While are not aware of any federal or Illinois laws that would expressly prohibit a policy to not open deposit accounts based on the non-resident alien status of a person (provided the denial is based specifically on citizenship or residency status and not on national origin), 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.

Under the Illinois Human Rights Act, banks that operate in Illinois may not deny any of the services they normally offer because of a customer’s national origin, and the Illinois Fairness in Lending Act includes a similar prohibition regarding denying or varying the terms of loans. The Illinois Fairness in Lending Act also prohibits utilizing “lending standards that have no economic basis and which are discriminatory in effect.” Similarly, in the context of extending loans and credit, Regulation B prohibits considering national origin in any aspect of a credit transaction. Thus, your policy of denying deposit products due to non-resident alien status is not prohibited, but you may have to show that the denials are not in fact motivated by national origin discrimination.

Additionally, while 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,” this 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.

Regulation B’s official commentary also states that when evaluating repayment rights and remedies when deciding whether to extend credit, creditors “may consider immigration status and differentiate, for example, between a noncitizen who is a long-time resident with permanent resident status and a noncitizen who is temporarily in this country on a student visa.” Thus, under Regulation B, creditors may consider the way in which immigration and residency status affect their repayment rights and remedies. Again, whether a blanket policy of denying all accounts to non-resident aliens would be considered nondiscriminatory by a court or regulator would ultimately depend on the specific underlying facts.

Consequently, while a policy of not offering deposit accounts to non-resident aliens does not seem to be expressly prohibited under anti-discrimination laws, we believe that such a policy would have a reasonably high likelihood of being closely scrutinized by the courts and regulators. We recommend that you consult with your bank counsel before drafting such a policy.

For resources related to our guidance, please see:

• 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 Fairness in Lending Act, 815 ILCS 120/3(c-5) (“No financial institution, in connection with or in contemplation of any loan to any person, may: . . . Deny or vary the terms of a loan on the basis of the borrower's race, gender, disability, or national origin”)

• Illinois Fairness in Lending Act, 815 ILCS 120/3(d) (“No financial institution, in connection with or in contemplation of any loan to any person, may: . . . Utilize lending standards that have no economic basis and which are discriminatory in effect.”)

• Regulation B, 12 CFR 1002.6(b)(9) (“Except as otherwise permitted or required by law, a creditor shall not consider race, color, religion, national origin, or sex (or an applicant’s or other person’s decision not to provide the information) in any aspect of a credit transaction.”)

• 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.)

• Regulation B, 12 CFR 1002.6(b)(7) (“A creditor may consider the applicant’s immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment.”)

• Regulation B, Official Interpretations, Paragraph 6(b)(7), Comment 1 (“The applicant’s immigration status and ties to the community (such as employment and continued residence in the area) could have a bearing on a creditor’s ability to obtain repayment. Accordingly, the creditor may consider immigration status and differentiate, for example, between a noncitizen who is a long-time resident with permanent resident status and a noncitizen who is temporarily in this country on a student visa.”)

• Regulation B, Official Interpretations, 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.”)