The Impact of Bank De-Risking in Washington State

By the Numbers

Conclusion

1. The decision made by state-chartered banks to stop serving money transmitters has adversely impacted small service providers owned by entrepreneurs of color (EoC). The denial of accounts goes against the public interest when it comes to public safety and equal access.

2. Unbanked money transmitters have become victims of armed robberies, causing a public safety crisis in immigrant communities.

3. The assertion by banks that money transmitters are “high risk” is not supported by the data. A study of civil penalties issued by the Office of Foreign Asset Controls (OFAC) between 2011 and 2015 shows that businesses with international sales made up 66% of the violators. There was only one incident of violation by a money transmitter out of 145 violations of Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) laws.

4. If bank de-risking is not resolved, it will lead to a consolidation of money transmitter services to large corporate players and the closing of more businesses owned by EoC.

5. Retail banking customers like DACA participants, Muslims, and religious organizations have seen their bank accounts closed without explanation.

Analysis of Department of Financial Institutions (DFI) Public Information Request Data

References:

1. Seattle Times — Seattle-area immigrant communities question why bank accounts are closed without explanation

2. https://www.cnn.com/2019/07/19/business/wells-fargo-dreamers-daca-lawsuit-auto-lending/index.html

3. World Bank — De-risking in the Financial Sector

1. Global Center on Cooperative Security — Understanding Bank De-risking and Its Effects on Financial Inclusion
2. House Finance Service Committee Hearing — Examining De-Risking and Its Effects on Access to Financial Services- Witness Testimony by Secretary Bryan Schneider, Illinois Department of Financial & Professional Regulation, 2–15–2018
3. Evaluating The Risk Posed by Money Transmitters to Banks
4. Seattle PI — Man who impersonated FBI agent to rob Seattle businesses gets 5 years in prison
5. Roxbury heist target handles cash for African immigrants