Pardee-CFLP-Remittances-TF-Report

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Some guidance may be found in the preamble, which explains that the CFPB is“not adjusting the required disclosures for transfers that a recipient picks up ata paying agent.” 66 In other words, if the recipient’s institution is deemed to be a“paying agent” under applicable law, the fee must be disclosed even if the remittancetransfer provider cannot determine the amount of the fee. The preamblenotes that the recipient’s institution may also be an agent of the remittancetransfer provider. The preamble states: “(I)f the designated recipient’s institutionis an agent of the provider . . . the provider must disclose all fees imposed on theremittance transfer.”The problem is made more complicated because there is no guidance regardingthe applicable law to be used for determining if the recipient’s institution is an“agent” or “paying agent” of the remittance transfer company. The 2012 regulationstates that when determining when an entity is an “agent” of a remittanceprovider, reference should be made to “State or other applicable law.” 67 Thiscould refer to the State where the remittance transfer provider is located, theState where the transaction occurred, the home State of the consumer, or thelaw of the foreign country in which the remittance is sent. Each of these jurisdictionsmay have different rules for determining if the recipient’s institution is the“agent” or “paying agent” of the transfer provider. Thus, without further clarification,a remittance provider may face liability for not precisely disclosing the feescharged by the recipient’s non-affiliated depository institution that is deemedunder applicable law (which is not defined) to be the “paying agent” of the remittancecompany.Limitation to Depository InstitutionsThe 2013 amendment may also be criticized for limiting the exemption to arecipient’s depository institution (e.g., a bank, savings association, or creditunion). According to the World Bank, three-quarters of the world’s poor don’thave a bank account, not only because of poverty, but also because of the cost,travel distance, and amount of paperwork involved in opening an account. 68 Inpost-conflict nations the percent of the population with access to bank accountsis reduced further by the degradation of the country’s financial system thatresults from warfare, enhanced concerns about the security of the nation’s financialinstitutions, potential for sharp changes in exchange rates, and the fear of66 78 Fed. Reg. 30673.67 12 CFR § 1005.30(a).68 See: http://tinyurl.com/WB-Unbanked.Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development 51
government corruption. Thus, limiting the benefit of the exemption to transfersmade into a recipient’s “asset account” at a bank or similar depository institutionis particularly disadvantageous to the remittance transfer providers seeking toprovide services to post-conflict areas.Exclusion for Transfers to Credit Card, Prepaid Card, or a Virtual Account Heldby an Internet-Based or Mobile Telephone CompanyThe CFPB considered, but specifically declined, expanding the fee disclosureexemption to include transfers to credit cards, prepaid cards, and virtualaccounts held by internet companies (e-wallets) and mobile phone companies(mobile phone payments). According to the Bureau, the systems for offeringsuch transfers are not yet fully developed and currently most of these transfersare provided through systems in which remittance transfer providers havecontractual arrangements with the recipient institutions, or the providers andthe recipient institutions operate within one single network. 69 The Bureauconcluded that, going forward, “arrangements will likely permit providers toexercise some control over, or learn about, fees charged by recipient institutions[emphasis added].” 70In the case of post-conflict nations, the failure to provide flexibility for transferinto such non-bankaccounts, and in particularto mobile phones andother devices, is particularlyproblematic. Inthese nations the use ofmobile banking deviceshas become a financiallifeline for much of thepopulation. In 2009, theBoth the World Bank and the U.S. Agencyfor International Development support andencourage the use of mobile devices formoney transfers. These agencies have foundthat mobile phones are widely availablein developing nations and have the addedbenefit of allowing access to funds withoutthe need to travel through dangerous countryside.Global System for Mobile Communications Association reported more than fourbillion mobile phone subscriptions globally, with 80 percent of new connectionsin emerging markets and mostly by lower-income consumers. 71 Both the WorldBank and the U.S. Agency for International Development support and encourage69 78 Fed. Reg. 30673.70 Id.71 USAID, Enabling Mobile Money Interventions at 2 (2010).52 A <strong>Pardee</strong> Center Task Force <strong>Report</strong> | October 2013
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Pardee Center TASK FORCE Report oct
Page 3 and 4:
This series of papers, Pardee Cente
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AcknowledgementsThis Task Force on
Page 7 and 8: ITU International Telecommunication
Page 9 and 10: networks and migrant associations i
Page 11 and 12: to developing countries than other
Page 13 and 14: But most importantly, remittances a
Page 15 and 16: often mix in the countries of desti
Page 17 and 18: According to the World Bank estimat
Page 19 and 20: Because of its focus on the multidi
Page 21 and 22: eceiving remittances provides an en
Page 23 and 24: associations for post-conflict inst
Page 25 and 26: are proposed to avoid the associate
Page 27 and 28: Terry, D. 2005. Remittances as a De
Page 29 and 30: oader approach to post-conflict rem
Page 31 and 32: networks can be seen as “homogeno
Page 33 and 34: That personalized nature of hawala
Page 35 and 36: Customary law (xeer) and other trad
Page 37 and 38: the world (Lindley 2009, 531). Much
Page 40 and 41: ize the informal equal efforts to a
Page 42 and 43: struction and development. Means sh
Page 44 and 45: opportunities should focus on exist
Page 46 and 47: 2. Dodd-Frank Act and Remittances t
Page 48 and 49: leadership. Formal payments systems
Page 50 and 51: and financial institutions. 26 Reso
Page 52 and 53: closures should be both in English
Page 54 and 55: issued a new proposed regulation De
Page 56 and 57: “closed network,” in which all
Page 60 and 61: the use of mobile devices for money
Page 62 and 63: Foreign TaxesUnder the 2012 regulat
Page 64 and 65: will be available in all cases. CFP
Page 66 and 67: Section II: Remittances in Post-Con
Page 68 and 69: Sri Lanka. The conflict also result
Page 70 and 71: Figure 2: Current Account, Trade Ba
Page 72 and 73: flows came from migrant workers in
Page 74 and 75: Informal Remittance Channels in Sri
Page 76 and 77: tory authorities, with some calls f
Page 78 and 79: 4. The Role of Remittances in Post-
Page 80 and 81: Figure 1: Liberia Per Capita Income
Page 82 and 83: associations, women’s groups, alu
Page 84 and 85: Remittances to LiberiaValue of Remi
Page 86 and 87: credit because of the need to be li
Page 88 and 89: Remittance Transfers in Sierra Leon
Page 90 and 91: Knowledge RemittanceThe Liberian di
Page 92 and 93: process furthermore was a pioneerin
Page 94 and 95: Levitt, Peggy and Deepak Lamba-Niev
Page 96 and 97: Section III: Diaspora Networks andC
Page 98 and 99: Post-Conflict Development,” this
Page 100 and 101: One of the main challenges for mobi
Page 102 and 103: 6. Transnational Remittances and De
Page 104 and 105: The Salvadoran Diaspora is very sig
Page 106 and 107: annually during the 1990s to less t
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Figure 2: Transnational Vicious Cyc
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The transnational vicious cycle not
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emittance flows is mixed, as initia
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individuals, communities, and famil
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areas. This issue can potentially b
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This is a breakthrough moment: afte
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Edwards, Sebastian and I. Igal Mage
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y La Distribucion Del Ingreso, 1st
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7. Remittances and Community Resili
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For quantitative data collection, a
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Remittances are perceived as playin
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the affected population. Internatio
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ReferencesAddleton, J. 1984. The im
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8. Filling the Gap in Health Staffi
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The alternative is for donors to se
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cians in the U.S. in 2000 (Clemens
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1. Remittances, Financial Inclusion
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networks, and communities. The role
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• In the present era of heightene
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the island of Kosrae, in the Federa
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and Sweden and has held visiting pr
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he organized a number of workshops
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Pardee Center Conference ReportsDev
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