The US financial services sector and illegal aliens: financial institutions legally meeting consumer demands – or social responsibility challenged business practices?

Purpose - The purpose of this paper is to discuss and evaluate the existing public and business policies which regulate and influence the operating procedures of USA, financial institutions qualifying prospective customers for their financial products and services. The specific focus of the paper is on the controversial issue of whether many of these financial institutions are recognizing forms of identification, such as the individual taxpayer identification number and foreign government‐issued documents, which are either inadequate for this purpose or inadequately secured as a legitimate form of identification. Design/methodology/approach - By reviewing key USA laws and regulations pertaining to the legal qualification of prospective customers, the author is able to evaluate (based on available evidence) the business practices engaged in by certain members of the financial services sector. Findings - The use of less secured forms of legal identification are allowing illegal aliens to gain access to a variety of financial products and services, thereby providing an environment conducive to encouraging further illegal entry and supporting residence of this population in the USA. Originality/value - The paper offers an in‐depth analysis of USA laws and regulations which appear to offer contradictory guidance to financial service companies who are required to legally identify prospective customers of their products and services. Furthermore, while recommending new legislation to harmonize a public policy approach among federal agencies, i.e. to require secure forms of legal identification which are readily available to USA citizens and legal alien residents, the paper also explores how financial institutions are capable of enhancing their corporate citizenship profile and reputation, especially to stakeholder groups concerned with enforcement of immigration laws, by exercising enhanced voluntary business operating policies.