Introduction to the Issue
Daniel Rosas, a partner at Nathan Russek law firm, has expressed concerns that designating Mexican cartels as terrorist organizations could negatively affect the flow of remittances from the United States to Mexico. This is due to anticipated stricter regulations and increased bureaucracy for money transfers.
Background on Cartel Designation
On February 19, the White House classified several Mexican cartels—Sinaloa, Jalisco Nueva Generación, del Noroeste, del Golfo, Los Cárteles Unidos, and the Nueva Familia Michoacana—along with other Latin American criminal groups as “global terrorist organizations.”
Anticipated Regulatory Changes
Rosas stated that this designation would likely lead to more stringent regulations and increased bureaucracy for money transfers in both the US and Mexico. Currently, financial institutions do not require extensive verification of senders and recipients.
He also mentioned that US Secretary of State, Marco Rubio, recently warned about creating a registry for remittance senders who must have legal immigration status. This move would minimize remittances to Mexico by ensuring that only legally present individuals can send money.
In Mexico, financial institutions offering remittance services would likely need to know more about the recipients, adding another layer of bureaucracy.
Impact on Remittances
According to data from the Bank of Mexico, remittances dropped by 0.8% annually in February to $4.459 billion, the first full month under President Donald Trump’s administration.
Rosas warned that the proposed legislation in the US would require legal immigration status for remittance sending, complicating matters since a significant portion of those sending money are undocumented immigrants.
Key Questions and Answers
- Q: What is the concern regarding cartel designation as terrorist organizations?
A: The primary concern is that it could lead to stricter regulations and increased bureaucracy for money transfers between the US and Mexico, potentially complicating remittance processes.
- Q: How might this affect remittance senders?
A: Many remittance senders are undocumented immigrants, and the new regulations may require them to have legal immigration status, which could hinder their ability to send money.
- Q: What changes are anticipated in money transfer regulations?
A: There is an expectation of more stringent verification processes for both senders and recipients, as well as the creation of registries for legal remittance senders in the US.
- Q: How would these changes impact remittance recipients in Mexico?
A: Financial institutions in Mexico may need to conduct more thorough due diligence on recipients, adding complexity and potential delays to the remittance process.
