Refusal to open bank accounts for Iranian nationals constitutes discrimination: human rights watchdog

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It constitutes discrimination for banks to refuse a customer the right to open a bank account based solely on their nationality, the National Human Rights Commission of Korea (NHRCK) ruled, Monday.

An Iranian national who has lived in Korea since August 2020 was denied the opportunity to open a bank account at MG Community Credit Cooperatives. Therefore, she has had to rely on her husband's account and debit card for financial transactions.

In response, the woman's husband filed a complaint with the NHRCK, contending that numerous hardships arise in one's life when access to banking services is denied.

This includes difficulties in accessing online documents from public institutions or carrying out essential daily activities, which often require credit information verification that is linked to Korean financial institutions.

The bank cited compliance with the relevant laws and guidelines of the Financial Supervisory Service as the basis for its refusal, stating that refusing to open new accounts for Iranian nationals is the bank’s policy.

The bank explained that its policy to refuse the opening of new bank accounts for Iranian nationals is based on the fact that Iran has been designated as a high-risk country by the Financial Action Task Force since 2011.

However, the NHRCK concluded that the bank's action was a discriminatory practice lacking reasonable justification. The commission deemed it unfair to uniformly reject the opening of bank accounts based solely on nationality without conducting minimum procedures, such as assessing creditworthiness.

The decision also considered that other banks often make individual assessments before deciding whether to engage in business with customers.

Consequently, the NHRCK recommended the Financial Services Commission to revise its relevant regulations. This aims to enable banks to make more case-by-case decisions regarding financial transactions through enhanced customer verification procedures, rather than uniformly refusing potential customers based on nationality.

The NHRCK also advised both the commission and the bank to disseminate the revised guidelines and educate stakeholders on them. Furthermore, it recommended corrective actions to be taken by the bank.