Stop Remittances to Reduce Illegal Immigration, Improve National Security

Donald Trump explains how he would persuade Mexico to pay for the wall on the southwest border: As President, he says he would tax the $25 billion in cash remittances going to Mexico annually, most of it sent by illegal aliens, according to a congressional report.

This is not a new idea, but it is a very good idea. Who opposes it? The usual suspects– those who profit from illegal immigration.

Back in 2004, I proposed the same thing in a speech on the floor of Congress and became Public Enemy Number One at Western Union headquarters and the National Council of La Raza. Wells Fargo Bank wasn’t too happy when I exposed it as the first American bank to help expedite wire transfers of remittance money by illegal aliens. Wells Fargo made it easier to send money back to Mexico by allowing illegal aliens to open bank accounts using their Mexican Consular ID cards.

By a weird but provident coincidence, Western Union was owned at that time by a company called First Data Corporation, which had its headquarters in my district. The chairman of the company threatened to move the headquarters operation and its hundreds of employees out of Colorado if Tom Tancredo was re-elected to Congress that November. He wrote editorials, held community meetings and for weeks campaigned to “teach Tancredo a lesson.”

It all came to nothing after opponents discovered that the large majority of voters in Colorado liked the idea of taxing the remittances, which at that time amounted to more than $50 million leaving the Colorado economy each year.

The amount leaving the U.S. economy annually in remittances rises and falls with the health of the economy, but today it is about $54 billion, $25 billion of that going to Mexico. A 10 percent tax would raise $7 billion in three years, enough to pay for the wall on the southwest border and a couple of thousand additional Border Patrol agents.

  • Could the remittances going to Mexico be taxed? The short answer is yes, probably, but it would take a resolute, determined White House and a cooperative Congress.
  • Would a President Trump devout the time and effort to get it done? Who knows? But ironically, the task would be easier today than it would have been 10 years ago because many remittances are going to Mexico by bank transfers instead of money orders sent by Western Union.
  • Banks are regulated by the federal government, as are international cash transactions. It is certainly reasonable that remittances to Mexico can and should be taxed to finance the fight against the cross-border drug trafficking by the vicious Mexican cartels.

The billions of dollars in cash going to millions of individuals in a hundred foreign nations ought to be a concern for another reason as well. There is a strong likelihood that millions of those dollars are helping finance Islamist terror groups.

The World Bank estimates that in 2011, worldwide remittances were $401 billion (in U.S. dollars) — an amount equal to 50 percent of total international investments in developing countries. In other words, remittances from the U.S. and Europe are a major source of capital and GDP in much of the world.

What the World Bank data and reports by other organizations that study remittance flows such as the Migration Policy Institute do not tell you is that much of this money finds its way to transnational crime organizations like the Mexican drug cartels and the Russian Mafia– and without doubt to radical Islamist networks.

Candidate Trump did not mention that aspect of the $400 billion remittance game, but cash remittances from immigrants and refugees are going to over a dozen nations with Islamist terrorist cells.

The size of the total remittance flow leaving the U.S. in 2014 was $54.2 billion — a whopping increase from the $20.3 billion in 1994. The U.S. population and GDP did not grow 150 percent since 1994, but remittances did– and almost half of the remittances in 2014 went to one country, Mexico. In fact, Mexico is tied for third place worldwide as a recipient of remittances, behind only India and China. Do you wonder how much Mexico, the richest nation in Latin America, SENDS in cash remittances to its citizens living abroad? The answer: only $1.0 billion, or less than 5 percent of its inflow from the United States.

Cash remittances from the U.S. to developing nations did recline 5.9 percent in the first year of the 2009-2011 recession, but then recovered quickly and grew by 25 percent from 2009 to 2011.

What about remittances going to Muslin nations from the U.S. and Europe?

  • Egypt ranks in the top ten countries in receipt of remittances at $18 billion. How much of that finds its way to the Muslim Brotherhood and to Hamas and the PLO in neighboring Gaza?
  • Lebanon received $7 billion in 2012, which was 18 percent of its GDP.
  • Pakistan, home to myriad jihadist groups including al-Qaeda and ISIS affiliates, received $14 billion in remittances in 2012.
  • Bangladesh also received $14 billion in cash remittances in 2012.
  • Even war-torn countries like Libya, Iraq, Syria and Somalia receive hundreds of millions of remittances annually.

Trump is right to focus a huge spotlight on the $25 billion in remittances to Mexico as a potential source of funding for border control projects. When you add to that the need to halt remittances going to terrorists in over a dozen countries, it is obvious that bringing the flow of remittances under control ought to be a top national security priority of the next President.

Somehow, I doubt the project would make Hillary Clinton’s top ten list. Her Secretary of State Geraldo Rivera would have a public hissy fit.


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