Making Remittances Work : Balancing Financial Integrity and Inclusion
The September 11, 2001, terrorist attacks on the United States exposed the use of remittance channels for financing terrorism. Acting on this, the international community, through the financial action task force (FATF), issued first international s...
| Main Authors: | , , , |
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| Format: | Publication |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/05/19628431/making-remittances-work-balancing-financial-integrity-inclusion http://hdl.handle.net/10986/18551 |
| Summary: | The September 11, 2001, terrorist
attacks on the United States exposed the use of remittance
channels for financing terrorism. Acting on this, the
international community, through the financial action task
force (FATF), issued first international standard to require
the licensing or registration of money transfer businesses
(MTBs) and to make them subject to anti-money laundering and
combating the financing of terrorism (AML and CFT)
requirements. This study aims to assess current practices,
draw lessons learned, and assist policy makers in designing
an effective regulatory and supervisory framework governing
remittances that not only meets AML and CFT international
standards, but also supports a country's overall
financial inclusion objectives. The study's assessments
and recommendations are based on extensive research and
analysis, including primary survey data received from 26
remittance sending and receiving countries. The report
follows on the 15 bilateral remittance corridor analyses
(BRCAs) undertaken during 2004-10 by the financial market
integrity (FMI) unit of the World Bank and three BRCAs
undertaken by the Government of the Netherlands using the
methodology developed by the FMI unit of the World Bank. The
study is organized as follows: chapter one analyzes the
various business models for remittance services currently in
existence, and the various types of agent networks of MTBs
available for the distribution of remittances. Chapter two
elaborates on AML and CFT risks related to products, market
structure, regulation, and supervision; discusses how
innovative products and services for remittance transfers
such as mobile money and internet-based money transfer may
pose new threats and risks; and includes a discussion on the
appropriate risk mitigation techniques so as not to
constrain the remittance market from developing and
innovating. Chapter three describes the various regulatory
frameworks that MTBs encounter around the world, including
different types of laws and regulations affecting them,
sheds light on how AML and CFT requirements can be
implemented, and provides a comprehensive analysis of
customer due diligence (CDD) requirements as a crucial
element to effectively fight money laundering and the
financing of terrorism. Chapter four discusses licensing and
registration regimes for, and appropriate regulatory
approaches toward, MTBs; examines the conditions that must
be fulfilled in order to apply for licensing or
registration. Chapter five discusses the various AML and CFT
supervisory models and identifies potential strengths and
weaknesses in each of these models; elaborates on the
supervisory practices of competent authorities, along with
the challenges faced by MTBs in implementing relevant
supervisory requirements; and discusses the risk-based
approach (RBA) to supervision of MTBs. Finally, chapter six
focuses on establishing an effective AML and CFT regime
while supporting broader financial inclusion and highlights
key policy recommendations underlined by a RBA that
encourages flexible implementation of the AML and CFT framework. |
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