BusinessTN

From 1990 to 2011, a mere 21 years, Nashville will experience an 871% increase in the number of Hispanic residents living in the community, according to a study performed by Geoscape International, a consumer research company based in Miami. And this exponential growth is not limited to Nashville. Small and large towns across the state of Tennessee are witnessing a shift in their populations. With that cultural shift comes an economic outgrowth that includes stores, restaurants and other businesses, all of which have a legitimate need for financial and banking services. In addition, there are also many undocumented immigrants in need of banking services, too.

Banks are responding, offering products and services including banking statements in Spanish, Spanish-speaking tellers, and foreign remittance cards that allow Hispanic residents of the United States to place funds on a card that can then be mailed to Latin America. In a recent criticized move, Bank of America decided to provide access to credit cards for undocumented immigrants.

According to Greg Gonzales, commissioner of the Tennessee Department of Financial Institutions, arguing against banking services for the “unbanked” is somewhat of an ad hominem fallacy—those engaging in the protests are attacking the people behind the issue instead of the issue itself. “Banking the unbanked is not a new issue at all,” Gonzales says. “It is the current hot-button illegal immigrant issue that has heightened interest in what banks are doing.”

Gonzales says that there has always been the need to provide banking services for immigrants who are mistrustful of banks, undereducated on wealth building, or siphoned away from legitimate financial institutions by underground organizations and payday lenders.

Tim Amos, vice president and general counsel for the Tennessee Bankers Association, points out that often the issues are confused, especially when touchy political issues such as illegal immigration arise. “Illegal immigration is not a banking issue,” he says. “The banking industry is, often and erroneously, viewed as an intermediary for all financial institutions, and law enforcement agencies think we ought to be in a position to police people. We’re not a police force, and that is not our role.”

“Our role is to assist institutions in serving their communities,” Gonzales says, “and bankers take that role very seriously. Bankers want to make sure they are meeting their obligations under the Bank Secrecy Act and under the USA Patriot Act.”

It is the federal government that establishes identification and documentation requirements that banks must comply with when providing services to customers. “Yes, minimum documentation for participation in banking services is a hotly contested issue right now,” Amos says, “but the fact is that federal law sets the parameters for necessary minimum documentation. When the federal government changes the policy on that, the banking industry will change along with it.”

Gonzales points out that while individual banks must examine their own risk assessment when deciding how deeply to delve into the issue of providing banking services to immigrants who may be in the country illegally, it is the role of the Tennessee Department of Financial Institutions to make sure that banks are in compliance with applicable laws. “Our primary mission is to provide the people of Tennessee with a safe and sound system of financial institutions, which we do primarily through the examination process.”

Regardless of the method, people are engaging in financial transactions. The question becomes whether they are doing it through traditional institutions, or through underground, unlicensed and unregulated channels. “We want transparency in the transactions—transactions that are reported and recorded—so that we can work to avoid financial crimes, money laundering and financial terrorism,” Gonzales says.

“If we, as a country, are concerned about illegal money laundering, terrorist activities and financing terrorist organizations,” Amos says, “it is much easier to monitor money going through legitimate and regulated financial institutions—institutions that are required to file various reports about who is sending how much money—and to whom.

While financial institutions already have policies in place about transferring money to known terrorist groups, many of the “unbanked,” while not in any way affiliated with such illegal activities, are unwittingly legitimizing that type of banking. According to Amos, it is estimated that $45 billion dollars flows from the United States into Mexico yearly, sent by people living here who are remitting money to their families there. The sheer numbers of dollars leaving the United States via underground financial paths means that tracking and documenting much of the illegal activity taking place is made more difficult.

Amos points out the irony of making banks serve as immigration cops. “If we force people out of the mainstream banking system and into underground organizations by requiring that restrictive measures be applied to the unbanked, then we are helping to legitimize those underground institutions,” he says. Providing banking services to all immigrants helps aid in protection against money laundering and terrorist activities.

From a banking perspective, Amos says that the industry has never—nor will it ever—adopt policies that discourage people from banking. “A bank is an economic engine that drives and supports communities,” he says, “so to adopt a policy that discourages banking is contrary to our fundamental history and mission.”

In Tennessee, bankers are working with the Tennessee Department of Financial Institutions and the Tennessee Bankers Association to help engage the Hispanic community. “You cannot ignore a particular segment of the population,” Amos says. “We have to recognize their needs and provide appropriate services.

“If a bank determines that it is going to engage any group, we work to see that they are complying with all federal regulations and have done their risk assessments,” Gonzales says.

With the continued robust growth of the immigrant population, bankers across Tennessee are on the front lines of this issue. It is necessary to figure out how to provide services effectively to these new customers and train personnel to understand cultural differences. “The only reason to prevent banking is if a banking practice in and of itself will create an unacceptable risk to community safety and sound banking practices,” Amos says. Immigrants—both legal and undocumented—are here, working and spending their money in the community and remitting large amounts of money to their home countries. The banking industry across Tennessee is working to bring those people into the banks in a way that helps them and benefits our country, too.