Dive Brief:

• The Florida and Missouri legislatures have bills before them that would bar money transfer providers from letting “unauthorized aliens” send money in cross-border transactions, which are often referred to as remittances. If companies allow such transfers, they must pay a monetary penalty, according to the legislation.
• The legislation was introduced this month in the Missouri House of Representatives by Republican Rep. Ben Keathley and in the Florida House of Representatives by Republican Berny Jacques, according to the legislatures’ websites.
• A hearing on the legislation took place in the Missouri legislature on Jan. 21, with testimony supporting the bill from an organization called Look to the States, which is tied to the State Financial Officers Foundation that seeks to counter what it called “woke capitalism.”

Dive Insight:

Both bills are still in the early stages of consideration by their respective legislatures, with committees reviewing them. The pending legislation in the two chambers is similar in its language, banning money transfer companies from allowing services to illegal aliens, requiring reports on such transactions and threatening penalties if such transfers take place.

Companies “may not initiate a foreign remittance transfer unless the licensee has verified that the sender is not an unauthorized alien,” the Florida bill says, with similar language in the Missouri bill.

Major money transfer companies that provide such services include legacy providers MoneyGram and Western Union as well as upstart rivals such as Remitly and Wise.

The legislation in both legislatures requires the companies to document prohibited transfers. “A licensee shall provide to the division confirmation of verification that the sender of a foreign remittance transfer is not an unauthorized alien on forms developed by the division,” the Missouri bill says. “The licensee shall submit the forms to the division not later than the fifteenth day of the month following the close of each calendar quarter.”

If such a transfer occurs, the money transfer company would be forced to pay a penalty equal to 25% of the amount of money sent, not including fees.

The foundation spelled out its reason for supporting the bill in testimony before the Missouri House Financial Institutions committee. In contrast to promoting what it deems to be progressive policies, the foundation supports “free market principles in defense of taxpayers, investors, and consumers,” according to a press release on the foundation’s website.

However, the legislation also has drawn opposition from a trade group that represents fintechs, including money transmitters. The American Fintech Council countered the legislation in letters to Florida committees, arguing that it’s wrong to require financial companies to enforce federal immigration laws.

“Licensed remittance providers already operate under some of the most rigorous state and federal oversight in the financial system,” the council’s CEO, Phil Goldfeder, said in a Jan. 26 press release regarding the legislation. “These proposals would force providers to perform verification they are not authorized or equipped to do, creating unnecessary barriers for consumers and weakening the regulated systems that law enforcement relies on to detect illicit activity.”