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Home My WebLink AboutCOW 2020-07-27 Item 4D - Resolution - Bank De-Risking (Money Transfers Operations)COUNCIL AGENDA SYNOPSIS ---------------------------------- Initials Meeting Date Prepared by Major's review Council review 07/27/20 BJM/LM 08/03/20 BJM/LM ITEM INFORMATION ITEMNO. STAFF SPONSOR: B.MILES AND L.FIUMPHREY ORIGINAL AGENDA DATE: 7/27/20 AGENDA ITEM TITLE RESOLUTION REGARDING UNBANKED MONEY TRANSFERS OPERATIONS CATEGORY ® Discussion Mtg Date 07/27/20 ❑ Motion Mtg Date ® Kesolution Mtg Date 8/03/20 ❑ Ordinance Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date SPONSOR ❑ Council ® Mayor ❑ HR ❑ DCD ❑ Finance ❑ Fire ❑ TS ❑ P&R ❑ Police ❑ PfF SPONSOR'S THE CITY HAS BEEN ASKED BY A COMMUNITY MEMBER TO ADOPT A RESOLUTION EXPRESSING SUPPORT SUMMARY FOR UNBANKED MONEY TRANSFER OPERATIONS AND ASKING THE WASHINGTON STATE LEGISLATURE TO PASS A FINANCIAL INCLUSION LAW. REVIEWED BY ❑ Trans&Infrastructure ® CommunitySvs/Safety ❑ Finance Com ❑ Planning/Economic Dev. ❑ LTAC ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. DATE: 7/13/20 COMMITTEE CHAIR: KRULLER RECOMMENDATIONS: SPONSOR/ADMIN. City Council COMMITTEE Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $N/A N/A N/A Fund Source: N/A Comments: N/A MTG. DATE RECORD OF COUNCIL ACTION 07/27/20 08/03/20 MTG. DATE ATTACHMENTS 07/27/20 Informational Memorandum, dated July 7, 2020. Draft Resolution Minutes from the July 13, 2020 Community Services and Safety Committee meeting 08/03/20 Final Resolution e 50 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- 181115-en.pdf 51 INFORMATIONAL MEMO Page 2 FINANCIAL IMPACT None. RECOMMENDATION Forward to the July 27 Committee of the Whole meeting for discussion. ATTACHMENTS • Draft Resolution 52 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 W:\Legislative Development\Unbanked Money Transfer Operators —affirming support 7-2-20 LH:bjs Review and analysis by Barbara Saxton Page 1 of 2 53 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: W:\Legislative Development\Unbanked Money Transfer Operators —affirming support 7-2-20 LH:bjs Review and analysis by Barbara Saxton 54 Page 2 of 2 Citvof City Council Community Services & Safety Committee Meeting Minutes July 13, 2020 - 5:30 p.m. - Electronic Meeting due to COVID-19 Emergency Councilmembers Present: Kate Kruller, Chair; Thomas McLeod, De'Sean Quinn Staff Present: David Cline, Rachel Bianchi, Vicky Carlsen, Jay Wittwer, Bruce Linton, Jason Konieczka, Laurel Humphrey Chair Kruller called the meeting to order at 5:30 p.m. I. BUSINESS AGENDA A. Resolution: Hazard Mitigation Plan Staff is seeking Council approval of a resolution to adopt the updated Tukwila Hazard Mitigation Plan as required by the State. Committee Recommendation: Unanimous approval. Forward to July 13, 2020 Committee of the Whole. B. Resolution: Bank De-Riskine Staff is seeking Council decision on a resolution to affirm support of unbanked money transfer operators and urging the Washington State Legislature to pass a financial inclusion law. Committee Recommendation: Unanimous approval. Forward to July 27, 2020 Committee of the Whole. C. Recognition of Juneteenth Staff is seeking Committee direction on next steps forthe honoring of Juneteenth as a holiday in Tukwila as requested by the Council during its adoption of Resolution 1992. Committee Recommendation: Continue to seek opportunities to spread awareness among city staff and community members; approach Equity and Social Justice Commission about a potential agenda item; survey community advocates and Equity Policy Implementation Committee for further ideas. II. MISCELLANEOUS The meeting adjourned at 6:30 p.m. Committee Chair Approval Minutes by LH 55