Mexico City (CNSNews.com) – Most of the billions of dollars in cash sent to Mexico by Mexicans living in the U.S. is transferred by “undocumented” workers, and the total was expected to top $26 billion in 2016, according to research by the Washington institute Inter-American Dialogue.
Mexico is the fourth largest recipient of all cash transfers – known as remittances – worldwide, according to the Congressional Research Service.
A survey by Inter-American Dialogue of remittances to Mexico found that a majority, 67 percent in 2013, were sent by “undocumented” individuals living in the U.S.
Of all of the remittances sent to 11 countries in Latin America from the U.S. in 2015, Mexico received the largest share by far at 36 percent – four times more than the closest competitor, Guatemala, at 9 percent, the survey found.
“Remittances to Latin America and the Caribbean (LAC), which exceeded US$70 billion dollars in 2015, are playing a key role in the region's economic development,” according to the institute’s 2016 “Remittances scorecard.”
The majority of remittances to Mexico, 88.2 percent, are sent using the services of companies like MoneyGram and Western Union, the institute found.
It said the cash transfer industry has “expanded dramatically,” and now helps migrants in the U.S. pay their bills in Latin America.
But while services have expanded, the cost of sending money to Latin America and the Caribbean has dropped to below 5 percent of the transfer amount.
Ira Mehlman, media director for the Federation for American Immigration Reform, says the cash transfers reveal a “hidden cost of illegal immigration because you have millions of dollars being taken out of local communities.”
“Remittances being sent out of the country represent a substantial economic impact on local communities because that money is not circulating in those communities,” Mehlman told CNSNews.com.
“On top of that, a lot of the people generating this money are working off the books and there are no payroll taxes being taken,” he added.
In remarks published in the Inter-American Dialogue’s “Remittance Industry Observatory” newsletter last November, Manuel Orozco, a member of the institute’s Financial Services Advisor board, said that “at least” $130 billion is transferred out of the U.S. each year by more than 35 million migrants.
Data gathered by the Mexican government and BBVA Research shows that in 2015, nearly one-third (29.6 percent) of all of the remittances sent from the U.S. to Mexico originated in California. Just over 14 percent was sent from Texas, and 5.1 percent from Illinois.
In 2015, remittances sent to Mexico totaled 2.3 percent of the country’s GDP, the data showed.
Forbes has reported that the money sent from the U.S. to Mexico by migrants “replaced oil revenues as Mexico’s number one source of foreign income” in late 2015.
Some 90 percent of all remittances sent worldwide are in cash, rather than by electronic or bank transfer, according to Alix Murphy, director of mobile partnerships at the remittances company WorldRemit, which operates in 47 states of the U.S.
She said the market for money transfer services in the U.S. was “very diversified.”
“We’re talking hundreds of companies that are regulated by the states.”
Individuals using the cash transfer services are required to show identification, but not immigration status, Murphy said.
Foreign-issued IDs, however, can be used, according to a 2016 analysis by the Congressional Research Service.
The Remittance Status Verification Act, introduced by then-Senator David Vitter (R-La.) in 2014 but never passed into law, would have fined senders of international cash transfers seven percent of the transfer amount if they could not show “proof of status under U.S. immigration laws.”
If enacted, such a law could slow the flow of remittances considerably, according to David Landsman, executive director of the National Money Transmitters Association.
In remarks published in the “Remittance Industry Observatory” newsletter last November, Landsman said that “[f]orcing remittance companies to be immigration enforcement agents would make remittance volumes plummet in the best of times.”
“Their transactions would then go through more informal methods, and become completely opaque to law enforcement.”