Are Remittances a Source for Money Laundering?


Is it true that remittances aid money laundering? This is the quintessential question that is asked by everyone. The Oracle of Remittances, Mr. Dilip Ratha of World Bank says ‘No’. Ask US Department of Treasury and other regulators, and they will answer with a ‘Yes’.

So which one is it? Do they? or Don’t they? Find out in this short video.

Transcription:

Hello. My name is Faisal Khan. I’m a banking and a payment consultant. And today we’ll be answering a very simple question. Do remittances account for money laundering? Are they a source of money laundering?

There’s a huge divide in this thing. If you ask the regulators, they say yes. Remittances do contribute towards money laundering and terrorist financing. If you ask the traditional remittance players, they will deny it, of course. So, what is the truth?

Well it depends on what we call remittance, and what value are we looking at. If we’re looking at sending let’s say, a thousand dollars, 500 dollars, 200 dollars, 250 dollars, then the great auricular of remittances Mr Dilip Ratha of World Bank as, you know, I would quote him he says ‘there has been no significant data to show that remittances aid in money laundering’. Again, this is the person who compiles all the remittance data from world and presents it to you. World Bank says we have no data to suggest so otherwise that remittances are actually contributing towards the money laundering. But, if you talk to the U.S. Department of Treasury or the FCA and other regulators worldwide they say no, no, no. Remittances do contribute towards money laundering etc.

Again, I think the balance in the sweet spot and the slider here is how much is a remittance. If you’re sending twenty five thousand dollars and seeing and classifying it as remittance. Yes. The possibility is very much there for it to be abused for use for nefarious purposes like money laundering. But if the amount is small, 250, 300 dollars, 500 dollars, 400 dollars then the chances of it being abused for money laundering purposes, are very minimal.

So, you know there is no consensus as such. Both the teams and the parties are divided on the subject and each one is holding true to their definition. And, you know, if it is true or not. World Bank says no they do not contribute. Department of Treasury and other regulators say yes, they do contribute. Again it all depends on what is the size of the remittance that we talk over here and how much are all in place.

If you have any other questions feel free to ask. I’ll be happy to answer in the comments below. Till next time. Have a good one.