US Banks Shun Money Transmittal

U.S. banks are keeping their distance from money transmitters sending cash to Mexico, as worries about money laundering and increased regulatory scrutiny ensue.

According to a report in The New York Times, while Mexico is the largest destination for money transfers from the U.S., banks no longer view it as an opportunity. That’s even with The New York Times, citing the World Bank, reporting around $24.3 billion was sent from the U.S. in 2017, accounting for almost all the cross-border money that came into Mexico from around the world.  But it’s not only money transmitters who are suffering from the moves on the part of the banks. The New York Times reported mom-and-pop convenience stores are feeling the pain. It also means limited options for those living in the U.S. who want to send cash home. They may be forced to do it by sending cash in the mail, which could be risky. The paper, citing the Conference of State Bank Supervisors, noted that more than a quarter of U.S. households rely on nonbank financial institutions, including money transmitters, for their banking needs. “Large banks are just walking away from the business completely,” Peter Ohser, an executive vice president of MoneyGram International, told the NYT in the report.

Don Aldridge, the chief executive of AmeriMex Communications, told the NYT the company, which sells cellphone minutes to people in the United States to give to family or friends in Mexico, has started to work with some convenience store owners because a lot of them are also money transfer agents and as a result have seen their bank accounts frozen. The report noted that in order for convenience stores to handle remittances, they have to have an account that they can deposit cash into — but with banks finding it close to impossible to identify who gets the money, it’s being labeled as a high risk for money laundering and thus shut out of banking services. “We are part of the collateral damage,” Aldridge said. The CEO said he had looked at buying three convenience stores in Atlanta to get access to a money transferring license, but was told by his bank that it would no longer work with him if the stores transferred money outside of the U.S., reported the NYT.  Aldridge’s bank is First Citizens Bank.

First Citizens Bank spokeswoman Barbara Thompson told the paper she was not aware of what happened to Aldridge, but that the bank does provide services to money-transfer companies that were registered with state and federal authorities. Wells Fargo is another bank that still provides the services to agents that send money to Mexico, noted the report.



New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.