View/save PDF version of this document - La Strada International

to anti-money laundering and suspicious activities. But it also addressesconsumer issues concerning rights of money senders. In Latin America, theapproach is broader and pays attention to compliance to rules that do notconflict with U.S. regulations.Unlicensed businesses represent a variety of players, such as individualentrepreneurs, travel agents who have a license for airfare sales but not forfinancial transfers, or retail outlet stores whose agents offer “alternative”transfers to licensed businesses, though they may also have a license toprovide transfers. Informal businesses typically operate in countries whereflows are not particularly attractive to companies because of their smallvolume, where foreign currency transfers are highly regulated by the state,where technology is still inaccessible to individuals and businesses, or wherecustomers have greater trust and preference for person-to-person delivery.However, these businesses or entrepreneurs are aware of the presence of aregulatory environment. In many instances, some informal entrepreneurshave matured and evolved into formally licensed business operations. Someof the Dominican Republic and Salvadoran companies operating today areexamples of this change. Conversely, informal businesses make up over 50percent of the total volume transferred to Haiti, Cuba, and Nicaragua.Most transfers to Latin America today, however, take place through fullylicensed businesses. Regulatory procedures monitoring the U.S.–LatinAmerica corridor primarily occur in the United States. In order for abusiness to legally offer money transfers, the company has to complywith federal and state (and sometimes municipal) regulations regardingmoney laundering, suspicious activities, and day-to-day operations. Thecompliance process often involves bonding and regular audits, as well asmaking information available about transfers and the agents with whomthe company operates.Money transfer companies are regulated in more than forty states andmunicipalities as non-bank financial institutions labeled as money servicebusinesses, with the requirement to have a license and a bond to operate.Federally, the regulatory environment of “Money Service Businesses” ismanaged by the Treasury Department through the Office of the Comptrollerof the Currency, the Financial Crimes Enforcement Network (FinCEN),and the Office of Foreign Assets Control (OFAC), agencies that complywith the Bank Secrecy Act and the USA Patriot Act. Reporting to FinCENfocuses on preventing money-laundering practices, while reporting toOFAC involves monitoring transfers from entities or countries listed by thisOffice. In addition to the reports and audits, the companies need to meetseveral procedural legal requirements, which include a written compliance305