OPINION: Three things Swedish banks could do to stop denying foreigners accounts

Many people in Sweden are denied bank accounts or have their bank accounts closed. Often this is something that happens to people who lack the traditional Swedish ID documents, or people who come from countries outside the Europe and who are in Sweden to work or to study.

Not getting an account is a big problem for those who are affected. Without a bank account, a lot of things in everyday life cease to function.

A bank account is a prerequisite for receiving your salary and being able to pay your bills. Being denied access to an account or having it terminated brings big problems and can lead to financial exclusion for those affected. We also see that companies suffer major problems carrying out their businesses as a result of losing access to their accounts. 

At the same time, banks play a key role in preventing criminals exploiting the financial system for their benefit. That they take this responsibility is key to consumer protection and it is important that the public has a high trust in financial services.

But casually excluding certain customer groups from having a bank account is not the right way to do this. Indeed, doing so can even increase the risk of money laundering by forcing people to use other payment routes where the controls and risk awareness are worse.

Instead, banks should look carefully at whether there are other steps they could take. We would like to see banks try to find ways of combating money laundering and other criminal activity which do not involve excluding individuals from their bank accounts.

This should be considered every time a bank is refusing to open or considering closing an account. We believe several measures are necessary to prevent financial exclusion from further increasing.

We would like banks to always:

Assess each case individually 

There is a risk that banks make decisions about whole groups of people instead of making individual decisions about which payment services a particular individual can have and which are offered by the bank. This risks making it unnecessarily difficult or even impossible for some people to access a payment account.

Find other risk mitigation measures

Banks should always check whether there are alternatives to excluding a person from having an account. For example, banks could tighten the monitoring of the customer's transactions to be able to stop suspicious activity and quickly detect irregularities.

Offer low-risk accounts instead 

In some cases, where banks have identifed a higher risk, people should be offered limited accounts. These could be accounts where, for example, the customer cannot carry out certain transactions that might involve a risk of money laundering, for example through limiting the maximum size of a transfer or putting restrictions on which services can be accessed.

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The Financial Supervisory Authority will continue working to promote financial inclusion and to protect every person in Sweden's right to have a bank account. We will do this, for example, through the new requirement on banks to report statistics on account closures and refusals, which will come into effect next year.

These statistics will give us the opportunity to conduct more active supervision.

If we do not find that banks' handling of these issues is changing for the better, we are prepared to take action. This could involve new guidance or pushing for an clearer regulatory framework. This could even involve making interventions if we deem this necessary.

Without a payment account, it is difficult to make everyday life hang together. Banks have a great responsibility not to make this more difficult than necessary.

This article is a translation of an opinion piece published in the Svenska Dagbladet newspaper on Monday.