How does an unhoused person open a bank account?
That’s what one homeless man in Taos asks himself each time he squirrels money away in the backpack he lugs around Taos each day. What he lacks is a permanent address.
“I just had to come forward to my employer Friday [Aug. 1], and tell them I was living at the NEST homeless shelter and couldn’t get a bank account,” the man, who spoke to the Taos News on condition he be identified only by the pseudonym "Mr. Smith," said. “They kept telling me, ‘You need a bank account because we don’t want to write you checks every month.’ That’s my private personal information that I had to disclose to my employer.”
Despite his job, Smith can't afford the cost of rent in Taos, where renters pay 9 percent more per month than the national average, according to Zillow estimates. Without a bank account, Smith said he has an even deeper hole to climb out of because it affects his job prospects and his ability to save money anywhere but on his person — making him a possible target of thieves.
Smith said he has been denied a bank account at three banks in Taos: U.S. Bank, Nusenda Credit Union and Centinel Bank. At least one wouldn’t accept a formal letter from the NEST shelter indicating the shelter's address is his address.
“Now, I have to get paid by a paper check, go with my manager to his bank, and sign my check over to him to get the cash,” Smith said. “He has to take time out of his day to drive me over there to do this, then I have to carry around this cash on me because I can’t store it in a bank.”
According to Federal Reserve data, approximately 6 percent of Americans were unbanked in 2023, meaning millions of households are without access to savings accounts, checking accounts, credit cards and debit cards. Among those who make less than $25,000 per year, 23 percent do not have a bank account.
In an increasingly cashless society, that poses a problem for people with no address besides a P.O. box, UPS mailbox, business address or homeless shelter.
“We’re people staying in a temporary shelter who get kicked out at 7:30 in the morning and have to carry all of our belongings with us — who can’t open bank accounts or get a job to begin with,” Smith said. “It’s such a frustration beyond anything you could imagine.”
Banks’ hands are somewhat tied by the federal Patriot Act, said Allen Suazo, a customer service representative at the Centinel Bank where Smith was denied an account. The act expanded intelligence and law enforcement agencies' powers to enforce national security.
“I think the terrorists involved in [9/11] had a P.O. box listed for their bank address,” Suazo said. “Because of the Patriot Act, we require a lot more things to open an account than we used to back in the ‘90s and ‘80s.”
The Patriot Act requires banks to adhere to regulations designed to detect money laundering and other terrorism-related financial crimes. Banks must verify an applicant resides in the U.S., then cross-check their information in a “check system” that detects unpaid balances at other institutions.
To open a bank account at Centinel Bank, U.S. citizens must provide one form of government ID, like a valid driver’s license, state-issued ID, military ID or passport. If the address on their government ID doesn’t reflect their current residence, applicants must also provide a social security number and proof of physical address, like a utility bill.
Non-U.S. citizens must provide two forms of government ID, like a passport, resident alien card or matricula consular card, for example. They also need an Individual Taxpayer Identification Number and proof of physical address if their current residence doesn’t match.
“For people who either owe money to another bank or overdrew their account, then never paid it off, that’s something that all banks can see," Suazo said of check systems. "They can then say, ‘You never paid this bank back, unfortunately, so we’re not able to bank with you today.'”
Check systems also identify people that “Know Your Customer” regulations call “politically exposed persons,” typically politicians. The check system flags them based on the fact that politicians have greater power to engage in illicit financial activity.
Suazo couldn’t say why Smith was rejected, but is unaware of anything that prevents them from accepting a letter from the NEST.
Nusenda Credit Union told him they required a second form of photo ID.
“I did have two forms of photo identification,” Smith explained, “but I got my passport and my social security card stolen … I mean, how many Americans have two forms of photo identification? It’s really not that many unless you have a passport, you’re pretty much going to just have your driver’s license.”
Because Smith doesn’t have his passport or social security card, he might need a new ID altogether. NEST’s address isn't on his government ID's address. Augustine Fernandez, branch manager of Taos’ U.S. Bank, said that might be necessary.
“I wouldn’t know until I put him into our database and try the application process,” Fernandez said. "But we can possibly take this letter.”
U.S. Bank in Taos requires valid government-issued ID, proof of residency and a $25 deposit. Fernandez said there’s no policy that prohibits anyone from using a temporary address as proof of residency.
Accepting a letter from the NEST is at the bank's discretion.
“It really just depends on the individual,” Fernandez said. "Our demographics are far and wide. We have individuals that are homeless that do bank with us. They get their social security deposited, withdrawn and so forth."
An inability to bank is just one challenge that homelessness presents.
“Doing normal day-to-day things becomes profoundly difficult, like taking a shower,” Smith said. “There’s no shower at the homeless shelter. You have to get a shower voucher, go to the Youth and Family Center, present it, then you can shower. But, it’s a really long way to get there.
“What we need most is a place where we can exist during the day,” he said. “Readily available washing machines and lockers to store our stuff, those are the things we need. We have no place to exist."
Suazo said banking could get even more difficult for the country's most vulnerable people. The federal government said in July it will cease issuing paper checks.
“ We might encounter this situation more often in the future,” Suazo said. “Social security has issued letters to people saying they’re no longer issuing paper checks anymore. People that were able to go by without a bank account, taking it and cashing it somewhere, can’t.”
