Earlier this month, the CJEU delivered a judgment in C-81/24 LH v OTP Banka d.d., the case known as 'Jenec'. This is the first case on the interpretation of Directive 2014/92/EU on access to payment accounts with basic features (PAD), and in particular Article 16, which provides a right of access to basic bank accounts.
The question referred to the CJEU by the Slovenian Okrajno sodišče v Mariboru asked whether Article 16(4) of PAD read in the light of Directive 2015/849 or the Fourth Anti-Money Launderng Directive (4AMLD), may be interpreted as authorising Member States to require banks to reject a consumer’s application to open a payment account with basic features on the ground that he or she is included in a list of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury.
This essentially required tackling the question of how the right to access payment accounts with basic features or basic bank accounts can be reconciled with the bank's duty to comply with anti-money laundering rules, and weighing two important policy goals, the financial inclusion of consumers, who have no other payment account, which is a cornerstone of financial inclusion, and the aim to prevent the use of the EU financial system for the purposes of money laundering and terrorist financing.
We have earlier reported on Advocate General Richard de la Tour's Opinion in the case. The AG was of the opinion that Article 16(4) of PAD must be interpreted as meaning that a banking institution may not refuse to open a payment account with basic features solely on the ground that the name of the consumer applying to open such an account is on the OFAC, unless, the applicable national law expressly provides for such a more stringent approach, given the minimum nature of the directives.
The CJEU acknowledged that the right of the consumer to open a basic bank account is dependent on compliance with the provisions relating to the prevention of money laundering and the countering of terrorist financing, and therefore that the AML rules must be considered when assessing whether or not the bank can refuse to open a basic bank account (para. 39). It has also established that 4AMLD does not provide that inclusion on an OFAC list or on any other list of that type drawn up by a third country automatically prohibits a bank from establishing a bank-customer relationship (para 45). The CJEU noted that, instead of a blanket exemption, 4AMLD adopts a risk-based approach and requires banks to conduct customer due diligence. Inclusion of a person on an OFAC list or on any other list of that type may constitute a relevant risk factor that the bank is required to take into account in its individual assessment of the risk of AML (para 51). However, it cannot be the only reason for the account's refusal.
The CJEU concluded that PAD must be interpreted as not permitting Member States to require banks to refuse to open a basic bank account for a consumer for the sole reason that that consumer is included on a list of persons subject to restrictive measures imposed by a third country, unless the bank has carried out an individual assessment of the risk of money laundering or terrorist financing connected with the intended business relationship.
This is an important judgment that strengthens the consumers’ right of access to basic bank accounts. Banks may be overly cautious in complying with AML rules for fear of very stringent sanctions, prioritising AML compliance. It is therefore important to clarify what exactly AML compliance requires in this context. Otherwise, consumers, those who are vulnerable and in the most need of an account, might often be denied access to an account by reliance on AML provisions, whether or not such denial would be effectively justified from a risk-based perspective.
