Western Union Co., the global money transfer provider, is in a heated battle that pits commerce and privacy rights against law enforcement efforts to stop human smugglers.
The Douglas County-based company is suing Arizona Attorney General Terry Goddard over a warrant to seize money transfers sent from 29 states, including Colorado, into the Mexican state of Sonora across Arizona’s southern border.
Western Union won a court order late last month to stop the seizures. A hearing in Maricopa County Superior Court in Arizona is scheduled for Oct. 30.
Goddard’s office wants authority to hold money transfers of $500 or more to more than two dozen Western Union agent locations in Sonora until senders call and clear them with law enforcement officers.
“We are going after drug smugglers and human smugglers,” said Andrea Esquer, Goddard’s press secretary. “Arizona has become a hub of this type of criminal activity. It endangers our residents.”
Arizona has seized $17 million and deported hundreds of people in a five-year battle against human traffickers. Human smugglers, also known as coyotes, have gotten around restrictions in Arizona to move money from other states, she said.
Western Union, in a court filing Sept. 19, claims the seizure warrant violates the commerce, due-process and equal-protection clauses of the U.S. Constitution, harming both its customers and the company.
Penalties for warning customers that their money transfers may be delayed would violate free-speech rights, Western Union argues.
“The crackdown harms many innocent people whose money transfers are being held up indefinitely with very little recourse,” said Dick Badler, a spokesman for Western Union.
The company, in a court filing, estimates that between Aug. 20 and Sept. 18 of this year, customers made 16,000 money transfers between the targeted states and Sonora.
During the three days transfers were seized, fewer than 15 percent were legitimate, Esquer said. Badler counters that many customers may have skipped calling law enforcement officials.
The money-transfer industry has come under close scrutiny since Sept. 11, 2001. Western Union has worked closely with federal and state regulators, even fingerprinting Arizona customers making money transfers to Mexico.
“They have been very cooperative with us over the last 4 1/2 years, until this last warrant,” Esquer said.
Western Union has 200 employees and a $35 million budget to deal with compliance issues, Badler said, and recently shut down eight agents who were smudging fingerprints of customers in Arizona.
“We have a very aggressive compliance program,” Badler said. “If agents don’t follow the rules, we do shut them down.”
Some stock analysts who follow the company, which spun off from First Data Corp. two weeks ago, are watching the case for any impact it has on the company’s largest market.
“Even the 100 percent legal immigrants and fully legitimate customers are not liking the idea of Big Brother watching them,” said John Kraft, an equity analyst with D.A. Davidson in Portland, Ore. “Everybody is a little bit spooked.”
Kraft said one reason people stay with Western Union, despite lower cost options with banks, is the convenience and privacy the company offers.
Remittances from the U.S. to Mexico topped $13 billion in 2003 and have become the second-largest source of foreign dollars for the country after oil exports, according to the World Bank.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
