Denying Bank Accounts Based on Nationality Deemed Discriminatory by National Human Rights Commission of Korea
The National Human Rights Commission of Korea has ruled that refusing someone a bank account solely based on their nationality is discriminatory.
On March 20, 2024, the National Human Rights Commission of Korea (NHRCK) made the following recommendations to the Commissioner of the Financial Intellignece Unit of the Financial Services Commission, the Central Chairman of the A Bank, and the Chairman of the A Bank (hereinafter referred to as the Respondent).
The NHRCK recommended that the Commissioner of the Financial Intellignece Unit of the Financial Intelligence Commission amend Article 43, paragraph 2 of the Business Regulations on Anti-Money Laundering and Anti-Terrorism Financing (hereinafter referred to as the Regulation) to provide that financial institutions should not uniformly deny financial services to customers on the basis that they are nationals of high -risk countries, but should individually conduct customer verification procedures for customers seeking financial services to determine whether they are eligible for financial services, and inform and educate financial institutions about the amendment. The NHRCK also recommended that the Central Chairman and the Respondent should not interpret Article 43(2)(3) of the Regulation and the Anti-Money Laundering Business Method to mean that they should refuse to provide financial services to customers solely because they are nationals of certain countries, and should conduct enhanced customer verification procedures for each customer seeking financial services. It also recommended that each branch should be informed, trained, counseled and monitored.
The complainant filed a complaint with the NHRCK alleging that the spouse applied to open an account at Branch A of Bank A but was denied an account because of the spouse's nationality, which constituted discrimination on the basis of nationality.
The respondent replied that according to the regulation of the Financial Information Analysis Institute, the bank has a policy of refusing to open new accounts for nationals of high-risk countries designated by the Financial Action Task Force (FATF).
The NHRCK Committee on Discrimination Remady concluded that the complainant's refusal to open an account solely on the basis of nationality was discriminatory without reasonable cause, because the victim would be disadvantaged in many areas of life if he or she were unable to open an account, the public interest role assigned to banks allows for greater restrictions on their freedom of management, and the fact that other financial institutions often open new accounts for nationals of high-risk countries, and the fact that other financial institutions often decide whether to carry out transactions after an individual verification makes it reasonable for them to carry out a minimum number of procedures, such as verifying the applicant's credit and security, before deciding whether or not to proceed with the transaction.
This decision means that it is an unreasonable discriminatory practice to deny financial services solely on the basis of nationality, even though today's financial services are fundamental to all areas of citizens' lives, including the economy, transportation, healthcare and employment, and access to them is closely linked to the guarantee of fundamental rights.
