The bill amends the Electronic Fund Transfer Act to require money services businesses (MSBs) to collect a new fee equal to 37% of each remittance sent to any country the Department of Homeland Security identifies as one of the five largest sources of unlawful entrants in the prior fiscal year. Collected fees are paid into the Treasury general fund and, beginning the following fiscal year, the Secretary of the Treasury transfers an amount equal to 50% of the prior year’s collected fees into a Border Security Trust Fund and 50% into a Border Security State Reimbursement Trust Fund.
The Security Fund can be spent by DHS, without further appropriation, on detection technology, southern border physical barriers, and Border Patrol wages; the Reimbursement Fund reimburses border States proportionally for prior-year border security expenditures based on submitted receipts. The statute requires investment of unused fund balances, imposes a $50 billion combined cap that triggers a rescission of excess funds to deficit reduction, and takes effect within 30 days of enactment.
The measure repurposes remittance flows into a dedicated border-security financing mechanism and creates new administrative and compliance obligations for MSBs and federal agencies.
At a Glance
What It Does
The bill requires MSBs to charge a 37% fee on remittances sent to annually designated “covered countries,” deposits those fees into the Treasury general fund, and then directs the Treasury to transfer 50% of prior-year fees into a Security Fund and 50% into a State Reimbursement Fund each fiscal year. DHS may spend Security Fund balances without new appropriations on specified border‑security items; states may apply to the Reimbursement Fund with receipts for prior-year expenditures.
Who It Affects
Money services businesses defined under 31 C.F.R. §1010.100 must collect the fee and remit it to Treasury; remittance senders—often migrants and their families—will bear the economic cost; DHS and U.S. Customs and Border Protection (CBP) are responsible for implementing covered-country designations and spending; southern border States are potential recipients of reimbursements.
Why It Matters
This bill shifts border-security financing onto private remittance flows and creates two off‑budget trust funds available without annual appropriations, altering how border programs are funded and overseen. It raises compliance, collection, and enforcement questions for remittance channels and could materially affect remittance-dependent households and cross‑border financial flows.
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What This Bill Actually Does
The bill adds a new subsection to the remittance-transfer provisions of the Electronic Fund Transfer Act that forces MSBs to add a surcharge on transfers sent to certain countries. A ‘covered country’ is identified each year by the Commissioner of CBP as one of the five countries whose nationals most frequently unlawfully entered the United States in the previous fiscal year.
The statute points providers to the federal definition of MSBs in anti‑money‑laundering regulations for who must collect the fee.
Collected fees are first deposited into the Treasury general fund. Starting in the fiscal year after enactment and each year thereafter, the Secretary of the Treasury must transfer an amount equal to 50% of the total fees collected in the prior fiscal year into a Border Security Trust Fund and 50% into a Border Security State Reimbursement Trust Fund.
The statute requires Treasury to invest fund balances in interest‑bearing government obligations and to credit interest and sale proceeds back to the funds.The Security Fund is narrowly earmarked: DHS can, without seeking further appropriations, spend balances on three categories—detection technology for the U.S.–Mexico border, installation of physical barriers on the southern border, and wages and salaries for Border Patrol agents. The Reimbursement Fund reimburses border States for prior‑year border‑security spending: States submit receipts within a process the Secretary defines, and Treasury distributes funds to states in proportion to their submitted eligible expenditures relative to all eligible submissions.To limit accumulation, the bill sets a combined ceiling: if the total across both trust funds exceeds $50 billion, Treasury permanently rescinds the excess and deposits it back into the general fund for deficit reduction, explicitly barring its future use as an offset.
The Act takes effect within 30 days of enactment, and states are given a 30‑day window after enactment to apply for reimbursements for the immediately preceding fiscal year.
The Five Things You Need to Know
The bill mandates a 37% surcharge on remittance transfers sent to ‘covered countries,’ and applies that surcharge only to remittance providers classified as money services businesses under 31 C.F.R. §1010.100.
CBP’s Commissioner annually designates ‘covered countries’ as the five countries whose citizens or nationals unlawfully entered the United States most frequently in the prior fiscal year.
Each fiscal year Treasury must transfer an amount equal to 50% of the prior fiscal year’s collected remittance fees into the Border Security Trust Fund and 50% into the Border Security State Reimbursement Trust Fund.
Border States may seek reimbursements by submitting receipts for prior‑year expenditures; Treasury distributes Reimbursement Fund dollars proportionally based on each applicant state’s eligible spending share.
If combined balances in the two trust funds exceed $50 billion, the statute permanently rescinds the excess and dedicates it to deficit reduction, and the Act takes effect within 30 days of enactment.
Section-by-Section Breakdown
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Creates a 37% remittance surcharge for MSBs sending money to selected countries
This provision inserts a new subsection into the Electronic Fund Transfer Act requiring money services businesses to charge senders a 37% fee on remittances to countries CBP designates as top sources of unlawful entrants. The text ties the MSB definition to existing Treasury/FinCEN regulations, which means the fee will attach to entities already covered by AML rules (money transmitters, MVUs, etc.). The fees must be forwarded to Treasury in the form and manner the Secretary prescribes, which will require MSBs to change checkout displays, receipt formats, and back‑office reporting.
Establishes a trust to reimburse border States for prior‑year security expenditures
Congress creates a Treasury trust fund that holds amounts transferred from the general fund equal to half of the prior year’s remittance fees. States must apply with receipts—submitted in the form DHS/Treasury specify—showing eligible expenditures used for deterrence, detection, or operational control. The statute requires proportional distribution among applicant states, which means small states that spent heavily can receive a larger share if others do not apply or report less spending.
Creates a fund DHS may spend without new appropriations for specific border uses
This Trust Fund receives the other half of the prior year’s remittance fees transferred from the general fund. The bill explicitly lets DHS spend these balances without further appropriation, but limits use to three categories: border detection technology, southern‑border physical barriers, and wages/salaries for Border Patrol agents. Because the language bypasses annual appropriations, it changes congressional control over funding levels and timing for those activities.
Caps combined fund balances and rescinds any excess to deficit reduction
If the combined balance of both trust funds exceeds $50 billion, the statute permanently rescinds the excess and deposits it into the general fund exclusively for deficit reduction, explicitly prohibiting use of the rescinded funds as offsets. This is a hard cap on accumulation but does not constrain annual transfers that create the excess—rather it claws back the surplus after the fact.
Fast implementation and a short window for state reimbursement applications
The Act directs that it and the EFTA amendment take effect no later than 30 days after enactment. States have a 30‑day window after enactment to apply to the Reimbursement Fund for spending in the immediately preceding fiscal year, which creates a compressed administrative timeline and may disadvantage states that do not have centralized, audited receipts ready to submit.
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Explore Immigration in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Southern border States that spent heavily on border security: they can recover a portion of prior‑year expenditures through reimbursements, providing a source of retroactive funding without needing new appropriations.
- Department of Homeland Security and Border Patrol: DHS gains a dedicated, off‑budget revenue stream for certain projects and personnel costs, providing spending flexibility and potential workforce support.
- Vendors of border detection technology and barrier contractors: because the Security Fund is earmarked for technology and physical barriers and is available without appropriation, suppliers may see steadier contracting opportunities.
- State and local agencies that can document eligible expenditures: agencies with robust procurement and accounting can more readily capture reimbursements, improving their fiscal position relative to peers.
Who Bears the Cost
- Remittance senders—often migrants and low‑income households—who will face a direct 37% surcharge on covered transfers, substantially reducing the purchasing power of money sent home.
- Money services businesses required to collect and remit the fee: MSBs will face operational, compliance, and customer‑service costs to implement the surcharge and reporting changes, and risk customer attrition or business loss.
- Financial channels that serve remittances (correspondent banks, fintechs): they will see changes in transaction volumes and may confront increased AML/onboarding friction as customers seek alternatives.
- Federal agencies (Treasury, CBP, DHS) that must administer designations, transfers, and reimbursement programs: they will assume new administrative workloads without explicit new appropriations for implementation.
Key Issues
The Core Tension
The central dilemma is between securing a dedicated, sizable revenue stream for border operations and doing so by imposing a heavy, targeted fee on remittances: the approach provides predictable funds and reduces reliance on annual appropriations but shifts costs onto often vulnerable households, risks driving transactions outside regulated channels, and reduces Congress’s routine control over border spending.
The bill repackages remittance receipts into dedicated border security funding, but it creates several practical and legal challenges. First, the 37% surcharge is large enough to materially alter remittance behavior; recipients may receive far less money, senders may switch to informal or in‑person channels to avoid the fee, and MSBs face incentives to discourage covered transfers.
That displacement can undermine anti‑money‑laundering controls and make enforcement harder. Second, the statute routes collected fees into the Treasury general fund before returning half to the two trusts the following fiscal year, producing a timing lag and making annual receipts subject to general fund accounting until the mandated transfers occur.
The definitions and program rules are thin in key respects. The term 'related to border security enforcement measures' for state reimbursements is broad, potentially allowing a wide array of expenditures to qualify and incentivizing states to reclassify routine public‑safety spending as border security.
Similarly, allowing DHS to spend Security Fund balances without further appropriation reduces congressional oversight and could lead to spending that Congress would otherwise block. Implementation also depends on administrative rulemaking (fee remittance procedures and the form of state receipts) that could materially shape burdens on MSBs and states.
Finally, targeting fees by nationality or country of destination invites constitutional and international law questions—particularly if the surcharge disproportionately burdens nationals of particular countries—or diplomatic friction with those countries.
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