Category: Archive

Last orders for bar banking?

February 17, 2011

By Staff Reporter

The amendment’s stated aim is the restricting of the flow of money to terrorists.
But its language is wide ranging and one member of congress is predicting that the effects of the provision will reach into those bars that still cash checks for immigrants, most often those who are working while undocumented.
Bar banking, as it is sometimes called, has provided a financial lifeline for huge numbers of undocumented Irish over the years.
It was particularly prevalent during the 1980s and early 1990s when the undocumented population peaked in cities such as Boston, New York and Philadelphia.
The practice has trailed off in more recent years but still occurs in some locales.
By virtue of their illegal status, the undocumented have long been unable to open regular bank accounts.
But over the years certain bars stepped into this financial gap.
The transaction is simple and usually occurs in a neighborhood bar where the check carrier is known to bar staff.
The paycheck is counter signed and handed over the bar by the individual who then spends part of its sum total on the premises.
He or she later leaves with the cash balance.
Terrorism might be the target of the revised Patriot Act amendment – authored by Rep. Melissa Hart, a Republican from Pennsylvania – but New York Democratic representative Joe Crowley believes that it will have additional and far reaching consequences.
The amendment, Crowley said, amounted to a money laundering provision that would result in the bar checking practice being forbidden to the point of extinction.
Crowley, a member of the House Committee on financial Services, told the Echo that bar owner could potentially find themselves open to prosecution under federal RICO (Racketeering Influenced and Corrupt Organizations Act) laws.
The Patriot Act, first passed in the wake of the 9/11 attacks, was reauthorized by the House of Representatives before Congress broke up for the summer break.
The Senate is due to consider the measure when Congress resumes after Labor Day. The Hart amendment was opposed by a minority of House members and will likely come under renewed critical scrutiny when the Senate runs its eyes over the entire act in September.
The Hart amendment to what is fully entitled the “USA Patriot and Terrorism Prevention Act of 2005” does not specifically refer to bar banking. But the practice would appear to be covered by the amendment’s targeting of so-called “paperless banking.”
In a statement, Hart’s office said that the congresswoman’s amendment deals with the “potential threat” posed by money transactions conducted through “Hawalas.”
“Generally, a Hawala is a system of brokers that provide a paperless banking system enabling individuals to transfer large sums of cash from one country to recipients in another country without the funds ever crossing borders or being recorded.
“Experts have long suspected that Hawalas are used by terrorists to funnel money to finance their activities,” Hart said in her statement.
Hart’s amendment, according to the release, “specifies stronger penalties for those caught financing terrorist activities, enhances the ability of law enforcement officials to prosecute terrorist financing conducted through Hawalas and tightens restrictions on the misuse of Social Security numbers.”
The amendment substantially raises fines and prison sentences for individuals deemed to be funding terrorists.
But the Patriot Act also covers a broad swathe of non-terrorist activities including so-called illegal money transmitters the “unlawful employment of aliens” and the obtaining of funds through misuse of a social security number.
Advocates for the undocumented have lately been complaining that politicians in Washington have been too closely blending the issues of immigration reform and national security.
The main immigration reform proposals currently before the House and Senate place heavy emphasis on security.
The Patriot Act is a specific security measure which, according to Rep. Crowley, has the potential, as a result of the Hart amendment, to reach deeply into a world occupied by individuals who, while illegally present in the U.S., do not pose a terrorist threat to the nation.

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