Thread: U.S. banks closing Mexicans' accounts

U.S. banks closing Mexicans' accounts

Efforts to combat money laundering hurting established businesses in Tijuana

By Sandra Dibble7:06 A.M.NOV. 9, 2014

TIJUANA — One of the oldest and largest businesses in Baja California, the Calimax supermarket chain got some unpleasant news last month: The company’s U.S. bank no longer wants its business.

This presents a problem for Calimax, where many customers pay in dollars and the products on the shelves often have been imported from the United States. The family-owned company is one of a growing number of Tijuana businesses that face the closure of their U.S. accounts as banks come under pressure to adopt stricter anti-money-laundering measures.

“They told us to come and pick up our money,” said Federico Díaz, chief financial officer for Calimax, which has 109 stores in Baja California and Sonora, with some 6,600 employees.

Word of these account cancellations has spread alarm in Tijuana’s business community. Dollars have long been a common currency here, used to pay for everything from rents to medical services to restaurant tabs. Rare is the business in Tijuana that refuses dollars.

“Where is all this cash supposed to go? Are we supposed to put it inside a shoe box under the bed?” asked José Manuel Ripa, vice president of finance for the Tijuana Chamber of Commerce, or CANACO. “We’re seeing established companies that are having problems. This isn’t good for either side of the border.”

The U.S. account cancellations have put some Tijuana businesses in a bind, as dollar deposits in Mexican banks were restricted in 2010, and until recently have been limited to $14,000 per month for businesses and $7,000 for individuals.

Though President Enrique Peña Nieto announced the lifting of the restrictions in September, the new policy apparently has yet to take effect at the border.

While not everyone has been touched by the measure, the closures by several major U.S. banks have been happening for the past two or three years, and appear to be growing.

At the Tijuana offices of Deloitte, an international professional services firm, partner Mario Díaz Carrasco knows of a half-dozen clients who have been given notice. “I can tell you it’s our big important clients,” Díaz said.

The closures come as U.S. banks have been under increased pressure to scrutinize their dollar accounts — or face steep fines if found in violation of government reporting requirements. In 2012, the British bank HSBC paid a record $1.9 billion settlement after admitting to U.S. authorities that it failed to maintain an effective money-laundering program, thus allowing Mexican drug traffickers to launder large sums through their bank.

The U.S. banks “are scared of being fined,” said José Larroque, a partner in the Tijuana office of the international law firm Baker & McKenzie who has seen clients in real estate and the maquiladora industry find themselves forced to move their funds.

For the banks, "it’s a huge reporting effort that they have to go through, and they’re weighing the differential between the amount of work they have to go through versus how much those accounts work for them,” he said.

Enrique Hernández, an international tax partner at Procopio law firm in San Diego said the banks “sometimes assess that being in the international market is too risky for them. ... It’s something we’ve been seeing for several years now.”

In Baja California, where dollars are a common currency, such policies reverberate more strongly than in Mexico’s interior, said Mario Escobedo Carignan, a longtime business leader in Tijuana.

The intensity of economic exchange between Tijuana and San Diego makes businesses particularly sensitive to the issue, and even more so as the holiday season approaches, he said:

“Mexican-Americans are coming down with dollars. We aren’t going to know what to do with them.”

Four years ago, in 2010, Tijuana’s business community erupted in protest when Mexico’s federal government placed limits on how much U.S. cash could be deposited into Mexican banks. The aim was to limit the financial resources available to drug trafficking organizations.

With Mexico’s crackdown, U.S. authorities noticed a new trend: an increase in the flow of drug dollars from Mexico to the United States, funds that have tradionally flowed largely in the opposite direction.

Michael Carney, a deputy special agent in charge for U.S. Immigration and Customs Enforcement in San Diego, said money exchange houses in Mexican border cities would typically consolidate the cash and ship it through armored vehicles, making it difficult to trace.

“The armored car service would report the cash as belonging to the casas de cambio (money exchange houses),” Carney said. “It was difficult to impossible to verify the true owners of the cash.”

Suspicions were especially raised at the Otay Mesa Port of Entry.

An Associated Press analysis found that declared cash at the port spiked from $10.6 million in 2009 to $1.17 billion in 2011 and $1.78 billion last year. Last August, the U.S. Treasury Department began requiring enhanced cash reporting by armored car services at the Otay Mesa and San Ysidro ports of entry.



Some relief was expected in Mexico after President Enrique Peña Nieto announced in September that the limit on dollar deposits in Mexican banks would be lifted for anyone who passes a certification process. But at a meeting at CANACO last week, business leaders said many Tijuana banks have yet to lift the limits.

Marco Antonio Blázquez, a senator from Baja California who attended the meeting, suggested that “this is a period of adjustment. We need to reach the institutions and correct officials to apply pressure” to lift the restrictions.

Mexican businesses say they still need American bank accounts--if only for the convenience of paying U.S. vendors directly and avoiding costly cross-border transaction fees.

Many are loath to publicly admit a major U.S. bank has rejected them. CANACO did not provide a figure for how many members were affected, but leaders said Chase Bank is known to have closed a good number of accounts.

Suzanne Ryan, a spokeswoman for Chase, would not discuss specifics, but said “we regularly review cash transactions for suspicious activity. If detected we may close the accounts.” She added: “You can’t assume because we close an account it has to do with anti-money laundering measures.”

U-T San Diego was able to see one closure notice, both with the bank’s name and the business blacked out. “We regret to inform you that we can no longer continue our relationship with your firm,” it stated, suggesting that the business “move its banking relationship to another banking institution.”

The letter explained that the bank “has recently increased its account monitoring requirements,” for commercial customers, and “undertaken a review of our current deposit account relationships to determine whether the size and type of the relationship sufficiently warrants the increased amount of oversight required.”

Gilberto Leyva, CANACO’s president, said U.S. banks twice have asked him to withdraw his money. He is the owner of a business in Tijuana that purchases used vehicles at auctions in the United States and sells them in Mexico.

Union Bank was the first, and so he transferred the funds to Chase Bank, but then was canceled there as well, he said.

“It’s all because I used a lot of cash. I said, ‘Look into my background since the moment I was born, and you’ll see that there is nothing illicit, it’s all legal.”

But Leyva has now found a place to put his money: First Bank, a family-owned bank based in Missouri with four branches in San Diego County.

Chula Vista-based Vibra Bank also has been opening its doors to Mexicans turned away from the larger institutions. “I can tell you we have been beneficiary of some very nice accounts as a result of it,” said Frank Mercardante, the bank’s president and CEO.

The bank has welcomed a dozen of these customers over the past six months, he said. “They’re good solid citizens. We think there’s an opportunity for us provided we do our proper diligence from a compliance standpoint.”

sandra.dibble@utsandiego.com
(619) 293-1716

http://www.utsandiego.com/news/2014/...ana-san-diego/

Some banks pulling back from doing business on border

12-01-2014

http://www.alipac.us/f19/do-not-disc...sumers-317150/

I don't support this closing of accounts as part of an "anti-money laundering" deal, because they aren't proving the money laundering activity before closing the account. This is wrong!

Other Voices: Drug war complicates border banking

The Imperial Valley Press10:23 p.m. PST January 30, 2015


(Photo: Desert Sun file photo)

The Imperial Valley press published this editorial on Jan. 27:

Border banking a tough sell these days

Banking on the border has become tough business. While not all financial institutions that have seen themselves curtail operations in cities like Calexico will attribute that to federal anti-money laundering efforts, it has had at least a tangential effect.

The most recent bank to announce its closure is the Rabobank branch in Calexico. Officials have not said the decision directly relates to anti-laundering regulations, but they have acknowledged heightened challenges to doing business on the border.

Chase Bank has closed its branch in Calexico and we hear other banks and credit unions have severely changed the parameters and numbers of customers they deal with making large cash deposits.

One such institution is First Imperial Credit Union, whose CEO is still doing business in Calexico but has changed how he does it, being selective with whom FICU does business.

It’s the price of doing business on the border, an increasingly difficult area to bank as law enforcement agencies try to find multifaceted approaches to crack down on drug cartels and drug-related crime.

As part of the overall stepped-up monitoring, it becomes cost-prohibitive for banks as they devote more personnel to checking on those accounts and put themselves at risk of hundreds of thousands of dollar of federal fines for lax accounting and monitoring.

At some point, it just becomes easier to pull out of Calexico altogether or stop accepting big cash transactions.

In Calexico that is difficult. There are many businesses who deal with large sums of cash, legitimate businesses that find themselves burdened with simply trying to do daily business, according to Calexico Chamber of Commerce officials.

It’s a double-edged sword for the border region. No one is going to put up a strong argument against the need to stop drug money from dirtying legitimate businesses and banking operations.

However, at what point do all banks decide it is too difficult to operate along the border? Will border banking become a niche operation, where choices become very limited? It already appears headed in that direction.

http://www.desertsun.com/story/opini...king/22639581/

6/15/2015

http://www.alipac.us/f12/mexican-car...-times-320372/

7/23/15

http://www.alipac.us/f12/citigroup-w...dering-321515/

Feds to investigate rash of border bank closures