Working holiday visa holders have to jump through hoops to get a bank account because of anti-money laundering provisions which even the Reserve Bank say aren't working.
Anthony and Laurine are a young French couple; back home he’s an engineer, she’s a social worker, but they arrived in New Zealand on working holiday visas, ready to head to the jobs our Government told them they were desperately needed for – on farms, in cafés, in tourist centres.
To get work they first needed a bank account. Simple, right, to open a bank account?
Not in New Zealand in 2023, not if you don’t have a fixed address – for example, if you are staying in a backpackers or a temporary Airbnb. God forbid if you’ve bought a camper van to live in and are heading down country.
“We asked at a few banks in Queen Street, but they wanted proof of address before we could open an account, and they wouldn’t accept a hostel address,” Anthony says. “We have friends who say it was easier last year, but banks have tightened up recently.”
It’s not just Anthony and Laurine. Over the past few months, backpacker forums on Facebook have featured numerous posts from newly-arrived visa holders asking for the latest intel on getting a bank account, Anthony says.
“Everyone’s asking ‘Where should I go, which is the best bank at the moment?’”
The Government says we need more backpackers. When, in April, Immigration Minister Michael Wood announced changes to working holiday visa rules to attract more visitors, his press release was headlined: 'Government delivers massive boost to working holiday workforce'.
“The Government recognises the crucial role working holiday visas play in the New Zealand economy,” Wood said. “We are doing everything we can to make New Zealand an attractive place to visit and work in an internationally competitive labour market.”
Actually, there is one thing the Government could do, but it’s got nothing to do with immigration. It’s about speeding up reform of money laundering laws.
What’s happening to Laurine, Anthony and hundreds of other working holiday visa holders is they are being caught by anti-money laundering regulations. Set up in 2009 to stop criminals, they are actually hitting not only backpackers, but other groups without stable accommodation – people who are homeless, moving from couch to couch, or recently out of prison.
It’s about the unintended consequences of trying to do the right thing.
Banks say their hands are tied.
“Proof of address is a requirement of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009,” a BNZ spokesperson told Newsroom.
“We appreciate it may be challenging for working holiday visa holders who have recently arrived in New Zealand to provide proof of address, but all banks in New Zealand must comply with the law and obtain and verify this information.
“Where banks have some discretion is in the type of proof required. For example, for seasonal worker requests, BNZ may accept a letter from an employer as proof of address and customers who are living in temporary accommodation have the option of presenting a letter from their accommodation provider.”
It’s a similar story from Kiwibank, which confirms the criteria are tougher this year.
“Until late 2022, we did accept campground or hostel address verification,” says external communications manager Leah Chamberlin-Gunn. However, we made a risk-based decision we would no longer accept this, and we also noticed that fraudulent documents were being used.
“We do our best to balance anti-money laundering regulations and our own internal risk appetite, while making it possible for Working Holiday Visa holders to gain access to the New Zealand banking system.”
ANZ Bank told Newsroom it will accept hostel addresses, a stance confirmed on its website. However backpackers Newsroom spoke to said their experience with ANZ was similar to that with other banks.
"Increasingly problematic"
Ironically, it appears the address verification rules aren’t either helpful, or necessary. Many other jurisdictions don’t have them, and no one's under any illusion they would stop a determined money launderer. But there’s no timeframe for much-needed change.
Submissions for a wider review of the 2009 anti-money legislation began in 2021, and showed almost unanimous agreement that address verification should go.
The Financial Services Federation’s comments reflected the views of a range of other submitters, from banks and law firms, to financial mentoring charity FinCap, the Public Trust and even the Reserve Bank.
“There are a variety of social factors that have resulted in the verification of addresses becoming increasingly problematic,” the FSF submission says. “These include more transient societies, the move for people to correspond by social media or email rather than via a postal address, large whānau-style living arrangements that result in only one or two members of the household being named on any form of acceptable utility bill so other family members are unable to verify their address.
“The requirement for verification of address as part of the identification process is particularly problematic for those customers whose circumstances make them more vulnerable such as the very young, the elderly, homeless people, people recently released from prison etc.”
In some cases, people can’t receive the benefits they are entitled to because they can’t set up the bank account that’s needed for benefits to be paid into, the FSF says.
Meanwhile, “The FSF also notes that it is not difficult for those people who wish to act fraudulently or dishonestly to provide a ‘verification’ of an address, so the requirement provides no benefit towards preventing money laundering or terrorism financing.”
In its summary, the Ministry of Justice noted: “Almost all submitters supported removing or reducing address verification requirements. Many questioned its usefulness for combatting money laundering or terrorism financing and others highlighted the disproportionate compliance cost.”
The Reserve Bank tells Newsroom change is coming.
“The Statutory Review recommended exempting the address verification requirement for all customers, beneficial owners and persons acting on behalf of a customer other than when enhanced customer due diligence is required,” an RBNZ spokesperson told Newsroom.
“Cabinet has agreed to progress this, and following consultation with industry, the Minister of Justice is actively considering the best method and form to do so.”
So far, there’s no timeframe for the change, however.
“The work is ongoing,” says Andrew Hill, criminal justice policy manager at the Ministry of Justice.
Work towards implementing the recommendations is happening in three phases, Hill says: an early regulatory package which is expected to be issued July 2023, and a further regulatory and legislative package once the proposals within these have been consulted on and further developed.
But he can’t say whether address verification will be part of the early package.
"Just don't give up. I heard many people having issues for the address, but just try again and again in different branches. They all have different requirements. It's crazy!" Andrada, working holiday visa holder
Meanwhile, working holiday visa holders are left jumping through hoops.
Anthony and Laurine eventually found a bank on Dominion Road in Auckland willing to let them open an account with a backpacker address, but it took 10 days, a lot of leg-work, and asking other working holiday visa holders for leads. Mostly it just seemed so random, Anthony says.
On the forums, backpackers trade advice: use a Wise account; sign up with a telco and use the address; see whether a bank will accept your address back home – that sometimes works.
In Dunedin, Liz from the US was told any “real” address in New Zealand would do. She eventually called on a random family friend who lives in Auckland and was happy to write her a ‘proof of address’ letter from there. It did the trick - she got the bank account she needed for the job she’d already lined up.
But if she hadn’t known anyone in New Zealand, Liz isn’t sure what she would have done. And she says that could be problematic for some working holiday visa holders.
“If you arrive intending to fund your travel with work, and you can’t get a bank account, it could get really dicey. You might come with the idea that you can easily get a job, or even have a job, and then find getting a bank account is a barrier that could derail everything.”
"Just don't give up," says working holiday visa holder Andrada. "I heard many people having issues for the address, but just try again and again in different branches. They all have different requirements.
"It is crazy."
