On 29 April 2020, the Office of the Ombudsman of the Republic of Latvia submitted a query to the European Ombudsman regarding the right to access basic banking services, such as opening a basic bank account and accessing payment facilities; in a scenario where an individual is not in compliance with the provisions of the EU Anti-Money Laundering Directive ("AMLD") and whether they may be offered alternative options to undertake essential transactions.
Under Recital 47 of the Payment Accounts Directive ("PAD"): "Credit institutions should refuse to open or should terminate a contract for a payment account with basic features only in specific circumstances such as non-compliance with the legislation on money laundering and terrorist financing or on the prevention and investigation of crimes." Furthermore, Article 1(7) of the PAD states that the opening and use of a payment account with basic features pursuant to the PAD shall be in conformity with the AMLD.
The Latvian Ombudsman relied on article 14(4) which imposes an obligation on obliged entities which are unable to comply with the customer due diligence requirements as laid out under article 13(1) to refrain from carrying out any transactions with such customer and to terminate the business relationship. The European Ombudsman then asked the European Commission to elaborate on:
- How Recital 47 and Article 1(7) of the PAD should be interpreted, in conjunction with Article 14(4) of the AMLD?
- Whether banks are obliged to refuse to open accounts with basic features on the basis of non-compliance with the AMLD, and if so, based on which provisions?
- Possible alternative mechanisms that would allow consumers, who cannot open a bank account with basic features due to non-compliance with the AMLD, to undertake essential payment transactions.
The European Commission delivered its opinion on the 20 July 2020 where it declared that there was no contradiction between Recital 47 and Article 1(7) of the PAD. The Commission held that (i) both Recital 47 and Article 1(7) clearly provide that no provisions in the PAD can infringe upon the provisions found in the AMLD. The Commission further explained that an obliged entity has to refrain from establishing a business relationship when it is unable to comply with the customer due diligence requirements. Therefore, Recital 47 of the PAD merely clarifies the limited scope, under the rules set out by the AMLD, under which a refusal can be made to open a bank account with basic features.
With reference to any alternative mechanisms that would allow consumers, who cannot open a bank account with basic features due to non-compliance with the AMLD, to undertake essential payment transactions; the Commission replied that it is not aware of any EU legal mechanism that would allow consumers to do so. The Commission also referred to the opinion EBA-Op-2016-07, where this issue was also brought up.
In its reply, the European Commission also considered whether any measures were needed to be taken amidst the ongoing reviews to both the Payment Accounts Directive and the Anti-Money Laundering Directive.
On 23 July 2020, the Latvian Ombudsman accepted the European Commission's reply, and the European Ombudsman's Office thus decided that the query was successfully completed.
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