The Commonwealth has pledged to work with regional and international financial institutions to reduce the risks associated with diaspora money transfers, which provide a crucial source of income to citizens in many developing countries.
The Financial Action Task Force (FATF), the US Treasury, regional bodies, international experts, central bank governors and global banks will attend a Commonwealth-led forum on remittances and regulations to tackle money laundering and terrorist financing.
The dialogue, which will take place in Marlborough House, London from 20 – 21 July 2015, will explore the implications of the de-banking of the remittance sector and identify policies to effectively address the impact of anti-money laundering and counter financing of terrorism (AML/CFT) regulations on money transfers.
“While AML/CFT regulations are essential to protect the integrity of the financial system, measures such as the closure of money transfer operators can have a marked impact on the flow of remittances,” said Deodat Maharaj, Commonwealth Deputy Secretary-General.
He added: “At their meetings in 2014, Commonwealth Finance Ministers and central bank governors from Africa, Asia, the Caribbean and the Pacific, emphasised the importance of balancing the need to tackle money laundering and terrorist financing with the need for financial inclusion. These concerns were echoed at the annual Commonwealth and Francophonie Dialogue with the G20, in April 2015.”
Eight Commonwealth developing countries are among the most dependent on remittances, with India receiving US$71 billion from diaspora communities - the highest value of remittances in 2014. Money transfers to the Caribbean and Africa also exceeded all other forms of external finance.
Mr Maharaj said: “The Commonwealth Secretariat is acting with urgency to find a way to decrease the cost of money transfers and to make remittances a viable and secure source of finance for developing countries.
“International co-operation remains crucial to maximise the mobilisation of all forms of finance - be they private or public. In this regard the Commonwealth is bringing together all key stakeholders to ensure that the development potential of remittances is not unduly constrained.”
FATF Executive Secretary, Rick McDonell, who will present the keynote speech at the event, added: "The FATF fully supports the objectives of financial inclusion and recognises the importance of remittances in many parts of the world. We believe that the international standards can and should be implemented in a balanced way that satisfies the need for appropriate regulation but does not unnecessarily obstruct international money transfers.”
Mr McDonnell described the dialogue as “a good opportunity to exchange views on whether that balance is being achieved."
The outcome of the forum, which will take place just three days after the Financing for Development conference in Ethiopia, where discussions centred on domestic revenue mobilisation, as well as innovative financing, will feed into meetings with finance ministers and central bank governors, and the continued engagement with the G20. The forum also comes ahead of the UN summit on the post-2015 sustainable development goals and climate change that will take place later this year.