HomeMy WebLinkAboutCSS 2020-07-13 Item 1B - Resolution - Unbanked Money Transfer Operators (Bank De-Risking)City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Services & Safety
FROM: Brandon Miles, Business Relations Manager
Laurel Humphrey, Council Analyst
CC: Mayor Ekberg
DATE: July 7, 2020
SUBJECT: Resolution Regarding Unbanked Money Transfers Operations
ISSUE
The City has been asked by a community member to adopt a resolution expressing support for
unbanked money transfer operations and asking the Washington State Legislature to pass a
financial inclusion law.
BACKGROUND
Federal and State law provides restrictions and verification requirements for accounts placed at
financial institutions in order to be compliant with international and national anti -money
laundering/combating the financing of terrorism (AML/CFT) laws. Financial institutions must
verify certain information regarding the account holder and source of funds placed in the
account and trace where the funds go. Significant documentation is also required for
international money transfers.
Financial institutions often practice "de -risking" which refers to the closing of accounts of clients
considered high risk for compliance under AML/CFT requirements. This de -risking often impacts
non -bank money service businesses, foreign embassies, nonprofit organizations, and
correspondent banks, which has resulted in account closures in the United States, United
Kingdom, and Australia'.
DISCUSSION
A 2015 report from the Global Center on Cooperative Security entitled, Understanding Bank De -
Risking and Its Effects on Financial Inclusion points out that de -risking can isolate communities
from the financial system and in fact undermine the goals of AML/CFT objectives. When
individuals lack access to bank accounts at established financial institutions it can result in
financial transactions occurring outside of the normal financial system. This often involves
"cash" transactions, including storing cash on premises or using couriers to transfer cash in and
out of the United States.
Bank de -risking impacts local immigrant communities by making it difficult for immigrant owned
businesses to open bank accounts and send money to family members living outside of the
United States. Not having a bank account can also make it difficult to obtain certain funds under
Federal and State programs.
The draft resolution expresses the City's desire to see changes made in State law regarding
bank de -risking. Note, the Federal Government has significant overnight in the United States
financial system, including oversight of foreign money transfers. This resolution only addresses
banks chartered by the State of Washington.
1 https://www.globalcenter.org/wp-content/uploads/2015/11/rr-bank-de-risking-
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INFORMATIONAL MEMO
Page 2
FINANCIAL IMPACT
None.
RECOMMENDATION
Forward to the July 27 Committee of the Whole meeting for discussion.
ATTACHMENTS
• Draft Resolution
204 https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/Council Agenda Items/Mayor's Office/CSS, July 13/Informational Memorandum, July 7.doc
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AFFIRMING SUPPORT OF
UNBANKED MONEY TRANSFER OPERATORS (MTOs)
AND THE IMMIGRANT COMMUNITIES THEY SERVE AND
URGING THE WASHINGTON STATE LEGISLATURE TO
PASS A FINANCIAL INCLUSION LAW.
WHEREAS, unbanked Money Transfer Operators (MTOs) in Tukwila, King County,
and across the United States of America have been unable to secure bank accounts due
to a process referred to as "bank de -risking"; and
WHEREAS, over the past few years, these MTOs have found it increasingly difficult
to operate without a bank account; and
WHEREAS, due to being unbanked, MTOs have been unable to access COVID-19-
related small business federally -funded assistance opportunities such as the Paycheck
Protection Program; and
WHEREAS, unbanked MTOs are mostly owned by black and immigrant residents;
and
WHEREAS, a financial inclusion law will help address the racial inequalities in
accessing economic opportunities; and
WHEREAS, a recent string of armed robberies on these unbanked MTOs, which store
large amounts of cash in their premises, in SeaTac, Seattle and surrounding cities has
turned this issue into a public safety concern; and
WHEREAS, East African immigrant communities in Tukwila rely on these MTOs to
send money to their loved ones abroad for basic needs including food, water, shelter and
education; and
WHEREAS, these MTOs provide culturally specific services; deliver money to remote
regions not served by the large operators, including refugee camps in East Africa; provide
good paying jobs; contribute to community activities; and are valuable members of
Tukwila's small business community; and
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WHEREAS, Tukwila and King County have one of the largest East African
communities in the United States —nearly 30,000 Ethiopians, Eritreans, and Somalis are
residents in King County; and
WHEREAS, the vast majority of our East African residents are refugees and our new
residents need effective systems that will support them in staying connected to their loved
ones back home; and
WHEREAS, East Africans are critical to Tukwila's economic vitality because they
purchase goods and services and run small businesses, which in turn create jobs and
generate revenue for the region; and
WHEREAS, the Washington State Legislature and the State of Washington have
jurisdiction over State -licensed banks; and
WHEREAS, the Washington State Legislature and the State of Washington have the
authority to pass laws and develop processes that promote financial inclusion and public
safety; and
WHEREAS, it is in the City of Tukwila's interest to promote financial inclusion and
public safety;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. The City of Tukwila affirms its support of our East African community in their
desire to support their loved ones in the Horn of Africa. The City of Tukwila also affirms the
right of Money Transfer Operators to engage in lawful commerce in a safe manner.
Section 2. The City of Tukwila strongly urges the Washington State Legislature to pass
a financial inclusion law that will address the public safety and equal access issues caused
by bank de -risking.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of , 2020.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Office of the City Attorney
De'Sean Quinn, Council President
Filed with the City Clerk:_
Passed by the City Council:
Resolution Number:
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