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News Article

Mexico Keeps Breaking Remittances Record

By Emilio Aristegui | Mon, 09/06/2021 - 18:40

President Andrés Manuel López Obrador’s latest government report highlighted that remittances registered record-breaking growth in July. But specialists warned that these numbers could have been affected by transfers made by criminal organizations.

President López Obrador third government report highlighted the achievements made by his administration, including the “historical record in remittances, historical record in foreign investment, historical record in increase in the minimum wage, historical record in no devaluation of the peso, historical record in no increase in debt, historical record in increase in the Stock Market index, historical record in the reserves of the Bank of Mexico.”

Banxico informed that in July, Mexico registered a record US$45 billion remittances, with Jalisco registering the highest amount, 10.5 percent of total remittances. Michoacan is in second place with 9.8 percent, followed by Guanajuato with 8.3 percent, State of Mexico with 6 percent and Mexico City with 5.6 percent, according to data from Banxico.

The increase in remittances represents an important achievement for López Obrador’s administration. However, Jorge Andres Castañeda, Director of Applied Research at Mexicanos Contra la Corrupcion y la Impunidad, a local organization that tracks corruption, said that these figures should be concerning: “The figures are very disconcerting and they do not add up. If you look at the mass of remittances reported in the National Household Income and Expenditure Survey (ENIGH) last year, they add up to less than US$3 billion.”

According to a recent report by the US Drug Enforcement Administration (DEA), these numbers are altered because they include criminal activities. “Mexican criminal organizations use electronic transfers, legitimate business accounts, funnel accounts and structured deposits with remittance companies to move money while hiding the path of illicit income.” According to data from Banxico, 98 percent of the US$45 billion in remittances for the month of July were electronic transfers, while the other 2 percent of the money was sent via money orders, personal checks and income in cash and kind.

Banxico also highlighted the record increase during 15 straight months, as remittances to Mexico grew 28.6 percent in July 2021, in comparison to July 2020. However, these remittances do not seem to impact the local economy according to Castañeda: “That is a stratospheric figure. If all that money were actually reaching households, if it were reaching savings and consumption, it would be seen in the local economy and it is not the case.” The majority of remittances seek to aid familiars on the day-to-day life back home, which assures the need of constant transactions to Mexico mainly from Mexican workers in the US.

The data used in this article was sourced from:  
DEA, SEGOB, BANXICO, CONDUSEF
Emilio Aristegui Emilio Aristegui Junior Journalist and Industry Analyst