Donald Trump continues his assault on all things South of the Border. And this time it’s remittances. The Republican candidate – or possible third-party candidate – said on his website that he would limit the flow of money transfers as part of his oft repeated pledge to make Mexico pay for the building of a wall, ostensibly to stem the tide of illegal immigrants. Trump has said he wants a one-time payment of between $5 billion to $10 billion to pay for the project.
In remarks posted on Trump’s site, there are some particulars. The impetus comes from the “know your customer” provision that has been part of the Patriot Act, and which has held financial institutions to demand proper documentation before opening accounts with customers or letting them conduct financial transactions.
Using that rule as a springboard, Trump stated that if Mexico ponies up the aforementioned few billion dollars, the nation can then “ensure that $24 billion continues to flow into their country year after year.” To pay for the wall, Trump would have the “know your customer” rule extend to embrace payments companies that would include some marquee names, such as Western Union – and the definition of accounts should be expanded to include wire transfers. And here’s the kicker: Trump says that “no alien may wire money outside of the United States unless the alien first provides a document establishing his lawful presence in the United States.”
A bit of quid pro quo, or a bit of ransom? If Mexico pays for the wall, said Trump, the remittance block will not go into effect.
Meanwhile, President Barack Obama is skeptical about Trump’s plans.
Obama commented on the matter, saying: “The notion that we’re going to track every Western Union bit of money that’s being sent to Mexico, you know, good luck with that. Then we’ve got the issue of the implications for the Mexican economy, which in turn if it’s collapsing actually sends more immigrants north because they can’t find jobs in Mexico. But this is just one more example of something that is not thought through and is primarily put forward for political consumption.”
What does all this mean for payments companies? Not much, at least not yet. Trump’s proposal no doubt would find backlash from all corners, and it is likely that the hue and cry from Mexico – which indeed does benefit from remittances – would be loudest, as it is the biggest destination for such fund flows. The real groundswell would be the creation of a black market that may be a conduit for money transfers that are truly unregulated, and given the meat and potatoes that such transfers offer up to companies such as Western Union and PayPal, prepare for some well-funded legal fireworks should the longshot candidate indeed make it to the Oval Office.
Legality of Trump’s plan aside, the stakeholders in this battle, should it ever come to pass, have too much to lose to sit idly by or just comply with documentation demands (and documentation can of course be faked). For now, consider it just another musing put forth as sound policy – but for payments firms, much sound and fury, signifying nothing.