Carlos Marin, president of Ambiotec Group, is presented with a plaque from Mario Reyna, South Texas College’s dean of technology, after giving the keynote address at the INNO’ 2017 conference.

BROWNSVILLE, RGV – Businessman Carlos Marin, co-founder of Bi-NED, the bi-national economic development zone project for the Rio Grande Valley and northern Tamaulipas, has praised Congressman Vicente Gonzalez for his efforts to help border area banks.

At a luncheon hosted by the Edinburg Chamber of Commerce recently, Rep. Gonzalez spoke about legislation he is putting forward that would loosen bank restrictions on foreign deposits put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Bank Secrecy Act (BSA).

Dr. Carlos Marin

“I applaud the efforts Congressman Gonzalez has taken to lead this very important program forward. The Congressman’s proposed legislation on loosening banking regulations to make it easier for Mexican investors to invest in the U.S. is very important for this region,” Marin said.

Since its passing in 2010, Dodd-Frank has required banks to increase oversight and reporting of international transactions, including foreign deposits. This has caused a strain on many community and regional banks that have fewer resources than larger national branches. In the Valley, some banks have even closed the accounts of Mexican investors, adding to the downturn of Mexican visitors. This has concerned Valley leaders such as Keith Patridge, president and CEO of McAllen Economic Development Corporation.

Marin said he has shared a draft white paper on a proposed Trusted Investor Program with Congressman Gonzalez and his chief of staff, José Borjón. The white paper is published in full at the end of this story.

U.S. Rep. Vicente Gonzalez

“We have also had positive discussions with the State of Texas’ bank regulating group about this issue,” Marin told the Rio Grande Guardian. “A Trusted Investor Program is a key strategy for increasing the competitiveness of our region because it addresses our critically deficient capital availability. The availability of capital is critically important to our economic growth.”

In his speech to the Edinburg Chamber of Commerce, Rep. Gonzalez said his legislation aims to help local banks.

“As many bankers know, compliance is out of control. Our small banks, and even some of our larger banks, are no longer taking Mexican National deposits,” said Gonzalez, D-McAllen. “These are billions of deposits that get invested and reinvested here in our district, and we need to find ways to make it easier, not more difficult, for them to leave these monies in our community.”

Although the proposed legislation is in the early stages of being drafted, Gonzalez would like to see a program similar to the Trusted Traveler programs under the Department of Homeland Security, where pre-screened individuals can enter the country more easily.

“I think that we should … have them get vetted, maybe [by] a hybrid between Homeland Security and Treasury, and find out where they come from, and who they are, and how they amass wealth, and have them come into any bank in this country with that card and make whatever deposit they’d like without bankers and credit unions having to play cop,” said Gonzalez. “This puts the burden on the federal government to provide relief to banks across the region, allowing them to continue to secure these deposits for our region.”

At a business leaders’ gathering hosted in Weslaco by Congressman Gonzalez and Congressman Filemon Vela in March, David Deanda, president of Lone Star National Bank, spoke about excessive regulations on the banking industry.

“The regulatory environment has required the validation and verification of BSA Bank Secrecy and it has been a detrimental effect in all banks along the border, so much so that if we have to validate and verify the source of the customers and the source of cash, it is very complex and it is very difficult to do,” Deanda said.

“I am going to tell you that I have always seen our economies between Mexico and the US as being interdependent. We depend on them more so than they depend on us because they come spend their dollars here and that affects retail, wholesale, housing, and hotels. We collect those taxes and we become very used to their source of revenue to help our cities and economies improve. One of my biggest concerns is that as we continue to focus more on that side, we are making the business relationship an immigration issue, one common theme, and it’s not. It’s two different things.

“My biggest concern and fear is that we are letting our political stance affect how we continue to focus and move forward as a value economy. I’m concerned about banks having to verify and validate every source of wealth of every customer. In my business, we know our customers. It is a family. I think we are all family in the Valley. One of my biggest fears is that we start to lose trust in each other and faith in each other as an economy of trust. It’s not like people from Mexico are not family, they are family as well.”

The Financial Crimes Enforcement Network (FINCEN) announced last week that it had assessed a $2 million civil money penalty against Lone Star National Bank for violating the Bank Secrecy Act. The news release says Lone Star has “expended considerable resources to respond to the findings regarding its BSA program” and to promote compliance with an Office of the Comptroller of the Currency Consent Order. Click here to read the FINCEN news release.

Here is Marin’s Trusted Investor Program draft white paper:

Trusted Investor Programs, Economic Development and Border Security

Given the current worldwide economic climate, which is characterized by the emergence of anti-globalization, mass customization, and the increasing competitiveness of North America vis-à-vis Asia, the United States, and its Border States in particular, have an opportunity to become the world’s leading advanced manufacturing economies.

Not only will this strengthen the economic growth of the U.S. and North America, but a concomitant increase in the prosperity of the U.S.-Mexico Border will also create an “economic border wall”: an economic barrier that will help secure our borders by reducing the underlying socio-economic forces that create illegal immigration and insecurity.

In view of President Trump’s focus on national economic policies, and the incentives it will place on re-shoring manufacturing back to the U.S., there will be an impetus for firms operating in foreign countries that primarily export to the U.S., to locate their operations to the U.S.

This is especially true for Mexican firms that, by relocating to the U.S., will be more readily able to reduce transportation and energy costs, and to tap into higher U.S. technology and resources to further innovate and increase their operational efficiencies.

In order to fully capture these opportunities, it will be necessary to further enhance the competitiveness of the Border States and regions in terms of five critical elements: Technology, Talent, Infrastructure, Leadership and Capital Availability.

Of these, capital availability is especially important. One of the major challenges to the relocation of Mexican industries to the U.S. is the difficulty that American banks face in making capital available to Mexican clients. This is due, in large part, to the excessive burdens placed by banking regulations, especially in terms of the verification of funds.

There are a number of contributing elements to this regulatory burden. They include the cost imposed on banks to verify the information, the lack of specific standards for the required verification, and the risk of potential enforcement liabilities.

The problem is so onerous, that some of the larger banks have decided to simply not serve Mexican clients. This is a significant barrier to fully realizing the potential economic development and the enhanced border security opportunities that are available on the U.S.-Mexico border. And it needs to be addressed; because the benefits of doing so will far outweigh the costs, especially if an efficient, effective, transparent and equitable process can be developed to remedy this significant constraint.

One possible solution is to develop a Trusted Investor Program along the lines of the U.S. Customs and Border Protection’s Trusted Traveler Programs. The Trusted Traveler Programs are designed to provide expedited travel for pre-approved, low risk travelers through dedicated lanes and checkpoints.

By implementing a Trusted Investor Program that provides expedited pre-approval for low risk investors, U.S. banks would be able to bank, qualify and finance foreign clients more cost effectively and with lower risk. This would increase the availability of capital for relocating foreign firms to the U.S., which would in turn lead to an increase in the number and value of manufacturing jobs in the U.S., especially along Border States.

Given President Trump’s emphasis on banking regulatory reform, re-shoring of manufacturing back to the U.S., and the renegotiation of NAFTA, the timing couldn’t be better to develop and implement a pilot-scale Trusted Investor Program focused along the U.S.-Mexico Border region, and in particular, along the Texas-Mexico Border region.