INVIP: Investing in People project

A research project co-funded by the European Commission involving NGOs from five EU countries, namely Portugal, Spain, Italy, Greece and Cyprus was carried out between 2007-2009 in an endeavour to identify good practices in the field of banking and credit services towards third country nationals. The project, entitled “Investing in People” aims at promoting integration of third country nationals in Europe. What these five countries have in common is the fact that in all five countries immigration from third countries has increased significantly in the last decade and they have either become or are on the verge of becoming full-fledged immigration receiving countries, after decades of being countries of emigration. The percentage incidence of immigrants on the population of these countries varies from an outstanding record of 20 per cent in Cyprus to 11.4 per cent in Spain; from 7.3 per cent in Greece to 5.6 per cent in Italy and 3.3 per cent in Portugal. Also, in all five countries, immigrant workers occupy mainly low-skill and poorly paid segments of the labour market, a situation which is clearly policy-induced and rarely demand-driven. A significant presence of irregular immigrants is reported in all five countries. Repeated legalisation exercises in the case of Italy have made it possible for about 1.2 million migrants to regularise their positions between 2002 and 2006. In all five countries, restrictive immigration laws have proven ineffective in terms of limiting unauthorised entry or work. In all countries studied except Italy, little or no attention has been dedicated to the issue of migrants’ access to and use of banking and credit services so far.

The research has shown that immigrants have access to some banking and credit services although at varying degrees in the fives countries and subject to different regulations and limitations; irregular migrants are completely excluded. In general, migrants are required to meet additional conditions compared to those requested of nationals, in order to be able to open current or savings account. In Cyprus, banks will monitor the amounts deposited and transferred and if these exceed what the banks deem reasonable according to the account holder’s income, then they will investigate the case to ensure compliance with money laundering legislation. This is a rather absurd practice, given that transactions of, say, 2,000 Euros may well be in excess of a migrant’s lawful income, which can be in the area of 300 Euros per month, but it can hardly be a suspect amount for money laundering purposes. The fact that, as a matter of practice, banks consider any amounts in excess of a migrant’s income to be ‘suspect’ amounts, may be the result of prejudice or even compliance with instructions from the immigration authorities. No such information emerged from the interviews and the assumption amounts to mere speculation. However, an officer of the Central Bank interviewed for the purposes of this research stated that banks have an obligation to investigate transactions involving “large amounts”, although the relevant Central Bank Directive to the commercial banks does not specify what is “large”, rather, it calls upon the banks to investigate “suspect” transactions. In the absence of instructions from the immigration authorities, it is presumably the banks’ own interpretation that amounts in the area of 2,000 Euros may be suspect for money laundering.

In some of the countries studied, banks and credit institutions have designed specific products for immigrants. However Cypriot banks do not offer specialised services to economic migrants. Instead they offer them some of the services offered to locals under certain conditions, which do not apply to locals. Various stereotypical perceptions about specific national groups and their alleged unreliability or propensity to crime act as effective barriers to access to banking services by members of such affected groups. From the discourses by bank officials, it is evident that there is some form of undeclared racial profiling practiced. In addition, stereotypical perceptions were expressed by bank officials about “illegal” migrants being prone to drug trafficking, money laundering etc. The link between migrants using the banking system and allegations of money laundering appears to be strong in all discourses emerging from the interviews with bank officials, including Moneygram whose clientele is 80 per cent migrants. Moreover, migrants in general are perceived by bankers as not being credit-worthy because they are ab initio considered as unable to provide the collateral. This approach is effectively shutting the door in the face of those migrants who meet the criteria set by the credit institution.

Present levels of integration of migrants in the banking system still leave out a high percentage of immigrants who, potentially, can meet the requirements for access set by most banks. Evidence from the research suggests that other factors contribute to keeping a significant share of this group of migrants away from banks. Such factors include poor knowledge of the language of the new country of residence; lack of understanding of banks and their practices and procedures; restricted opening hours etc. In all the countries studied except Cyprus, the banks have adopted outreach measures aimed at attracting immigrant clients, such as translating existing information brochures or producing specific information / publicity materials in the languages of some of the largest immigrant groups in the areas where they operate. Some have set up multimedia information centres that can accommodate more languages at relatively low cost. Others are experimenting with employing, in some of their branches, multilingual staff from immigrant background who are able to communicate effectively with immigrants from the groups prevalent in the areas where such branches are located. The report identifies a number of these measures as possible good practices that, if implemented on a large scale by most banks, can make outstanding contributions to the integration of many more migrants into the financial and banking system.

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