Credit union organisations in the US have voiced their opposition to plans by the Trump administration to tighten banking access for undocumented immigrants.
The proposal was outlined by the federal government on 19 May, in the Executive Order: Restoring Integrity to America’s Financial System.
The Trump administration says the changes will “protect America’s financial system from illicit activity, strengthen customer identification requirements for financial institutions, and address the credit risks posed by extending financial services to non-work authorised illegal aliens”.
If the order is implemented, the Treasury secretary and federal financial regulators will issue guidance to banks on identifying customers whose profiles or transactions potentially indicate risks like money laundering, terrorism financing, and labour trafficking in line with the 1970 Bank Secrecy Act.
This will “account for the risks foreign consular identification cards pose to the integrity of the United States financial system,” the order said.
Inclusiv, the apex for US community development credit unions, and the National Association of Latino Credit Unions and Professionals (NLCUP), warn that although the order is not binding law, it is “concerning” and “would exclude immigrants from the mainstream financial system, restricting access to credit for people with Individual Taxpayer Identification Numbers (ITINs) as well as imposing limitations on the use of consular identification cards”.
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The apexes say that are “deeply opposed to the financial exclusion this executive order is likely to drive. If implemented as proposed, it would cause a surge in the number of unbanked people including immigrants with work authorisation who may feel unwelcome at mainstream financial institutions as a result.”
They add: “We will likely see increasing property crime as people carrying their paychecks in cash become attractive robbery targets. All this to exclude from our financial system people who want nothing more than to achieve the American dream and build a better life for themselves and their families.
“As our movement faces the challenges this executive order creates together, Inclusiv and NLCUP remain focused on working with community development credit unions to strengthen their local economies and effectively and responsibly serve their members.”
The apexes say that allowing people to access financial services and participate in the economy regardless of immigration status helps drive social stability.
”The economy functions best when finances flow through regulated financial institutions like banks and credit unions because they are subject to well-established safeguards and regulatory oversight,” they added. “In contrast, pushing more people and money flows outside of regulated financial systems creates gaps in visibility and greater risk of fraud and abuse, as well as increasing property crime.
“In addition to driving exclusion from the banking system and reducing the ability of federal regulators to safeguard our financial system, the executive order, if the recommended regulations are enacted, could create a nearly insurmountable operations and compliance burden for financial institutions in tracking the immigration and work authorisation status of their members.
“This burden will be felt most acutely by small credit unions and will likely lead to closures and fewer affordable financial services in the communities that need credit unions the most.”
Inclusiv and NCLUP say they will be be monitoring subsequent developments and providing updates to members and partners as more information becomes available.
