Identity Dilemma

Risk management has always been an essential discipline for bankers, who are well versed in the art of balancing potential risk and reward. Banking to some immigrant communities, however, entails risks that are difficult to quantify and a matter of some debate.

The issue is identity verification. When customers apply for checking accounts in the U.S., the financial institution can usually access enough data to verify identities with a high degree of confidence. This is not the case with people from countries where records may be sparse and hard to access. Before 2001, for example, it was difficult for Mexican immigrants to obtain U.S. bank accounts.

Then Mexico began issuing "matricular consular" cards to allow immigrants to prove their identities. Boosted by strong promotional efforts by the Embassy of Mexico and its 45 consulates in the U.S., the matricular consular card is now accepted as a form of ID at 74 of the nation's 9,000 banks, according to the embassy. Last year, Mexican consulates issued 1.04 million cards, but the embassy declined to say how many have gone into circulation overall since 2001.

"We consider it a highly secure form of identification," says Miguel Monterrubio, press secretary with the embassy in Washington, D.C., noting that consular officials ask for an applicant's original birth certificate as well as a second ID with a photograph. A high-tech version of the card introduced last year is more difficult to counterfeit, Monterrubio adds.

But critics charge that the matricular consular cards continue to be subject to widespread fraud. "People have been found with five matriculars with five different names," says Laura Kennedy, press secretary for Rep. Tom Tancredo, R-Colorado, who has introduced legislation to bar the use of matricular cards for ID purposes at federal agencies and to discourage state and local governments from recognizing them.

New York State, for example, already declines to accept the cards for identification, although this does not affect the ability of banks to use the cards in New York, since the private sector doesn't have to follow state procedures in this matter.

Tancredo, chairman of the House Immigration Reform Caucus, has complained that the matricular consular cards cannot be authenticated — meaning that the consulates do not authenticate the documents presented to establish the applicant's identity. Monterrubio denies the charge but adds that Mexico is now working on a way to cross check identities with Mexico's biggest database, its electoral register.

The controversy presents banks with a dilemma, since the USA Patriot Act — the anti-terrorism, anti-money laundering legislation signed by President Bush in 2001 — requires them to verify the identity of those who open checking accounts. Banks also have to report any suspicious activity that might raise concerns the accounts could be used for money laundering or transferring funds to terrorist organizations. Last April, the Treasury Department issued regulations clarifying when banks can or cannot accept the matricular card from Mexico or any foreign ID.

So far, banks that have agreed to accept the matricular consular card are not reporting any major problems with false identities. "That's a risk we take, and we monitor it all the time," says Steve SaLoutos, senior vice president and manager of product management at Minneapolis-based U.S. Bancorp, which requires two forms of ID to open an account, one of which can be a matricular consular.

Some banks assess the risk of fraud as no greater than the risk they face from any group of potential customers. "We do not believe our acceptance poses any additional incremental risk," says Robert Byrne, director of diverse growth segments group at Wells Fargo & Co., San Francisco, who deems the matricular card to be no riskier than federal or state-issued IDs in the United States. "We're comfortable with it," he says.

— Robert Stowe England