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A law designed to stop money laundering is having the unintended consequence of preventing some vulnerable Kiwis from being able to open a bank account, Westpac New Zealand boss Catherine McGrath says.
And she wants the Government and regulators to do more to make it easier for banks to offer accounts to those people.
“We think there is more that we can do about being a bit more flexible with our processes within the current regulations, but we also think there’s a role for both regulators and Government.
“The rules are there for a really good reason, but they are having unintended consequences on some of the most vulnerable New Zealanders.”
Westpac has today released a report on access to banking, highlighting the barriers that stop some Kiwis from being able to set up a bank account.
Rough sleepers, youths without family support, prisoners coming out of jail, refugees and sex workers are among those less likely to have a bank account, according to social agencies interviewed for the research.
McGrath said for most people it was unimaginable to operate in today’s world without a bank account.
“We take it for granted that we can get payments – we can get paid, we can support our families through paying the mortgage and paying the bills.”
But there were tens of thousands who struggled, and they tended to be the most vulnerable, so it exacerbated their difficulties.
“The research shows not having a bank account has a profound impact – it makes it hard to pay for a place to live, keep a job and pay bills. It also leaves people open to exploitation and disconnected from their community. This can have a big impact on people’s welfare.”
McGrath said the bank became more aware of the issue after it started working with the Department of Corrections to help people leaving prison to get a bank account.
“Then, as we understood the issues there, we started to look at what are some other groups and then we started working with Oranga Tamariki.”
McGrath said laws to combat money laundering were a challenge in such cases. Banks were required to ask for ID and address verification, which vulnerable people often did not have.
“We need to know who our customers are, so there will always be identification requirements, but there is definitely scope to make those processes more welcoming, flexible and accessible.”
The bank had set up a centralised extra care team to help people struggling to open an account.
“Because what’s difficult is if you are sitting in a branch somewhere you may only see one of these in a year. So your ability to navigate your way through it I think is really difficult.”
It had also given additional training to branch staff.
Homeless people can find it difficult to set up a bank account. Photo / 123rf
Asked if having an account was a human right, McGrath said that was a conversation best directed to those who made laws.
“At Westpac, as far as possible we would like to open bank accounts for all New Zealanders. The caveat is I would like our teams to always feel safe.
“Making sure that it operates within those realms is the way we try and think about it, because I do think it is really hard to fully participate in society if you don’t have a bank account.”
