A new FinCEN warning on U.S. remittances and money laundering raises concerns for migrants, regulators, and Mexico’s government.
The shadow of money laundering looms over more A new FinCEN warning on U.S. remittances and money laundering raises concerns for migrants, regulators, and Mexico’s government.than $51 billion in remittances that cross from the United States to Mexico. Last week, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an alert to money transfer companies — such as Western Union, MoneyGram, and Remitly — urging them to monitor the origins of cross-border transfers.
“While the vast majority of remittances from the United States are legitimate and can provide critical financial support to family members abroad, FinCEN previously cautioned that malignant actors have used low-dollar cross-border funds transfers to facilitate or commit terrorist financing, narcotics trafficking, and other illicit activity,” the alert states.
US Authorities argue that this alert is part of the Treasury Department’s efforts to prevent undocumented immigrants from exploiting the U.S. financial system to transfer illicitly obtained funds. In the United States, money transfer companies are required to report any suspicious cross-border payments involving amounts of $2,000 or more. The FinCEN alert comes amid a series of measures by the Trump administration aimed at curbing the influx of migrants into the country, while intensifying its crackdown on drug cartels — a battle that includes cutting off the finances of organized crime groups through freezes and sanctions.
When questioned about the U.S. Treasury alert, Mexican President Claudia Sheinbaum rejected any suggestion that remittances are a channel for money laundering by criminal groups. However, she warned that if any cases were to arise, Mexico’s Financial Intelligence Unit (UIF) would be in charge of the investigation. “This idea that remittances are used for money laundering, there is no evidence of it; and if there were, it would have to be punished, but that doesn’t mean we’re going to criminalize everyone who sends remittances,” Sheinbaum said at Mexico’s National Palace. More than 15 million Mexican migrants in the United States regularly send money to their families living on the other side of the Rio Bravo.
The Treasury Department’s alert follows an earlier series of measures aimed at combating illicit financial activity linked to Mexico-based cartels. Previously, the U.S. imposed sanctions on casinos, companies, and banks. Money transfer companies have faced additional pressure under the Trump administration with a new 1% tax on remittances sent by foreigners, a levy set to take effect in 2027.
Rogelio Madrueño, a researcher at the Center for Advanced Studies in Security, Strategy and Integration at the University of Bonn in Germany, explains that although there is documentation showing that remittances are “infiltrated” by illicit flows, the percentage is still low compared to the total amount of migrant remittances. In this modus operandi, he adds, criminal organizations recruit both Mexican and U.S. citizens who, in exchange for a commission, facilitate multiple small transfers, which are then mixed with legitimate remittances to avoid suspicion. That money is later delivered to the cartels in Mexican territory. This follows the traditional money laundering strategy through the phases of placement, layering, and integration of illicit funds into legal economic activities. In 2023, it was estimated that around 7% of remittances came from illicit activities.
José Antonio Quesada, adviser to the national president of the Mexican Institute of Finance Executives (IMEF), indicates that the United States has been tightening controls on intermediaries. “With these measures, they are beginning to acknowledge that they can be part of the problem. This warning is a great first step; FinCEN is pointing out the obvious: for dirty money to arrive here from the United States, there must have been a conduit, and that conduit could be the money transmitters,” he explains. IMEF spokesperson adds that a Mexican bank does not have a direct legal obligation because of this alert, but it must adjust its risk controls and monitoring, since there is now an increased risk recognized by the U.S. financial authority.
Quesada acknowledges that given the increased surveillance of remittances and stricter immigration policies, migrants have sought new ways to send money through channels like fintechs or cryptocurrencies. However, he argued that this is a double-edged sword for the system because it makes it more difficult to track these funds and, as a result, makes them a target for illicit activities. “And in these channels, the transfer isn’t classified as a remittance because the definition of a remittance refers to all the dollars received in this economy that are exchanged for pesos to be distributed among the population by the family member sending the money, but this money isn’t received in dollars and isn’t converted to pesos,” he explains.
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