The small money-transfer company owned by Igot and her husband, Romeo, sends about $1 million a month to Manila. They charge a flat $10 fee, while larger companies charge as much as $30. They pay the state $4,000 for their biennial licensing fee.
Banks are in a sticky situation, said John J. Byrne, director of the American Bankers Association's regulatory compliance center. Regulators have said they mean business when it comes to ensuring that banks identify and report suspicious transactions. Riggs was fined $25 million by bank regulators for failing to file such reports and not complying with anti-money-laundering laws.
Luz and Romeo Igot's small company sends about $1 million a month to Manila, but the growing reluctance of banks to handle accounts for small money-transfer companies may put them out of business.
(Sarah L. Voisin -- The Washington Post)
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"Banks not wanting to be criticized are closing the accounts. Our industry clearly would like stronger guidance [about] what are acceptable relationships with those entities," Byrne said.
J.P. Morgan Chase & Co. announced last year that it would cut ties with all of its money-transfer customers. Spokesmen for two major banks operating in the region, Wachovia and Bank of America, said they are evaluating their money-transfer clients and would decide whether to close accounts on a case-by-case basis.
The confusion in part stems from different approaches to money transmitters taken by FinCEN, which regulates the transmitters and other cash businesses, and the Office of the Comptroller of the Currency, which oversees banks.
The goal of the meeting FinCEN will host next week is to offer joint guidance from both banking regulators and FinCEN, said William D. Langford Jr., associate director for regulatory policy at FinCEN. He said his agency plans to make it easier for a bank to determine whether a money-transfer company is licensed. "We have a very grave concern that if we make it so onerous for [money-transfer companies] to obtain a bank account we will drive them underground," he said.
Money transmitters are trying to adjust. Remesas Quisqueyana Inc., a money-transfer business with 20 locations in five states, has had accounts closed by a few large banks although it is registered with FinCEN and has a compliance program.
"It is very, very hard," said chief executive Mohamed Chalabi in New York. His customers are mostly Latin American immigrants. "There are a number of states where I don't have bank accounts, which means trucking the money for long distances at serious risks."
Banks "are acting based on illusions and creating a lot of fear. The problem is it is affecting consumers," said Manuel Orozco, a Georgetown University professor and remittance expert. "At the end of day, we are talking about small minority businesses being affected by the regulatory environment."
Like many owners of niche money transmitters, Igot and her husband are immigrants; they came to the United States in 1986. For 10 years, they worked as housekeepers in Maryland. Then they set up their money remittance business, which grew. In January they also opened a grocery store.
To stay in business, though, Igot must keep her bank accounts open, she said. She is now down to one account at one bank, which she declined to name for fear it would close her account.
