Check, mate

One amendment to the controversial act has been highlighted by critical members of Congress for its potential and lasting effect on the longtime practice of bar banking — for many undocumented immigrants the only means by which they can turn paychecks into negotiable cash.
The current Patriot Act, passed in the aftermath of Sept. 11 and originally due to expire Dec. 31 last, has been extended twice by Congress.
Sixteen of the act’s provisions are now due to expire March 10 but will be replaced by provisions in the revised, permanent version.
Much of the Patriot Act debate, which has seen Democrats and some Republicans on the same side, centers on the degree to which the government can scrutinize personal and business financial records.
Bar banking is one business transaction that has come under particular scrutiny from Patriot Act supporters on Capitol Hill — so much so that it last year led to an amendment being introduced by a member of the House of Representatives.
The amendment’s stated aim was the restricting of the flow of money to terrorists.
But its language was wide ranging and led to predictions that its effects would reach into those bars that still cash checks for immigrants, most often those who are working while undocumented.
Bar banking, as it is sometimes called, has for years provided a financial lifeline for the undocumented Irish.
By virtue of their lack of status, the undocumented are unable to open regular bank accounts.
But over the years, certain bars serving immigrant communities in various cities have stepped into this financial gap.
The transaction is simple and usually occurs in a neighborhood bar where the check carrier is known to bar staff.
The paycheck is counter signed and handed over the bar by the individual who then spends part of the cash total on the premises. He or she later leaves with the cash balance.
This is the relatively innocent manifestation of bar banking.
But one member of the House of Representatives saw the potential for a more sinister version.
Rep. Melissa Hart, a Republican from Pennsylvania, last year drew up an amendment which, according to critics, carried the potential to treat even the most benign form of bar banking as an act of money laundering punishable under wide ranging anti-terrorism laws.
One critic, Rep. Joe Crowley, a member of the House Committee on Financial Services and a co-chair of the Ad Hoc Committee for Irish Affairs, said that under the Hart amendment, a bar owner could potentially face prosecution under federal RICO (Racketeering Influenced and Corrupt Organizations Act) laws.
The Hart amendment does not specifically refer to bar banking. But critics, including Rep. Crowley, have stated that the practice would appear to be covered by the amendment’s targeting of so-called “paperless banking.”
Hart’s office is on record as stating that the congresswoman’s amendment deals with the “potential threat” posed by money transactions conducted through so-called “Hawalas.”
Widely prevalent in some immigrant communities, a Hawala is a system of unofficial brokers providing a paperless banking system enabling individuals to transfer cash from one country to another without the funds ever crossing borders or being recorded.
“Experts have long suspected that Hawalas are used by terrorists to funnel money to finance their activities,” Hart stated when she first introduced her amendment.
The amendment, according to an explanatory statement, “specifies stronger penalties for those caught financing terrorist activities, enhances the ability of law enforcement officials to prosecute terrorist financing conducted through Hawalas and tightens restrictions on the misuse of Social Security numbers.”
The amendment substantially raises fines and prison sentences for individuals deemed to be funding terrorists.
But the Patriot Act also covers a broad range of non-terrorist activities including so-called illegal money transmitters the “unlawful employment of aliens” and the obtaining of funds through misuse of a social security number.
A permanent act that includes the Hart amendment in its original form, has, according to Crowley, the potential to reach deeply into a world occupied by individuals who, while illegally present in the U.S., do not pose a terrorist threat to the nation.
In recent weeks, negotiators on Capitol Hill have been attempting to more clearly define the scope and intentions of the amendment which, according to one well placed source, will definitely end up being included in the permanent Patriot Act.
Some elements of the amendment, according to the source, have been removed or changed to the point that the concerns of congressional critics have been met.
“It should be okay as far as bar banking is concerned. Cashing pay checks should generally be fine,” the source said.
How the law is ultimately applied will, however, depend on particular circumstances. It is expected that law enforcement agencies will have the power to evaluate the nature of particular transactions.
If, for example, it was determined that a bar knew that money it was handing over in exchange for checks was ultimately going to a terrorist group it could expect to be rigorously investigated under Patriot Act provisions.
Negotiators, however, are taking the view that law enforcement agencies will exercise discretion when it comes to bar banking.
The money laws, said a Capitol Hill observer, needed to be “tight but realistic.”
Sending money overseas to family members should not be a major concern, the observer said.
The Senate is expected to vote of the revised Patriot Act this week with the measure then going to President Bush for his signature next week.