Western Union Transfers To Mexico Being Seized

Bloomberg News, September 23, 2006

Western Union Co. said the state of Arizona, trying to track down smugglers of drugs and illegal immigrants, plans to seize most money transfers of $500 or more sent from 29 states, including Colorado, to Sonora, Mexico.

A warrant obtained by Arizona Attorney General Terry Goddard blocks the money-transfer company from sending funds directly to 26 locations in the Mexican state, Western Union said in a filing Friday with the U.S. Securities and Exchange Commission. Instead, it must put the funds in a “detention account,” even if the senders were outside Arizona.

Western Union said in its SEC filing the seizures begin immediately and run through Oct. 6. In the past, the state has sought “back-to-back” court orders that extended the seizures to eight weeks, the company’s court complaint said.

Greenwood Village-based First Data Corp. plans to spin off Western Union into a separate company next Friday.

In July, First Data said U.S. proposals to tighten immigration rules cut Western Union’s revenue from migrant workers, who feared authorities might use records to track them down.

Western Union-branded money transfers from the U.S. to Mexico grew at a 23 percent rate in the first quarter. That dropped to 10 percent in the second quarter. In the third quarter through Sept. 14, the growth plummeted to 3 percent.

Western Union said in a federal court complaint Tuesday that Arizona has seized money before, and then “interrogated” senders and recipients

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Western Union said it would try to block the seizure in court.

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