On Friday, November 28, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury issued a warning to remind Money Services Businesses (MSBs) to be vigilant of cross-border remittance activities by undocumented immigrants within the United States.
The warning highlighted that while the majority of remittances from U.S. residents to foreign nationals are legitimate, there are also fraudulent individuals who exploit small-scale cross-border fund transfers to engage in illegal activities.
It emphasized that for transactions exceeding $2,000 and where MSBs have reasonable suspicion that the transaction may violate laws or regulations, the relevant institutions must file Suspicious Activity Reports (SARs).
Furthermore, the warning added that, “This includes cross-border transfers of funds from illegal employment or other illicit sources, if MSBs are aware of, suspect, or have reason to suspect that these funds were illicitly obtained by undocumented immigrants within the United States.”
According to the official guidance from FinCEN, voluntary submission of SAR reports for suspicious activities below reporting thresholds is explicitly allowed and encouraged for MSBs. Many MSBs have already proactively implemented internal compliance procedures to identify anomalies, mitigate risks, and enhance overall Anti-Money Laundering (AML) system effectiveness.
FinCEN stated that in recent years, there has been a significant volume of cross-border fund transfers in the United States and measures have been taken this year to address related risks.
John K. Hurley, the Deputy Assistant Secretary for Terrorist Financing and Financial Crimes, emphasized in a statement, “MSBs should remain vigilant in identifying suspicious financial activities involving undocumented immigrants, as these individuals pose significant threats to national security and public safety. The Department of the Treasury will continue to faithfully uphold U.S. laws and protect the American people.”
In August, FinCEN issued alerts stating that Chinese money laundering networks are conducting large-scale cross-border fund transfers and providing financial support to Mexican drug trafficking groups. The agency mentioned in a consultation document that such networks have become one of the most significant threats faced by the U.S. financial system.
Earlier this year, FinCEN issued Geographic Targeting Orders requiring certain counties and postal codes along the Southwest border of Arizona, California, and Texas to submit transaction reports for MSBs, including transactions that do not reach reporting thresholds.
Freight Waves, a U.S. freight and supply chain information website, reported that FinCEN’s latest warning signifies a significant new move by the U.S. government to combat financial channels of undocumented immigrants, showcasing a strategic and assertive shift in enforcement priorities.
The report noted that FinCEN now explicitly categorizes “income from illegal employment” repatriation as illegal activity, treating it on par with structuring transactions and money laundering, targeting the primary means through which undocumented immigrants support their families abroad.
“This action goes beyond traditional border security measures, focusing on financial institutions and remittance services that facilitate the transfer of funds for undocumented immigrants back to their home countries, effectively disrupting the lifeline of the U.S. shadow economy,” the report said.
It is estimated that the United States is home to 11 to 14 million undocumented immigrants, of which approximately 60% to 70% regularly remit funds, totaling around $160 billion annually – surpassing the GDP of many countries. Just four countries – Mexico, Guatemala, Honduras, and El Salvador – collectively receive over $100 billion in remittances.
Founded in 1990, FinCEN is known as the “most powerful enforcement agency you’ve never heard of,” with broad control over the banking system, giving it unique influence over remittance services.