I. Introduction
An estimated 11.6 million unauthorized aliens [1] are currently in the United States. [2] This growing population has not gone unnoticed by American financial institutions. For years banks have offered checking and some savings accounts to aliens without requiring them to prove valid immigration status. [3] In recent years, however, banks have widened the scope of financial products available to aliens who do not have a Social Security Number. [4] While the intent of these products was to provide services to green card holders and legal nonimmigrants, fairly relaxed identification requirements and the overly general specifications of the USA PATRIOT Act ("Patriot Act") allow unauthorized aliens to take advantage of these products in many situations. [5] Although some have argued that banks are violating the Patriot Act's Customer Identification Program ("CIP") requirement by agreeing to accept non-traditional identification to establish new accounts, this argument does not appear to be consistent with the language of the statute. [6] A more intriguing legal argument is the possibility that banks are violating the Immigration and Nationality Act ("INA") by offering these products that are, at least in theory, available to unauthorized immigrants. Specifically, some have asserted that banks are unlawfully encouraging and inducing aliens to reside in the United States in violation of section 274 of the INA. [7] Regardless of whether or not banks are acting in violation of immigration law, legislation has been proposed that would close the loophole allowing unauthorized aliens to take advantage of these products. [8] By requiring proof of a valid visa by way of an identification card issued by the Department of Homeland Security ("DHS"), Congress can allow the enormous population of legal immigrants and nonimmigrants access to financial products without also extending these benefits to unauthorized aliens.
II. Financial Products
Providing financial products to unauthorized aliens is not a new phenomenon. In the past, however, few banks would offer these individuals services beyond a simple checking account. [9] Recently, banks have created new financial products, including credit cards and even mortgages, that are available without a Social Security Number. [10] Numerous banks offer aliens checking accounts upon presentation of an Individual Tax Identification Number ("ITIN") and one other form of identification. [11] An ITIN is obtained from the Internal Revenue Service ("IRS") simply by filing Form W-7 and offering notarized proof of identity and foreign status. [12] Obtaining an ITIN allows aliens to file federal income tax returns, but has no impact on their immigration status. [13] Bank of America has reenergized the debate over the identification required to open an account by creating a credit card that is available without a Social Security Number. [14] These credit cards are available to customers who have held a checking account for at least three months without an overdraft charge. [15] After paying a fee of $99, cardholders are given a $500 credit limit with the possibility of increasing the limit once they establish a favorable credit history. [16]
Bank of America's CEO, Ken Lewis, says that they created the credit card to help legal immigrants establish a credit score and enable them to not have to rely on cash transactions. [17] Mr. Lewis has conceded that unauthorized aliens are able to obtain credit cards through the bank, but says that they are in compliance with all regulations. [18] He further asserts that the bank has an obligation to provide services to all those who qualify under federal law. [19] Mr. Lewis may well be morally (and perhaps even constitutionally) correct, but the bank's program has drawn the wrath of many of its customers. [20] Some consumers have expressed anger that the bank would offer credit that could concededly be secured by individuals unlawfully present in the United States. [20] The bank has stated that they will continue to offer these products so long as it remains permissible under banking regulations, [21] but some argue that the bank is already violating federal law. [22]
III. Does Extending Credit to Unauthorized Aliens Violate Federal Law?
Critics of financial products that are available to unauthorized aliens claim that providing such services is not only bad policy, but is also a violation of federal law. Their argument is twofold: (1) That banks are violating section 326 of the Patriot Act by accepting forms of identification that do not comport to the requirements of a valid Customer Identification Program; and (2) that, by offering such products to unauthorized aliens, banks are encouraging or inducing unlawful presence in the United States in violation of section 274 of the Immigration and Nationality Act.
A. The USA PATRIOT Act
Section 326 of the Patriot Act requires that financial institutions adopt reasonable procedures to verify the identity of every person seeking to open an account, to maintain records of the information used to verify the person's identity, including their name, date of birth, address, and an identification number, and compare names to a list of suspected terrorists maintained by the government. [23] The programs, called Customer Identification Programs or CIPs, simply require covered financial institutions to make reasonable efforts to ascertain customers' identity and, once the minimum requirements of the statute are satisfied, leave it to the institutions to determine what they consider reasonable. [24] The statute's requirement of an "identification number" is, at best, vague. Generally, a Social Security Number ("SSN") is used as the identification number to satisfy the statute but, because the Patriot Act does not specifically require a SSN, individuals are not limited to that form of identification. Because the statute does not specify what the term "identification number" means, regulations from the Department of the Treasury are generally substituted for clarification. [25] The regulations enumerate four forms of identification that are believed to satisfy the statute: (1) a taxpayer identification number; (2) a passport number and country of issuance; (3) an alien identification card number; or (4) the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard. [26] The flexibility of these regulations has generated significant controversy.
It has been argued that the Patriot Act's identification number requirement cannot be satisfied by an ITIN or foreign-issued identification. [27] Although it is true that the Patriot Act does not specifically qualify what may be used as identification, it seems implausible that allowing the types of identification frequently used by unauthorized aliens could be a violation of law. Had Congress intended the Patriot Act to require banks to secure a Social Security Number or to verify the immigration status of customers, they could have included such a provision in the statute. Absent an amendment to clarify the intentions of Congress, allowing unauthorized aliens to open credit card accounts using an ITIN or otherwise valid identification number is not a violation of the Patriot Act.
B. The Immigration and Nationality Act
A more plausible legal argument is that allowing unauthorized aliens to apply for credit cards is a violation of the Immigration and Nationality Act. The INA provides that anyone who, "encourages or induces an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of law" is subject to fines and imprisonment. [28] Opponents of Bank of America's credit card program and other similar products argue that allowing for the possibility that unauthorized aliens will receive a credit card is tantamount to "encouraging" these aliens to "reside" in the U.S. in violation of immigration law. [29]
There is very little case law on the issue of what constitutes "encouraging" or "inducing" someone to reside in the United States. [30] Courts have ruled that actions taken in to convince an unauthorized alien to remain in the country constitute "encouragement", but have not given substantial direction as to the scope of the provision. [31] Even if banks technically are encouraging unauthorized aliens to reside in the country, the mens rea of knowledge or reckless disregard must also be proven. [32] This requires a showing that banks either were conscious and aware that they were encouraging unauthorized aliens to reside in the U.S. or that they were conscious and aware of a substantial or unjustifiable risk that they were doing so. [33] It is debatable whether a nation-wide, facially neutral policy that concededly could lead to unauthorized aliens receiving a credit card is enough to constitute a substantial risk that a bank is encouraging unlawful presence. The vast majority of precedent on this issue concerns individuals who have encouraged a specific alien to reside in the country unlawfully and there is generally an affirmative act of encouragement rather than simply a policy offering a product that is helpful to the alien. [34] Although banks are, at least arguably, in technical violation of the INA, it is unlikely that a financial institution would ever face criminal prosecution for violating immigration law. Rather than go after specific banks for violations of law, some members of Congress are attempting to close the loophole allowing unauthorized aliens access to financial products through legislation. [35]
IV. The Photo Identification Security Act
On March 5, 2007, Representative Marsha Blackburn (R-TN) introduced H.R. 1314, dubbed the Photo Identification Security Act. [36] The bill, which has since been referred to the House Subcommittee on Government Management, Organization, and Procurement, would limit acceptable forms of identification for opening an account with a financial institution to the following: (1) "a Social Security card accompanied by a state-issued ID; (2) a driver's license or identification card issued in compliance with the REAL ID Act of 2005; (3) a passport issued by the United States or a foreign government; or (4) a photo identification card issued by the Department of Homeland Security through U.S. Citizenship and Immigration Services" ("USCIS"). [37] The legislation would not allow the opening of bank accounts, credit cards, or the procurement of mortgages by using ITINs or any similar form of identification. [38] The bill would not necessarily stop banks from potentially offering products to unauthorized immigrants, however. By allowing a valid passport as an acceptable form of identification, the possibility for abuse will continue to exist. The legislation, while not perfect, begins to close the loophole allowing unauthorized aliens to receive credit cards from American banks.
V. Conclusion
Banks should be required to verify their customers' identity through either a valid state-issued identification card or a current, lawfully obtained immigrant or non-immigrant visa. Requiring proof of a valid visa is not an onerous restriction for obtaining accounts and would close the loophole in the current law. Although there are valid arguments on both sides of whether or not banks are in technical violation of federal law, specifically the INA's unlawful encouragement provision, it is certainly the case that allowing unauthorized aliens to establish bank accounts and secure credit in the United States is inconsistent with the policy objectives of the INA. This simple modification in law would accomplish the goals of both sides in the immigration debate: it would allow lawful immigrants and nonimmigrants who don't have a social security number the opportunity to establish a credit history and deal in non-cash transactions, while at the same time disallowing aliens who cannot present a valid visa from taking advantage of relaxed regulations of financial products.
[1] For purposes of this article, the terms "unauthorized aliens" and "unauthorized immigrants" will be used to refer to those who entered the country without inspection, individuals who overstayed a valid nonimmigrant visa, and those who are unlawfully present despite once having a valid immigrant visa.
[2] Michael Hoefer, Nancy Rytina, and Christopher Campbell, Department of Homeland Security, Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2006 (Aug. 2007), available at http://www.dhs.gov/xlibrary/assets/statistics/publications/ill_pe_2006.pdf .
[3] Drew K. Kifner, Alien to Financial Services: Should Social Security Numbers be Required for Banking Services Provided to Immigrants?, 12 N.C. Banking Inst. 303, 306 (Mar. 2008).
[4] Id. at 307.
[5] Id. at 309.
[6] John Coyle, The Legality of Banking the Undocumented, 22 Geo. Immigr. L.J. 21, 26 (Fall 2007).
[7] 8 U.S.C. § 1324(a)(1)(A)(iv) (2006).
[8] H.R. 1314, 110th Cong. (2007).
[9] Kifner, supra note 3, at 306.
[10] Id.
[11] Id. at 307.
[12] Coyle, supra note 6, at 29.
[13] Id. at 28.
[14] Kifner, supra note 3, at 309.
[15] Id.
[16] Id.
[17] Kenneth D. Lewis, Not in the Cards, Wall St. J., Feb. 22, 2007, http://online.wsj.com/article/SB117211624809015805.html?mod-opinion_main_commentaries.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Kifner, supra note 3, at 309.
[23] 31 U.S.C.A. § 5318 (West 2007).
[24] Coyle, supra note 6, at 25.
[25] Id.
[26] 31 C.F.R. § 103.121(b)(2) (West 2007).
[27] Kifner, supra note 3 at 309.
[28] 8 U.S.C. § 1324(a)(1) (2006).
[29] Coyle, supra note 6, at 34.
[30] Id. at 37.
[31] United States v. Oloyede, 982 F.2d 133, 137 (4th Cir. 1992).
[32] 8 U.S.C. § 1324(a)(1).
[33] Coyle, supra note 6, at 36.
[34] Id.
[35] Kifner, supra note 3, at 319.
[36] H.R. 1314, 110th Cong. (2007).
[37] Id.
[38] Id.