Why Is Bank Of America Asking Clients About Their Citizenship?

The reports start­ed trick­ling in to online forums and local news, start­ing in 2017. From Reddit to The Kansas City Star, Washington to New York, the sto­ries all fol­lowed rough­ly the same pat­tern: Bank of America sent a cus­tomer a notice demand­ing details about their cit­i­zen­ship — and if they refused to answer, their accounts were prompt­ly frozen.

Outside the United States, this is a nor­mal prac­tice. Dozens of coun­tries have agreed to the Common Reporting Standard aimed at com­bat­ing tax eva­sion, and began col­lect­ing cit­i­zen­ship infor­ma­tion as part of that effort in 2017.

But state­side, these reports have raised fears that banks could, at least the­o­ret­i­cal­ly, help the author­i­ties iden­ti­fy and tar­get immi­grants. In the UK the bank­ing indus­try has already been charged with col­lect­ing infor­ma­tion on for­eign­ers as part of a big­ger plan to cre­ate a “hos­tile envi­ron­ment” for undoc­u­ment­ed immi­grants. Immigrants and advo­cates wor­ry the United States could be next.

Bank of America explained that it was required to ask the ques­tion to com­ply with Treasury reg­u­la­tions. It’s true that American finan­cial insti­tu­tions must mon­i­tor their accounts for signs of mon­ey laun­der­ing, and com­ply with the Office of Foreign Assets Control’s eco­nom­ic sanc­tions on sev­er­al coun­tries, includ­ing Iran, Cuba, and Syria. Under a sep­a­rate law, for­eign banks must col­lect cit­i­zen­ship infor­ma­tion from Americans, osten­si­bly in order to track down poten­tial tax-dodgers.

But domes­ti­cal­ly, they are not required to col­lect cus­tomer cit­i­zen­ship infor­ma­tion. In fact, Social Security num­bers aren’t even required to open an account. Shortly after Donald Trump’s elec­tion, in December 2016, a senior coun­sel for the American Bankers Association said that “banks don’t track whether or not some­one is legal­ly in the U.S.”

Paulina Gonzalez, exec­u­tive direc­tor of the finan­cial inclu­sion non­prof­it California Reinvestment Coalition, sug­gests that Bank of America’s pol­i­cy “rais­es ques­tions about the role banks will play in Trump’s America.” Writing in The Hill, Gonzalez spec­u­lates that “some banks are more than will­ing to car­ry out Trump’s agen­da of cre­at­ing a sys­tem where immi­grants have few­er eco­nom­ic rights than oth­ers.”

The American Bankers Association declined to com­ment on spe­cif­ic insti­tu­tions’ poli­cies, but said that “strict reg­u­la­to­ry require­ments” aimed at deter­ring illic­it activ­i­ties jus­ti­fy requests for per­son­al infor­ma­tion. “Banks of all sizes are required to col­lect a range of infor­ma­tion about their cus­tomers to com­ply with the Bank Secrecy Act of 1970 and ‘Know Your Customer’ stan­dards,” says spokesper­son Blair Bernstein. “Since 911, these strict reg­u­la­to­ry require­ments have steadi­ly expand­ed.”

Bank of America spokesper­son Christopher Feeney says the com­pa­ny does not ask for any actu­al proof of cit­i­zen­ship — just a customer’s word — and that it does not share that infor­ma­tion with any gov­ern­ment enti­ties. It insists that this pol­i­cy is not enforced selec­tive­ly with regard to what the gov­ern­ment con­sid­ers “high­er-risk cus­tomers.” Eventually, every sin­gle one of the bank’s cus­tomers will be asked for their cit­i­zen­ship infor­ma­tion, Feeney says.

This type of out­reach is noth­ing new — we’ve asked the cit­i­zen­ship ques­tion for many years, near­ly a decade,” says Feeney. “Citizenship sta­tus is not con­sid­ered when it comes to estab­lish­ing bank accounts and cit­i­zen­ship sta­tus is not shared with any oth­er par­ty.” Immigration author­i­ties or oth­er gov­ern­ment enti­ties would require a court order to obtain it.

Still, even if the pol­i­cy isn’t new, selec­tive, or unique to Bank of America, its clum­sy appli­ca­tion at a crit­i­cal moment con­tributes to an atmos­phere of dread for nonci­t­i­zens in Trump’s America. What’s more, it com­pounds the long-stand­ing prob­lem of finan­cial exclu­sion. While the result of banks’ col­lect­ing cit­i­zen­ship infor­ma­tion is less imme­di­ate­ly fright­en­ing than the prospect of depor­ta­tion, cit­i­zen­ship data give banks more infor­ma­tion with which to assess a customer’s cred­it­wor­thi­ness.

In the United States immi­grants make up a sig­nif­i­cant share of poten­tial bor­row­ers and account-hold­ers. There are more than 13 mil­lion per­ma­nent res­i­dents with green cards, 2 mil­lion work­ers in the coun­try on visas, and an esti­mat­ed 11 mil­lion res­i­dents who are undoc­u­ment­ed. Denying bank­ing ser­vices to this large pop­u­la­tion — and miss­ing out on all those fees and deposits — is not a great way of max­i­miz­ing prof­its.

But immi­grants are not a pro­tect­ed class under fair-lend­ing laws, and face legal dis­crim­i­na­tion from finan­cial insti­tu­tions as a mat­ter of course. While finan­cial insti­tu­tions can­not dis­crim­i­nate based on “nation­al ori­gin,” they are free to dis­crim­i­nate based on immi­gra­tion sta­tus. Asking for a customer’s cit­i­zen­ship helps them do that.

Legal sta­tus isn’t an unrea­son­able fac­tor for any lender to take under con­sid­er­a­tion when look­ing to lim­it their risk. If some­one is like­ly to leave the coun­try on short notice, it can affect their abil­i­ty to pay back a loan, which, in turn, can jus­ti­fy requir­ing larg­er down pay­ments on mort­gages, high­er inter­est rates on per­son­al loans, or denials of those lines of cred­it entire­ly. Policies requir­ing clients to reveal their cit­i­zen­ship thus for­mal­ize prac­tices that pre­vi­ous­ly might have been casu­al­ly or selec­tive­ly applied.

Currently, nonci­t­i­zens are able to access tra­di­tion­al loans only at the dis­cre­tion of indi­vid­ual lenders, some of which adver­tise spe­cial advis­ers and prod­ucts for immi­grant cus­tomers, and some of which deny cer­tain ser­vices to cer­tain class­es of immi­grants.

A pend­ing class-action law­suit filed with the US District Court of Northern California against Wells Fargo claims that the bank refused to accept appli­ca­tions for stu­dent loans and cred­it cards from DACA recip­i­ents, which plain­tiffs claim is a form of ille­gal dis­crim­i­na­tion under California con­sumer-pro­tec­tion law, as well as a fed­er­al civ­il-rights law orig­i­nal­ly draft­ed to pro­tect eman­ci­pat­ed slave “aliens.”

Wells Fargo doesn’t deny dis­crim­i­nat­ing against Dreamers, but con­tends that it is allowed to, because immi­gra­tion sta­tus isn’t a pro­tect­ed class. In its defense, Wells Fargo specif­i­cal­ly cit­ed President Trump’s com­ments that he would end DACA as proof that those cus­tomers were espe­cial­ly risky — after all, with depor­ta­tion loom­ing, how would the bank pos­si­bly recoup their debts?

Still, by the num­bers, immi­grants prove to be good bank cus­tomers. Since receiv­ing Social Security num­bers, tens of thou­sands of DACA recip­i­ents have tak­en out stu­dent loans and cred­it cards, and bought cars and homes — even though their mort­gages can come with high­er inter­est rates, as they’re hard­er to sell on the sec­ondary-debt mar­ket. There’s lit­tle data avail­able spe­cif­ic to nonci­t­i­zen immi­grant loans — but when immi­grants are able to become cit­i­zens, home­own­er­ship rates jump.

What’s more, fed­er­al immi­gra­tion poli­cies end up chang­ing the way banks eval­u­ate risk. The more the fed­er­al gov­ern­ment cracks down on immi­gra­tion, the more immi­grants can be jus­ti­fi­ably treat­ed as risky cus­tomers under exist­ing con­sumer-pro­tec­tion laws, and denied the same finan­cial rights as their cit­i­zen neigh­bors.

Asking for cit­i­zen­ship sta­tus pro­vokes anoth­er, more imme­di­ate effect: fear.

Some of the under­banked avoid tra­di­tion­al finan­cial insti­tu­tions because of a lack of trust. They aren’t nec­es­sar­i­ly forced into the more expen­sive alter­na­tive finan­cial-ser­vices mar­ket — they often just feel it’s their best, safest option. This Article was fist pub­lished here. https://​www​.then​ation​.com/​a​r​t​i​c​l​e​/​w​h​y​-​i​s​-​b​a​n​k​-​o​f​-​a​m​e​r​i​c​a​-​a​s​k​i​n​g​-​c​l​i​e​n​t​s​-​a​b​o​u​t​-​t​h​e​i​r​-​c​i​t​i​z​e​n​s​h​ip/