Banking on Illegals
May 9, 2003
The Latino Community Credit Union in Durham, N.C., which caters to illegal aliens, is considered a model in international banking and among federal regulators concerned about the so-called unbanked population here and in Latin America. Last year, its members wired $1.01 million in remittances outside the United States, making it the number one credit union in overseas remittances, credit union officials say.
To do so, it has had to overcome the initial distrust many Latinos feel for financial institutions. Illegals often fear listing their names and addresses with authorities. And since banks in Latin America frequently go under and currencies plunge in value, many Latinos keep their savings, even large amounts, in cash.
To help woo skittish customers the credit union:
- Offers inexpensive money-transfers -- $10 to send as much as $1,000, compared with surcharges of more than 20 percent of the amount being wired at some money-transfer agencies.
- Encourages illegals to open savings and checking accounts with a minimum $25 deposit and $2 monthly service fee.
- Helps customers qualify for consumer loans.
- Holds classes on how to write checks and use a debit card, and has a loan officer examine cars before approving loans to pay for them, to make sure a potential borrower isn't overpaying.
The credit union also helps illegals apply for a federal tax identification number, which allows them to pay taxes and open interest-bearing accounts. It assures them the tax ID number won't be reported to immigration officials.
Offering banking services to illegal immigrants has attracted some critics, however. Some in Congress and, lately, in North Carolina, say allowing illegal immigrants to open bank accounts, while not illegal, subverts U.S. immigration laws.
Source: Evan Perez, "North Carolina Credit Union Banks on Latino Immigrants," Wall Street Journal, May 9, 2003.
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