Latino Community Credit Union says U.S. Patriot Act may hurt potential immigrant members

<p>DURHAM, NC – The passage of the U.S. Patriot Act after Sept. 11 that aimed to stop foreign nationals from opening financial accounts using fake identification, may be discouraging immigrants from opening mainstream credit union and bank accounts. John Herrera, board chair of LCCU, went to Washington on Feb. 12 to testify before a hearing of the House Oversight and Investigations Subcommittee of the Financial Services Committee on the effects the federal law could have on its predominantly Hispanic membership. Herrera, speaking on behalf of CUNA and the World Council of Credit Unions, said a segment of the law would deter immigrants from joining credit unions like his and could force them to keep large amounts of cash on hand, making them vulnerable to robbery and assault. Potential members may also turn to “high-priced” check-cashing agencies and wire-transfer services, Herrera testified. In addition, “dozen of our members have reported to us that some IRS staff have been overzealous in questioning them regarding their purpose in obtaining an individual tax identification number and their current employment status,” for the purpose of the credit union reporting interest income to the IRS, Herrera said. At issue is the proposed implementation of a new identification number that foreign nationals would have to obtain before opening any type of financial account. The number would also be used by government agencies, possibly including the Immigration and Naturalization Service to look at pertinent information. The U.S. Treasury Department is scheduled to make a recommendation by April 26 as to whether the ID number system would be established. Juan Zerate, a deputy assistant secretary at Treasury, said at the hearing that requiring an ID number would close loopholes in the country’s system for catching money, according to the Associated Press. He added that the new number will “make certain that as terrorists and money launderers move toward less traditional financial institutions, they will not be able to avoid our regulatory controls.” Of the estimated 28 million foreign-born people living in the United States in March 2000, 51% were from Latin America, according to the Census Bureau. Roughly 6% of all Hispanic immigrants have no bank or credit union account, compared with 10% of the total U.S. population, according to WOCCU. The Hispanic population in North Carolina has increased by 400% over the past decade, Herrera said, contributing to the state’s expansion of furniture plants and construction. Potential members at LCCU can not open a non-interest bearing account if they don’t have a social security number of taxpayer ID number, Herrera said. Other legitimate forms of ID such as a driver license, voter registration card or consulate registration card, commonly known as the `matricula’ are used. Herrera pointed out the Bank Secrecy Act already contains “substantial record keeping and reporting requirements for financial institutions” and credit unions and others have complied with the Office of Assets Control’s (OFAC) requirements to check names of new members against its `specially designated names (SDN) and the block country list. “We do this on a real-time basis for all our international money transfers – a popular service among our membership,” Herrera said. “It truly saddens me to see so many people trying their hardest to play by the rules we established for them, only to be turned away by our government because of the terrible events of Sept. 11. Terrorists are the exception.” David Beck, policy director at Self-Help Credit Union, also attended the hearing and is also concerned that the new ID number will further dissuade Hispanic immigrants from opening financial accounts. “One of the reasons we opened the credit union was the amount of crime cropping up because so many of the immigrants (here) are unbanked,” Beck said. “Since (LCCU) has opened, there’s $3 million in member deposits, which is a significant amount of money off the street. We have serious concerns about the new ID number proposed because there’s still some who are leery of banks and credit unions.” -</p> <p>[email protected]</p>