Overcoming Account Opening Impediments to the Bank Secrecy Act

The New America Foundation and Appleseed hosted a timely roundtable discussion on a proposed policy aimed at clearing the path for opening basic bank accounts for immigrants and those who are new to the financial system. Participants included counsel and compliance officers of banks, prepaid firms and financial institution processors, representatives of nonprofits serving immigrant families, delegates from the Mexican Embassy and public policy experts.

Many of the 40 million "unbanked" persons living in the US are financially underserved because they lack sufficient identification. As a result, they are denied opportunities for saving and achieving long-term financial goals. The Bank Secrecy Act requires that financial institutions develop Customer Identification Programs, but the method of achieving customer "knowledge" is largely at the discretion of the banks. As a result, banks' customer identification programs differ greatly - some accept "alternative" ID forms, such as the Mexican Matricula Consular, while others go so far as to deny drivers' licenses from other states.

Roundtable participants explored this issue and a policy proposal, the Passageway Account, which would enhance the bank account opening process while enabling banks to comply with the BSA effectively and without excess cost. The Passageway Account proposal seeks to safely open the door for customers whose identities are difficult to verify. The strategy behind this proposal is to expand identification options at the account opening level while setting account restrictions that will protect from the risks of money launderer financing.

The panelists provided valuable perspectives regarding the challenges of banking individuals whose identifications are hard to verify, along with critical insights for the Passageway Account proposal.

To view the Passageway Account proposal, please click here.

Participants