Locked up then locked out: how NZ’s bank rules make life for ex-prisoners even harder

People coming out of prison in New Zealand face multiple hurdles reintegrating into society – starting with one of the most fundamental elements of modern life: getting a bank account.

Not having a bank account can make it difficult to receive wages or a benefit, and to get a job or rent accommodation.

In our new research we spoke with financial mentors and others working with prisoners on release, along with the Department of Corrections and banks, to better understand the hurdles for ex-prisoners.

We found not having a bank account on release was common and that it hindered reintegration efforts. It also appears to directly increase the chance of an ex-prisoner returning to crime. As a representative from Maori social services organisation Te Pa explained,

It is really important to get them a bank account if we want them to stay on the right side of the law. It is a key part of being part of society. [They] need to be part of mainstream financial services. If not, then [they are] much more likely to go back into crime.

The relationship between not having access to banking and getting back into crime was also noted in a 2016 report from the Salvation Army. And a financial mentor told us the current situation was “making it hard for people to not re-offend”.

A fundamental need

Our research is spread over two reports commissioned by financial services organisation FinCap and includes 40 interviews with people in the banking industry, financial mentoring organisations, community groups and the Department of Corrections.

The first report outlining our data was released in 2023, and the second in April 2025. The latter outlined the steps Corrections and the banking sector need to take to remove the hurdles faced by ex-prisoners trying to access a bank account.

Approximately 10,000 individuals were held in a New Zealand prison in 2024 at any one time, and around half of these were sentenced prisoners with the rest on remand. New Zealand’s reimprisonment rate is high, with about 30% of first-time prisoners likely to return to prison.

The Reserve Bank has argued that broad financial inclusion is important for society as it helps promote prosperity and contributes to a productive economy. Part of this involves ensuring everyone has access to a bank account.

Hurdles to access

There seem to be several things hindering ex-prisoners’ access to banking, with New Zealand’s anti-money laundering rules a major problem.

The law requires banks to complete certain checks before a person is allowed to open an account. Currently, banks require two forms of ID and a verifiable address.

People just out of prison often don’t have these. We found other hurdles include limited access to the internet, banks being unwilling to take on this group of customers, and ex-prisoners’ lack of confidence to engage with banks.

But there are ways we can make access to bank accounts easier for ex-prisoners.

Putting the onus on Corrections to proactively assist people due for release to get whatever documents the banks require, and to apply for the account to be set up before release, would be a good start. But it will likely require additional resourcing for the department.

A recent discussion paper from the Council of Financial Regulators has suggested the introduction of transactional accounts – a new type of bank account requiring less in the way of formal ID.

Basic transactional accounts could help ex-prisoners by making it easier to meet bank requirements. These would be a basic account that could receive wages and benefits and enable payments, but not provide credit.

It could also have limits on the amounts held in the account, which would minimise money laundering risks.

The major banks also have a key role to play in making change happen. Only one major bank – Westpac – has been willing to offer bank accounts to ex-prisoners so far, with a special programme that allows people in prison (both those still not due for release and those on their way out) to open an account. This has been very helpful for those who have had access to it.

During our research, Corrections emphasised the importance of major banks acting as default providers of banking services to prisoners and ex-prisoners (similar to default providers of KiwiSaver).

This approach would aim to ensure prisoners had the freedom to choose their banking provider. Encouraging participation in such a programme was seen as an opportunity for banks to demonstrate corporate social responsibility.

Victoria Stace does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.