• Remittance companies Remitly ($RELY) and Western Union ($WU) face a trifecta of risk: slowing growth in key markets; more affordable competition from peer-to-peer apps, cryptocurrency, or card-to-card options; and now, federal scrutiny of cross-border transfers tied to cartels that the United States designated terrorist groups in February.
• Remitly is the “fastest growing partner” of Grupo Elektra/Banco Azteca, a conglomerate accused of cartel money laundering. Western Union and MoneyGram also work with Elektra, whose stock plummeted more than -75% in 2024.
• Elektra has helped fuel Remitly’s growth since the start of their “direct partnership” in 2021, but also may have implicated Remitly in a cartel laundering scheme detailed by Reuters, Univision, and a major Mexican investor. Remitly is used by “‘money-mule’ networks,” according to an investigative nonprofit. All of Remitly’s revenue is from cross-border remittances.
• Remittances have been linked to the fentanyl trade by federal agencies and academics. The Trump administration’s crackdown began with new Financial Crimes Enforcement Network (FinCEN) restrictions issued March 11, which lower the reporting threshold for remittance companies in specific regions to $200 from $10,000 — the start of an “all government effort” to fight cartels, according to Treasury Secretary Scott Bessent. Vice President JD Vance introduced a bill to tax remittances as a senator. Secretary of State Marco Rubio restricted remittances to Cuba his first week in office. Several states are also imposing costs on remittances.
• In February, Congress unanimously advanced the Stop Fentanyl Money Laundering Act of 2025 from committee with bipartisan support. The Act mandates the Treasury Department to strengthen regulations on financial institutions including remittance companies.
• Policies targeting remittance platforms could also impact immigrants sending money back home to loved ones. “People who barely scrape by and try to send money home, if they have to show IDs, and companies take their commissions, then it is extra punitive to add more taxes, more tariffs, in the supposed effort to fight the cartels and fentanyl,” a former kindergarten teacher and U.S. Navy veteran who has sent remittances to Mexico for 30 years told Hunterbrook Media. “These people are not the culprit.”
• Growth in remittances has already decelerated, according to the Bank of Mexico, from 25.9% in 2021 to just 2.3% in 2024. Western Union’s CEO told investors on March 11 that the remittance company has seen a “slowdown in our Latin America business” and guided lower for Q1 2025, blaming “anxiety in the marketplace post-election.”
• Remitly initially launched with the promise of charging users less to send money home, then hiked fees and cut website comparisons to incumbents like Western Union and MoneyGram, which now charge similar amounts. A study by the government of Mexico found Remitly to be the most expensive option for remittances — with the company obfuscating charges through a worse exchange rate.
• Remittance companies are fighting a wave of competition from more affordable options: 1) card-to-card programs like Visa Direct; 2) cryptocurrency, from apps like Coinbase and Robinhood to stablecoins like Tether and Circle; and 3) peer-to-peer transfers like Venmo, Zelle, and Cash App.
• Remitly’s CFO, chief accounting officer, and other executives departed within the past year, following material weaknesses in SEC filings. The CEO, CBO, and former COO have each rapidly sold Remitly stock in recent months.
• Remitly, Western Union, MoneyGram, Banco Azteca, and Grupo Elektra did not reply to repeated requests for comment. They did not deny cartel activity on their platforms or respond regarding any efforts to limit cartel transfers. In 2017, Remitly’s CEO argued to Congress: “Digital remittance providers like Remitly provide an additional layer of security against consumer fraud and money laundering risks by not accepting cash and by providing services directly to the end customer without relying upon the use of an agent network or other intermediary.”