Bill introduced to regulate wire transfer agencies; transparent accounts for remittances

On July 21, New York Senator Charles Schumer submitted a new bill that would require businesses that wire money abroad to reveal all activities in their accounts. Schumer’s proposal will permit regulators to examine whether charges to clients are properly adjusted to the costs assumed when providing cash transfer service.

Schumer stood with City Councilman Miguel Martinez and Dominican activists Ricardo Ureña and Giselle Martínez in front of the offices of “La Nacional,” a remittance vendor in Washington Heights. Schumer stated that in just the last year, cash transfers have totaled the astronomical sum of $32 billion, but that during that same period, immigrants have had to pay $4 billion for the service.

Schumer characterized these immigrants, particularly those from the Caribbean and Latin America, as “driven workers who work hard in order to wire money to their families.” He defined money transfer by immigrants as in the “best American tradition.” Schumer explained that many remittance vendors charge 15, 20, or even 30 percent for money transfers, which he decried as “unjust and wrong.”

Schumer said that the solution is to make the accounts of remittance vendors public, so that customers can choose the best service in accordance with his or her needs. “The American cure is competence and openness,” the senator emphasized. He argued that the majority of remittance customers earn less than $25,000 per year, with an approximate average wire transfer of $200 per month.

Councilman Martínez said that the funds not only cover the needs of the immigrants’ own families in the countries where they are remitted (needs like food, medicines, and education), but also constitute a dynamo for the national economies of the immigrants’ home country. He indicated that the bill, which is sponsored by New Jersey Senator Jon Corzine, will allow “consumers to decide where and with what vendor they choose to wire their remittances.”

As an example, Ureña showed receipts from Money Gram and Western Union documenting payments for services that he considered high. “For every $100, I have to pay $10, and for every $60, I have to pay $8. Even within the United States, they have charged me up to $13 for a remittance.”

For his part, Oscar Herasme, from the association of remittance agencies, characterized as “worrisome” Schumer’s failure to stage his criticisms in front of Money Gram or Western Union, “where the commissions are really high. Instead, he decides to come to a smaller agency.”

He agreed that “La Nacional,” like “Quisqueyana,” or “Pronto Envío,” charges between 30 and 40 percent less than the big companies, and that their services include delivery of the cash to the recipient’s home, “something that Money Gram and Western Union don’t do.”

”You pay a little more for this service because the consumers demand it. We go out into the countryside where they [Money Gram and Western Union] don’t go,” Herasme said. For his part, Frank R. Reyes, operations manager for “La Nacional,” indicated that intermediaries—the little agencies that manage postal charges and get their earnings from the commissions charged by companies like “La Nacional”—will disappear if the law is approved and enforced.

”If they force us to lower our commissions, they will not be able to survive, they are going to vanish. These agencies provide a service to the community and they have to pay up to $9,000 per month for rent,” Reyes pointed out. He made a comparison between a $100 money transfer using Money Gram and Western Union, where the consumer is responsible for a payment of $16.50, and his business, which would charge just $13.75.

”La Nacional” works with 450 intermediary agencies across the city and has 37 of its own offices, employing 160 workers throughout New York, New Jersey, Rhode Island, and Massachusetts.

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