Rep. Smith Urges Biden Administration to Address Banking Access Issues for Money Service Businesses in Washington State
January 5, 2022
“Many MSBs in Washington and across the country, especially those serving certain higher risk foreign countries, have been unable to obtain banking services,” wrote Representative Smith. “The lack of a bank account has a negative impact on the MSB’s long-term viability and their ability to serve consumers and presents a safety and security issue. Unbanked MSBs that have been forced to store large amounts of cash in their premises have become victims of armed robberies. These challenges disproportionately affect immigrant communities and communities of color. A study by The Right to be Banked Campaign showed that twenty-five percent of licensed MSBs in Washington State are unbanked and most of these businesses are owned by people of color. The lack of banking access also presents a barrier to federal relief – unbanked MSBs were unable to access the Paycheck Protection Program (PPP) and other federal assistance programs throughout the COVID-19 pandemic due to not having a banking relationship.”
Money service businesses (MSBs) make it possible for people in the Puget Sound and across the United States to send money to family and loved ones in other countries. These remittances serve as a lifeline for countless people and can help alleviate poverty, especially in developing countries. Unfortunately, many MSBs – primarily those that serve countries that are perceived to be higher risk – have been unable to gain access to the banking services that make it possible to transmit money abroad.
In his letter, Representative Smith urges the Treasury Department to collaborate with Washington stakeholders to develop creative solutions to address the ongoing MSB banking access crisis. The letter comes as the Treasury Department is set to develop a strategy to combat ‘de-risking’ by banks, one of the primary practices that has led to banks not serving MSBs. The Fiscal Year 2021 National Defense Authorization Act (NDAA) – led by Representative Smith – included a provision requiring the Treasury Department to undertake a comprehensive review of, and develop a strategy to, combat de-risking and its adverse consequences.
Representative Smith concluded the letter, “I applaud President Biden and the Biden-Harris Administration’s commitment to advancing racial equity and strengthening underserved communities, including improved access to the financial sector. Taking immediate steps to alleviate de-risking and unbanked MSBs, the vast majority of whom are owned by people of color and supporting communities of color, fits directly into this mission. Washington state would be a perfect place to begin fixing this problem facing our communities.”
A full copy of the letter can be found here.