It’s getting harder for immigrants to the U.S. to send money back to their countries of origin as U.S. government regulators are cracking down on terrorists and drug traffickers by pursuing their money sources. In response to the increased regulatory scrutiny, big banks stateside are simply abandoning the international money transfer arm of their businesses.
Though Mexico will be the most affected—nearly half of the $51.1 billion in remittances sent from the United States in 2012 were ultimately Mexico bound —other countries in Latin America and parts of Africa will also be sharply affected.
“This is transforming the business and may increase the costs of international money transfers,” Manuel Orozco, a senior fellow at the Inter-American Dialogue, a research group in Washington, told The New York Times.
Among major banks that have dropped low-cost money transfer services are JP Morgan Chase and Bank of America. BBVA is exploring selling off its wire unit for Mexico, and Citigroup’s Banamex USA unit has a large number of branches in Texas, California and Arizona. Banamex was created to appeal Mexicans living in the U.S., and has recently run afoul of federal regulators for it money laundering and risk assessment procedures.
“The money transfer business has become the whipping boy of regulators who want to show how tough they are,” said Paul S. Dwyer Jr., chief executive of Viamericas, a money transfer company based in Maryland with a large focus on Mexico.
The price of international transfers had been falling for the last five years, according to the World Bank, though the increased regulatory scrutiny is expected to reverse that trend.
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