Can a bank have a policy not to open accounts for non-U.S. citizens, even if they have documentation establishing their legal right to work in this country?

While we are not aware of any federal or Illinois law that expressly prohibits a policy to not open deposit accounts based on the non-citizenship status of a person, some courts or regulators still could consider such a policy to constitute unlawful discrimination.

The federal Civil Rights Act states that “all persons within the jurisdiction of the United States shall have the same right in every state to make and enforce contracts . . . as is enjoyed by white citizens.” We are not aware of any courts that have applied this provision in the context of denying bank accounts to non-citizens, but we do note that this provision has been applied in other instances of private contracting. For example, one federal appellate court permitted a resident alien to sue an insurance company for refusing to enter into a homeowners’ insurance contract based on the applicant’s citizenship status.

In the context of lending, state and federal law prohibit discrimination on the basis of national origin. The official commentary to Regulation B clarifies that denying credit based on a person’s citizenship status “is not per se discrimination based on national origin.” However, that simply means that denying credit based on citizenship is not automatically discriminatory. The specific facts regarding each policy or transaction could lead a court or regulator to conclude otherwise.

In sum, while we do not believe that a policy to not offer accounts to non-citizens is expressly prohibited under anti-discrimination laws, we would caution that such a policy has a reasonably high likelihood of being closely scrutinized by the courts and regulators. Consequently, we recommend that you consult with your bank counsel before drafting such a policy.

For resources related to our guidance, please see:

42 USC 1981(a) (“All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts . . . as is enjoyed by white citizens. . .”)

Duane v. GEICO, 37 F.3d 1036, 1043 (4th Cir. 1994) (Concludes “that section 1981 prohibits private discrimination against aliens. . .” and permits a resident alien to sue insurance company for refusing to sell him homeowner’s insurance based on his citizenship status.)

Illinois Human Rights Act, 775 ILCS 5/4-102 (“It shall be a civil rights violation for any financial institution, on the grounds of unlawful discrimination, to: . . . Deny any person any of the services normally offered by such an institution.”)

Illinois Human Rights Act, 775 ILCS 5/1-103(Q) (“‘Unlawful discrimination’ means discrimination against a person because of his or her race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service as those terms are defined in this Section.”)

Illinois Human Rights Act, 775 ILCS 5/1-103(K) (“‘National origin’ means the place in which a person or one of his or her ancestors was born.”)

Regulation B, Official Interpretations, 12 CFR 1002 Paragraph 6(b)(7), Comment 2 (“A denial of credit on the ground that an applicant is not a United States citizen is not per se discrimination based on national origin.”)