The US financial services sector and illegal
aliens: financial institutions legally meeting
consumer demands – or social responsibility
challenged business practices?
Thomas A. Hemphill
Abstract
Purpose – The purpose of this paper is to discuss and evaluate the existing public and business
policies which regulate and influence the operating procedures of USA, financial institutions qualifying
prospective customers for their financial products and services. The specific focus of the paper is on the
controversial issue of whether many of these financial institutions are recognizing forms of identification,
such as the individual taxpayer identification number and foreign government-issued documents, which
are either inadequate for this purpose or inadequately secured as a legitimate form of identification.
Design/methodology/approach – By reviewing key USA laws and regulations pertaining to the legal
qualification of prospective customers, the author is able to evaluate (based on available evidence) the
business practices engaged in by certain members of the financial services sector.
Findings – The use of less secured forms of legal identification are allowing illegal aliens to gain access
to a variety of financial products and services, thereby providing an environment conducive to
encouraging further illegal entry and supporting residence of this population in the USA.
Originality/value – The paper offers an in-depth analysis of USA laws and regulations which appear to
offer contradictory guidance to financial service companies who are required to legally identify
prospective customers of their products and services. Furthermore, while recommending new
legislation to harmonize a public policy approach among federal agencies, i.e. to require secure forms
of legal identification which are readily available to USA citizens and legal alien residents, the paper also
explores how financial institutions are capable of enhancing their corporate citizenship profile and
reputation, especially to stakeholder groups concerned with enforcement of immigration laws, by
exercising enhanced voluntary business operating policies.
Keywords Customers, Financial services, Immigration, United States of America
Paper type Viewpoint
Introduction
According to the Pew Hispanic Center (2006), a non-partisan Washington, DC-based
research organization, there are between 11.5 million and 12.0 million illegal aliens now living
in the United States (USA), with an estimated 57 percent identified as Mexican nationals
(Passel, 2005)[1]. USA immigration law violators are not immigrants; they are aliens who are
in violation of law, specifically the Immigration and Nationality Act of 1952, having decided to
enter the USA intentionally or overstay their visa (Weissinger, 2003). In today’s business
environment, many American businesses are now catering to the consumer demands of
illegal aliens. For executives in the USA financial services sector, which includes commercial
banks, mortgage and securities brokerages, and insurance companies, this market
segment is considered underserved and thus, a potentially lucrative profit opportunity. But
there remains a perplexing dilemma in this market situation: Should the American financial
services sector offer its services to individuals who have knowingly violated USA immigration
laws by illegally entering or remaining in the USA? If so, how does this policy square with a
DOI 10.1108/17471110810909911 VOL. 4 NO. 4 2008, pp. 517-526, Q Emerald Group Publishing Limited, ISSN 1747-1117
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SOCIAL RESPONSIBILITY JOURNAL
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PAGE 517
Thomas A. Hemphill is
Assistant Professor based
at the School of
Management, University of
Michigan – Flint, Flint,
Michigan, USA.