Updated 1:30 pm, Saturday
Massachusetts banking authorities confirmed this week that companies that specialize in money transfers used by foreign nationals living and working in the United States transferred a total of $16.7 million out of the United States from Martha’s Vineyard in 2012.
Earlier this month, the Massachusetts Office of Consumer Affairs and Business Regulation and the Division of Banks (OCABR) ordered three of those companies, InterTransfers Inc. and its wholly owned subsidiary, Global Money Remittance Inc., a Miami-based company, and Braz Transfers Inc., based in Saugus, to cease operations, after receiving reports that the companies failed to transmit customer funds to the intended recipients.
InterTransfers, a 13-year old company licensed in Massachusetts since 2006, transferred nearly $26 million from Massachusetts consumers in 2012, most of it going to Brazil, according to state banking authorities.
On April 10, state banking regulators issued a temporary cease and desist order, which prevents the company from doing any more business in the state. Regulators said that $232,000 had not been transmitted.
In a press release dated April 10, OCABR said that Braz Transfers, licensed with the division since 2004, offered foreign transmittal services through 93 authorized agent locations in the state, and transferred funds primarily to Brazil. The company also operated a check cashing service at a location in Somerville.
Jayda Leder-Luis, a spokesperson for OCABR, in an email to The Times, provided the following breakdown of international money transfers by the three companies from the Vineyard in 2012: Braz, $9,180,004; InterTransfers, $1,764,830; and Global Money Remittance, $1,713,037.
Local transfer agents facilitate money transfers most often through a local bank account through which they transfer money to a company specializing in international money transfers. Agents and businesses acting as agents that provide money transfer services must be licensed by the state. The licenses must be renewed annually.
Previously, the Island counted five agent locations: Stop & Shop in Edgartown and Vineyard Haven; Vineyard Grocer in Vineyard Haven; North Star in Edgartown; and Island Star in Vineyard Haven.
State officials said this month that number is now three, the two Stop & Shop locations, which rely on Western Union for money transfers, and Island Star in Vineyard Haven, which relies on BB Money Transfers of White Plains, N.Y.
Last week, Elio Silva, owner of the Tisbury Farm Market and Vineyard Grocer, said he first heard that there were problems with transfers around April 1. Customers said money transmitted on March 25 was not transferred to the intended recipients.
Mr. Silva said last week in a phone call with The Times, “I offered the transfer service as a convenience, but it is no longer convenient due to the missing money.” He no longer offers money transfer services and has joined a group of 10 stores, eight of them off-Island, to hire an attorney to expedite the return of his customers’ money. Mr. Silva could not be reached for comment this week.
Maira DeSouza, owner of Island Star, a small market on Beach Road in Vineyard Haven, told The Times last week that she handles between 60 and 70 money transfers to Brazil per week. She said that she used InterTransfers for about one year, until she received a notice from OCABR alerting her to the order against InterTransfers, to cease and desist. She said that about 25 customers have reported to her that money they transferred was not received in Brazil.
Ms. DeSouza could not be reached this week for an update.
On Wednesday, a man who declined to identify himself filled out a state claim form at the Island Star store. He said that a $600 child support payment that he sent three weeks before was not delivered in Brazil. He said he hoped the state would see that his money was either delivered or returned.
Valerio Destefani, owner of the three-month-old restaurant and convenience store “A Bite on the Go,” at the Shell station on Beach Road in Vineyard Haven, is undeterred by the recent problems. He hopes to offer money transfer services soon to his customers.
He is awaiting state approval of his application to become a money transfer agent for the transfer company MoneyGram, a company based in Dallas, Texas. MoneyGram is licensed as a foreign transmittal agency in Massachusetts, but it does not have any agents on the Vineyard now. MoneyGram handles money transfers for Massachusetts CVS stores and Walmart.
Mr. Destefani said he has a binder filled with company regulations that he must master before MoneyGram will allow him to handle transfers. These regulations include requirements that he check customer photo identification for all transactions. Multiple ID checks are required for larger transfer amounts. He is also required to report any suspicious activities, which include regular transmittals of large amounts of money, and some cash transactions.
Island bankers are wary
In conversations with The Times Wednesday, officials at Martha’s Vineyard Savings Bank and Edgartown National Bank said their banks handle few foreign money transfers.
Paul Falvey, president and chief executive officer of Martha’s Vineyard Savings Bank, said in a telephone call that he could not comment on specific account activity at his bank. He declined to comment on outside transfer companies. “I can tell you that the bank has a minimal number, approaching zero, of international transactions,” he said.
Edgartown National Bank chief financial officer Victoria Lazzarova, also said that there are few international transfers from her bank.
Ms. Lazzarova expressed skepticism about money transfer businesses. “They are a very fringe service in a lot of ways, on the borderline of legitimacy in my opinion, simply because they are not regulated like a bank,” she said. “As a bank, we are required to monitor and report the activities of money services if we were to have them as customers.”
Ms. Lazzarova said she could not comment on whether any of the transfer agents were customers of the bank, but she did say that they would have to operate through a financial intermediary such as a bank in order to function.
She said banks are required to monitor all banking activity closely. “We have not reported any suspicious activity or concerning activity,” she said.
Both bank officials said federal banking regulations, particularly those involving foreign transfers, have increased since 9/11. Some of these concerns center on money laundering, attempts to conceal the source of money. Both said they must report any suspicious activity and all large or repeated foreign transfers. They also are required to report activity involving large cash transactions of any kind, except for the activity of recognized high cash businesses that have an established history.
Correction: An earlier version of this story may have confused readers, who gathered that three companies were responsible for $16.7 million in cash transfers from Martha’s Vineyard. A clarification posted here added to that confusion. The $16.7 million figure represents the total for all companies operating on Martha’s Vineyard. The story highlights the individual totals for three of those outlets that together accounted for approximately $12 million.
InterTransfers transferred nearly $26 million from Massachusetts consumers in 2012. Those numbers were reversed in an earlier version on this story so that it read $62.