Banks shutting down local wire transfer accounts

LYNN – Grocery shop owner Javier Rincon was surprised when his checks to suppliers bounced last month.He and his wife run a profitable shop in downtown Lynn, selling everything from cigarettes to the ability to wire money to Latin America.The Central Avenue shop is one of dozens of immigrant shops in Lynn that provide services for immigrants to wire money back to their families. Contrera’s Grocery sends about $15,000 in cash every day to South America, Rincon said.But Rincon said he recently received a letter from Bank of America telling him the bank was closing his account because of the wire transfers his business does. He has $15,000 holed up in the closed account that he can’t access, wreaking havoc on his finances.”They almost ruined my business,” Rincon said inside his store during a recent interview.Joanna Pena, the owner of Union Travel on Union Street, said she received a similar letter from Eastern Bank around the same time.”They wanted nothing to do with anything with my name on it because I do money transfers,” she said.Both business owners say they haven’t received a straight answer from the banks as to why their accounts were closed. But Pena and Rincon said they believe it is because they offer customers a place to wire money.That’s exactly the case, said Joe Bartolotta, a spokesman for Eastern Bank.Bartolotta said the federal government requires banks to heavily regulate clients who wire money or provide other check-cashing services.As a result, he said it’s often too much paperwork for a bank to monitor a business like Union Travel or Contrera’s Grocery, especially when Eastern Bank would rather have customers use its own company to wire money.”It’s not in our interest from a business standpoint or from a financial-services philosophy to encourage people to use these services,” Bartolotta said.And Bank of America wouldn’t close an account without good reason, said T.J. Crawford, a spokesman for the company.In an e-mail, Crawford declined to comment on Rincon’s case, but did say Bank of America serves businesses of all sizes that provide wire-transfer services for their customers.”While concerns with certain wire transfers may be a part of that reason, the mere fact that they are offered would not be,” Crawford wrote.Wire transfers don’t pose as much of a risk for smaller banks, said Adam Sherman, the finance manager at Brotherhood Credit Union, a North Shore bank with offices in Marblehead and Lynn.”From what I understand, the bigger banks find it more of a hassle to deal with mom-and-pop stores when they could be dealing with a larger business account,” Sherman said. “They’re really not looking for these types of accounts and are trying to push them out.”Brotherhood Credit Union is usually willing to provide banking services to businesses that wire money, but Sherman said that may not last long as the financial sector becomes more skittish about wire transfers.Sherman said the recent raid in which police charged eight Lynn store clerks with using federal food-stamp cards to deal drugs didn’t help the situation.”The tough thing is, we don’t know where the money’s coming from and where it’s going,” he said.But Rincon of Contrera’s Grocery dismissed those explanations as excuses. He said the IRS audited his businesses this winter and found nothing wrong with it, and when he opened his bank account with Bank of America two years ago, he was honest about the fact he provides money transfers.”I have nothing to hide,” he said.Pena of Union Travel said businesses in Lynn depend on wire services to bring customers into their stores.”It’s not the money that we make, it’s the service we give to people having everything here and being a flexible company,” she said.Most businesses that offer money transfers contract the actual wiring to companies like Western Union. Customers pay a fee, about $5 for every $500 they want to wire, and the wiring company splits the fee with the local business, Pena said.The local office for