Banks eying foreign remittance biz

&#8220Every month I send $200 to my family. Here it is just a little money, but in Colombia my loved ones have enough to live on,” said Amparo Mejia, 40, who works cleaning houses.
Mejia is one of millions of immigrants who have settled in the United States and she sends her family support money each month from Delgado Travel, the most popular remittance business in Jackson Heights.
&#8220In 2005, money transmitters in New York State alone processed more than 92 million transactions totaling in excess of $96 billion,” said Diana L. Taylor, New York State Superintendent of Banks.
Known as Money Service Businesses (MSBs) in the banking industry, the remittance and check cashing businesses are authorized to offer traditional banking services to customers who may not have access to - or may be reluctant to use regular banks. These customers pay a small fee for the services.
Because of the fiery competition, in New York some companies were charging only $3 to send up to $1,000 to the most popular destinations. But after several conversations, the remittance companies agreed to 3 percent of the amount sent.
&#8220Several businesses were forced to close. Now, three percent of the money sent looks like the regular fee,” said Luz Mary Quiceno, who has a small business in Corona serving different remittance operators like La Nacional and Mateo Envos.
The fee charged families to get the money from the U.S. at the other end varies according to the laws of each country. Some like Mexico, Pakistan and Colombia have special government projects (like construction of bridges, schools and hospitals) that are funded by the fees collected.
&#8220Our business is in jeopardy. About three years ago, the banks began to deny us bank accounts. The banks want the business for themselves. We need the banks. You can't have a business without a bank account. We want regulations, but we need the government of the United States to give us the regulations,” said David Landsman, executive director of The National Money Transmitters Association, Inc., based in Great Neck, with more than 480 businesses which gather remittance money.
&#8220The Latin American and Caribbean countries' immigrants will send more than $60 billon in remittances to their homelands this year,” said Donald F. Terry, manager of the Inter-American Development Bank. &#8220These immigrants are an essential part of the economies of their mother countries.”
According to the World Bank, this year's remittances are going to be about $360 billion dollars, and will account as the biggest source of income for the countries of Mexico, Pakistan, Dominican Republic, India, Colombia, Ecuador, El Salvador, Honduras, Nicaragua, Peru, Syria and others.
&#8220Remittances already are the largest poverty alleviation programs in several countries of the Latin region. The challenge now is to turn these cash flows into a major tool for economic development,” said Terry.
Now, the MSBs are facing two big problems. &#8220First, is that the business is considered as &#8220a high risk activity” by the Homeland Security Department - because of the problem of money laundering and financial aid to terrorists - and second is that the banking industry is trying to get into the business,” said Horacio Poveda, manager of Servientrega Internacional.
&#8220We are aware that as a result of the ongoing war on terror, the duties and responsibilities imposed upon financial institutions by the federal government for the actions of their clients have complicated the relationships between banks and MSBs,” said Roberta Kotkin, general counsel and chief operating officer of the New York Bankers Association.
&#8220We are interested in questionable transactions related to criminal activity, especially those related to terrorism and narcotics trafficking. The U.S. Government would have no interest in secure and clean business transactions. If these remittance companies are legitimate and follow all the federal regulations, we will not interfere with their legitimate business,” said Michael Keegan, spokesperson for the Homeland Security Department in Washington, D.C.
&#8220This business is a need of our community. We have immigrants from almost every country, and many of them are supporting their families. Remittances are a business, but also a community service,” said Linda Delgado, vice-president of Delgado Travel. Her company has over 8,000 distribution points around the world, for 980,000 customers who make over three million transactions a year.
&#8220We have customers who only can send home $25 each week. All our customers have an address here and an address in their homeland. We are sending money not to terrorists, but to family members who need this money to live on,” said Poveda.
&#8220The solution requires effort from all parties involved,” said Taylor.