WASHINGTON, D.C. - Starting Oct. 1, credit unions and other financial institutions must start verifying the identities of new members under the USA Patriot Act. In most cases, a Social Security number will play a key role. But what if the person who wants to join is an immigrant, a...
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WASHINGTON, D.C. – Starting Oct. 1, credit unions and other financial institutions must start verifying the identities of new members under the USA Patriot Act. In most cases, a Social Security number will play a key role. But what if the person who wants to join is an immigrant, a foreign student or someone else who doesn’t have an SS number? The World Council of Credit Unions, the National Council of La Raza and others emphasize there is an alternative. Individual Taxpayer Identification Numbers issued by the Internal Revenue Service are available to immigrants and can be used to verify identity. It’s not a new idea in areas such as Texas or California, where many credit unions serve large numbers of immigrants. Nationwide the IRS has issued more than 6.8 million ITINs since 1996, including almost 1.5 million in 2002. Credit unions in other areas seem to be catching on. “Every day I hear of more and more credit unions looking into this and learning how they can help their members obtain Individual Tax Identification Numbers,” says Dave Grace, WOCCU financial and regulatory affairs manager. “It isn’t something that’s widely known today, but there are 70 credit unions I happen to be aware of who accept it (the ITIN).” Grace explains the IRS has for many years offered a specific way for people unable to obtain a Social Security number to acquire a tax identification number so they can open accounts at financial institutions. The agency’s focus isn’t on immigration law. It simply wants to carry out its job – collect taxes. Grace acknowledges some groups are concerned allowing use of ITINs encourages illegal immigration. For example, the Center for Immigration Studies issued a paper early this year arguing that accepting alternative identification such as the matricula consular card issued by the Mexican government to certify age and identify simply provides quasi-legal status for otherwise undocumented aliens living in the United States. “I would say credit unions are engaged, and should be engaged, in banking issues,” Grace emphasizes. “We’re not in charge of immigration issues. The fact remains 50 percent of all Latino immigrants in the United States today do not have a bank or credit union account. That is a banking issue. It’s an issue that should be troubling to credit unions – and I think it is. It also represents a business opportunity. “The USA Patriot Act is very clear in that it does allow financial institutions to serve undocumented individuals and people who have not had accounts before. While there are new requirements for identifying individuals, and the World Council fully supports that, it does not create barriers (for serving undocumented immigrants).” In fact, Grace continues, all the various regulatory agencies have become clearer on this issue – financial institutions can serve undocumented members. “The World Council policy stance is we do have information on our Web site (www.woccu.org) on how credit unions can serve undocumented individuals. We don’t feel it’s our position to determine whether credit unions should or shouldn’t. That’s a decision to be made by the credit union board and senior management. What we have provided is guidance if they do.” The National Council of La Raza is one group that hopes financial institutions, including credit unions, do say yes to alternative identification. Brenda Muniz at La Raza says larger financial institutions seem to be aware of the options. “My understanding is that the big banks – such as Wells Fargo, Bank of America and Citicorp – are well aware of this and many of them accept ITIN along with a foreign-issued government ID, the most common being the Mexican matricula consular card,” she says. “It’s also my understanding there are a number of credit unions that also accept ITINs. I was told seven banks accept the Mexican consul ID and most of them require both – the consul ID in addition to the ITIN.” Muniz adds she has heard that a number of smaller community banks and credit unions in areas with significant immigrant population are also becoming aware of alternative identification options in order to serve the communities where they’re located. That puts them ahead of the curve, she suggests, because they understand what they’re allowed to accept as identification. Meanwhile, financial institutions in other areas are still wondering what they can and can’t do. “We were pleased that the final rules of the Patriot Act, like the proposed rules, seem to treat certain forms of alternative identification more favorably and do say that a financial institution can accept an ITIN or a Social Security number,” Muniz points out. “The rules also refer to an earlier report Treasury put out that says banks are not disallowed from accepting the matricula consular. It seems as long as financial institutions exercise due diligence in verifying identity, they do have some flexibility. In our opinion the Patriot Act actually helps, rather than hurts, that effort.” Even so, Muniz says she has heard anecdotal reports that some banks have been told by anti-immigration groups they are violating immigration law and could possibly face racketeering charges. But she adds most financial institutions that have done their research and talked to authorities such as NCUA know they are not violating the law. “I’m guessing, but some have probably said, `It’s too much trouble, so why bother?’ In a nutshell, the acceptance of verifiable alternative identification – namely the ITIN and the matricula consular – are very important. It adds to the safety of communities when immigrants have access to financial institutions and aren’t carrying large amounts of cash. It also facilitates the economic potential of an economically active population.” -
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