The Immigration and Nationality Act (INA) governs the opening of bank accounts by undocumented immigrants. This law affects approximately 11 million undocumented immigrants in the US.
The effective date of the INA’s provisions on banking is October 1, 1996, under Section 326 of the USA PATRIOT Act, which requires a $100 minimum opening deposit for certain accounts.
Banking Law Standard
The law governing bank accounts for undocumented immigrants is based on Section 5313 of the Bank Secrecy Act (BSA), which requires financial institutions to verify the identity of customers. In practice, this means that undocumented immigrants can open a bank account if they provide a valid government-issued ID, such as a passport, and a secondary form of identification, such as a utility bill, within 30 days of account opening. The BSA also requires financial institutions to maintain records of customer transactions for at least 5 years.
In plain terms, the BSA sets a $10,000 threshold for reporting certain transactions to the Financial Crimes Enforcement Network (FinCEN). This is where the law gets teeth, as financial institutions must file a Suspicious Activity Report (SAR) if they suspect a customer is engaging in illicit activity. The SAR must be filed within 30 days of the suspicious transaction.
The BSA also requires financial institutions to have an Anti-Money Laundering (AML) program in place, which includes customer due diligence and monitoring of account activity. The AML program must be reviewed and updated annually, and financial institutions must provide training to employees on AML procedures at least once a year.
When the Answer is YES
Undocumented immigrants can open a bank account if they meet certain conditions, such as providing a valid ITIN (Individual Taxpayer Identification Number) and a secondary form of identification. The ITIN must be renewed every 5 years, and the application process can take up to 6 weeks. In addition, some banks may require a minimum deposit of $500 to open a checking account.
This is where the law provides some flexibility, as some banks may offer alternative forms of identification, such as a matricula consular card, which is issued by the Mexican government. However, the bank must still verify the customer’s identity and maintain records of the account activity, including transactions exceeding $3,000. The bank must also monitor the account for suspicious activity and report any transactions exceeding $10,000 to FinCEN.
When the Answer is NO
The law prohibits banks from opening accounts for customers who cannot provide valid identification or who are on the Office of Foreign Assets Control (OFAC) list. The OFAC list includes individuals and entities subject to US economic sanctions, and banks must screen customers against this list before opening an account. Failure to comply with OFAC regulations can result in fines of up to $1 million and imprisonment for up to 20 years.
In practice, this means that banks must have a robust customer due diligence program in place to verify the identity of customers and detect potential money laundering activity. The program must include a risk-based approach to customer due diligence, and banks must maintain records of customer transactions for at least 5 years. The Bank Secrecy Act (BSA) sets a $10,000 threshold for reporting certain transactions to FinCEN, and banks must file a SAR if they suspect a customer is engaging in illicit activity.
The Process
To open a bank account, undocumented immigrants must provide the required identification and complete the application process, which can take up to 30 days. The application process includes providing proof of address, such as a utility bill, and proof of income, such as a pay stub. The bank must also verify the customer’s identity and maintain records of the account activity, including transactions exceeding $3,000.
The bank must also provide the customer with a copy of the account agreement, which includes the terms and conditions of the account, including any fees or charges. The customer must sign the account agreement and provide a valid government-issued ID, such as a passport, to complete the application process. The bank must also provide training to employees on AML procedures at least once a year.
In plain terms, the process involves several steps, including verifying the customer’s identity, maintaining records of account activity, and monitoring the account for suspicious activity. The bank must also comply with OFAC regulations and screen customers against the OFAC list before opening an account. Failure to comply with OFAC regulations can result in fines of up to $1 million and imprisonment for up to 20 years.
State-by-State Variation
Some states, such as California, Illinois, and New York, have laws that allow undocumented immigrants to obtain a state-issued ID, which can be used to open a bank account. California’s law, for example, requires a minimum of 2 years of residency in the state and a $30 application fee. Illinois’ law requires a minimum of 1 year of residency in the state and a $20 application fee.
In contrast, states such as Arizona and Texas have laws that restrict the ability of undocumented immigrants to obtain a state-issued ID. Arizona’s law, for example, requires proof of citizenship or lawful presence in the US, and the application process can take up to 60 days. Texas’ law requires proof of identity and residency in the state, and the application process can take up to 30 days.
Special Situations or Exceptions
Refugees and Asylees
Refugees and asylees are eligible to open a bank account, as they have been granted lawful status in the US. They must provide a valid government-issued ID, such as a passport, and a secondary form of identification, such as a utility bill. The bank must also verify the customer’s identity and maintain records of the account activity, including transactions exceeding $3,000.
In practice, this means that refugees and asylees can open a bank account without the same restrictions as undocumented immigrants. However, they must still comply with the requirements of the Bank Secrecy Act (BSA) and provide proof of identity and residency in the US. The BSA sets a $10,000 threshold for reporting certain transactions to FinCEN, and banks must file a SAR if they suspect a customer is engaging in illicit activity.
Temporary Protected Status (TPS) Holders
TPS holders are also eligible to open a bank account, as they have been granted temporary lawful status in the US. They must provide a valid government-issued ID, such as a passport, and a secondary form of identification, such as a utility bill. The bank must also verify the customer’s identity and maintain records of the account activity, including transactions exceeding $3,000.
This is where the law provides some flexibility, as TPS holders can open a bank account without the same restrictions as undocumented immigrants. However, they must still comply with the requirements of the Bank Secrecy Act (BSA) and provide proof of identity and residency in the US. The BSA sets a $10,000 threshold for reporting certain transactions to FinCEN, and banks must file a SAR if they suspect a customer is engaging in illicit activity.
Enforcement and Consequences
The enforcement of banking laws for undocumented immigrants is primarily the responsibility of the Financial Crimes Enforcement Network (FinCEN) and the Office of the Comptroller of the Currency (OCC). FinCEN sets a $10,000 threshold for reporting certain transactions, and banks must file a SAR if they suspect a customer is engaging in illicit activity. The OCC also requires banks to maintain records of customer transactions for at least 5 years.
In practice, this means that banks must have a robust compliance program in place to detect and prevent money laundering activity. The program must include a risk-based approach to customer due diligence, and banks must maintain records of customer transactions for at least 5 years. Failure to comply with banking regulations can result in fines of up to $1 million and imprisonment for up to 20 years. Recent trends show an increase in enforcement actions against banks for non-compliance with AML regulations, with fines exceeding $100 million in some cases.
- Office of the Law Revision Counsel. relevant federal statute
- U.S. Courts. federal court procedures
- USA.gov. relevant government resource
