Late last year, Senator John McCain of Arizona sent a letter to the heads of Bank of America, Wells Fargo, Citigroup and JPMorgan Chase requesting information about bank closures along the border. In addition to the closure of banks near the southern border, some banks were iimplementing stricter cross-border banking requirements and reducing services offered to customers.

"These actions have not only made it more difficult for certain Arizonan entrepreneurs, who own or manage cash-intensive businesses, to obtain the necessary capital to run those businesses, but have also presented new obstacles for companies that do business in both the United States and Mexico" reads the letter sent by Senator McCain in September of last year.

While the Senator's office has not made the responses from the banks public, it appears as though he is pressing forward with the issue and has called for a hearing before the senate Committe on Banking, Housing and Urban Affairs to examine the banks' pullout from states neighboring the border with Mexico.

In Nogales, Arizona, for example, Banamex USA, JP Morgan Chase and Bank of America closed one or all of their branches. Chase alone closed close to 5,000 small foreign business accounts, some of which had been opened more than fifty years ago.

Banks in question attributed the closures to the economic decline of the border area, the rise of online banking services, and regulatary and compliance burdens. Burdensome regulatary compliance costs as a result of anti-money laungering regulations are expensive to implement, and banks face steep fines or audits for failure to comply with the regulations. As such, many have opted to avoid the risk altogehter and pull out.

Banking regulations tightened in the face of what the U.S. Justice Department stated was the banks' "blatant failure to implement anti-money laundering controls. " In 2012, HSBC was fined $1.9 billion for allegedly allowing Mexican and Colombian drug cartels to launder $881 million from 2006 to 2010. Chase has also had to pay billiions in fines over the years as a result of inadequate anti-money laundering monitoring.

The closures have had a especially negative impact on cash-intensive business that operate on both sides of the border and need U.S. bank accounts to pay suppliers or get paid by customers.

For an economy that is just recovering from a recession, these bank closures put a strain on the local economies that are heavily dependant on cross-border transactions. According to McCain's letter, "as regulatory pressures increase and compliance costs continue to rise, it is crucial for the economic vitality of border communities that local businesses continue to have access to necessary banking services."

Transparent and honest businesses are now bearing the burden of regulations meant to crack down on criminals. But, according to expertes, inevitably what will happen is that this will force legitimate business to become more inefficient, or into illegitimacy. And while the U.S. Treasury office has urged banks to consider businesses on a case-by-case basis, the reality is that banks prefer to close down a risky sector of its business rather than investing money to implement better policies or monitor accounts.

According to the U.S. Census Bureau, U.S. goods exports to Mexico were 216 billion dollars in 2012, equaling 277.5 billion dollars. The United States is Mexico's largest trading partner, buying 77.5% of Mexican exports in 2012, equaling 493 billion dollars. Mexico exports more to the United States in goods and services in one month than it does in one year to the 27 countries of the European Union. Over the past three years, these figures have continued to increase.

As reported by the San Diego Union Tribune in November of last year, it is not just the mom and pop businesses that are at risk of bank closures. Calimax, one of Baja California's biggest super market chains, had its U.S. bank. With many customers paying in U.S. dollars, and suppliers in the U.S. for imported products, this leaves Calimax in a tricky situation as banks in Mexico also limited U.S. dollar deposits in 2010 as a way to fight drug fueled money laundering.

Many business owners have had one account closed down and have switched to another bank, only to lose that account shortly after. The domino effect of this, of course, is that if businesses are forced to rely on cash transactions it makes the businesses less transparent and actually increases business vulnerability to money laundering. If nothing else, it makes the cost of doing business higher and will inevitably force businesses to pass down the increased costs the consumer in the form of higher prices for goods and services.

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