Immigrants From Latin America Squeezed as Banks Curtail International Money Transfer

windeguy

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Jul 10, 2004
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Immigrants From Latin America and Africa Squeezed as Banks Curtail International Money Transfers

As government regulators crack down on the financing of terrorists and drug traffickers, many big banks are abandoning the business of transferring money from the United States to other countries, moves that are expected to reverse years of declines in the cost of immigrants sending money home to their families.

While Mexico may be most affected ? nearly half of the $51.1 billion in remittances sent from the United States in 2012 ended up in that country ? the banks? broad retreat over the last year is affecting other countries in Latin America and parts of Africa as well. The banks are being held accountable not only for the customers who directly use their money transfer services but also for their role in collecting remittances from money transmitting companies and wiring them abroad.

http://dealbook.nytimes.com/2014/07...0140707&nl=todaysheadlines&nlid=42303622&_r=0
 

AlterEgo

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Jan 9, 2009
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I wonder if this will affect the little storefronts that send money - that's what we usually use. We hand over the cash here, and within an hour it's available for delivery or pickup in Santo Domingo.
 

windeguy

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This is making the money transfer process more costly and more scrutinized. Some of the smaller operations may not be able to survive just as some larger operations have found the new regulations too difficult to comply with and have closed up some money transfer businesses.
 

bob saunders

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Jan 1, 2002
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dr1.com
If the money is legit and the transfers are not large what's the big hassle? What about the new regulations makes it so hard to comply?
 

windeguy

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If the money is legit and the transfers are not large what's the big hassle? What about the new regulations makes it so hard to comply?
From the article:

Regulators say the banking system was being exploited by terrorists and drug lords seeking to launder money. While they have not banned banks from engaging in higher-risk businesses like money transfers to certain countries, they acknowledge that banks must now invest significantly more to monitor the money moving through their systems or face substantial penalties.
 

Africaida

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Jun 19, 2009
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As AE said the little guy send their money through little storefronts. I don't know any African immigrants who send money back home through bank transfers.
 
May 12, 2005
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From the article:

Regulators say the banking system was being exploited by terrorists and drug lords seeking to launder money. While they have not banned banks from engaging in higher-risk businesses like money transfers to certain countries, they acknowledge that banks must now invest significantly more to monitor the money moving through their systems or face substantial penalties.

As yes, Dodd-Frank.
 

Cdn_Gringo

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Apr 29, 2014
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The small non-financial money transfer services (Hawala) usually operate outside the mainstream financial system. You give them money to send to Nepal, an email is sent and buddy in Nepal goes to the local transfer guy and gets his money less a fee. The actual money is physically transferred later by someone travelling to the country in question. Usually the individual transaction amounts being sent this way (but not always) are not large so a simple balance sheet accounting system is employed. It can be quite some time between physical cash deliveries between the players in the transfer network. Day to day operating capital comes from the individual transfers themselves.

It's quite a sophisticated system and has been employed for generations by those who either don't or can't use banks.