GUIDANCE REPORT FOR THE
IMPLEMENTATION OF THE
CPSS-WORLD BANK
GENERAL PRINCIPLES FOR
INTERNATIONAL REMITTANCE SERVICES
FINANCIAL INFRASTRUCTURE SERIES
PAymENT SySTEmS PoLICy ANd RESEARCh
October 2012
GUIDANCE REPORT FOR THE
IMPLEMENTATION OF THE
CPSS-WORLD BANK
GENERAL PRINCIPLES FOR
INTERNATIONAL REMITTANCE SERVICES
October 2012
FINANCIAL INFRASTRUCTURE SERIES
PAYMENT SYSTEMS POLICY AND RESEARCH
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FOREWORD
e CPSS-World Bank General Principles for International Remittance Services
1
analyzes the payment system
aspects of remittances and provides ve general principles and two associated roles related to the market for
international remittances.
e main purpose of this Guidance Report is to provide national authorities, international organizations, pri-
vate sector stakeholders, civil society and other entities working on remittance policy and market reform, with
additional guidance for the implementation of the general principles. Such guidance is derived from practi-
cal experiences and lessons accrued by the World Bank through its operational work in this specic eld in
more than 30 countries over the last 5 years, oen in cooperation with other international organizations and
national authorities. e report provides examples of tools and instruments that have shown to be eective in
improving and reforming remittance markets.
e Guidance Report is not intended to set standards and does not supersede or modify the General
Principles for International Remittance Services.
rough the preparation of this Guidance Report and its on-going eld work, the World Bank has also con-
rmed that the General Principles for International Remittance Services continue to be a valid and eective
framework to assess and reform remittance markets. e Guidance Report should nevertheless be seen as a
living document that is likely to undergo periodical updates to accommodate emerging market practices and
other relevant new realities in the remittances market.
Janamitra Devan
Vice President
Financial and Private Sector Development
e World Bank
1
CPSS-WB, General Principles for International Remittance Services, Bank for International Settlements, Basel, Switzerland, January 2007.
ACKNOWLEDGEMENTS
e ideas presented in this document are combined work of many contributing authors and the members of the
Financial Infrastructure and Remittances Service Line of the World Bank’s Financial Inclusion and Infrastructure
Global Practice.
Primary authors are: Massimo Cirasino (World Bank and co-chair of the CPSS-World Bank General Principles
Task Force), Carlo Corazza, Isaku Endo, Jose Antonio Garcia, Rahul Kitchlu, Marco Nicolì and Kai Schmitz (all
World Bank), and Paloma Monroy (Center for Monetary Studies of Latin America).
e authors are grateful to many colleagues at the World Bank for their comments and overall support in the
creation and publication of this report. In particular, the authors would like to thank Gabi Afram, Maria Teresa
Chimienti, Lily Chu, Mario Guadamillas and Jane Hwang.
e authors are also thankful for the support and collaboration received from other international organiza-
tions through the dierent partnerships created to implement the General Principles. Among them, special
mention goes to the Arab Monetary Fund (AMF), the Center for Latin American Monetary Studies (CEMLA),
the International Finance Corporation (IFC), and the Multilateral Investment Fund of the Inter-American
Development Bank (MIF-IDB).
e Committee on Payment and Settlement Systems of the Bank for International Settlements, in the framework
of the CPSS-World Bank General Principles Task Force, provided comments on this report. e authors would
like to thank Marc Hollanders (BIS and co-chair of the CPSS-World Bank General Principles Task Force) for his
advice and guidance.
III
TABLE OF CONTENTS
Acronyms and abbreviations V
Executive Summary VII
I. Introduction 1
1. BACKGROUND, 1
2. APPLICATION OF THE GENERAL PRINCIPLES, 2
3. OBJECTIVE AND ORGANIZATION OF THE GUIDANCE REPORT, 3
II. Lessons for the Implementation of the General Principles 5
1. TRANSPARENCY AND CONSUMER PROTECTION, 5
1.1 Key Lessons Regarding Transparency, 5
1.2 Key Lessons Regarding Consumer Education, 8
1.3 Key Lessons Regarding Consumer Protection, 9
2. PAYMENT SYSTEM INFRASTRUCTURE, 12
2.1 Key Lessons Regarding Payment System Access, 12
2.2 Key Lessons Regarding the Expansion of Retail Payments Infrastructure, 13
2.3 Key Lessons Regarding Remittance Distribution, 14
2.4 Key Lessons Regarding New Technologies, 15
2.5 Key Lessons Regarding Open and Interoperable Remittance Systems, 16
2.6 Key Lessons Regarding Improvements to Cross-Border Payment Infrastructure, 17
3. LEGAL AND REGULATORY ENVIRONMENT, 17
3.1 Key Lessons Regarding the Soundness and Flexibility of Regulatory and Legal Frameworks, 18
3.2 Key Lessons Regarding Non-Discriminatory Regulatory and Legal Frameworks, 20
3.3 Key Lessons Regarding the Proportionality of Regulatory Frameworks, 21
3.4 Key Lessons Regarding International Coordination of Legal and Regulatory Frameworks, 23
4. MARKET STRUCTURE AND COMPETITION, 23
4.1 Key Lessons Regarding Market Access, 24
4.2 Key Lessons Regarding Access to Domestic Payments Systems , 24
5. GOVERNANCE AND RISK MANAGEMENT, 23
5.1 Key Lessons Regarding Self-Regulation for Risk Management and Governance, 26
5.2 Key Lessons Regarding Regulatory Requirements for Governance and Risk Management
of RSPs, 27
IV GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
6. ROLE A: THE ROLE OF REMITTANCE SERVICE PROVIDERS, 29
6.1 Key Lessons Regarding Cooperation and Competition between RSPs, 29
6.2 Key Lessons Regarding RSPs Role in Transparency, 29
7. ROLE B: THE ROLE OF PUBLIC AUTHORITIES, 30
7.1 Key Lessons Regarding Cooperation of Public Authorities, 30
7.2 Key Lessons Regarding the Involvement of Public Authorities, 30
III. General Principles Assessments of National Remittance Markets 35
1. OBJECTIVES AND BENEFITS, 35
2. SCOPE, 35
3. ASSESSMENT REPORTS, 36
ANNEX A: Remittance Questionnaire for Central Banks, Financial Authorities, Statistical
Agencies, and Others, 39
ANNEX B: G20 Remittances Toolkit, 49
BOXES
Box 1: List of the General Principles and related Roles, 2
Box 2: Excerpt from the 2009 L’Aquila Declaration on Responsible Leadership for a Sustainable Future, 3
Box 3: Transparency to the Sender, 6
Box 4: Requirements for World Bank Accreditation of Remittance Price Databases, 9
Box 5: Send Money Pacific, 10
Box 6: Good Practices for Developing an Industry Code of Conduct, 11
Box 7: Example of Banking Services for RSPs, 13
Box 8: Retail payment systems developments, 14
Box 9: Increasing Remittance Services In Rural Areas: Correspondent Banking in Brazil, 15
Box 10: Use of Technology for Remittance Services, 16
Box 11: Interoperable and Open Remittance Networks, 17
Box 12: Interconnection of Payment Systems and Services across Borders, 18
Box 13: RSP Regulation: the Uniform Money Services Act in the United States, 19
Box 14: Regulatory Reform, 21
Box 15: Identification Requirements, 22
Box 16: International Coordination, 24
Box 17: Prohibiting Exclusive Distribution Agreements, 25
Box 18: Payment System Access through Associations, 26
Box 19: Regulators’ Guidance for RSPs, 27
Box 20: The Remittances Working Group in the UK, 31
Box 21: A potential Role for Central Banks for Application of General Principles, 32
Box 22: Possible Cooperative Oversight Framework , 33
V
ACrONymS ANd
ABBrEviATiONS
ACH Automated clearinghouse
AMF Arab Monetary Fund
AML Anti-money laundering
ATM Automated teller machine
BIC Bank identication code
BIS Bank for International Settlements
BTS Bancomer Transfer Services
CEMLA Center for Latin American
Monetary Studies
CFT Combating the nancing of terrorism
CPSS Committee on Payment and Settlement
Systems
EU European Union
FATF Financial Action Task Force
IBAN International bank account number
IFC International Finance Corporation
IFI International nancial institution
MFI Micronance institution
MIF-IDB Multilateral Investment Fund of the Inter-
American Development Bank
MSB Money services businesses
MTO Money transfer operator
NGO Non-governmental organization
PSD Payment Services Directive
RCB Rural and community bank
RSP Remittance service provider
SMP Send money pacic
SWIFT Society for Worldwide
Interbank Financial
Telecommunications
WB World Bank
ExECuTivE
SummAry
VII
T
his Guidance Report aims to present the
key lessons learned from the work on re-
mittance market reform since the General
Principles for International Remittance
Services were published. Organized around the struc-
ture of the General Principles, the Guidance Report
explores common issues and problems with remit-
tance markets that World Bank experts and experts
from governments and other international organiza-
tions have encountered when working on remittance
market reform, as well as other problems that were
reported by authorities, private sector market partici-
pants or development organizations.
Practical examples of what national authorities and/
or other market participants have done to address the
identied problems in the market for remittances are
presented in various boxes throughout the report. e
lessons presented herewith have been derived mainly
from those concrete actions and are intended to pro-
vide context and specic guidance for the implemen-
tation for the General Principles. ese lessons are
consistent with the list of possible actions already iden-
tied in Annex 1 of the General Principles report.
GENERAL PRINCIPLE 1:
TRANSPARENCY AND CONSUMER
PROTECTION
Remittance services involve certain risks and require
that remittance service providers (RSPs) can be trust-
ed with the consumer’s funds. ey also oen include
complex pricing structures expressed as xed fees or
percentages which typically vary depending on the
amount sent. In addition, the conversion of the remit-
tance from the legal tender of the sending country to
that of the receiving country normally entails addi-
tional charges. Finally, fees or taxes may be levied at
the receiving end in addition to what was charged to
the sender when sending the money.
Experience in the eld has shown that some RSPs still
do not make the terms and conditions of their remit-
tance services fully and easily available to senders. In
some cases not even the basic price for the service is
clearly disclosed. Especially in less competitive mar-
kets, consumers are sometimes forced to ll out a full
form for the remittance before they are told the price
and the foreign exchange rate of the service.
From the diagnostic assessments and reform work in
the area of transparency and consumer protection the
following lessons can be drawn:
VIII GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
Lesson 1.1.1
Appropriate disclosures and presentation of the
relevant attributes of a remittance service by RSPs
can facilitate the ability of consumers to “shop
around” for a best alternative.
Lesson 1.1.2
Transparency and consumer protection are en-
hanced when consumers are provided with writ-
ten and clear conrmation of transaction details,
including fees, the foreign exchange rate applied
and other attributes of the service provided.
Lesson 1.2.1
If transparency is to be eective, consumers need
to have sucient background knowledge to be
able to understand the information provided and
make informed choices.
Lesson 1.2.2
Consumer remittance price databases may be an
eective means to provide consumers with readily
comparable information on the prices and other
service features of specic remittance services.
Lesson 1.3.1
An eective, readily accessible mechanism for
consumers to le complaints enhances the ef-
fectiveness of consumer protections and deepens
consumer condence in regulated remittance
channels.
Lesson 1.3.2
Industry-led initiatives to enhance consumer pro-
tection and eectively support customers with
their problems can be an important complement
to the ocial framework for resolving consumer
disputes.
GENERAL PRINCIPLE 2: PAYMENT
SYSTEM INFRASTRUCTURE
RSPs usually need to use national payments systems
at some stage to be able to collect, settle and disburse
funds. Non-bank RSPs such as micronance institu-
tions (MFIs) and others oen only have indirect access
to payment systems and depend on direct participants,
usually banks, to provide them the required services.
In some countries, access of RSPs to the national pay-
ments system is compromised because direct partici-
pants refuse to serve RSPs. e following lessons can
be drawn:
Lesson 2.1.1
In deciding how non-bank RSPs are granted ac-
cess to national (centralized) payment system
platforms, regulators should weigh the objectives
of an ecient remittance market with the need
for safety and reliability of the payments system.
In any case, where access to payment systems for
non-bank RSPs is granted only indirectly, it is
crucial that direct participants continue to oer
appropriate indirect access to RSPs and that regu-
lation does not inappropriately restrict this access
or deter direct participants from providing access
services to non-bank RSPs.
Lesson 2.1.2
Regulators that work with banks and other RSPs
to identify ways to mitigate and control risks in
the payments system may help facilitate non-bank
RSPs’ continued access to the relevant payment
services.
Lesson 2.2
Where nancial institutions or (retail) payment
(distribution) networks are not present in rural
areas and therefore large parts of the population
remain un-served or under-served, regulators
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS IX
Executive Summary
could encourage or incentivize nancial institu-
tions and other RSPs to develop suitable infra-
structure to increase distribution.
Lesson 2.3
Allowing for dierent types of entities such as
MFIs, postal operators and other non-bank -
nancial services providers to participate in the
remittance market may be important to achieve
sucient coverage of remittance distribution net-
works, including for rural areas. An enabling reg-
ulation may be needed to provide clarity on this
respect. Where participation in payment system
distribution networks (e.g. in ATM networks) is
limited to specic regulated nancial institutions
(e.g. banks), non-bank RSPs should be able to
enter into partnerships with other organizations
suitable to act as their disbursement points for
remittances.
Lesson 2.4
A regulatory and legal framework that enables
and facilitates banks and other RSPs adopting
new technologies for the expansion of retail and
remittance payment systems is benecial also to
the development of an ecient remittance market.
Lesson 2.5
A good practice is when public and private sector
stakeholders support the development of central-
ized, open and interoperable remittance payment
platforms, and at the same time encourage opera-
tors of existing remittance infrastructure to make
them accessible to other parties by means of en-
hanced interoperability. Where the public sector
and international donors sponsor, commission or
support the development of remittance infrastruc-
ture, they may wish to ensure that these systems
are open to dierent RSPs and that they are con-
nected and interoperable with other payment sys-
tems relevant for remittances.
Lesson 2.6
Connecting domestic retail payment systems of
sending and receiving countries can oer RSPs a
mechanism capable of improving their eciency
in processing remittance transactions.
GENERAL PRINCIPLE 3: LEGAL AND
REGULATORY ENVIRONMENT
Assessments and advisory work in many countries
have shown that the legal and regulatory framework
is still one of the most critical areas for the eciency
and improvement of remittance markets. e most rel-
evant of these aspects are summarized in the following
lessons learned:
Lesson 3.1.1
Establishing at least basic prudential requirements
for RSPs can help ensure that consumers are ap-
propriately protected against nancial losses.
Lesson 3.1.2
Technology and business models for remittances
are evolving fast. Regulation for RSPs and remit-
tance services functions best if it is independent of
specic technologies and business models.
Lesson 3.2
A good practice is when dierent types of enti-
ties are permitted to provide remittance services
and the requirements applicable to them are pro-
portionate to the specic risks associated with
the service. In this context, regulations should be
designed on the basis of the type of service being
provided rather than the type of institutions pro-
viding the service.
X GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
Lesson 3.3
e social and economic circumstances of many
remitters and the small-value nature of remittanc-
es are important aspects to be considered when as-
sessing the costs and benets of current and new
regulations.
Lesson 3.4
Remittance markets of countries with remittance
ows between them benet if the countries under-
stand each other’s legal and regulatory framework
for remittances and cooperate where possible to
increase consistency of regulation and the proper
functioning of the market.
GENERAL PRINCIPLE 4: MARKET
STRUCTURE AND COMPETITION
Policy and technical assistance work has shown that
many remittance markets, both in sending and re-
ceiving countries still lack sucient competition. e
main causes were found to be barriers to entry, anti-
competitive behavior and regulations that stie com-
petition. Key lessons are as follows:
Lesson 4.1
A functioning market requires that new RSPs are
able to enter the market and establish distribution
channels. A good practice is when anti-competi-
tive arrangements are prohibited where they pre-
vent a level of competition sucient to ensure a
functioning market. High prices may be an indica-
tion of a lack of competition.
Lesson 4.2
e ability to use relevant payment systems in the
country eectively is a key operational require-
ment for RSPs and aects the competitiveness of
individual RSPs.
GENERAL PRINCIPLE 5:
GOVERNANCE AND RISK
MANAGEMENT
Assessments, survey results and reports by regulators
and consumers have shown that some RSPs, in partic-
ular smaller ones, do not always have the governance
structures and risk management procedures that are
necessary to ensure that consumers’ funds are protect-
ed and that consumers receive an appropriate level of
service. Relevant lessons include the following:
Lesson 5.1.1
e remittance industry, in cooperation with the
relevant authorities and consumer interest groups,
can enhance condence in international remit-
tance services and protect consumers by establish-
ing guidelines for and practicing good governance
and appropriate risk management.
Lesson 5.1.2
Authorities can eectively support RSPs by pro-
viding guidance on how to design appropriate risk
management and governance programs. Oen,
the adoption of even basic risk management and
good governance practices can lead to signicant
improvements.
Lesson 5.2.1
Regulators can benet from a better understand-
ing of the actual risks associated with remittance
operations and the operational procedures and
business models involved.
Lesson 5.2.2
Regulatory requirements relating to risk manage-
ment and governance can be an important part of
a licensing or other supervisory regime for RSPs.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS XI
Executive Summary
ROLE A: THE ROLE OF REMITTANCE
SERVICE PROVIDERS
In order to achieve their public policy objectives, the
implementation of the General Principles require the
active participation of RSPs. Field work has conrmed
the value that RSPs can add to the objectives of the
General Principles, and has also highlighted some ar-
eas where greater eorts could be made, in particular
in the areas of transparency and competition.
Lesson 6.1.1
When RSPs cooperate on infrastructure and com-
pete on services, the market for remittances can
work more eciently.
Lesson 6.1.2
e market as a whole may benet from the shar-
ing of experiences and good practices, and from
leveraging capabilities between RSPs and other
nancial service providers.
Lesson 6.2
A good practice is when RSPs are actively and
transparently providing information on the attri-
butes and cost of their remittance services.
ROLE B: THE ROLE OF PUBLIC
AUTHORITIES
Since the publication of the General Principles, public
authorities have carried out or supported many initia-
tives to reform remittance markets and have played an
important role in implementing the General Principles.
eir eorts and support will still be needed to address
the many remaining challenges in remittance markets.
Lesson 7.1
e remittance market and remittance policies
benet from cooperation between public authori-
ties with responsibility for remittances.
Lesson 7.2
Public authorities have played a key role in sup-
porting the implementation of the General
Principles in many countries. Nevertheless, there
is still a long way to go in many countries to
achieve the public policy objectives of the General
Principles. is will require the continuous in-
volvement of public authorities.
1
SECTION I
iNTrOduCTiON
1. BACKGROUND
1. In January 2007, the “General Principles for
International Remittance Services”
2
report was re-
leased. It was prepared by a taskforce consisting of
representatives of multilateral development banks and
central banks, and was jointly chaired by the World
Bank and the Committee on Payment and Settlement
Systems (CPSS) of the Bank for International
Settlements (BIS). e report provides an analysis of
the payment system aspects of remittances, on the ba-
sis of which it sets out general principles designed to
assist countries that want to improve the market for
remittance services (Box 1).
2. e G8 declarations of Sea Island in 2004,
Heiligendamm in 2007 and Toyako in 2008 made spe-
cic reference to the importance of facilitating remit-
tances. e G8 Conference on Remittances in Berlin
in November 2007 reviewed the actions agreed at the
Sea Island Summit in 2004 and recommended sev-
eral areas for action: (a) improvement in remittance
data; (b) research on development impact of remit-
tances; (c) implementation of the General Principles
for International Remittance Services; (d) facilitating
remittance ows and deepening the development im-
2
CPSS-WB, “General Principles for International Remittance Services”, Bank
for International Settlements, Basel, Switzerland, January 2007.
pact of those ows; (e) attracting remittances to bank-
able channels; (f) supporting innovative payment in-
struments; and, (g) establishing a Global Remittance
Working Group.
3. For the rst time at the international level, the G8
Summit at L’Aquila identied and adopted a clear and
quantiable goal in a declaration on responsible lead-
ership for a sustainable future (Box 2).
4. At the G20 Seoul Summit in November 2010, the
G20 leaders reiterated the importance of facilitating
international remittance ows and enhancing their
eciency to increase their contribution to growth
with resilience and poverty reduction, and commit-
ted to a signicant reduction of the cost of remit-
tance services. e G20 Seoul Multi-Year Action Plan
on Development of 2010 states: “We recognize the im-
portance of facilitating international remittance ows
and enhancing their eciency to increase their con-
tribution to growth with resilience and poverty reduc-
tion. We ask the World Bank, regional development
banks, and other relevant organizations, including the
Global Remittances Working Group, to work with in-
dividual G20 members and non-G20 members in order
to progress further the implementation of the General
Principles for International Remittance Services and
related international initiatives aimed at a quantied
reduction of the global average cost of transferring
2 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
remittances.” Finally, at the Cannes Summit, the G20
also endorsed the commitment to reduce the costs to
5 percent by 2014, including in the Final Declaration
the pledge to “[…] work to reduce the average cost of
transferring remittances from 10 to 5 percent by 2014,
contributing to release an additional 15 billion USD
per year for recipient families.”
2. APPLICATION OF THE GENERAL
PRINCIPLES
5. e General Principles are designed to assist coun-
tries that intend to improve the market for remit-
tance services. For their eective implementation, the
General Principles require combined eorts by both
public authorities and remittance service providers
(RSPs). is is true for both sending and receiving
BOX 1: LIST OF THE GENERAL PRINCIPLES AND RELATED ROLES
The General Principles are aimed at the public policy objectives of achieving safe and efficient international remittance services. To this
end, the markets for the services should be contestable, transparent, accessible and sound.
Transparency and consumer protection
General Principle 1. The market for remittance services should be transparent and have adequate consumer protection.
Payment system infrastructure
General Principle 2. Improvements to payment system infrastructure that have the potential to increase the efficiency of remittance
services should be encouraged.
Legal and regulatory environment
General Principle 3. Remittance services should be supported by a sound, predictable, non-discriminatory and proportionate legal and
regulatory framework in relevant jurisdictions.
Market structure and competition
General Principle 4. Competitive market conditions, including appropriate access to domestic payments infrastructures, should be fos-
tered in the remittance industry.
Governance and risk management
General Principle 5. Remittance services should be supported by appropriate governance and risk management practices.
Roles of remittance service providers and public authorities
A. The role of remittance service providers. Remittance service providers should participate actively in the implementation of the
General Principles.
B. The role of public authorities. Public authorities should evaluate what action to take to achieve the public policy objectives through
implementation of the General Principles.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 3
Section I. Introduction
countries; indeed, in many cases, if the attempt to im-
prove the market in a particular remittance corridor
is to be fully eective, it will require cooperation be-
tween stakeholders in the relevant sending and receiv-
ing countries. However, the importance of remittance
ows as well as market conditions vary from country
to country. erefore, although the principles are de-
signed to be generally applicable, some countries may
decide that the size of the remittance market does not
justify signicant action or that there is no need for
such action.
3
It should also be noted that oen it may
be dicult for RSPs to distinguish remittances from
other cross-border retail payments. So, authorities
3
e size of the remittance market may only be one factor that inuences
whether signicant action or no action is warranted.
implementing the principles should be mindful that
the latter may, in practice, apply to other cross-border
retail payments as well.
6. Since remittance transfers are also a form of re-
tail payment, the CPSS reports on “Policy Issues for
Central Banks in Retail Payments”
4
and the forthcom-
ing World Bank report “Developing a Comprehensive
Retail Payments Strategy”
5
may be helpful in addition
to the General Principles. Finally, the CPSS report
on “General Guidance for National Payment System
Development”
6
provides basic guidance on the devel-
opment of payment systems, which are also relevant
for remittance services.
3. OBJECTIVE AND ORGANIZATION
OF THE GUIDANCE REPORT
7. Following the publication and circulation of the
General Principles report in 2007, the World Bank and
many governments and international organizations
have used the General Principles to implement re-
forms to achieve a more ecient market for remittanc-
es.
7
Based on this experience, the Guidance Report’s
4
CPSS, “Policy Issues for Central Banks in Retail Payments”, Bank for Interna-
tional Settlements, Basel, Switzerland, March 2003.
5
is report is part of the so-called World Bank “retail package” for the devel-
opment and reform of the national retail payments system, which synthesize the
lessons learned in over a decade of technical assistance and research outputs of
other international and national agencies. Other documents comprising the “retail
package are: “A practical guide for retail payments stocktaking” in cooperation
with the Banco Central do Brasil and the European Central Bank; “From remit-
tances to m-payments: understanding ‘alternative’ means of payment within the
common framework of retail payments system regulation, and; “Innovations in
retail payments worldwide: A snapshot. Outcomes of the global survey on innova-
tions in retail payments instruments and methods 2010”.
6
CPSS, “General Guidance for National Payment Systems Development”, Bank
for International Settlements, Basel, Switzerland, January 2006.
7
In 2007 the World Bank, the MIF-IDB and CEMLA launched a regional pro-
gram to assist the Latin American Central Banks and other relevant institutions
in those countries in implementing the GPs. Since then, thirteen countries have
been assessed against the General Principles and the program has provided tech-
nical assistance to the Latin American countries in several areas. is Guidance
Report beneted largely from the lessons learned through the experience built in
the region and from the collaboration with these institutions.
BOX 2: EXCERPT FROM THE
2009 L’AQUILA DECLARATION ON
RESPONSIBLE LEADERSHIP FOR A
SUSTAINABLE FUTURE
Paragraph 134: “Given the development impact of remit-
tance flows, we will facilitate a more efficient transfer and
improved use of remittances and enhance cooperation
between national and international organizations, in order
to implement the recommendations of the 2007 Berlin G8
Conference and of the Global Remittances Working Group
established in 2009 and coordinated by the World Bank.
We will aim to make financial services more accessible
to migrants and to those who receive remittances in the
developing world. We will work to achieve in particular
the objective of a reduction of the global average costs of
transferring remittances from the present 10 percent to 5
percent in 5 years through enhanced information, trans-
parency, competition and cooperation with partners, gen-
erating a significant net increase in income for migrants
and their families in the developing world.”
4 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
main purpose is to provide suggestions of practical ac-
tions and examples of how the General Principles may
be put into practice. It needs to be noted that several of
these actions had already been identied in a general
form in the 2007 report.
8
8. is Guidance Report is intended for practitioners
such as central banks, other nancial authorities and
any other government agencies responsible for regu-
lating and/or implementing policies in the remittance
market. While this Guidance Report is based on prac-
tical experience and oers practical examples, it does
not intend to provide a list of implementation actions
that will work in every context or country environment.
9. Since the denitions and key features of the market
for remittances are elaborated in detail in the General
Principles report, this Guidance Report will not restate
them but will refer to them where appropriate.
8
See Annex 1 to the General Principles report, “Possible actions to implement
the Principles”.
5
SECTION II
LESSONS FOr ThE
impLEmENTATiON OF ThE
GENErAL priNCipLES
10. is Guidance Report presents the key lessons ob-
tained mainly by the World Bank in the implementa-
tion of the CPSS-World Bank General Principles for
International Remittance Services (General Principles)
since their publication in January 2007. Annex 1 of the
General Principles report “Possible actions to imple-
ment the Principles” is taken as the basis for this dis-
cussion.
9
Practical examples of what national authori-
ties and/or other market participants have done to
address problems in the market for remittances are
presented in various boxes throughout the report. e
lessons presented herewith have been derived mainly
from those concrete actions and are intended to pro-
vide context and specic guidance for the implementa-
tion for the General Principles.
1. TRANSPARENCY AND
CONSUMER PROTECTION
General Principle 1: The market for remittance
services should be transparent and have
adequate consumer protection.
9
Annex 1 of the General Principles report shows possible actions based on the
experiences of a number of sending and receiving countries. It is recognized that
actions that are helpful in one country may not be equally helpful in another, for
which reason the possible actions are not to be taken as a checklist of what needs
to be done to ensure the Principles are met.
11. Remittance services are oen characterized by
complex pricing structures and terms of service.
Remittances also involve certain risks and require that
RSPs can be trusted with consumers’ funds. General
Principle 1 states the need for openness and transpar-
ency in the market for remittances. General Principle
1 also promotes greater consumer awareness and con-
sumer protection to ensure fair treatment.
1.1 Key Lessons Regarding Transparency
Lesson 1.1.1
Appropriate disclosures and presentation of the
relevant attributes of a remittance service by RSPs
can facilitate the ability of consumers to “shop
around” for a best alternative.
12. Adequate transparency for remittance services
would mean that RSPs disclose the fees charged to the
sender and the recipient, the exchange rate applied to
the transaction, any other fees charged and the time
and location at which the remittance would be avail-
able for collection, among other key features of the
service. is information relevant information should
be easily available and made available upon request,
without requiring any other action from the consumer
such as opening an account or committing to use the
remittance service. Annex 1 of the General Principles
6 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
report identied the specic information that an RSP
should aim to provide if it wants to achieve full trans-
parency.
10
ose requirements are reproduced here in
Box 3.
10
See Box 6 in Annex 1 of the General Principles report.
13. In addition, RSPs could also inform consumers
of the various options and service alternatives that
are available, including, where applicable, the various
amount bands, transfer speed options, alternatives for
the recipient (e.g. pick-up, credit to an account, etc.),
the currency or currencies in which the remittance can
be disbursed, among others.
BOX 3: TRANSPARENCY TO THE SENDER
When a customer enquires about a specific remittance transfer, full transparency would mean that RSPs clearly disclose the following in-
formation without requiring any other action from the consumer such as opening an account or committing to use the remittance service:
(A) the total amount in originating currency that will be paid by the sender;
(B) the amount in disbursing currency that will be paid to the final recipient;
(C) the fees paid by both sender and receiver (and any other relevant costs such as taxes) and the exchange rate;
(D) the time when the remittance will be available for pickup by the recipient or delivered to the recipient;
(E) the location(s) where the remittance will be available for pickup.
If the above information varies according to how the receiver is paid (e.g. in cash collected by the receiver, in cash delivered to the re-
ceiver or by crediting an account) or according to the information the receiver is able to provide about the sender (e.g. if a bank account
is to be credited, whether the sender knows the relevant bank and account identification codes such as BIC or IBAN), this should be clear
to the sender.
For key remittance corridors, it may be appropriate to provide the information in the languages of both the sending and receiving
countries.
If the customer chooses to use the remittance service, the RSP should also provide the information above (plus the information provided
by the sender to identify the receiver) in written form as confirmation of the agreed service.
To achieve full transparency, RSPs should also provide information about any other relevant aspects of their service. For example, this
might include: (a) the ability, if any, of the sender to revoke the transfer after it has been paid for; (b) whether the RSP will inform the
receiver when the funds are available; (c) information about the rights of the consumer in the event of any problems (e.g. the procedures
to be followed in the event of a dispute about the service), and; (d) appropriate contact information about the RSP.
Source: from Annex 1 of the General Principles for International Remittances report.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 7
Section II. Lessons for the Implementation of the General Principles
14. RSPs should also provide a pre-transaction quo-
tation for the specic amount/service combination
pre-selected by the customer. e quotation should in-
clude, in separate line items, the information indicated
in items (A) through (E) in Box 3. Consumers should
also be informed about the possibility of one or more
of the information items changing from the moment
the quotation is provided to the moment the transac-
tion is actually executed, as may be the case for the ap-
plicable exchange rate.
11
15. According to World Bank eld work experience,
authorities have focused their attention on those in-
formation items more directly related to pricing is-
sues such as item (C) and in some cases also (A) and
(B). Clear and precise information about the timing
and location of pay-out also play an important role.
Remittances oen go to families living in rural areas or
in marginalized urban areas and family members have
to travel to a specic location to pick up their remit-
tances. To avoid multiple costly journeys, the recipient
needs to know the exact time and location in which
the money will be available. On the other hand, RSPs
usually use a wide network of agents in the receiving
country to pay remittances on their behalf, which may
make identifying the proper pick-up location a com-
plicated matter for the sender and/or the recipient.
16. Self-regulatory measures such as the adoption of
a code of conduct by the industry containing agreed
standards with regard to information disclosure to re-
mittance consumers have proved useful as a comple-
ment to ocial regulation and supervision in enhanc-
11
Moreover, as identied in the General Principles report, there could be cases
- typically with open network services - where the remittance service business
model is such that the sending RSP cannot make a commitment about how long
the transfer will take or does not know what fee the receiver may be charged or
what specic amount the beneciary will receive - and is thus unable to provide all
the required information to the customer. When this is the case, the sender should
be made aware of the reasons for the lack of such information.
ing transparency levels.
12
Further, initiatives like this
can play an important role in lling the gap as the
government works to implement or extend the ocial
regulatory and supervisory framework. However, self-
regulation is not always eective. It can be expensive
for industry to enforce. ere are also some risks as-
sociated with self-regulation, including the risk that
dominant players in the industry use self-regulation
enforcement or certication to constrain entry to the
market by other service providers.
Lesson 1.1.2
Transparency and consumer protection are en-
hanced when consumers are provided with writ-
ten and clear conrmation of transaction details,
including fees, the foreign exchange rate applied
and other attributes of the service provided.
17. As earlier discussed, some of the conditions of a
remittance transaction may vary from the moment a
quotation is provided to the moment the transaction
is actually executed. e customer should be informed
of the specic exchange rate that was applied to his/her
transaction. In some cases, this can help consumers in
identifying what RSP provide reliable/serious quota-
tion information.
18. A written conrmation of the nal amount to be
received by the beneciary in the requested currency
provides certainty and also prevents fraud at the re-
ceiving end, since the beneciaries know the exact
amount they are entitled to collect.
19. Post-transaction services should include detailed
information on the procedures to be followed in case
12
Additional information on an industry code of conduct is provided as part
of the lessons learned in the area of ensuring appropriate consumer protection
(see sub-section III.1.3).
8 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
there is a problem with the transaction (e.g. the re-
mittance failed to reach the receiver) or if any of the
agreed conditions were not properly met.
13
1.2 Key Lessons Regarding Consumer
Education
Lesson 1.2.1
If transparency is to be eective, consumers need
to have sucient background knowledge to be
able to understand the information provided and
make informed choices.
20. Public sector authorities and private sector entities
alike in both sending and receiving countries can un-
dertake educational campaigns that explain the main
characteristics of remittance services, available prod-
ucts and services and how to use them (e.g. required
documentation and other necessary information),
how to evaluate dierent alternatives, and the con-
sumer protection mechanisms that can be used in the
event of fraud or disputes.
14
For example, the govern-
ments of some receiving countries oer educational
programs through their embassies and consulates in
the relevant sending countries to raise awareness about
important issues related to remittances and other -
nancial services. Similar educational eorts can also be
undertaken in receiving countries because a recipient
oen inuences the sender’s choice of RSP. In the latter
case, it is likely that the eort will be more eective if
13
Detailed guidance on consumer redress mechanisms is provided as part of
the lessons learned in the area of ensuring appropriate consumer protection (see
sub-section III.1.3).
14
Although out of the scope of this Principle, educational eorts should also
target entities that could potentially become RSPs or RSP agent or sub-agents
and which may not be aware of the market opportunities that exist from the large
migration ows and the demographic changes this creates. Indeed, some nan-
cial institutions still view remittance senders and recipients as unprotable and
high-risk customers. Publication of data and other publicity about the scale and
importance of remittance ows can help understand such market opportunities.
undertaken by those authorities with a closer relation-
ship with the receiver of remittance services, such as
the consumer protection agency.
21. Private sector institutions such as individual RSPs,
migrant associations, consumer protection groups,
and non-governmental organizations (NGOs) can play
a role in the preparation, collection, and dissemination
of educational materials and other relevant informa-
tion. As identied in Annex 1 of the General Principles
report, some of the most eective means and channels
for disseminating remittance-related information in-
clude: i) use of ethnic media in the sending country,
especially press and radio; ii) use of nancial media as
appropriate, iii) immigrant aid organizations; iv) pub-
lic and private sector consumer bodies, using printed
material and web pages; v) overseas consulates and
embassies of receiving countries; and, vi) internet and
social media
Lesson 1.2.2
Consumer remittance price databases may be an
eective means to provide consumers with readily
comparable information on the prices and other
service features of specic remittance services.
22. e World Bank developed and periodically up-
dates a worldwide database covering various inter-
national sending and receiving corridors (http://re-
mittanceprices.worldbank.org). Box 4 provides a list
of key minimum requirements for developing an ap-
propriate national remittance price comparison data-
base, based on the World Bank’s own experience with
this tool as outlined in the World Bank policy paper
“Remittance Price Comparison Databases: Minimum
Requirements and Overall Policy Strategy”.
15
15
Available at http//:remittanceprices.worldbank.org
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 9
Section II. Lessons for the Implementation of the General Principles
23. When disseminated extensively, a properly-built
consumer remittance price database can become an
additional tool to improve overall transparency levels
by prompting individual RSPs to, as a minimum, pro-
vide information on all the same variables and use pre-
sentation standards similar to those featured in those
databases.
1.3 Key Lessons Regarding Consumer
Protection
Lesson 1.3.1
An eective, readily accessible mechanism for
consumers to le complaints enhances the ef-
fectiveness of consumer protections and deepens
consumer condence in regulated remittance
channels.
24. Consumer redress mechanisms aim at protecting
consumers of remittance services against fraud, misap-
propriation of funds and other types of problems and
shortfalls in the service provided by RSPs. For it to be
eective, the procedures to address fraud and resolve
other disputes with the RSP should be clear and easily
applicable. e existence of such a redress mechanism
should be widely disseminated and the applicable pro-
cedures should be publicly available to promote con-
sumer awareness.
BOX 4: REQUIREMENTS FOR WORLD BANK ACCREDITATION OF
REMITTANCE PRICE DATABASES
1) Double price points data gathering (and using the average value).
2) Collection of information about the fees for the sender.
3) Collection of information about the exchange rate applied.
4) Provision of total amount of the identified costs on the website.
5) Data on speed of the transaction.
6) Data on type of services provided.
7) Coverage of at least 60 percent of all remittance providers per corridor.
8) Independence of the researchers (for example, not affiliated with any RSP).
9) Validation through “mystery shopping” exercises for data integrity tests.
10) No advertisement policy in the price database (to maintain independence).
11) No subscription policy and clear funding process.
12) Linkage with other WB-approved databases.
10 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
25. Many countries already have a general framework
for resolving consumer disputes, and in some cases a
specialized framework of this kind has been developed
specically for nancial services.
16
Oen, however,
even the specialized framework does not apply to re-
mittance services and/or to all RSPs (e.g. those RSPs
not classied as “nancial institutions” under the ap-
plicable legal framework). Consideration should be
16
In some countries, consumer protection is ensured by a nancial ombuds-
man that protects consumers from malfeasance by nancial service providers.
e ombudsman is sometimes also empowered to sanction the relevant service
provider. Where this is not the case, the roles and boundaries of the various na-
tional authorities (central banks, prudential supervisory agencies and consumer
protection groups) for matters related to consumer protection of nancial service
users should be clear and be publicly disclosed to the extent possible.
given by the relevant authorities to extending the ap-
plication of such a framework for resolving consumer
disputes to the remittances industry.
26. To the extent possible, dispute resolution proce-
dures should recognize that a signicant share of the
users of remittance services may face particular dif-
culties in enforcing their rights through the general
legal system (e.g. due to their situation as illegal immi-
grants, or because of cultural and/or language barriers,
among other factors).
Lesson 1.3.2
Industry-led initiatives to enhance consumer pro-
tection and eectively support customers with
BOX 5: SEND MONEY PACIFIC
Send Money Pacific (SMP) is a remittance price database funded by AusAID and NZAID. It includes data on pricing for sending money
from Australia and New Zealand to eight of the Pacific Islands. SMP first went online on January 9th, 2009 and was certified by the World
Bank to meet the requirements for remittance price databases in September 2010.
Data for SMP is collected on a monthly basis for two amounts (AUD/NZD 200 and 500). The database includes services offered by spe-
cialized money transfer operators (MTOs) as well as commercial banks.
An encouraging sign of the effectiveness of SMP is that the cost of remittance services in the surveyed corridors from New Zealand fell
from 18.64 percent in January 2009 to 14.83 percent for transferring NZD 200 in July 2011. Australia has also experienced a reduction
of the cost for sending AUD 200 from 23.19 percent to 19.78 percent over the same period of time. Since the market in the Pacific is
dominated by MTOs, it is important to note the particularly steep reduction in the costs of services offered by MTOs. According to the
SMP data, such costs dropped from 14.60 percent to 10.51 percent for remittances from New Zealand, and from 16.54 percent to 12.67
percent for remittances from Australia.
The SMP team has implemented a number of marketing activities over the years. These have included presence at events and festivals,
workshops, creation of a newsletter, meetings with community leaders, radio and press releases and others. The SMP team has also
promoted the website by linking with other websites and publishing a page on social network sites (e.g. Facebook). These promotion
activities have been very successful and brought SMP from a few hundred of visits per month in early 2010, to over 5,000 in April and
May 2011. An online survey clearly showed that most of the visitors of the sites are migrants sending money home, suggesting that SMP
is influencing the remittance market.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 11
Section II. Lessons for the Implementation of the General Principles
their problems can be an important complement
to the ocial framework for resolving consumer
disputes.
27. As earlier discussed, self-regulatory measures such
as the development and adoption of a code of con-
duct or customer charter by the industry, either as a
complement to any ocial regulations with regard to
transparency or when ocial regulation and oversight
cannot be implemented in a short time span, can also
be an eective means to enhance transparency and
consumer protection. ese initiatives should address
consumer protection issues in detail and suit nation-
al circumstances, including the legal and regulatory
environment.
28. An appropriately protective industry code of con-
duct could be agreed upon and subscribed by the larg-
est possible number of RSPs at the national level. On
this basis, each RSP should develop clear procedures
that can be easily followed by an average remittance
customer in the event of a problem or dispute. Where
applicable, these procedures should also conform to
relevant ocial regulations.
29. e code of conduct/customer charter should con-
tain high-level principles in consumer-friendly lan-
guage – not in the form of a legal contract. However,
there may be a need to provide explanatory guidance
for RSPs to articulate the high-level principles in more
detail in order to provide operational clarity. Both
the code of conduct and the detailed guidance for its
implementation should be in the public domain. Box
6 describes examples of good practices for developing
and adopting an industry code of conduct.
30. Industry eorts to promote enhanced transparency
and consumer protection might be further expanded
by developing an independent RSP certication pro-
gram, one of its specic purposes being to help con-
BOX 6: GOOD PRACTICES FOR DEVELOPING AN INDUSTRY CODE OF CONDUCT
1) The code should contain recommendations for transparency and consumer protection, as described in this Guidance Report, among
other key aspects.
2) There should be arrangements for regular review and updating of the code.
3) There should be adequate human and financial resources for the industry effort.
4) Ideally, there should be organizational independence from the industry.
5) There should be widespread coverage of service providers adhering to the code.
6) The arrangements should have the support of key stakeholders.
7) Enforcement of the provisions in the code is important to bring offenders into line. The effectiveness of enforcement or monitoring
of compliance will depend largely on the resources available to perform this task.
12 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
sumers identify with ease those RSPs that have been
certied as fully compliant with the industry code of
conduct or any other relevant industry standards.
2. PAYMENT SYSTEM
INFRASTRUCTURE
General Principle 2: Improvements to payment
system infrastructure that have the potential to
increase the efficiency of remittance services
should be encouraged.
31. Remittance services, except perhaps those that are
entirely cash based, depend at some stage on national
or international payments infrastructure for settle-
ment (and sometimes also for the transfer of informa-
tion). RSPs oen require using parts of the payments
infrastructure in the sending and receiving countries
to, for example, pay the actual remittances or to fa-
cilitate settlement between dierent parties involved
in the processing of remittances. Access to national
or centralized payment systems can generally be pro-
vided as direct access or as indirect access. In the lat-
ter case, an RSP uses the payments system through the
services provided by a direct participant of that pay-
ments system, typically a bank.
17
32. Remittances, like other payments, require sig-
nicant investments in infrastructure (and therefore
economies of scale to break even). is includes build-
ing collection and distribution networks and retail
payment platforms in the sending and the receiving
country.
17
On the other hand, direct access means that the RSP is itself a direct par-
ticipant in the payments system, submits its payment instructions directly to the
system, and is responsible for settling them.
2.1 Key Lessons Regarding Payment System
Access
Lesson 2.1.1
In deciding how non-bank RSPs are granted ac-
cess to national (centralized) payment system
platforms, regulators should weigh the objectives
of an ecient remittance market with the need
for safety and reliability of the payments system.
In any case, where access to payment systems for
non-bank RSPs is granted only indirectly, it is
crucial that direct participants continue to oer
appropriate indirect access to RSPs and that regu-
lation does not inappropriately restrict this access
or deter direct participants from providing access
services to non-bank RSPs.
33. In many countries access to national or centralized
payment systems is limited to regulated nancial in-
stitutions, mostly banks, and access for other RSPs is
therefore only possible indirectly through banks. An
example of banking services for RSPs is provided in
Box 7 below. To process remittances eciently, non-
bank RSPs therefore depend on banks and banking
services. However, in a number of countries where this
is the case, banks have decided to discontinue bank-
ing services to non-bank RSPs for a variety of reasons,
including: a) the bank and the RSP(s) are direct com-
petitors in this market, which raises a conict in the
bank; b) nancial regulators have extended the burden
of monitoring the transactional activity of RSPs onto
the banks; c) regulators have highlighted remittances
as a high risk services and thereby discouraged banks
from serving RSPs.
Lesson 2.1.2
Regulators that work with banks and other RSPs
to identify ways to mitigate and control risks in
the payments system may help facilitate non-bank
RSPs’ continued access to the relevant payment
services.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 13
Section II. Lessons for the Implementation of the General Principles
34. Non-bank RSPs that operate safely and do not have
direct access to a centralized payments system should
be able to continue using the services of banks to ac-
cess such a system. Regulators in some countries are
engaging in discussions with banks and other RSPs to
determine the way in which payment services by banks
to those non-bank RSPs can be provided on an ongo-
ing basis without jeopardizing the ongoing safety and
integrity of the relevant payment systems, or without
putting at risk the banks’ themselves in their role as
payment services providers with responsibility for en-
suring the integrity of transactions.
2.2 Key Lessons Regarding the Expansion of
Retail Payments Infrastructure
Lesson 2.2
Where nancial institutions or (retail) payment
(distribution) networks are not present in rural
areas and therefore large parts of the population
remain un-served or under-served, regulators
could encourage or incentivize nancial institu-
tions and other RSPs to develop suitable infra-
structure to increase distribution.
35. e payments infrastructure in many developing
countries that receive a large volume of remittances is
very limited and the existing infrastructure oen suf-
fers from ineciencies. Modern payment systems and
payment distribution networks that would enable the
ecient processing of payments and support low cost
delivery of remittances, such as automated clearing-
houses or ACHs, or networks of ATMs and point of
sale terminal, either do not exist or are available only to
a few nancial institutions and retailers. Bank branch
networks are oen limited and only reach urban ar-
eas. Some payments or remittance service providers
in developing countries have innovatively used new
technology to overcome these shortcomings with great
benets.
36. Many remittance and retail payment systems exist
today that have the ability to process remittances e-
ciently, but they are oen proprietary, are stand-alone
solutions, are not interconnected or otherwise limit
scalability. is oen means, for example, that banks
and other distribution parties in the receiving coun-
tries need to operate multiple systems – for the various
RSPs they do business with - and develop the required
expertise, or need to connect their internal systems to
a large number of dierent RSP systems, which is gen-
erally costly and lengthy. Innovative remittance and
retail payment systems are nevertheless a desirable fea-
ture in the marketplace.
37. Examples in a number of countries have shown
that sharing infrastructure (e.g. through increased in-
teroperability of payment systems) can enable RSPs
to establish remittance services to new destinations
quicker, at lower cost and with signicant benets to
all parties involved. Box 8 below provides two exam-
ples of commendable developments in retail payments
infrastructure. e emergence of specialized service
providers to connect sending and receiving RSPs can
produce signicant eciencies and cost savings by fa-
cilitating standardization, spreading costs over many
parties and reaching economies of scale quicker.
BOX 7: EXAMPLE OF
BANKING SERVICES FOR RSPS
WestPac is one of Australia’s leading banks and offers an
online banking facility that allows its RSP customers to
make online settlement payments with their remittance
partners overseas using SWIFT. These services are pro-
vided at a reduced cost compared to over-the-counter
international money transfers.
14 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
2.3 Key Lessons Regarding Remittance
Distribution
Lesson 2.3
Allowing for dierent types of entities such as
MFIs, postal operators and other non-bank -
nancial services providers to participate in the
remittance market may be important to achieve
sucient coverage of remittance distribution net-
works, including for rural areas. An enabling reg-
ulation may be needed to provide clarity on this
respect. Where participation in payment system
distribution networks (e.g. in ATM networks) is
limited to specic regulated nancial institutions
(e.g. banks), non-bank RSPs should be able to
enter into partnerships with other organizations
suitable to act as their disbursement points for
remittances.
38. In many developing countries where retail pay-
ments locations of banks and other nancial institu-
tions are limited, alternative payment locations ex-
ist that can extend the reach of traditional nancial
outlets, for example (MFIs, national postal systems or
commercial retailers-see Box 9). ese can be particu-
larly relevant for international remittances due to their
wide geographic reach and accessibility for the rural
and lower income population. RSPs oen outsource
part of their distribution operations and use third
parties as agents (or under other legal arrangements)
to act as collection or disbursement points. Banks in
many countries also increasingly use these distribution
models.
39. World Bank experience in the eld has nonetheless
shown that some countries restrict non-bank nancial
institutions from participating directly in remittance
BOX 8: RETAIL PAYMENT SYSTEMS DEVELOPMENTS
Example 1: Banco de México.
Banco de Mexico, Mexico’s central bank, has been intimately involved in the development of payment systems in the country. During the
last few years, the regulatory framework has been modified to reduce barriers to entry, facilitate access to domestic payment systems
and increase price transparency. A number of measures have been undertaken to further promote and facilitate the development of
payment services. Among these, the introduction of new transparency rules for bank charges and the reform of the requirements to
access to the common inter-bank infrastructure for electronic fund transfers should be mentioned. More recently, changes to banking
regulations have been adopted to facilitate the use correspondents and/or agents and the provision of mobile payment services using
prepaid accounts.
Example 2: Mobile phone-based payment system at postal operators in West Africa.
Several postal operators in West Africa have connected, through mobile phones with a specific application, their post office locations - as
payment locations - at their head office where all payments and remittances are centrally processed. Staff at individual post offices can
request a remittance or domestic transfer for a customer by entering the required information into the mobile phone of the post office
and the receiving post office can access this information for payment the same way. Such system, when linked to the International
Financial System provided by the Universal Postal Union, has allowed post offices in remote areas to provide remittances services for
their customers.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 15
Section II. Lessons for the Implementation of the General Principles
markets, and in some cases even prohibit their indirect
participation as agents or correspondents of a bank or
otherwise regulated RSPs.
40. National postal services, for example, which oen
provide payment services, usually have a large distri-
bution network and are therefore widely accessible
in many countries. Enabling them to provide remit-
tance services or at least provide distribution services
to RSPs can increase competition, provide more con-
venient services to recipients and may help to reduce
prices.
41. e banking system could be encouraged to further
develop arrangements with third parties with wide
distribution networks suitable to provide payment ser-
vices. Enlarging the national payments system through
increased interoperability of networks for specic
types of payment instruments, notably payment card
and ATM networks, could also provide increased ac-
cess to remittance services.
2.4 Key Lessons Regarding New Technologies
Lesson 2.4
A regulatory and legal framework that enables
and facilitates banks and other RSPs adopting
new technologies for the expansion of retail and
remittance payment systems is benecial also to
the development of an ecient remittance market.
42. New technology, including mobile telecommuni-
cation, is increasingly used to overcome infrastructure
limitations and has demonstrated potential to ex-
pand the reach of existing payment systems, or even
to function as the backbone of new payment systems.
Electronic payments oer lower operating costs for
RSPs and lower prices and increased convenience for
consumers. While the majority of remittances are still
sent from and received in physical locations using cash,
BOX 9: INCREASING REMITTANCE SERVICES IN RURAL AREAS:
CORRESPONDENT BANKING IN BRAZIL
Some of the 5,578 municipalities in Brazil have no bank branches but receive banking services instead through so-called corresponden-
tes bancários (bank correspondents). In 2000 there were approximately 2,000 correspondentes bancários in Brazil, but nowadays the
number has risen to slightly less than 150,000 - almost six times the number of bank branches (26,500). They act on behalf of banks
under agency agreements and are authorized, among other things, to receive deposits and general payments, make payments related to
the accounts concerned and receive applications related to loans and credit cards. The most important correspondente bancário is the
Brazilian post office (ECT - Empresa Brasileira de Correios e Telégrafos). ECT acts on behalf of a major Brazilian private bank and serves
all but a few of the municipalities where there is no bank branch. Other correspondentes bancários include lottery outlets, supermarkets,
drugstores and other small retailers. The activities of the correspondentes bancários are regulated by the National Monetary Council, a
government body in which the Central Bank of Brazil participates. The rules set out the kinds of institutions that can be correspondentes
bancários, the types of services that they can provide, the settlement procedures between the correspondente bancário and the bank for
which it acts and the requirement that a correspondente bancário cannot use its own funds for its banking service activities.
16 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
new online and mobile phone services have grown fast
in some markets and demonstrated their potential to
reduce costs (see Box 10).
18
2.5 Key Lessons Regarding Open and
Interoperable Remittance Systems
Lesson 2.5
A good practice is when public and private sector
stakeholders support the development of central-
18
Note, however, that in most instances, the use of electronic payments for
remittances does not eliminate the need for cash-in/cash-out distribution net-
works or agents.
ized, open and interoperable remittance payment
platforms, and at the same time encourage opera-
tors of existing remittance infrastructure to make
them accessible to other parties by means of en-
hanced interoperability. Where the public sector
and international donors sponsor, commission or
support the development of remittance infrastruc-
ture, they may wish to ensure that these systems
are open to dierent RSPs and that they are con-
nected and interoperable with other payment sys-
tems relevant for remittances.
43. Developments in competitive remittance markets
have shown that increased cooperation of RSPs by
combining distribution networks and the creation of
BOX 10: USE OF TECHNOLOGY FOR REMITTANCE SERVICES
Example 1: Times of Money/Remit2India.
Times of Money operates an internet funds transfer platform which has been used by financial service providers in India to develop
branded remittance products. The platform uses services of financial institutions in the sending countries like US, UK and Australia to
receive the funds from the sender either through a direct debit or credit transfer using the domestic payment infrastructure like ACH. The
funds are then aggregated and sent to the financial service provider in India typically through correspondent banks. The funds are then
remitted to the recipients using the domestic payment infrastructure in India, typically the National Electronic Funds Transfer (NEFT) sys-
tem. The platform avoids the use of agents and thus has been able to offer the services at very low fees, and given that it operates as a
service provider to multiple financial services institutions it has benefited from economies of scale. This platform is not suitable however
for instantaneous transfers given the processing time and operating rules related to settlement in the domestic payment systems used.
Typically, the transfers take 3-5 days to get to the final beneficiary.
Example 2: Smart and GCash Mobile Remittances in the Philippines.
In the Philippines, telecom companies provide remittance services that use mobile phones and e-money (stored value). The telecom
company recruited RSPs to provide services in sending countries with significant Philippine communities. To make a remittance transfer,
the sender pays cash to one of these partner RSPs, in return for which the RSP sends a secure text message to the mobile phone of
the receiver in the Philippines. The effect of this text message is to load e-money onto that phone, which the receiver can then either
transfer by a further text message to the phone of another person or to an agent of the telecom company. In the latter case, the agent in
return will give the receiver cash. Settlement between the sending RSP and the telecom company, and between the telecom company
and its Philippine agents, is via the usual banking channels. The electronic money transfer service aspects of these remittance services
are regulated by the central bank as the payment system overseer.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 17
Section II. Lessons for the Implementation of the General Principles
open remittance networks that can be used by a num-
ber of market participants can greatly enhance e-
ciency and reduce costs (see Box 11 on interoperable
and open remittance networks).
2.6 Key Lessons Regarding Improvements to
Cross-Border Payment Infrastructure
Lesson 2.6
Connecting domestic retail payment systems of
sending and receiving countries can oer RSPs a
mechanism capable of improving their eciency
in processing remittance transactions.
44. World Bank assessments and studies in recent years
have shown that some payments system operators have
begun to develop payment platforms to connect the
domestic payments system in remittance sending and
receiving countries to establish a fast and ecient way
to process international payments (see Box 12 below).
45. In any event, to implement a link requires a high
level of bilateral (or eventually multilateral) coopera-
tion on technical, regulatory and oversight matters.
e complexity of constructing a payments channel
that complies with the requirements in two or more
jurisdictions may require the extensive involvement
of central banks, other regulators, payment system
operators, banks and bankers’ associations and other
industry representatives from both jurisdictions.
3. LEGAL AND REGULATORY
ENVIRONMENT
General Principle 3: Remittance services should
be supported by a sound, predictable, non-
discriminatory and proportionate legal and
regulatory framework in relevant jurisdictions.
46. General Principle 3 aims to ensure that remittances
are supported by an appropriate legal and regulatory
framework. World Bank assessments and advisory
work in many countries, especially developing receiv-
ing countries, have shown that the legal and regulatory
framework is still one of the most critical areas for the
eciency and improvement of remittance markets.
BOX 11: INTEROPERABLE AND OPEN REMITTANCE NETWORKS
Example 1: BRAC Remittance Processing Hub.
BRAC is a microfinance bank in Bangladesh that has built a central remittance processing hub called “ELDORADO” that combines the
branch network of BRAC with that of other participating banks and other financial services providers. The network is also connected to
the ATM network and has entered into a partnership with Bangalink, the country’s largest mobile network operator. RSPs can connect to
the hub and will be able to send remittances through all participating institutions.
Example 2: Bancomer Transfer Services.
Bancomer Transfer Services (BTS) is a subsidiary of the Mexican bank BBVA Bancomer (part of Spanish bank BBVA) which has developed
an open remittance platform that combines its originally proprietary branch distribution network in Mexico with the branch network of
many of its correspondent banks and recently also retail networks in other Latin American countries. RSPs can access the combined
network simply by establishing one connection to BTS’s platform.
18 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
47. Given the size and importance of remittances for
social and economic development and the risks of in-
ternational cash transfers, the policy side of remittance
regulation serves more than one objective, Typically
policy needs to ensure that remittances can benet the
economy and the oen poor people who receive them
as much as possible while ensuring that the nancial
system is protected from risks.
3.1 Key Lessons Regarding the Soundness and
Flexibility of Regulatory and Legal Frameworks
Lesson 3.1.1
Establishing at least basic prudential requirements
for RSPs can help ensure that consumers are ap-
propriately protected against nancial losses.
BOX 12: INTERCONNECTION OF PAYMENT SYSTEMS AND SERVICES ACROSS BORDERS
Example 1: Earthport.
Earthport is a UK company founded in 1997 that provides banks and RSPs a connection to many national ACHs around the world. RSPs
connected to Earthport’s payments platform are able to send remittances to bank accounts in many countries by establishing just one
connection.
Example 2: SWIFTRemit
SWIFT is a messaging system for banks that is used by most banks in the world to make international transfers. SWIFT, which was tra-
ditionally limited to account-to-account payments, introduced SWIFTRemit to provide banks with a tool to process remittances through
a variety of channels and payment instruments, including cash. Combining a contract template, a common market practice rulebook,
an online reference data directory, messaging standards and services, SWIFTRemit supports all types of retail payment products and
channels: account, cash, cards, cheque and mobile.
Example 3: Connecting domestic ACHs across borders.
The Federal Reserve Banks in the United States have undertaken a number of initiatives to offer low-cost cross-border ACH services by
linking the US ACH system to that of several other countries.
In 2001, the Federal Reserve Banks in partnership with a private sector bank in Canada began offering a cross-border ACH service to
Canada. The Canadian ACH service permits depository institutions in the United States to send ACH credit and debit transactions to
depository institutions in Canada.
In 2003, the Federal Reserve Banks and Banco de México (Mexico’s central bank) began offering a cross-border ACH service from the
United States to Mexico, which was later named Directo a Mexico. While the majority of the payments are US government payments
to individuals in Mexico, the channel is available for use by depository institutions offering cross-border remittance services to Mexico.
In 2009, the US ACH service was extended to cover a wide number of European countries for transfers to accounts and several countries
in Latin America for transfers with payment in cash via RSP’s distribution networks. To facilitate this, a new ACH format, the International
ACH (IAT), was implemented starting September 2009.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 19
Section II. Lessons for the Implementation of the General Principles
48. Remittance services can entail risks of nancial
losses for consumers who entrust funds to an RSP ex-
pecting that a payment will be made to the designated
beneciary. Countries have chosen very dierent ap-
proaches to ensuring that consumers are appropriately
protected against this potential nancial loss, ranging
from prudential requirements that are very similar to
those applicable to banks, to licenses with simplied
prudential requirements, to simple registration, or no
requirements at all.
49. World Bank analyses from assessments and other
market studies indicate that remittance markets where
high prudential requirements are applied to non-bank
RSPs tend to be uncompetitive because the markets
lack specialized operators and have comparatively large
usage of unregulated channels. On the other hand,
market participants and regulators in several countries
with no prudential or licensing requirements at all, or
where such requirements are not enforced, reported
more oen that they had cases of fraud (e.g. RSPs that
only promoted a remittance service for few weeks, col-
lected funds for transfer from consumers and then
disappeared with these funds), or had bankruptcies of
RSPs that caused losses to consumers.
50. Licensing and registration procedures and require-
ments should be proportionate to the risk associated
with the remittance service provided (Box 13 outlines
the US approach to RSP regulation). Requirements
for licensing of RSPs in competitive markets with low
costs tend to cover the following:
a) Identication of benecial owners and proof of
their reliability;
b) nancial soundness;
c) operational capacity;
d) management of consumers’ funds;
e) compliance with anti-money laundering and
counter-terrorist nancing regulation.
Lesson 3.1.2
Technology and business models for remittances
are evolving fast. Regulation for RSPs and remit-
tance services functions best if it is independent of
specic technologies and business models.
51. New payment and telecommunications technology
is shaping remittance markets. New forms of electron-
ic payments and electronic user interfaces are chang-
ing the traditional business model of RSPs and are
fostering the evolution of more ecient and cheaper
remittance services.
19
19
For example, the collection of remittances through retail agents which main-
tain physical locations is costly, being responsible for about 30 percent to 50
percent of the total costs of RSPs.
BOX 13: RSP REGULATION: THE UNIFORM MONEY SERVICES ACT IN THE UNITED STATES
In the United States, most individual states regulate and supervise many of the RSPs that are not banks or credit unions. Many RSPs
that are not banks or credit unions that wish to operate across the US hence need to obtain licenses or register in most of the 50 states.
The Uniform Money Services Act was suggested by the National Conference of Commissioners on Uniform State Laws as a worthwhile
Uniform State Law to help regulate money transfer operations and other “money services businesses” in 2000. It was later amended in
2004. The act provides a framework for regulating some aspects of money services businesses: the act focuses on prudential require-
ments and anti-money laundering issues, while not addressing consumer protection issues. The Act was adopted by Alaska, Arkansas,
Iowa, the U.S. Virgin Islands, Vermont and Washington and used as a basis for regulation in many other States.
20 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
52. Regulation in some countries is still based on the
traditional model of remittance services, or is tailored
around one specic emerging technology. Discussions
with market participants have shown that RSPs in
these cases tend to stick to the less ecient business
model or favor one technology over other, potentially
more ecient ones. A regulatory framework that is too
rigid can maintain or promote ineciencies in the re-
mittance market.
53. Regulation should therefore consider and accom-
modate dierent business models, processing arrange-
ments, and technologies and establish the necessary
requirements for RSPs without prescribing specic
means to achieve them.
3.2 Key Lessons Regarding Non-Discriminatory
Regulatory and Legal Frameworks
Lesson 3.2
A good practice is when dierent types of enti-
ties are permitted to provide remittance services
and the requirements applicable to them are pro-
portionate to the specic risks associated with
the service. In this context, regulations should be
designed on the basis of the type of service being
provided rather than the type of institutions pro-
viding the service.
54. Remittance services are still mostly cash based
and therefore require broad distribution networks. In
many countries, regulated nancial institutions do not
have the necessary network of branches to cover rural
areas. In addition, remittances are large volume, small
value transactions that require high eciency and
low operating costs. RSPs are therefore oen special-
ized money transfer operators (MTOs) with dedicated
systems and that operate through commercial retail-
ers and other entities to collect and disburse the funds.
Because they are highly specialized operators, their
risk prole is dierent to that of banks which oer a
variety of much more complex nancial services and
take deposits from the public.
55. e legal requirements that apply to banks in
some cases make it dicult for them to oer remit-
tance services eciently because the regulatory re-
quirements are too costly and burdensome or do not
allow for business practices that facilitate the ecient
processing of remittances. At the same time, in some
cases bank regulation is simply extended to specialized
MTOs that have a very dierent risk prole and opera-
tional capacity.
56. Regulators face the challenge to ensure that both
specialized service providers and banks are able to par-
ticipate in the remittance market (Box 14 outlines the
solutions adopted by the European and Japanese regu-
lators). Banks play an important role because they can
oer senders and recipients of remittances access to a
broad range of nancial services and can thereby fur-
ther the objectives of nancial inclusion. Specialized
providers may have broader reach, increase competi-
tion, and may adopt new technologies more quickly.
57. World Bank experience in assessing legal frame-
works for remittances has shown that markets tend to
function best when a specic type of license is devel-
oped for specialized payment services providers (i.e.
providers that are not banks or other deposit-taking
institutions), which limits the services they can pro-
vide to money transfers/remittances. is approach
generally allows for setting regulatory requirements
that are commensurate with the products and services
provided by these specialized service providers.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 21
Section II. Lessons for the Implementation of the General Principles
BOX 14: REGULATORY REFORM
Example 1: The EU Payment Services Directive.
The Payment Services Directive (2007/64/EC) (PSD) of the European Union (EU) covers various issues related to remittances identified
in the CPSS-World Bank General Principles and establishes rules for payment service providers including RSPs. The PSD establishes a
harmonized legal framework for remittance services in the EU by creating a single license for all providers of payment services which
are not taking deposits or issuing electronic money. To this end, the PSD introduces a new category of provider of payment services, the
‘Payment Institution’.
The PSD serves three main goals: First, the PSD supports the establishment of a single payments market and harmonizes payment ser-
vices regulations across member states. Second, the PSD increases competition among payment service providers and efficiency in the
payments market. Third, the PSD promotes transparency and consumer protections for payment services users.
The rules only apply to payment transactions in EU currencies where both the payer’s payment service provider and the recipient’s pay-
ment service provider are located in the EU (so-called two-leg payment transactions).
20
Thus, the PSD only covers part of the remittance
flows entering or leaving an EU country. The PSD already acknowledged this in Article 87, in which the Commission is invited in the con-
text of the review of the Directive after three years of operation, to examine the possible need to expand the scope of the PSD to include
payments where either the payer or the payee is outside the EU (one-leg payment transactions), as well as to include transactions in
non-EU currencies.
21
Several countries have already made use of the option given in the PSD to widen the scope of the rules to one-leg
transactions and to all currencies when they transposed the Directive into their national legislation.
22
Example 2: The Payment Services Act of Japan.
The Payment Services Act in Japan came into effect in April 2010 and deregulated various aspects of the payments market in Japan.
Among other issues, it enabled companies to offer remittance services by registering as a special type of entity with lower regulatory
requirements than previously necessary when only banks were allowed to offer remittance services.
20
Article 2 of the Directive excludes Article 73 on value dating from the provision that only transactions within the EU and in any EU currency are within
the scope of the Directive.
21
European Commission, Payment Services Directive: Frequently Asked Questions, Memo 07/152, Brussels 24 April 2007, available at: http://ec.europa.eu/
internal_market/payments/framework/archive_en.htm
22
e PSD allows the individual Member States in twenty-three instances to decide on how to implement the rules. See for the dierences in implementation:
http://ec.europa.eu/internal_market/payments/framework/options_en.htm
3.3 Key Lessons Regarding the Proportionality
of Regulatory Frameworks
Lesson 3.3
e social and economic circumstances of many
remitters and the small-value nature of remittanc-
es are important aspects to be considered when as-
sessing the costs and benets of current and new
regulations.
58. Remittances can pose risks to the nancial system,
in particular with respect to money laundering and
terrorist nancing, and of nancial losses for consum-
ers. At the same time, they provide an important social
benet and individually are very small-value transac-
tions. Senders and recipients of remittances are oen
disenfranchised due to poverty, lack of education and
their legal status.
22 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
59. World Bank assessments of the legal framework
particularly in sending countries in some cases have
shown that regulation intended to prevent money
laundering can create barriers for senders to use regu-
lated remittance services, discourage banks and other
regulated nancial institutions to oer remittance ser-
vices (and to provide banking services to non-bank
RSPs), and hamper the growth of new technologies
that facilitate the usage of electronic remittance pay-
ments and potentially lower costs.
60. In particular, very stringent identication require-
ments for small transactions have shown to be a dis-
incentive to oer remittance services, in particular for
banks, because they cause high administrative costs.
New electronic remittance services where the (cost-
intensive) physical location to send remittances is re-
placed with a low cost self-serve interface such as an
electronic kiosk, a mobile phone or a website depend
on users having an ecient electronic way to identify
themselves or on lowered identication requirements
for small transactions (see example 1 in Box 15).
BOX 15: IDENTIFICATION REQUIREMENTS
Example 1: Electronic identification for users of remittance kiosks in Russia.
In Russia, a wide network of electronic payment kiosks exists which enable consumers to pay their utility bills, add money to their
prepaid mobile phone account and recently also make remittances. To meet the identification requirements, the RSP offering the remit-
tance service through the kiosk has entered into partnerships with banks and other entities with retail locations where consumers can
go to present their identification documents, register and receive an identification card and number that they can then use to identify
themselves at the electronic kiosk to make a remittance.
Example 2: Lowered identification requirements for low value transactions in India.
In 2010, a new health system payment program was launched in Bihar, India that included beneficiary payments, salaries, incentive
payments, etc. One of the main elements supporting the program was the creation of a basic bank account with lower account opening-
requirements and a transaction limit that permitted reduced know-your-customer requirements. Despite not being primarily targeted for
remittances, lessons learned from this project can be implemented in the remittance scenarios as well.
Example 3: Mexican Consular ID.
The Matricula Consular, or “Consular ID,” is an identification card issued by the Mexican consulate to Mexican nationals in the US. The
card is predominantly issued to Mexican citizens residing outside of Mexico for identification purposes. The Matricula Consular features a
photograph of the bearer and lists the individual’s birthplace, address outside of Mexico, and an official, government-issued identification
number. Applicants must show proof of identity, proof of Mexican nationality, and proof of their local mailing address. For Mexican citi-
zens applying for the Matricula Consular in the United States, one can provide a utility bill as proof of their U.S. address. The identification
card certifies that the bearer is a Mexican citizen, but does not provide immigration information and is issued regardless of immigration
status. Some major banks within the U.S began recognizing the Matricula Consular as an acceptable form of identification for non- US
individuals opening banking accounts. Today, the consulate identification cards are accepted at many financial institutions across the
United States. Other countries issuing similar consular identification cards include Argentina, Brazil and Colombia, among others.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 23
Section II. Lessons for the Implementation of the General Principles
3.4 Key Lessons Regarding International
Coordination of Legal and Regulatory
Frameworks
Lesson 3.4
Remittance markets of countries with remittance
ows between them benet if the countries under-
stand each other’s legal and regulatory framework
for remittances and cooperate where possible to
increase consistency of regulation and the proper
functioning of the market.
61. Due to the international nature of remittances,
RSPs and their services are aected by the legal and
regulatory framework of both the sending and the re-
ceiving countries. is is particularly important where
countries have signicant migration and remittance
ows between them. e way market participants can
fulll regulatory requirements in one country is oen
inuenced by the regulatory framework in the other
country. For example, if the migrants’ home country
does provide identication documents to the migrants
but the host country adopts identication require-
ments that do not allow RSPs to accept them, many
migrants may be prevented from using regulated re-
mittance channels.
62. World Bank assessments have shown that coordi-
nation between authorities on both sides of a remit-
tance corridor can lead to signicant benets for the
remittance market. Bilateral coordination on migra-
tion, identication documents of migrants and remit-
tance regulation can create a safe and sound remit-
tance market that still ensures that migrants can and
will use regulated remittance channels.
63. Such international cooperation can increase the
overall eectiveness of the regulatory framework cov-
ering remittance operations. Regulators may meet
with, or even establish regular meetings with their rel-
evant counterparts of other countries within the same
remittance corridor to discuss policy initiatives (see
Box 16).
4. MARKET STRUCTURE AND
COMPETITION
General Principle 4: Competitive market
conditions, including appropriate access to
domestic payments infrastructures, should be
fostered in the remittance industry.
64. e eciency of remittance markets can be en-
hanced by the existence of a competitive market where
a sucient number of dierent RSPs are oering re-
mittance services that are in direct competition with
each other so that they oer consumers choice and
force the RSPs to compete on price, speed, distribu-
tion, and other aspects of the remittance services.
65. e number of RSPs in any given remittance cor-
ridor is not only determined by the market opportu-
nity, but also by the applicable regulatory framework
in each country and other barriers to entry. For RSPs
to compete in a market they need to be able to use the
various relevant services eectively, be able to nd suit-
able distribution channels, and nd an environment in
which they can operate eciently and on a level play-
ing eld with other providers. Experience from World
Bank remittance market assessments and discussions
with market participants and regulators have shown
that these are critical areas where problems exits that
negatively impact the eciency of remittance markets
in a number of countries.
24 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
4.1 Key Lessons Regarding Market Access
Lesson 4.1
A functioning market requires that new RSPs are
able to enter the market and establish distribution
channels. A good practice is when anti-competi-
tive arrangements are prohibited where they pre-
vent a level of competition sucient to ensure a
functioning market. High prices may be an indica-
tion of a lack of competition.
66. RSPs need to build their own network of distri-
bution agents or have access to existing distribution
channels in order to provide recipients access to their
remittance funds. Distribution networks are usually
made up of local partners able to make cash payments
or capture remittance details for initiating a transac-
tion, such as banks. World Bank assessments have
shown that in many receiving countries access to dis-
tribution channels is a problem for RSPs. Adding to
the fact that in some cases only a limited number of
entities are allowed to enter into the remittance value
chain to provide some specic but relevant services
(i.e. initiate transactions and/or pay-out remittances),
these same entities many times enter into exclusive
partnerships with RSPs, eectively locking out market
entrants.
67. Regulators and governments may be able to promote
competition by ensuring that there are sucient enti-
ties permitted and able to provide the relevant services
to RSPs and – where this is limited – that they are able
to service dierent RSPs (see Box 17). Government-
owned providers that have a general service obligation,
for example postal operators or national railway opera-
tors, should be prohibited from making exclusive ar-
rangements for the payment of remittances to enable
other providers to access their distribution capabilities.
To increase competition, public authorities could also
support the participation of alternative types of nan-
cial institutions like credit unions, savings banks and
micronance institutions to oer remittance services.
68. While insucient competition in the marketplace
can result in high prices for the end-users of remit-
tance services, it should be noted that such high prices
may also be an outcome of high operating costs or the
high costs of compliance with already existing rules.
4.2 Key Lessons Regarding Access to
Domestic Payments Systems
Lesson 4.2
e ability to use relevant payment systems in the
country eectively is a key operational require-
ment for RSPs and aects the competitiveness of
individual RSPs.
69. As discussed in General Principle 2, access to the
payment system infrastructure can be granted on a di-
rect or indirect basis. Both forms of access (i.e. direct
or indirect access) are capable of providing RSPs with
suitable payment services.
70. Payment system access criteria should be clear,
well-dened and fair. Payment system operators and
their overseers may want to check whether their direct
access requirements are consistent with best interna-
tional practices to ensure payment system safety and
BOX 16: INTERNATIONAL
COORDINATION
The Ministry of Foreign Affairs of the Netherlands in 2010
commissioned studies of the regulatory framework in
the three countries receiving most remittances from the
Netherlands and hosted an international workshop for
government officials, RSPs and other market stakehold-
ers where the studies were presented and opportunities
for coordination and harmonization were discussed.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 25
Section II. Lessons for the Implementation of the General Principles
soundness and a level playing eld for dierent poten-
tial nancial service providers. Issues regarding direct
and indirect access to payments systems are discussed
in detail in the CPSS report “e Role of Central Bank
Money in Payment Systems”.
23
71. Direct participants in the payments system may
compete as RSPs with other RSPs that can only access
the payments systems indirectly. Many markets are
suciently competitive so that RSPs with only indirect
access will have a choice of which direct participant to
use. However, experience in some countries has shown
that circumstances exists where some or even many
direct participants are unwilling to provide payments
systems access to non-bank RSPs (see discussion un-
der General Principle 2).
72. Regulators should monitor whether RSPs have ap-
propriate access to the domestic payment systems (and
banking services in general). When draing access re-
23
CPSS, “e Role of Central Bank Money in Payment Systems”, Bank for
International Settlements, Basel, Switzerland, August 2003.
quirements they should consider the role, risk prole
and operational capabilities and requirements of RSPs
as participants in the domestic payments market.
73. A model that has been successful in some coun-
tries to, among other purposes, facilitate direct access
to national (centralized) payment systems is for small-
er non-banking nancial institutions and/or payment
service providers to come together to create a “limited
purpose bank”, whose only function is to provide pay-
ment services to its members and their customers (see
Box 18).
5. GOVERNANCE AND RISK
MANAGEMENT
General Principle 5: Remittance services should
be supported by appropriate governance and
risk management practices.
74. Consumers rely on the RSP not only to deliver the
money in the agreed timeframe but also to keep the
funds received from the consumer safe until payment
is made to the (correct) beneciary. World Bank as-
sessments, survey results and reports by regulators and
consumers have shown that in particular smaller RSPs
do not always have the governance structures and risk
management procedures that are necessary to ensure
consumer funds are protected, and that consumers re-
ceive an appropriate level of service. As a result, con-
sumers complain about delays in payment, nancial
losses, diculties in receiving reimbursements and
other problems related to their money handled by
RSPs. Some regulators and law enforcement agencies
report weaknesses in programs and procedures to pre-
vent abuse of remittance services for money launder-
ing, terrorist nancing and other illicit activities.
BOX 17: PROHIBITING EXCLUSIVE
DISTRIBUTION AGREEMENTS
The central banks or other authorities in charge of remit-
tance regulation in Bangladesh, Ethiopia, Ghana, India,
Morocco, Nigeria, Rwanda, Senegal, Tanzania and other
countries have prohibited exclusive remittance distribu-
tion agreements for banks regulated by them (in many of
these cases, following General Principles Assessments)
because the number of available entities to offer remit-
tance distribution services was too small to provide for
sufficient distribution and a competitive market.
26 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
5.1 Key Lessons Regarding Self-Regulation for
Risk Management and Governance
Lesson 5.1.1
e remittance industry, in cooperation with the
relevant authorities and consumer interest groups,
can enhance condence in international remit-
tance services and protect consumers by establish-
ing guidelines for and practicing good governance
and appropriate risk management.
75. RSPs as any other provider of payment services
are subject to operational, nancial and legal risks.
All RSPs should implement good governance and risk
management procedures to help improve the nancial
and operational safety and soundness of their services
and to meet their responsibilities to their customers –
independent of whether these are legal requirements.
76. As participants in international payments markets,
RSPs have a responsibility for preventing their services
from being used for money laundering, nancing of
terrorism, and other illicit activities. is includes the
design of AML/CFT programs, the appropriate allo-
cation of resources and responsibilities to AML/CFT
activities, familiarity of sta with AML/CFT proce-
dures and requirements, and that the rm’s governance
structure is responsive and adapting to the changing
nature of terrorism nancing and money laundering.
77. In the case where the RSPs outsource functions
such as, for example, funds capture, funds disburse-
ment, and international settlement, the RSP should
remain responsible to the end user for the funds trans-
mitted and the timely delivery to the recipient. Where
RSPs use third parties to collect funds from senders on
their behalf, to make payments or for the settlement
between these parties and themselves, RSPs should en-
sure that these third parties manage the ensuing capital
and liquidity risks appropriately and comply with rel-
evant regulations.
Lesson 5.1.2
Authorities can eectively support RSPs by pro-
viding guidance on how to design appropriate risk
management and governance programs. Oen,
BOX 18: PAYMENT SYSTEM ACCESS THROUGH ASSOCIATIONS
Example 1: ARB Apex Bank Ghana.
The Association of Rural Banks Apex Bank (ARB Apex Bank) in Ghana is the bank of the rural and community banks (RCB) providing
banking and non-banking support to the RCBs. The key functions are training and human resource development of the ARB Apex Bank
and RCBs staff, cheque clearing and other operations on behalf of its member banks and audit and inspection services.
Example 2: Bansefi, Mexico.
Bansefi, a state-owned development bank, has created a special infrastructure to support a network of rural financial institutions (MFIs,
cooperatives and other non-bank financial institutions). The infrastructure was created to strengthen this sector, improve access to
finance in rural areas and give these financial institutions better access to payment and other services. The special communications
network connects participating entities with Bansefi, on the basis of which those entities can then offer payment products and services,
and also link up their service outlets to provide a virtual large service delivery network.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 27
Section II. Lessons for the Implementation of the General Principles
the adoption of even basic risk management and
good governance practices can lead to signicant
improvements.
78. Many RSPs are small businesses with limited rev-
enues and therefore limited operational capacities and
sometimes management experience. ey may lack
the experience or know-how to design and implement
programs that will help them to ensure appropriate
risk management and good governance. Regulators
and other parties such as international donors and
NGOs can support RSPs by providing them with prac-
tical guidance in these areas (see Box 19).
5.2 Key Lessons Regarding Regulatory
Requirements for Governance and Risk
Management of RSPs
Lesson 5.2.1
Regulators can benet from a better understand-
ing of the actual risks associated with remittance
operations and the operational procedures and
business models involved.
79. Remittance service providers face similar risks
to other nancial or payment services providers, but
typically have very specic operational and business
arrangements as determined by the specic nature
of remittances as small-value, large volume, interna-
tional, mostly cash-based payments to countries with
limited infrastructure and for consumers with specic
requirements.
80. Most RSPs collect cash through independent third
parties acting as agents for the RSP. e agent legally
binds the RSP, collects funds on their behalf and makes
representations regarding the service (delivery times,
distribution points etc.). erefore, agents oen also
carry out important risk management aspects, in par-
ticular related to the identication of customers and
the collection of information about the background of
the transaction as it relates to suspicious activities. e
RSP needs to collect the funds received by the agent on
its behalf, which entails credit risks relating to the abil-
ity and willingness of the agent to pay.
81. On the receiving side, RSPs oen also work with
third parties that make the payments for them. RSPs
BOX 19: REGULATORS’ GUIDANCE FOR RSPS
Example 1: US Money Services Business website.
The US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) offers RSPs and other money services businesses
(MSB) a website, http://www.fincen.gov/financial_institutions/msb/, which provides guidance on how to design effective and compliant
programs to prevent money laundering and terrorist financing and explains the RSPs’ regulatory requirements in this respect.
Example 2: AUSTRAC Online Service for RSPs.
AUSTRAC is Australia’s anti-money laundering and counter-terrorism financing regulator and specialist financial intelligence unit and as
such in charge of registering RSPs. AUSTRAC provides an online service where RSPs (and other regulated entities) can submit transac-
tion reports, review their past reports and update their information held by AUSTRAC. In addition, RSPs can find all the relevant informa-
tion on regulatory requirement and obtain counselling to address issues and doubts.
28 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
usually oer customers the immediate payment of the
remittance, e.g. before they may even have received the
funds from the agent. Agents and correspondents of-
ten require that the RSPs provide advance funding for
the payments they are requested to make on behalf of
the RSP.
24
e RSP therefore faces a delay in collecting
funds from the agents on the origination side and a
need to prefund payments on the payment side.
82. RSPs normally operate proprietary payment plat-
forms. ese systems may or may not be used by their
agent(s) or correspondent(s). Where they are not, the
RSP needs to integrate its system with that of the agent
or correspondent. e correspondent on the receiving
side may have very limited telecommunication infra-
structure and systems may be very basic.
83. Since RSPs oer a fast and ecient way to make
international payments oen with lower identication
requirements than banks, they are at risk to be used for
money laundering and terrorist nancing. However,
the number of known cases of, and the funds involved
in, money laundering through remittance networks
seems small compared to the number of transactions,
the volumes processed and cases that are reported
from other areas of the nancial system.
25
24
Banks acting as agents of RSPs typically make payments only aer principal
has been settled though the dierent settlement institutions or mechanisms (for
example SWIFT settlement banks).
25
Financial Action Task Force, “Money Laundering through Money Remittance
and Currency Exchange Providers”, June 2010. is report in particular states that
“Clearly, laundering through money remittance and currency exchange providers
poses a number of regulatory and enforcement challenges. At the same time, it
was observed that there is low detection of money laundering in comparison to
the size of the industry as a whole.” One of the reasons is that the small transaction
size of remittances makes it dicult to launder larger amounts of money without
being detected. Most of the conclusions of the subsequent FATF Guidance of June
2011 “Anti-money laundering and terrorist nancing measures and Financial
Inclusion” are based on the same principles. e Guidelines introduce in this area
a risk-based approach for the regulation of the remittances market.
84. Finally, regulators should consider the importance
of remittances for the economic development of many
developing countries, for development policy and for
their oen poor population.
85. Regulators that wish to ensure through guidance,
regulation and supervision that RSPs have appropri-
ate risk management will benet from understanding
these and other operational dierences and should
consider them when draing regulation, examination
manuals and other guidance.
Lesson 5.2.2
Regulatory requirements relating to risk manage-
ment and governance can be an important part of
a licensing or other supervisory regime for RSPs.
86. Given the risks involved with remittances, the im-
portance of risk management for RSPs and the short-
comings of RSPs’ risk management and governance
demonstrated by assessments and other experiences,
regulators can ensure that RSPs meet minimum stan-
dards by establishing regulatory requirements to do so.
87. Such requirements should consider the guidance
that applies to the legal and regulatory framework as
set out in General Principle 3 and section III.3 of this
Guidance Report. It should also take into consider-
ation the dierences between the types of services pro-
vided by RSPs and other regulated nancial entities as
pointed out earlier in this section.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 29
Section II. Lessons for the Implementation of the General Principles
6. ROLE A: THE ROLE OF
REMITTANCE SERVICE
PROVIDERS
Role A: Remittance service providers should
participate actively in the implementation of the
General Principles.
88. In order to achieve their public policy objectives, the
implementation of the General Principles require the
active participation of RSPs. Field work has conrmed
the value that RSPs can add to the objectives of the
General Principles, and has also highlighted some
areas where greater eorts could be made, in particular
in the areas of transparency and competition.
6.1 Key Lessons Regarding Cooperation and
Competition between RSPs
Lesson 6.1.1
When RSPs cooperate on infrastructure and com-
pete on services, the market for remittances can
work more eciently.
89. As has been set out earlier in this document, remit-
tances require ecient payments system infrastructure
to deliver the service in oen rural places with very
limited infrastructure. World Bank assessments of
remittance markets and discussions with stakehold-
ers have shown that in some markets RSPs cooperate
on creating this infrastructure and share it to deliver
their services. It has been demonstrated that through
such forms of cooperation, important economies of
scale and the required network eects can be reached/
delivered quicker than individual, competing eorts.
erefore, to the extent possible RSPs should cooper-
ate on the provision of infrastructure when this can be
done in a way that is not anti-competitive.
Lesson 6.1.2
e market as a whole may benet from the shar-
ing of experiences and good practices, and from
leveraging capabilities between RSPs and other
nancial service providers.
90. Industry associations could be engaged in the dis-
cussion of common issues and policies. ese associa-
tions should include the full range of service provid-
ers and seek to nd practical ways to implement the
General Principles.
91. Dissemination of examples of good practice in
seeking and formulating alliances in countries where
such alliances are geographically wide-spread will help
reinforce the outreach of the registered/licensed pro-
viders even to rural or more remote areas.
92. RSPs should seek partnerships and alliances, in-
cluding linkages between money transfer companies
and nancial institutions in order to leverage capabili-
ties and promote “cash to account” services where ap-
plicable. In particular, they may consider partnerships
with credit unions, rural micronance institutions,
post oces, and similar entities that may have a greater
reach into the community.
6.2 Key Lessons Regarding RSPs Role in
Transparency
Lesson 6.2
A good practice is when RSPs are actively and
transparently providing information on the attri-
butes and cost of their remittance services.
93. Work in many countries has shown that RSPs,
especially in less competitive markets, do not always
openly display the prices and other attributes of their
services, especially the exchange rate (see section III.1
above). While the diculties with providing a xed
exchange rate for a transaction that may span several
30 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
days are acknowledged, RSPs should aim to at least
clearly display their prices and the then current FX rate
so that consumers are able to compare services.
7. ROLE B: THE ROLE OF PUBLIC
AUTHORITIES
Role B: Public authorities should evaluate what
action to take to achieve the public policy
objectives through implementation of the
General Principles.
94. Public authorities play a key role in implementing
the General Principles. Ultimately, it is the responsi-
bility of public authorities to ensure that remittance
markets function in accordance with the General
Principles.
7.1 Key Lessons Regarding Cooperation of
Public Authorities
Lesson 7.1
e remittance market and remittance policies
benet from cooperation between public authori-
ties with responsibility for remittances.
95. e authorities entrusted with overseeing and
monitoring RSPs and/or remittance markets typically
vary from country to country, depending on the in-
stitutional framework of each jurisdiction. Since the
General Principles pursue a number of public policy
objectives, there are usually also dierent authorities
involved in their implementation which may have
competing objectives. Experience in dierent coun-
tries has shown that the responsibilities of the authori-
ties are not always clearly assigned and that sometimes
public authorities do not have the necessary resources
to carry out these responsibilities, for example to pro-
vide eective recourse for complaints from consumers
using remittance systems or the supervision of RSPs.
96. Where responsibilities overlap or policy objectives
compete against each other, eective coordination and
cooperation is necessary. Public authorities should
regularly exchange their views and plans for regula-
tion and policy initiatives for the remittance market.
ey should consult each other – and the industry
– before new regulation or policies are put in eect.
Policymakers should ensure that domestic policies and
the actions of implementing agencies are coherent and
coordinated, and that regulations and guidelines are
predictable and well-publicized.
97. In order to carry out their policies eectively, pub-
lic authorities will benet from clear mandates and an
appropriate legal empowerment as well as appropriate
resources. Also, appropriate organizational arrange-
ments should be in place to ensure timely and coordi-
nated action. Finally, a wide set of public policy instru-
ments should be available, suciently capable to being
calibrated to the dierent needs and objectives of the
national remittance markets and their changing chal-
lenges and opportunities (see Box 20 below).
7.2 Key Lessons Regarding the Involvement of
Public Authorities
Lesson 7.2
Public authorities have played a key role in sup-
porting the implementation of the General
Principles in many countries. Nevertheless, there
is still a long way to go in many countries to
achieve the public policy objectives of the General
Principles. is will require the continuous in-
volvement of public authorities.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 31
Section II. Lessons for the Implementation of the General Principles
98. ere are multiple tools that public authorities
can use to develop further initiatives and/or carry out
additional actions with regard to international remit-
tance services (also see Box 21 on the central bank’s
role vis-à-vis the General Principles, and Box 21 on
cooperative oversight):
• Monitoring: the changing nature of the remit-
tance market increases the importance of moni-
toring. To understand how the remittance mar-
ket is evolving, it could be useful to: (i) have an
updated list of intermediaries that provide re-
mittance services, and (ii) collect, or having ac-
cess to, relevant data and information on RSPs
and the remittance industry. In respect to the lat-
ter, collection of data could cover, for example:
the features of remittance services, functioning
rules of the remittance system, description of
settlement mechanisms and volumes processed
and settled, the countries where money is sent
to, etc.
• Dialogue:togetherwithdatacollection,dialogue
with industry participants is an important tool
to understand market trends. Dialogue can also
be used to inuence outcomes. Dialogue can
improve the eectiveness of actions taken and
prevent authorities from taking inappropriate or
even damaging actions. Dialogue should also in-
volve other parties such as end users, so that the
views of all stakeholders are taken into account.
• Catalyst:authoritiesmaybeabletohelpthepri-
vate sector improve the market for remittances
by acting as a catalyst or facilitator for innova-
tion or reforms where necessary.
• Regulation:insomecasesregulationcanbethe
only eective means to address some of the mar-
ket failures that may have been observed. On
the other hand, it should be noted that extensive
regulation oen represents a signicant barrier
to entry that can limit the supply of remittance
services and increase prices. When resorting to
regulation, the perceived benets of such regu-
lations should be weighed against the costs of
compliance as well as any potential market dis-
tortions that might ensue, and determine wheth-
er the proposed new regulatory intervention is
likely to result in net benets.
• Communicationandoutreachtoconsumersde-
serve specic attention as it is consumers who
ultimately determine which remittance services
are used. Financial literacy programs targeted at
end-users should not only focus on providing in-
formation on remittance services but also foster
the understanding and use of nancial products.
• Directprovisionofremittanceservicesbypublic
sector entities is a possible instrument, although
oen this will be desirable for a limited time (e.g.
BOX 20: THE REMITTANCES WORKING
GROUP IN THE UK
The UK Remittances Working Group1 (Working Group)
was formed as a result of interest expressed in the ‘Re-
mittances as a Market Opportunity’ meeting, opened by
the Secretary of State for International Development on
29th June, 2004.
The Remittances Working Group offers an opportunity for
private and public sector representatives to discuss op-
portunities, as well as constraints, and identify actions
to expand and improve remittance transfer services to
developing countries.
32 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
during a specic crisis) and only if other options
available have proven ineective. e same is
true for taxes and subsidies.
99. In order to ensure that public policy is well-adjust-
ed to the market and industry, authorities can establish
advisory groups with membership from all relevant
types of industry participants. Authorities should en-
sure that such advisory councils do not unduly favor
incumbents.
100. International nancial institutions (IFIs), such as
the World Bank, regional development banks and the
International Monetary Fund can oer support to au-
thorities and market participants in the application of
the General Principles. It is important that the actions
of the IFIs are also well coordinated and eective. At the
global level, IFIs can focus on disseminating best prac-
tices and help implementing the General Principles
through technical assistance, research and remittance
market overview and stock-taking exercises.
101. e G20 has developed and adopted a Remittances
Toolkit that oers countries and public authori-
ties practical examples and actions that support the
implementation of the General Principles. e G20
Remittances Toolkit is attached as Annex B.
BOX 21: A POTENTIAL ROLE FOR CENTRAL BANKS FOR APPLICATION OF GENERAL PRINCIPLES
The authority or authorities entrusted with the pursuit of the objectives concerning remittance services may vary from country to coun-
try, depending on the institutional framework of each jurisdiction. Given their expertise in payment system development, operation and
oversight, in general it is advisable that central banks be actively involved in the application of the General Principles. However, central
banks’ oversight activities concerning retail payments, including remittance services, vary depending on their oversight responsibilities,
policies and powers.
To the extent that central banks provide payment services, they may be able, where appropriate, to enhance these services to support
the smooth functioning of international remittance services. Examples might include the development of new services that support
cross-border payments or enhancing existing services to make them more useful for supporting cross-border payments.
The central bank should cooperate with other public authorities to address significant policy issues arising from market structure and
performance. Central banks may wish to enter into discussions with the private sector and other national central banks to facilitate the
achievement of public policy objectives regarding international remittance services and to foster international cooperation.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 33
Section II. Lessons for the Implementation of the General Principles
BOX 22: POSSIBLE COOPERATIVE OVERSIGHT FRAMEWORK
The 2005 CPSS Oversight report
26
developed the following principles for international cooperative oversight of payment and settlement
systems. While not all of these principles are relevant for remittances, they provide a framework for cooperation among central banks
on cross-border issues:
Cooperative oversight principle 1: Notification
Each central bank that has identified the actual or proposed operation of a cross-border or multicurrency payment or settlement sys-
tem should inform other central banks that may have an interest in the prudent design and management of the system.
Cooperative oversight principle 2: Primary responsibility
Cross-border and multicurrency payment and settlement systems should be subject to oversight by a central bank which accepts
primary responsibility for such oversight, and there should be a presumption that the central bank where the system is located will
have this primary responsibility.
Cooperative oversight principle 3: Assessment of the system as a whole
In its oversight of a system, the authority with primary responsibility should periodically assess the design and operation of the system
as a whole. In doing so it should consult with other relevant authorities.
Cooperative oversight principle 4: Settlement arrangements
The determination of the adequacy of a system’s settlement and failure-to-settle procedures in a currency should be the joint respon-
sibility of the central bank of issue and the authority with primary responsibility for oversight of the system.
Cooperative oversight principle 5: Unsound systems
In the absence of confidence in the soundness of the design or management of any cross-border or multicurrency payment or settle-
ment system, a central bank should, if necessary, discourage use of the system or the provision of services to the system, for example
by identifying these activities as unsafe and unsound practices.
26
CPSS, “Central Bank Oversight of Payment and Settlement Systems”, Bank for International Settlements, Basel, Switzerland, May 2005.
35
SECTION III
GENErAL priNCipLES
ASSESSmENTS OF
NATiONAL rEmiTTANCE
mArkETS
102. e General Principles provide valuable guidance
on the most important aspects of national remittance
markets. As such, they have been used by the World
Bank and other organizations to undertake diagnostic
assessments of the remittance markets in specic coun-
tries to serve as a basis for reforms and other improve-
ments. Since the publication of the General Principles
over 30 sending and receiving countries have under-
taken or supported General Principles Assessments
and initiated reforms based on these assessments.
1. OBJECTIVES AND BENEFITS
103. e key objective of a General Principles assess-
ment is to identify market ineciencies and develop
recommendations for concrete actions that can be
used to address these issues.
104. Diagnostic assessments based on the General
Principles allow countries to analyze their remittance
markets using a proven methodology and assess all rel-
evant aspects in a comprehensive manner. e assess-
ments deliver important information on which areas
of the national market function eciently and where
market or other failures exist. ey oer indications
for possible reforms and help to guide policy and reg-
ulatory initiatives. At the same time, the assessments
can help governments to initiate discussions with
other stakeholders, in particular private sector market
participants and consumers.
2. SCOPE
105. e assessments cover the areas of the ve General
Principles and the role of private sector remittance ser-
vice providers and public authorities in analyzing the
environment of a remittance market of a country. A
team of remittance specialists should initially review
all relevant publicly available information, including
information on the level of prices, laws and regula-
tions and any other reports that have been produced.
In some cases reports in the general media may also
provide useful indications.
106. Even though the assessments generally cover
- where possible - issues in the main sending or re-
ceiving countries in the relevant corridors of the as-
sessment country, the assessments are particularly ef-
fective where both sending and receiving country in a
remittance corridor are assessed so that issues on both
sides can be identied and suggestions for bilateral im-
provements can be made.
107. e main assessment should be undertaken in
the country through meetings with all stakeholders of
36 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
the remittance market. e assessment is usually best
undertaken in cooperation with the central bank and/
or the Ministry of Finance by at least two remittance
and payment specialists who spend one to three weeks
on the ground to meet with all relevant stakeholders.
27
e following table provides suggestions of parties to
meet and issues to discuss:
3. ASSESSMENT REPORTS
108. e stock-taking exercise will provide a review
of the remittance services market in the country un-
der examination, and should provide a report that can
function as a sound basis for developing improvement
strategies and action plans to foster remittance mar-
kets reform. An assessment report should:
1. Set-out the context of the country’s remittance
market (migration patterns, remittance ows,
general nancial services market);
2. Analyze the current status of the remittance
market based on the General Principles;
3. Provide practical and strategic recommenda-
tions and suggestions for improvement oppor-
tunities, including short-term and long-term
improvements to the remittance market.
27
Carrying out the assessment also in cooperation with the ocial development
agency of the main sending country(ies) might also be considered.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 37
Section III. General Principles Assessments of National Remittance Markets
Relevant Party of Parties Possible Discussion Topics
Central Bank
• Review of existing data on remittances
• Statistics and data on RSPs (if possible)
• Review of Payment System Infrastructure
• Framework for settlement of money transfers
• AML/CFT issues (if responsibilities fall under the Central Bank)
• Financial institutions supervisory issues
• Legal and Regulatory framework for payments systems and remittances
• Consumer protection issues (if applicable)
• Other issues mentioned in the guidelines related to role of authorities and other principles
• Coordination with other authorities
Other relevant payment
system operators, such as
payment cards operators
• Review of Payment System Infrastructure
• Framework for settlement of money transfers
• AML/CFT issues
• Legal and regulatory framework for payments systems and remittances
• Consumer protection issues
• Other issues mentioned in the guidelines related to role of authorities and other principles
Ministry of Finance
• Financial institutions supervisory issues (if applicable)
• Other issues mentioned in the guidelines related to role of authorities and other principles
• AML/CFT issues (if applicable)
Statistics
Agency/Department
• Review of existing data on remittances
• Statistics and data on RSPs (if possible)
• Data on migration
Consumer Protection
Agency
• Consumer protection and remittance services
• Consumer protection law and remittances services and customers
• The role of consumer authorities in remittance market
Competition Authority
• Competition laws and regulation
• The role of the authorities in promoting competition in remittance market
• Exclusivity agreements
Commercial banks
• Data on remittance ows
• Available products for money transfers (for example: electronic transfers, money orders, dual debit cards, etc.)
• Methods of payment of remittances (cash payments, deposits in bank accounts, ATMs, etc.)
• Geographic distribution of payment of remittances
• Fees associated with money transfers (fees paid by senders, exchange rate spreads and fees paid by
beneficiaries)
• Market share of different institutions in the payment of remittances
• Agreements with money transfer companies and commercial banks and other correspondent banks located in the
countries where transactions originate
• Mechanism of remittances (payment order, wire, settlement, payment, etc.)
• Settlement of remittance transactions
• Impact of AML/CFT regulations
• Securitization of remittances (if applicable)
• Supply of nancial products for households receiving remittances (deposit and investment accounts, consumer
credit, mortgages, pension funds, life and non-life insurance products, etc.)
• Other issues mentioned in the guidelines related to role of RSPs and other principles
38 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
Relevant Party of Parties Possible Discussion Topics
Money transfer operators
• Data on remittance ows
• Available products for money transfers (for example: electronic transfers, money orders, dual debit cards, etc.)
• Methods of payment of remittances (cash payments, deposits in bank accounts, ATMs)
• Geographic distribution of payment of remittances
• Fees associated with money transfers (fees paid by senders, exchange rate spreads and fees paid by
beneficiaries)
• Market share of different institutions in the payment of remittances
• Agreements with commercial banks
• Mechanisms to transfer money
• Settlement of remittances
• Impact of AML/CTF regulations
• Other issues mentioned in the guidelines related to role of RSPs and other principles
Other RSPs: credit unions,
cooperatives, MFIs,
bureau of exchange,
MTOs, the Postal Office,
etc.
• Data on remittance flows
• Available products for money transfers (for example: electronic transfers, money orders, dual debit cards, etc.)
• Methods of payment of remittances (cash payments, deposits in bank accounts, ATMs, etc.)
• Geographic distribution of payment of remittances
• Fees associated with money transfers (fees paid by senders, exchange rate spreads and fees paid by
beneficiaries)
• Agreements with other market players
• Agreements with other Postal Office
• Mechanisms to transfer money
• Settlement of remittances
Other organizations
• Mobile network operators (for mobile payment services)
• Official development agencies (especially in sending countries)
• Hometown or neighborhood associations
• Migrant welfare associations
• CGAP in the country
• Non-governmental organizations
• Microfinance organizations and cooperatives
• Community organizations
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 39
Annex A
ANNEx A: rEmiTTANCE QuESTiONNAirE FOr
CENTrAL BANkS, FiNANCiAL AuThOriTiES, STATiSTiCAL
AGENCiES, ANd OThErS
Please note: is questionnaire is intended for use by an oral interviewer that interviews the respondent in person. If
the survey is to be used for written responses, it should be adapted to t with a written format. e survey should be
adapted to local circumstances, including the country’s regulatory structure and data sources.
In adapting the questionnaire, please note that this questionnaire is designed to capture both sending and receiving
countries. e questionnaire should also be adapted according to the nature of the country as either mainly remit-
tances receiving country or mainly remittances sending country.
While it is recognized that not all remittance senders are migrants, the main focus of this specic questionnaire is on
remittances sent by migrants.
Where alternatives are given for answering a question, it is recommended that the interviewer asks the question and
based upon the response, checks the appropriate box, rather than the interviewer reading out all the alternatives. If the
listed alternatives are not appropriate or additional information is needed, use the “Other” option.
1. BASIC DATA ON REMITTANCE INFLOWS
1.1 Please indicate what the source(s) of your ocial data on remittances are?
a. Reports from rms specialized in money transfers (Western Union, Money Gram, etc.) ______
b. Reports from banking institutions ______
c. Reports from exchange bureaus ______
d. Reports from other nancial institutions that deliver remittances (e.g. micro-nance institutions,
credit unions, saving and loans companies, etc) ______
e. Reports from non-nancial institutions that deliver remittances (e.g. post oces) ______
f. Reports from settlement and clearance agencies ______
g. Information reported by migrants themselves entering the country (at airports or other points of entry)
h. Other, please specify ______
40 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
1.2 What type of transactions do you record as remittances?
a. Electronic transfers ______
b.
Dras ______
c.
Money orders ______
d.
Withdrawals at automated teller machines (ATMs) using cards issued by
foreign nancial institutions ______
e.
Money reported by migrants visiting their home country at point of entry ______
f.
Use of pre-paid cards for remittances ______
g.
Cheques issued by banks in foreign jurisdictions ______
h.
Other (please specify) ______
1.3 Does the data you collect allow you to identify the source country of remittances? ______
1.4 Does the data you collect allow you to identify the number of remittances transactions? ______
1.5 Do you disclose information on remittances to the public? ______
1.6 If so, how oen is the information disclosed?
a. Every month ______
b. Every quarter ______
c. Every year ______
d. Other ______
1.7 Which year did you start to collect information on remittances? ______
1.8 Are there other government agencies collecting information on remittances in your country? If so,
which? ________________________________________________________________________________
1.9 Do you have any plans to improve the coverage of your data and the methodology used to measure the
volume and structure of remittances? If so, please describe your current or future initiatives on this
matter.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 41
Annex A
2. BASIC DATA ON REMITTANCE OUTFLOWS
(MONEY SENT BY FOREIGN WORKERS LIVING IN YOUR COUNTRY)
2.1 Please indicate what the source(s) of your ocial data on remittances outows are?
a. Reports from rms specialized in money transfers (Western Union, Money Gram, etc.) ______
b. Reports from banking institutions ______
c. Reports from exchange bureaus ______
d. Other, please specify ______
2.2 What type of transactions do you record as remittances outows?
a. Electronic transfers ______
b. Dras ______
c. Money orders ______
d. Other (please specify) ______
2.3 Does the data you collect allow you to identity the destination country of remittances? ______
2.4 Does the data you collect allow you to identify the number of remittances transactions? ______
2.5 What is the country of origin of migrants living and working in your country? Please list the ve
largest countries (in terms of migrant population)
42 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
3. STATISTICS ON REMITTANCES (INFLOWS)
3.1 How many nationals of your country live overseas (number of migrants and migrants as a
percentage of total population)? ______
3.2 Do you know in which countries do migrants live (top ve destination countries)? ______
3.3 Do you have specic information regarding the number of migrants of your country living in each
foreign country (top 5 destination countries)? ______
3.4 Do you have any statistics on the average amount of remittances sent by migrants every month and
every year? ______
3.5 Do you know how oen migrants actually send remittances (on average) to their families and relatives?
a. Every month ______
b. Every two months ______
c. Every three months ______
d. Every six months ______
e. Once a year ______
3.6 Could you please provide the following data on remittances for the past three years?
Instrument to
transfer remittances
Year 1 Year 2 Year 3
Number of
transactions
Volume of
transactions
($)
Number of
transactions
Volume of
transactions
($)
Number of
transactions
Volume of
transactions
($)
Electronic wires
Drafts
Debit cards
Money orders
Pre-paid cards
Cheques
Money sent through
relatives traveling to
home country
Other, please specify
Total
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 43
Annex A
3.7 Which country (countries) is the major source of your remittances? ______________________________
3.8 Please indicate which types of institutions below deliver remittances in your country.
4. FINANCIAL INFRASTRUCTURE SUPPORTING REMITTANCES -
PAYMENT SYSTEMS, TECHNOLOGY, PLAYERS
4.1 Which institutions operating remittances in your country (commercial banks, exchange bureaus,
micro-nance institutions, credit unions, etc.) have direct access to the central bank’s clearing and
settlement systems?
4.2 For institutions with no direct access to the central bank’s clearing and settlement systems, what clear-
ing and settlement systems do they use?
Types of financial and non-financial institutions delivering
remittances in your country
Number of
institutions
Who supervises
these
institutions?
Share of the market
of remittances
(percent)
Firms specialized in money transfers (Western Union, Money
Gram, etc.)
Private banking institutions
State-owned banks
Exchange bureaus
Other financial institutions (e.g. micro-finance institutions,
credit unions, saving and loans companies, etc)
Non-financial institutions (e.g. post offices, commercial
retail chains, travel agencies, etc.)
Other
44 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
4.3 Are there any plans to modify access rules to the central bank’s clearing and settlement systems?
If so, please describe your plans. ______
4.4 Do institutions operating remittances in your country have direct access to an Automated Clearing
House system (in case this is not operated by the central bank)? ______
4.5 If so, which institutions operating remittances have access to the Automated Clearing House (banks,
exchange bureaus, micro-nance institutions, credit unions, etc.)?
4.6 How do banks deliver funds in locations where they do not have branches?
5. BEST PRACTICES IN THE MARKET, GOOD PRACTICES AND BAD
PRACTICES USED BY MARKET PLAYERS
5.1 From your perspective, what are the areas that require more attention by authorities in order to make
the transfer and delivery of remittances more ecient and secure? Please select all applicable areas.
a. Better statistics on remittances (amount, characteristics, composition) ______
b. Better statistics and studies on migrants (location, social background) ______
c. Competition among institutions transferring and delivering remittances ______
d. Delivery of remittances in rural areas ______
e. New technologies and products for the transfer and delivery of remittances ______
f. Financial integrity issues ______
g. Other, please specify ______
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 45
Annex A
5.2 From your perspective, are there any practices that should be prohibited in order to make the transfer
and delivery of remittances more secure? ______
5.3 Have you experienced cases of fraud or other types of losses in the transfer and delivery
of remittances? ______
5.4 Is there any oce in your country responsible for handling and resolving customer complaints
on issues related to transfer and delivery of remittances? ______
5.5 If so, what is the oce? _______________________________
5.6 If not, how are issues related to consumer complaints on remittances normally resolved?
6. REGULATORY ENVIRONMENT
6.1 According to your laws, which institutions can receive and deliver remittances from foreign sources?
a. Private commercial banks ______
b. Public-owned nancial institutions ______
c. Post oces ______
d. Exchange bureaus ______
e. Credit unions ______
f. Micro-nance institutions ______
g. Other ______
6.2 Do the above institutions need to be registered in order to receive and deliver remittances? ______
6.3 How many institutions delivering remittances have been ocially registered so far? ______
6.4 Who supervises each of the above institutions? _______________________________
6.5 In the particular case of money transfer companies, what are the capital requirements for establishing
this type of rms?
46 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
6.6 In case of money transfer companies, do they need a bank-like license to operate? ______
6.7 Are remittances taxed? If so, what types of taxes apply to remittances and what is the tax rate (s)?
6.8 How are consumers informed about the cost of sending remittances in the source and destination
country?
a. Each nancial institution informs the public about its fees ______
b. A non-government organization (NGO) provides comparative data to the public on the
costs of sending remittances ______
c. A government entity regularly provides comparative data to the public on the costs of sending
remittances ______
6.9 Does your country allow the general public to have deposit accounts in foreign currency? ______
6.10 How is the exchange rate for retail transactions in your country determined (conversion of remittances
to local currency), by market or by government?
6.11 Do you have any legal powers to issue regulation to limit the fees related to the transfer and delivery
of remittances (such as exchange rate to be used for the transaction, currency in which the delivery of
remittances occurs, fees for ATM withdrawals, etc.)? ______
6.12 Have you used these legal powers in order to lower the cost of remittances in the
past three years? ______
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 47
Annex A
7. PUBLIC POLICY ISSUES
7.1 What is, in your opinion, inhibiting migrants from using formal channels to transfer remittances to
your country?
a. Lack of valid identication in home country ______
b. Lack of access to nancial institutions in home country ______
c. Mistrust or lack of information about electronic transfers ______
d. High costs of services ______
e. Other ______
7.2 In your opinion, what needs to be done in your own country to encourage migrants to transfer their
remittances through formal channels?
a. Li foreign exchange restrictions ______
b. Allow remittances to be delivered in US dollars or Euros or another international currency and not just
in local currency. ______
c. Improve postal service infrastructure to be able to deliver remittances to more locations ______
d. Other, please specify
7.3 What incentives do you grant migrants to transfer their money back to the country (such as attractive
investment options, purchases of land, tax breaks, etc.)? Please describe them.
7.4 What eorts have nancial authorities recently undertaken to expand the outreach of remittances ser-
vices to rural areas and remote locations in your country in which population have no means to receive
their remittances?
48 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
7.5 In your opinion, what else could be done in your country to improve the transfer and delivery of remit-
tances to rural areas and remote locations?
7.6 Do nancial authorities in your country have any plans to foster the use of formal mechanisms to trans-
fer remittances (banks and other registered nancial institutions), instead of informal channels (money
sent by migrants through relatives traveling to home country)? If so, please describe the plans. If actions
are already underway, please describe them.
7.7 Do you have any plans to make use of the amount of funds your country receive in remittances each
year to obtain additional nancing in the local or international markets (e.g. securitizing future ows of
remittances)? If so, please describe the plans. If actions are already underway, please describe them.
7.8 What type of actions has your government conducted in coordination with counterparts in foreign
countries (source of remittances) in order to facilitate and lower the cost of the transfer of remittances?
Please describe them, if any.
7.9 At an international level, what can the World Bank do to facilitate the rapid, secure and inexpensive
transfer of remittances of migrants to their home countries?
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 49
Annex B
ANNEx B: G20 rEmiTTANCES TOOLkiT
G20 Seoul Multi-Year Action Plan on Development 6th Pillar –
Action 2 (International Remittances)
G20 Remittances Toolkit Policy Tools for the Implementation of the
General Principles for International Remittances
At the G20 Seoul Summit in November 2010, G20 leaders reiterated the importance of facilitating international
remittance ows and enhancing their eciency to increase their contribution to growth with resilience and poverty
reduction. e G20 also committed to reduce the global average cost of remittances.
e G20 remittances toolkit provides countries with a selection of policy options aimed at reducing the global average
cost of remittances and increasing their development benets. G20 countries can select specic and concrete actions
relevant to their specic remittance market. e toolkit provides country specic examples, however these should be
adapted to meet dierent country contexts. e toolkit builds upon previous work, including the 2009 Rome Road Map
for Remittances, the Committee on Payment and Settlement Systems (CPSS)
28
and World Bank General Principles for
International Remittance Services
29
(Principles are at Attachment A) and the World Bank’s report and Guidance Report
on the implementation of the General Principles.
30
MEASURES TO INCREASE COMPETITION
1. Establish a remittance price comparison website (Principle 1: Transparency and Consumer
Protection)
e General Principle for International Remittance Services 1 addresses the need to ensure that remittance service
providers (RSPs) disclose all fees and the foreign exchange rate that apply to their service, that RSPs can be trusted,
and that consumers have recourse in case of problems. Some countries have established public websites that list
available RSPs and the terms of their services including fees, foreign exchange rates applied (where necessary) and
delivery times. e objectives of the price comparison websites are: a) to increase transparency; b) to promote lower
cost options; and c) to foster competition between RSPs in order to drive down prices. G20 countries that do not have
a remittances price comparison website may want to put one in place or consider sponsoring national or regional
initiatives to establish one.
28
e Bank of International Settlements Committee on Payment and Settlement Systems (CPSS) is responsible for strengthening the nancial market infrastructure through
promoting sound and ecient payment and settlement systems. e CPSS is the standard stetting body for payment and securities settlement systems. It also serves as a
forum for central banks to monitor and analyse developments in domestic payment, settlement and clearing systems as well as in cross-border and multicurrency settlement
schemes. CPSS and the World Bank jointly chaired a process to develop the General Principles for International Remittance Services in 2007.
29
e “General Principles for International Remittance Services”, Bank for International Settlements, Basel, Switzerland, Committee on Payment and Settlement System
and World Bank, January 2007. e Principles were developed by a taskforce chaired by the World Bank and the CPSS in 2007. e G20 endorsed the principles in 2010.
30
Since remittance transfers are also a form of retail payment, the CPSS reports on “Policy Issues for Central Banks in Retail Payments” may be helpful in addition to the
General Principles, and also the report on “General Guidance for National Payment System Development”, Bank for International Settlements, Basel, Switzerland, Committee
on Payment and Settlement System, March, 2003.
50 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
Guidance
Price comparison websites require the regular survey of remittance service providers and the costs of their remittance services and to
make this information available on a public website. To ensure that the price comparison website is effective, it should be promoted through
media and services targeting.
The World Bank offers technical assistance for establishing price comparison websites and can certify the compliance of national and
regional websites to its methodological standards (see www.remittanceprices.worldbank.org).
31
Example
Some countries, including Australia, UK, Germany, Norway, France, Italy, Mexico and the Netherlands, have established their own price
comparison websites and keep them regularly updated. These websites can have real impacts on encouraging competition in the
remittance market leading to a reduction in remittance costs.
31
For more information on the topic, please see the World Bank “Guidance and Special-Purpose Note - Remittance Price Comparison Databases: Minimum
Requirements and Overall Policy Strategy”, available at http://go.worldbank.org/SOAZF9BP80.
2. Improve market access (Principle 4: Market Structure and Competition)
e General Principle for International Remittance Services 4 states that competitive market conditions should be
fostered in the remittance industry. In certain countries the network for the collection and/or disbursement of remit-
tances can be limited, and in some cases restricted to only a few entities, such as banks. In addition, dominant money
transfer operators (MTOs) in some cases use their market position to prevent other competitors from entering the
market. Traditional legal requirements, which are targeted at nancial institutions, oen impose an excessive and
discouraging burden for remittances operators. Adapting regulations to include prudential requirements proportion-
ate to the operational and nancial risks faced by remittance payments providers in the course of their business, can
reduce costs and encourage new operators to enter the market.
G20 countries should discourage, limit or ban exclusivity contracts between RSPs and important distribution net-
works. is allows new competitors to enter the market, oer lower cost or more convenient services, and free the
available distribution channels to work with a number of providers or select one based on the merit of their service
and cost.
3. Support innovation in the payment processes through the use of technology (Principle 2: Payment
Systems Infrastructure)
General Principle for International Remittance Services 2 states that improvements to payment system infrastructure
that have the potential to increase the eciency of remittance services should be encouraged. Migrants and their
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 51
Annex B
families in many countries lack access to nancial services and therefore ecient electronic means for payment. As a
result, remittances are still sent and received mostly through branch, agents and in cash. erefore, the costs to pro-
cess remittance transactions are signicantly higher than comparable electronic payments.
New nancial services and payment technologies such as payment cards, mobile and online payments can help banks
to serve migrants, provide migrants access to low cost electronic payment means and thereby eliminate or reduce
the need for cash and branches. is leads to a reduction of transaction processing costs and in return to a reduction
of the fees charged to consumers. G20 members could encourage non-bank entities to provide remittance services,
thereby increasing competition among service providers.
G20 members should consider supporting a holistic approach towards the reform of the retail payment systems in-
frastructure and the introduction of new technologies that reduce transaction costs and promote nancial inclusion.
Guidance
Governments can introduce specific regulations for the payment service providers. The requirements for the payment institutions should
reflect the fact that payment institutions engage in more specialised and limited activities, thus generating risks that are narrower and
easier to monitor than those that arise in other financial institutions. Payment institutions should also be subject to effective anti-money
laundering and anti-terrorist financing requirements.
Examples
The European Union adopted the EU Payment Services Directive in 2007, which provides companies with the opportunity to obtain a
license that enables them to offer payment and remittances services across all countries of the EU.
In Mexico, practitioners inside the industry cite the breakup of exclusivity contracts and the entry of new competitors – especially banks
– into the corridor as among the key events leading to a steady decline in prices.
In Ethiopia, the National Bank banned exclusive remittance distribution agreements for banks in 2008. Since then, banks have been able
to enter into agreements with many new RSPs and the number of RSPs has increased from five to over 20. In return, prices have fallen
and consumers in sending and receiving countries have more choice.
In Japan, the Payment Services Act of 2009 has reformed the regulatory framework for remittances so that licensed non-bank providers
can offer remittance services in addition to banks.
52 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
MEASURES TO IMPROVE THE LEGAL AND REGULATORY ENVIRONMENT FOR
REMITTANCES
4. Assess and reform national remittance markets and payment systems consistent with the General
Principles
e General Principles establish best practices for the policy framework of remittance markets to ensure eective
competition, nancial inclusion, appropriate prices and other policy objectives. Various countries have used the
General Principles to assess their remittance market using a methodology established by the World Bank. e assess-
ments cover all areas of the General Principles (transparency and consumer protection, payment systems, regulatory
framework, competition and market structure, and governance and risk management) and deliver recommendations
for concrete actions for the implementation of the General Principles and improvement of the remittance market of
the country.
Guidance:
Options to support the growth of new technologies include: a) ensuring that an appropriate legal and regulatory framework that balances
the objectives of financial inclusion with the need for consumer protection and market integrity is in place; b) ensuring interconnectivity
of payment systems in sending and receiving countries; and c) supporting projects that introduce innovative new technology. A major
challenge is to do this transnationally, i.e. allowing for mobile international payments.
Examples
In Kenya, three in four adults now make or receive domestic remittances through a mobile phone because it is cheap and convenient;
the mobile payment infrastructure is now also used for the distribution and origination of international remittances at a significantly
reduced cost.
In Gabon, the Universal Postal Union introduced an electronic remittance system in 2007 that has reduced the cost for domestic remit-
tances by 50 percent and for international remittances by 25 per cent compared to the costs charged by the dominant remittance service
provider. In 2008, the market leader reduced its prices for domestic remittances by 50 percent.
In 2004, the Federal Reserve in the US and the Bank of Mexico began offering a cross-border ACH service from the United States to
Mexico under the name “Directo a Mexico.” It uses the exchange rate published daily by the Bank of Mexico (‘the fix”) as reference
exchange rate. The Federal Reserve Banks charge depository institutions in the US less than one dollar per payment. The Bank of Mexico
does not charge banks in Mexico for the service but receives part of the fee charged by the Federal Reserve Bank.
In India, Several banks have begun to offer online remittance services that allow Indian migrants in the US and the UK to send remit-
tances directly from their bank account or credit card by visiting a website established by the Indian bank, eliminating the money transfer
company as a middle man and reducing costs to migrants, in some cases by more than 30 percent.
In Japan, the Payment Services Act, which enabled non-bank entities to provide remittance services, was enacted in 2009 and enforced
in 2010. The number of registered non-bank remittance services providers has increased to 17 as of July 2011.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 53
Annex B
5. Better coordination between government agencies in sending and receiving countries to improve
the development impact of remittances (Principle 3: Legal and Regulatory Framework)
General Principle for International Remittance Services 3 states that remittance services should be supported by a
sound, predictable, non-discriminatory and proportionate legal and regulatory framework in relevant jurisdictions.
Remittance policies oen involve multiple authorities in one country (for example, payment system overseers, com-
petition authorities, and consumer protection authorities, the ministry of nance, nancial supervisors and anti-
money laundering authorities). In addition, due to the cross-border nature of remittance ows, they involve the legal
and regulatory framework in both the sending and receiving country. Policymakers should ensure that domestic
policies are coherent and coordinated and a degree of coordination, based on international best practices, between
sending and receiving countries exists when relevant and appropriate.
Guidance
G20 countries can ask their Central Banks or other government agencies to undertake a General Principles self-assessment or request
suitable consultants such as the World Bank to carry it out. The World Bank Guidance Report for the Implementation of the General Prin-
ciples provides useful guidance in such exercise.
Countries can also support the assessment of other countries’ market, either by providing funds directly to the countries or by participating
in regional programs that provide General Principles Assessments.
Examples
The World Bank, supported by Australian Agency for International Development (AusAID), has completed the assessments of four neigh-
bouring countries: Tonga, Samoa, Vanuatu and Solomon Islands. Australia is also coordinating with the WB on the deployment of a mission
for the assessment of its own market for remittances against the GPs.
The African Institute for Remittance, an institution of the African Union financed by European Commission, has financed General Prin-
ciples Assessments for various countries in Africa and already completed Malawi, Liberia and Tanzania.
Germany has developed a checklist to analyse national remittance markets and to identify bottlenecks which need to be tackled. The
checklist has already been successfully tested in Uzbekistan leading to the creation of specific financial products for migrants and remit-
tances recipients as well as increased work on financial literacy.
54 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
ACTIONS TO INCREASE FINANCIAL INCLUSION AND INCREASE THE
DEVELOPMENT IMPACT OF REMITTANCES
6. Support financial inclusion mechanisms and financial education programs for migrants
Many migrants are keen to support development in their home countries, beyond sending money to their families.
Given the large amounts of remittances they send, this can represent a substantial contribution. At the same time,
migrants tend to be unbanked and hence lack access to, and experience with, nancial services that could help them
and their families to use nancial services more eectively. G20 members can take action to: a) promote the use of
nancial education programs for migrants; b) encourage the development of nancial services customized to the
needs of, and suitable for, migrants and; c) ensure that migrants have access to banks and other nancial institutions.
7. Ensure cooperation between the public and private sector, migrants and civil society on the
development impact of remittances.
Remittances impact dierent areas of public policy and implementation. Enforcement of remittance policies depends
on cooperation between public authorities, migrants and civil society concerned with development and migrant wel-
fare. Broad representation between stakeholders should be an integral element of the policy formulation process.
G20 countries could support this process by facilitating dialogue between the dierent stakeholders of remittance
policy through formal bodies, roundtables, and other means of cooperation and communication.
Guidance
The G20 Principles for Innovative Financial Inclusion provide a useful checklist of issues to be addressed to improve the regulatory
context, including clear leadership and coordination between government agencies. Regulators and policymakers of G20 countries can
establish bilateral or multilateral dialogue with relevant authorities in their remittance corridors and coordinate where possible policy
initiatives, ensure that policies in other countries are taken into account when formulating their own legal reforms, and ensure that they
understand the possible effects of their policies on other affected countries. The 2005 CPSS Oversight report provides guidance on is-
sues that should be addressed when coordinating payment systems internationally.
Example
France established a coordination group on remittances that comprises representatives from the Ministry of Foreign Affairs, the Trea-
sury, the Banque de France, the Ministry of Home Affairs (responsible for immigration affairs) and the French Development Agency. It
meets around 5 times a year, conducts studies and works on ways to lower remittances costs and encourage productive investments
from the diasporas in their country of origin, using the different tools and leveraging possibilities of each ministry or agency.
GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS 55
Annex B
Guidance
Governments can develop or support financial education programs to be delivered by financial institutions, government agencies or
NGOs that help migrants, prior to departure, understand their financial options and further financial inclusion. Receiving countries can
use their consular networks to offer migrants financial education or promote opportunities for investment in the country, be it only by
opening a local savings account. Receiving countries can also encourage local banks to create and offer specialized products to mi-
grants, such as non-resident savings and investment accounts.
Examples:
In Brazil, 1,740 out of 5,578 municipalities (30 percent) have no bank branches, but receive banking services through correspondentes
bancários (non-bank corresponding agents). Correspondentes bancários act on behalf of banks under agency agreements and are
authorized, among other things, to receive deposits and general payments, perform credit transfers from an account and receive ap-
plications related to loans and credit cards.
In 2004, South Africa launched a low-cost national bank account, called “Mzansi”. These accounts extend access to low-income earn-
ers and other non-banked people. By August 2005, more than 1.5-million Mzansi accounts had been opened. The Mzansi initiative also
includes a commitment by South Africa’s banks to establishing banking services within 15km of all South Africans, and an automatic
teller machine (ATM) within 10km of all South Africans.
Germany has organised a dialogue between Serbian banks and Serbian migrants’ associations in order to discuss the migrants’ needs
for financial services in Serbia. As a result, Germany produced an information brochure informing Serbs living in Germany about recent
changes in the Serbian banking system, provisions for customer protection and migrant-friendly financial services available (e.g. cost-
free transfer of pension funds etc).
56 GUIDANCE REPORT FOR THE IMPLEMENTATION OF THE CPSS-WB GPS
Guidance
G20 countries could organise outreach events and special initiatives on the development impact of remittances with other governments,
academia, the private sector and civil society. They can also initiate a Public-Private Remittance roundtable to advocate for reducing the
cost and increasing the developmental aspects of remittances. Objectives may also include encouraging all remittance service provid-
ers to broaden their services and to discuss regulatory barriers, financial literacy campaigns or public service information campaigns.
Examples:
In the UK, the Department for International Development has set up a Remittances Task Force consisting of representatives from the
private sector, including money transfer organisations, international banks, domestic banks, payment system operators and consumer
representatives. One of the possible outcomes form the taskforce is a code of conduct or “quality mark”. To be awarded a quality mark,
remittance service providers would be required to be transparent about their service.
In Australia, a remittance roundtable and partnership between with AusAID, NZAID, the private sector, and banking regulators have
helped to progress remittance policies. This involved intensive data collection, awareness raising, and bridging numerous information
and coordination gaps in order to arrive at robust public private partnerships that have shaken up the inertia in the remittance market
and led to incumbents lowering prices and the introduction of effective competition.
In Italy, the Directorate General for Global Issues of the Ministry of Foreign Affairs is coordinating since 2008 a domestic working group
dedicated to remittances. The working group holds regular meetings with the private sector.
In Brazil, the Ministry of Foreign Affairs organize yearly a general meeting with members from the Brazilian communities living abroad to
discuss issues of common interest. The topic of remittances has been addressed on a regular basis with support from the World Bank
and the Central Bank of Brazil.
