In recent years, as remittance flows and funds transfer systems have become increasingly important for international policymakers, the broad concepts of remittance phenomena have become well documented. This essay compares the key features of two remittance corridors, identifying two distinct stages for inducing a comprehensive shift from informal to formal channels. The main source of analytical information is work conducted by the World Bank in support of the Asia-Pacific Economic Cooperation (APEC) Remittance Initiative. Additional research could explore in more detail how the features of a given corridor should be addressed in implementing regulations and how operators in the formal sector can best reach remittance senders.
The First International Conference on Hawala, hosted by the government of the United Arab Emirates under the leadership of the Central Bank of the U.A.E. in May 2002, was a groundbreaking event that produced the Abu Dhabi Declaration on Hawala. The IMF was very pleased that the government of the U.A.E., again with the leadership of the Central Bank, collaborated with the IMF to organize this second conference.
On behalf of the Somali people, I would like to take this occasion to thank H.H. Sheikh Zayed bin Sultan Al Nahyan, the President of the United Arab Emirates (U.A.E.); Their Highnesses, the members of the Supreme Council; and the government and the people of the U.A.E. for their generous hospitality in accommodating such a big community of Somalis who live and work in their country. The U.A.E. has been our second home for a long time and especially during the past 14 years since the state of Somalia collapsed.
In September 2004, Da Afghanistan Bank, the country’s central bank, introduced legislation to regulate and supervise the activities of money service providers in Afghanistan. This regulation applies to all individuals and legal entities that provide money services in Afghanistan, whether or not the individuals and legal entities are domiciled in Afghanistan. For the purposes of the regulation, money services are defined to include safekeeping, money transmission, check cashing, and currency exchange. A licensed money service provider is entitled to engage in all of the activities of a foreign exchange dealer, but a licensed foreign exchange dealer may not engage in safekeeping, money transmission, or check cashing without upgrading its license to that of a money service provider.1
The Eastern and Southern Africa Anti–Money Laundering Group (ESAAMLG) was conceived in 1999 and is a Financial Action Task Force–style (FATF-style) regional body with a membership of 14 countries—Botswana, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.
Hawala means “transfer” in Arabic and refers to a traditional informal and efficient funds transfer method used by millions of expatriates to send remittances to their families around the world. Several studies emphasize hawala’s economic and humanitarian significance. In the midst of calls to shut down all potential means used by militants to finance their terror, the First International Conference on Hawala, held in 2002 in Abu Dhabi, was successful in offering an opportunity to examine hawala beyond media sensationalism and rushed policy responses.
Given the large turnover in the money remittance sector, money remittance offices are considered a significant part of the Dutch financial system. In addition, because it has emerged that money remittances can be misused for money laundering and terrorist financing, the Netherlands has found it necessary to regulate the money remittance providers.
This paper discusses Colombia’s experience of implementing a regulatory framework for money transfers that is capable of attracting money remitters to cross the line to a formal system. It also describes the supervisory practices and procedures the country designed and has applied for the past 12 years to enforce those regulations.
Hawala and other remittance systems have gained attention in recent years with the substantial growth of remittance flows from countries with large migrant labor forces and with increased focus on combating money laundering and the financing of terrorism. The IMF and the World Bank have been researching these systems since 2002 to better understand the interplay of historical, cultural, and economic factors that promote such systems. This book is a survey of regulatory practices and an overview of experiences in different countries, and includes articles on regulatory frameworks in remitting and receiving countries and on the problems that can arise when regulating remittance systems.