International banks’ AML/CFT strategies a major barrier to reducing the cost of remittances

De-risking by international banks in response to increasingly tough anti-money laundering and counter financing of terrorism (AML/CFT) regulations is a major barrier to reducing remittance costs according to the World Bank.

In its latest Migration and Development Brief, the bank says other barriers include exclusive partnerships between national post office systems and money transfer operators.

Costly service

The brief says the global average cost of sending US$200 was 7.1 per cent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 per cent.

Sub-Saharan Africa is the most expensive place to send money to, where the average cost is 9.4 per cent.

Technology opportunities

The brief argues that regulations and barriers to competition put up by national post offices and exclusive money transfer operators constrain the introduction of more efficient technologies.

The World Bank wants to see introductions of new remittance channels using the Internet and smartphone apps.

The brief also suggests a greater use of cryptocurrencies and blockchain in remittance services.

Categories: Trade Based Financial crimes News

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