Equality watchdog suggests foreigners discriminated by Maltese banks

A standard practice by major financial and telecommunication service providers of asking non-Maltese or non-EU citizens to provide specific identification before opening client accounts has attracted the attention of Malta's equality watchdog.

A National Commission for the Promotion of Equality study into racial discrimination said 40% of interviewed people hailing from an ethnic minority reported discrimination when provided goods and services by the private sector.

"Maltese banks appear to have a procedure requiring people of minority ethnic origin, or possibly all non-Maltese people to produce a letter from a lawyer before they can open an account," the NCPE report claimed.

The practice appears pretty standard across most banks and telecommunications firms, which, to go by the European Commission's views of the practice, is essential to safeguard companies' due diligence requirements.

The telecommunications firm GO plc said its current policy differentiates between EU citizens and non-EU citizens, but not between nationals and non-nationals; and rather than a legal letter, the company demands a monetary deposit.

"The policy does not require non-EU citizens to produce a letter from a lawyer as a reference to obtain a service from GO but it does require non-EU citizens to pay a deposit, in addition to the payment methodology opted by the customer, which should be payment by credit card unless otherwise authorised."

On its part, Melita did not specify whether it levies some form of deposit, but its spokesperson said it does not require any legal letter from non-nationals to open accounts.

Banks however were more likely to demand additional information, perhaps as expected, from non-nationals opening deposit accounts.

HSBC Malta said its account opening procedures do not entail asking for a legal letter for non-Maltese residents, but non-residents or foreign nationals do require a banker's reference or letter of introduction. The bank said this was in line with "existing banking procedures".

APS, on its part, said that it does request higher identification requirements when dealing with non-residents.

The bank points out that the issue had already been the subject of a European parliamentary question to EU Commissioner Viviane Reding, on the specific subject of whether such practices were discriminatory towards non-Maltese, EU citizens.

In her reply, Reding said that as far as personal banking was concerned, all banks had the commercial freedom to decide to whom they offer their services and under which conditions.

As Bank of Valletta told this newspaper, its procedures for identification were based on "objective considerations" in accordance with money laundering rules, something Reding points out in her reply.

"Banks are required to apply a series of customer due diligence rules on identification of the customer and verification of identity on the basis of documents, data or information obtained from a reliable and independent source.

"They are also required to identify the purpose and intended nature of the business relationship. As a result, banks are likely to have higher requirements in relation to identification of customers who are not residents or have been shortly residing in a given member state, as this situation may present a potentially higher risk of money laundering or fraud."