Thomas Sung, chairman for the Abacus Federal Savings Bank, a community bank in Chinatown, said his bank is in trouble again. Worse trouble. Previously there was a rush on the bank due to a false rumor that the bank was insolvent. This time around the challenge may be insurmountable. The Patriot Act is far more potent than a false rumor.

Abacus does not have terrorists as investors or clients. The fact that the bank accepts undocumented immigrants as account holders is intolerable to the government. After October 1st, the bank cannot accept identification from the undocumented.

“We understand the importance of national security. But I have to say that Section 326 of the Patriot Act will be a big blow to our community banks, and a nightmare for undocumented immigrants,” said Sung.

Section 326 is the Customer Identifying Program (CIP), which sets the banks up in the frontline in war against terrorism. CIP requires banks to identify their clients by only accepting official photo identification. Banks must keep information on clients such as birth date, profession and so on, and report any suspicious transactions to the government. Examples of the latter are if deposits do not match the client’s income history.

As many as ten Chinese banks doing business with the exploding undocumented immigrant community are affected by the new law.

Abacus has a very good reputation among its clients for the ease with which one can open an account. It is one of the few banks that accepts foreign identification, guarantees from relatives, and even thumb impressions. Most of its 60,000 clients are undocumented Chinese. That was also the reason for the rush on the bank this spring when there was a rumor about the insolvency of the bank. Abacus is insured under the FDIC but its clients were not sure if the deposits of undocumented immigrants would be protected by this Federal insurance.

“There are many kinds of risks in the banking industry. We just survived an operational one in the spring. This new law is another one. The biggest losers will be the undocumented who work very hard and pay taxes,” said Sung.

Sung has asked the Treasury Department if foreign identification, such as a Chinese passport or resident identification can be acceptable. He also contacted the Chinese embassy to see if they can issue a card to the undocumented, as the Mexicans do for their people.

In New York’s Chinatown alone, 10,000 people will be affected by the new law.

Qingquan Chan, of the American Fujianese Association, said that the new law could increase crime. Many Fujianese are illegal immigrants and owe large sums of money to the people who brought them over. They work twelve hours a day to pay that off. If they cannot safely put the money they earn daily in a bank, they will be carrying it everywhere they go.

The Chinese community in general will also be affected because it’s traditional for people to deposit large amounts of cash. The new law requires banks to report transactions of over $10,000. Chinese will react by depositing smaller amounts of money over time, which will also be considered suspicious under the law. Banks will have to report such “structured” transactions to the Financial Crime Enforcement Network.

Abacus is hiring five more staff to deal with the changes the new law has brought—the installation of new software, training etc. This increases the cost of banking by 30 percent per account. “The banks use to relish attracting clients. Now the game will be about cutting costs,” said Sung.

This article was written as part of the Ethnic Press Fellowship of the Independent Press Association-New York.