money laundering and countering-terrorist financing (AML/CFT) might prevent asylum seekers from accessing basic financial services, the EBA said, in an official opinion published on April 12.

"Providing asylum seekers with access to at least basic financial products and services" was not only "a prerequisite for their participation in modern economic and social life", the EBA argued, it was also "central to the fight" against money laundering and terrorist financing. Failing to ensure financial access might drive refugees to use "underground" financiers away from effective controls, the EBA argued.

The EBA welcomed the effort that competent authorities of "some EU member states" had made to "clarify" how institutions could provide asylum seekers with financial access. It called on others to "consider taking similar steps".

One million asylum seekers had entered Europe in 2015, the EBA noted. Many were from countries regarded as being at "higher risk" of involvement in money laundering and terrorist financing, which was taking place on a large scale. This combination had created "unique compliance challenges" for financial institutions, the EBA said.

European financial institutions had to carry out customer due diligence (CDD) on people wishing to use their services, it added. This would often be difficult with asylum seekers, who might legitimately be unable to provide verifiable identity documents.

The EBA called on financial regulators to work closely with other national authorities to ensure identity documents issued to asylum seekers by EU member states were "likely to satisfy the verification requirements" for financial institutions' customers. Currently, the EBA said, such documents "can differ significantly even within one member state".

Competent authorities should monitor institutions, the EBA said, to ensure they held up-to-date CDD information on asylum seekers, and that there was nothing unusual about their transactions.

Authorities could also limit money laundering and terrorist financing risks by putting certain restrictions on asylum seekers, the EBA said. If permitted by national legislation, they could put limits on the size and direction of financial transfers, forbid credit and overdraft facilities, impose monthly turnover limits and prohibit cash withdrawals from developing countries.