He works 12-hour days in a Brooklyn factory and fears disclosing his real name. But Juan, a bespectacled Peruvian who came to New York in 2000 and overstayed his visa, will happily talk about how he finally realized a few months ago that he could open a bank account. Before that, he cashed his paychecks at a neighborhood check-cashing place, and paid several dollars to do so. The former owner of a computer business in Lima, he wanted to start a business here, but figured he couldn’t because he’s undocumented. Without bona fide U.S. papers, he thought, he couldn’t open a bank account–and couldn’t establish credit or get a business loan. “America was a big disappointment,” Juan says.

Then, through internet research, he learned this fall that all he needed was his Peruvian passport, a proof of address in New York, his address in Lima, and an ITIN–an Individual Taxpayer Identification Number, issued by the IRS so that people without Social Security numbers can file tax payments. A posting on an immigrant information web site guided Juan to a particular GreenPoint Bank branch. Soon he had a checking account.

The undocumented status of customers like Juan doesn’t matter much to financial institutions. There’s no law saying a person must be in the country legally to open a bank account. In the last few years, banks and credit unions have quietly been accepting foreign consular documents as proof of their customers’ identities.

The matrícula consular, issued by the Mexican consulate to its nationals, has gained particularly widespread acceptance as a form of ID. Mexico has issued more than 1.5 million matriculas since 2002. The American Bankers Association estimates more than 200 U.S. banks among the industry’s 9,000 currently take it. In some towns in Illinois, matriculas and other consulate IDs are accepted as valid identification, even by the police. Currently, Guatemala and Ecuador issue matricula-style cards to their nationals. Other Latin American countries are considering doing so.

Some federal agencies worry that accepting foreign ID harms efforts to track financial transactions and stop the flow of cash to alleged terror groups. U.S. Department of Homeland Security Secretary Tom Ridge has warned that businesses and local authorities accept matriculas “at their own risk.” The FBI considers them “vulnerable” to fraud and forgery.

Even so, you’d hardly notice these concerns if you visited a bank today. In the current economy, where money knows no borders, dollars have ways of trumping fears about security. Immigration, after all, is big business–a fact that President Bush has as much as acknowledged with his recent proposal to legalize undocumented workers by issuing them three-year visas.

It’s not a given that the Bush plan will win legislative support. Even if it does, many undocumented immigrants are skittish: They worry they’ll be booted out of the U.S. when the visas expire. They say they’ll likely stay undocumented. And financial institutions will probably still open accounts for them, using increasingly novel forms of ID.

Even the federal Patriot Act–which demands that financial institutions keep careful records of the identification they accept–leaves plenty of wiggle room. It requires only that banks “use documentary and non-documentary methods sufficient to enable the financial institution to form a reasonable belief that it knows the customer’s true identity.” In other words, says James Hodgetts, senior vice president at the Federal Reserve Bank of New York, “Banks are given quite a bit of latitude.”

The berth is so wide, in fact, that some financial institutions and community groups have started issuing their own ID to undocumented people.

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The financial incentives for banks to get in the undocumented-worker business are impressive. Account-holders might start with balances of as little as $2,000, says Brenda Muñiz at the National Council of La Raza, a national Latino advocacy group. “But once you get these folks as customers,” she notes, “the banks can offer them other products.”

One is wire transfer of money to immigrants’ native countries, where they may be supporting family members with their U.S. wages. According to a city Department of Consumer Affairs study, wire transfers to Latin America and the Caribbean totaled about $25 billion last year, of which customers paid some $3 billion to businesses that did the transfers. Banks and credit unions have their eyes on these transfers, since they are highly profitable.

Currently, the cost to send money internationally through wire services like Western Union is about $12 for every $100 sent, according to a 2003 study by the Inter-American Dialogue, a Washington-based think tank. Banks charge about $7.

Citigroup has been a leader in the effort to break into the markets long monopolized by firms like Western Union. The financial institution now offers a checkless “Access” account that lets family members in Mexico get money from U.S.-based account holders for only $5 per transaction. Citigroup wins on both ends: It owns not just Citibank, but Banamex, the largest bank in Mexico. According to Citibank spokesperson Mark Rodgers, foreigners from any country can apply for Access with government-issued documents. “Although we have to make some adjustments because of the Patriot Act’s rules, things have not changed so much for us,” he says, pointing out that the bank has long had its own stringent ID requirements and anti-money-laundering security measures.

While Citibank is just breaking into the undocumented-immigrant market, many community-based credit unions have been in it for years. “We’re just a mile away from Wall Street, so you might think everyone would be reaping the benefits,” says Pablo DeFilippi, CEO of the Lower East Side People’s Federal Credit Union. In fact, when the credit union opened in 1986, it was the only financial institution on the East Side between 14th Street and Delancey. With Spanish and English services, it reached out to nearby residents–including immigrants, both documented and not.

To deal with undocumented immigrants’ lack of ID, the Lower East Side credit union opens non-interest–bearing accounts, which needn’t be reported to the IRS and thus don’t require Social Security numbers. Commercial banks sometimes do the same, notes DeFilippi. But seldom will they offer additional services, such as credit and loans, since few of the undocumented have a prior credit history. Credit unions will often take the risk, because their members can vouch for the person who takes out the loan. As a result, someone with no credit history–including an undocumented immigrant–can still borrow from the Lower East Side People’s credit union after a month of membership. Other credit unions have similar policies.

Credit unions often use unorthodox methods of validating identity. DeFilippi notes that his organization does drive-bys to check addresses on applications. His credit union also calls homes, and contacts references to establish that people are who they say they are.

In other communities, financial institutions are going one step further and issuing their own documentation. Chinatown’s Abacus Federal Savings Bank, for instance, was slated to issue an “internal ID card” to customers at the end of January, with a photo and the bearer’s name, birth date, address, height and weight. Undocumented immigrants can apply for the card by providing Chinese-government-issued IDs, or fingerprints, affidavits and birth certificates. Abacus CEO Thomas Sung says that if community organizations support the card, it may become the first non-governmental ID to be widely accepted in the Chinese community.

Community groups are also getting creative. At Wind of the Spirit, a grassroots immigrants’ rights organization in Morristown, New Jersey, day laborers can apply for the group’s photo ID. These cards have the holder’s photo and address, as well as a bar code and the organization’s address.

The group began issuing them last year after police detained a Guatemalan member who had no ID. He was freed after Wind of the Spirit tracked down his mother, in Mexico, and got her to send identification. To help its members, the group decided to issue its own IDs, distributing 50 of them in 2003.

Wind of the Spirit has partnered with First Morris Bank, which now accepts Wind of the Spirit’s IDs, along with ITINs, matriculas and passports, to verify clients’ identities. According to Miguel Angel Pati–o, co-founder of the organization, the police and First Morris “know we are keeping a record of who we give IDs to.” Pati–o says the bank “can come to us if anything happens.”

Anthony Lucas, who immigrated from Guatemala and now works as a gardener, visited Wind of the Spirit’s office recently. He wanted to open a bank account because his employer, who used to pay in cash, switched to checks.

But lots of immigrants still don’t know there are options out there. Ms. Chan, a sales assistant at a boutique on East Broadway in Manhattan was smuggled into the country last fall from Fujian Province in Southeastern China. She quickly landed her job, and she’s satisfied with her monthly salary: $1,800 in cash. But she has heard–incorrectly–that she can’t open a bank account, and worries that her income, which she keeps in her room, isn’t safe.

Meanwhile Juan, the Peruvian factory worker, only wishes he’d realized when he first moved to New York that he could open a bank account. “If I knew then what I know now,” he says, “maybe I’d already be an American.”

Amy Zimmer is a Manhattan-based freelance writer. Xiaoqing Rong is a reporter for the Sing Tao Daily.