If You Immigrate, You Can’t Bank

This post is by Jeff Carter from Points and Figures

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Immigration is top of mind for people all over the world.  In America, it’s our Southern border.  In Europe, it’s immigration from India, Africa and the Middle East. As countries around the world fail their people, they risk it all to go somewhere else.

When you immigrate legally to somewhere else, you run into a policy thicket that has been set up to trap the bad guys.  Bad guys meaning terrorists, drug cartels, weapon cartels and ne’er do wells who aren’t interested in participating in a civil society.  That’s too bad but every financial institution has strict rules and government mandated regulations on anti-money laundering and know your customer laws.  In the business the shorthand is AMLKYC.

One of our portfolio companies, Pipit, solves big problems for creditworthy hard-working immigrants that cannot open up a bank account due to AMLKYC rules.

Recently Ollie Walsh CEO did an interview.  Pipit has the classic characteristics of a successful startup.  Ollie is Irish and was working in London.  He couldn’t set up a bank account.  His partner Julian was standing in line one day at the Post Office paying a bill in person because he had concerns about using his credit card online.  Imagine if you moved from Ghana to London.  At least Ireland is relatively close geographically.

In the UK cash remittance market, 30% of the cash flowing out of the UK and to another is so immigrants can pay bills for people back home.  Generally, those immigrants part with 9.5% of their hard-earned dollars to send money home just to pay bills.

Banks don’t usually participate in this market.  It’s dominated by Western Union.  But, now thanks to Pipit they can-even if a bank account is impossible to open up because of AMLKYC.