Myth and realities
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| Photo: istockphoto.com |
Often anti-money laundering and combating the financing of terrorism (AML/CFT) regulations are said to be a major barrier to the market entry of cross-border remittance services providers and promoting remittance flows through formal channels. It would be naïve to deny it but it would be excessive to generalize it too.
As to market entry, often the problem seems to be associated with foreign exchange or other laws and regulations. Many countries have foreign exchange regulations that do not allow remittance companies to operate outside banks. This is confirmed by our surveys conducted for an upcoming paper. On the other hand, I have seen no case where remittance companies are not allowed to operate independently from banks because of AML/CFT requirements.
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This blog is hosted by Dilip Ratha, lead economist at the World Bank. Its goal is to leverage migration and remittances for development. 