The Taxing of Remittances in the US

Georgia & Iowa move to leverage a tax on remittances – Financial Institutions are reacting

In a previous blog (in Spanish), posted in the midst of the many reporter calls, especially from Latinamerica (driven by the anxiety over the migration policies of the new US Trump administration), I mentioned the US legislators drive to tax remittances in the US. The State of Oklahoma is taxing remittances for some years now ($5 up to $500 and 1% after that). Several other States such as Georgia and Iowa are moving on this direction and the industry is watching. In the federal level there are also some initiatives being proposed. in an effort to fund the border wall.

The shifting views on family remittances

After a series of media interviews a couple of weeks ago, in a trip to Guatemala, I realized in a moment that I was witnessing a change in the public perception of remittances that I had not grasped before. Answering one by one journalist questions, it was unquestionable that I was witnessing a shift that I had not noticed before. After thinking about it, I could say that the shift is global although that doesn’t mean that a shift is happening in the same way or at the same time in every region or country in the world. Having been a part of the remittance industry for three decades I suddenly saw it very clearly. But I don’t want to get ahead of myself so let’s back up a little.

Las amenazas de Trump – Remesas, impuestos, migración, deportaciones y la construcción del muro

Remesas, impuestos, migración, deportaciones y la construcción del muro

Durante las primarias presidenciales republicanas del año pasado, Donald Trump expuso su propuesta de cómo forzar a México a pagar por el muro de 1,000 millas en la frontera entre Estados Unidos y este país. Los periodistas Bob Woodward y Robert Costa del Washington Post publicaron en Abril 5 de 2016 la noticia (http://wapo.st/2jbWHFn) en la cual Trump manifestaba su intención de amenazar a México con “cortar el suministro de remesas”. Trump envió en esta ocasión un memorando de dos páginas…

Michael McDonald, in memoriam

Michael was a 27-year veteran of the Internal Revenue Service, Criminal Investigation Division. He retired in 1998 and formed a Miami based consulting firm specializing in international money laundering, Bank Secrecy Act, Patriot Act, asset forfeiture, compliance and related matters. The firm has been a network of retired Special Agents, each with in-depth experience in money laundering investigations.

The US CSBS & the MTRA Report on the State of MSBs Regulation & Supervision

The Conference of State Bank Supervisors (CSBS) and the Money Transmitter Regulators Association (MTRA) released an important report on the state of the industry that is a must read for anyone in the industry and a report that all US Money Transmitters should be sending to their banks. The report is entitled “The state of state money services businesses regulation & supervision” and it examines the non-bank financial sector in the US and the bank discontinuance and de-risking challenges the industry faces. But the main objective is to let the banks know of the strict regulations and close supervision the state regulators have on all licensed MSBs.

MONEY TRANSFER COMPANIES WIN A MATCH AGAINST BANKS IN BRUSSELS

The Spanish Courts petitioned the European Tribunal for a guidance to clarify Bank Account Closure Cases and the presumption of remittances being high risk

Our IMTC speaker and colleague Antonio Selas from the firm Cremades & Calvo Sotelo in Madrid has been preventing Banks from closing bank accounts of MTOs in Spain by taking to court the banks and convincing judges that Banks are discriminating against their competitors and that their “remittances are high risk” argument has no factual evidence. We met Antonio Selas in IMTC EMEA 2015 in Istanbul and he came to Miami and made a presentation in IMTC WORLD 2015 entitled “Bank Account Closures Are Against the Law“.

FATF-GAFI GUIDANCE – A Risk-Based Approach for Money or Value Transfer Services

The timing could not have been better. FATF just published – February 2016, a report that all Compliance Officers of this industry must read, entitled Guidance for a Risk-Based Approach for Money or Value Transfer Services (SummaryFull Report (69 pages). I want to highlight three statements in the presentation of the report:

  • The risk-based approach, the cornerstone of the FATF Standards, requires that measures to combat ML/TF are commensurate with the risks. Such measures should not necessarily result into the categorization of all MVTS providers as inherently high-risk.
  • The overall risks and threats are influenced by the extent and quality of regulatory and supervisory framework, as well as the implementation of risk-based controls and mitigating measures by each MVTS provider.
  • While this Guidance is applicable to the entire MTVS sector (both banking and non-banking institutions offering MVTS); it is primarily intended for non-banking MVTS providers.

GAO Reports on International Remittances

I think it is very important that every person in this industry reads the GAO Report published on February 16th, 2016, entitled INTERNATIONAL REMITTANCES: Actions Needed to Address Unreliable Official U.S. Estimate – Highlights Page (1 page), Full Report (62 pages). A second report published the same day is entitled INTERNATIONAL REMITTANCES: Money Laundering Risks and Views on Enhanced Customer Verification and Record keeping RequirementsHighlights Page (1 page), Full Report (59 pages), Accessible Version (62 pages).

The House Financial Services Committee Letters

Just two weeks after the end of our IMTC USA 2015 Conference in Las Vegas, where we had a great panel on Bank Discontinuance entitled “Financial Access for the Money Transfer Industry – One step forward, two steps back? brilliantly moderated by Connie Fenchel with panelists Deborah Thoren-Peden from Pillsbury Law and Thomas Fleming from TF & Associates, the Republican leaders on the US House Financial Services Committee sent letters to the federal financial regulatory agencies asking to publicly disavow their “past, present, and future involvement in Operation Choke Point or any similar operation”. You can read the OCC letter here: http://bit.ly/1aP00Nu.