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Mr. W Rathke, Chief Organiser Ms. K Bisnah, President ACORN International P O Box 3924 New Orleans LA 80177 USA 9 February 2011
Dear Mr. Rathke and Ms Bisnah
Thank you for your letter of 3rd January 2011 addressed to Mr M Geoghegan our former Group Chief Executive Officer enclosing a copy of your report on remittance services. I have been asked to write to you in response given my responsibility for our retail banking services on a global basis.
We have considered your report and its conclusions with interest and fully appreciate the impact that the costs incurred by expatriate workers in making what may often be relatively small remittances from the US and Canada to their home countries. It is not possible for us to comment on the overall conclusions of your report, but I am writing to clarify the following points in relation to our activities in the USA and Canada. These are:-
§ We do not have a large geographical footprint in either country. In the USA we have 482 branches largely located in New York State, New York City and in a small number of major urban centres. This compares to circa 6,000 for the 3 largest banks. Similarly in Canada we operate 145 branches based principally in Vancouver and again in the main urban centres compared to over 1,000 for the top 5 Canadian Banks..
§ We are subject to stringent regulatory requirements, particularly those relating to Anti-Money Laundering; Counter Terrorist Financing and compliance with economic sanctions, including those promulgated by the US Office of Foreign Assets Control. As a consequence, we have decided that it is neither permissible nor appropriate for us to offer services to non-customers. Accordingly we are only able to support customers who maintain an account with us. In our experience this often means that customers who only require occasional remittance services are likely to prefer to use the services of specialist providers. We do believe that any further research you carry out should assess the impact of these regulatory requirements and expectations. Many of the countries you refer to as the destination for remittances are also viewed as carrying high risk for money laundering activity. Remittance services, including products such as stored value card are viewed as carrying potential high risk of money laundering.
§ Given the nature and scale of our Retail Business, we have concluded that developing a large scale remittance business is not a priority for our Group. Indeed it is notable that based on your own research the specialist remittance services providers are able to operate the most cost-effective services from a customer perspective.
We hope the above helps and clarifies some of your report’s findings.
Yours sincerely
Kevin Newman Head of Retail Banking
Remittance meeting on February 22nd at 6pm.
On Tuesday February 22nd at 6pm, Ottawa ACORN members will be meeting at 81 Montreal Rd to strategize and discuss the upcoming March 2nd action on remittance fee reduction. The remittance justice campaign was initiated over a year ago with ACORN members fighting for regulations on remittance costs. The rally on March 2nd at 12pm which members are organizing for, on Tuesday evening, is set to take place at 427 Laurier Ave, located at Laurier and Kent. Childcare and ride services are available for all those attending. For ride services or more information on the meeting Tuesday night, please contact Ottawa ACORN at (613) 746-5999
Remittance Meeting on February 22nd at 6pm.
Watch:
Remittances, which begin as simple financial transfers from an immigrant or a migrant worker thousands of miles away to their families back home, are not only lifeblood to their relatives and communities in the home country, but also are frequently critical to the entire national economy of whole countries. According to the Inter-American Development Bank remittances are a significant component of many developing countries’ GNP and far outstrip inputs of foreign aid or private investment from other countries.
Over and over, the countries where ACORN International members and partners live come up high on the list of remittance beneficiaries: India, Mexico, Honduras, Dominican Republic, Kenya, Philippines and Korea, especially. This matters to us in a deeply personal and very national way in both our home countries and our adopted countries where we have family. Clearly, remittances are valuable to immigrant families and their relatives. There are many developing countries where a primary export is migrant labor and a critical import is remittance dollars. Yet, central banks and global financial institutions seem impotent in the face of money transfer organizations and banks.
ACORN International has come up with a remittance grid which shows the costs that are attached to sending money overseas. We found that most of these costs are hidden, some even unavailable to the general public. We focused on ten (10) countries in which ACORN International has head offices and/or we are partnered with. We chose several major institutions of both the United States and Canada and gathered data on what costs are attached to sending a $100 remittance from Toronto, Canada or New Orleans, Louisiana, in Canadian and American Dollars respectively to the ten countries where we work. We choose $100 because it is most common according to both our members and outside studies.
Following our research, the cost of sending (often excluding pick-up costs) the 100 dollars varies depending on type of transfer speed and delivery options. Some institutions have extra costs attached such as “communication” or “processing” fees. There is also an exchange rate charge where the individual institutions profit after the 100 dollars is sent when they exchange the Canadian or American dollars into the currency appropriate for the recipient country. This is calculated by subtracting the institution’s exchange rate from the general exchange rate. Sometimes the difference is not much. At other times however, the cost is quite steep, especially when in conjunction with the other costs involved.
A dramatic example from our investigation is Bank of America: To send US$ 100 to Kenya with Bank of America, it can cost US$ 45 transfer fee + US$ 16 pick-up fee. On top of this, the sender could lose $13 from the remittance due to the exchange rate. So the immigrant or migrant worker is paying almost $75 to send US$ 25 back to their families at home.
ACORN International has concluded that to advance remittance justice and citizen wealth for our members we need the architecture of a three pronged effort:
(1) Transparency: We have exposed the real costs and fees in as clear a manner as possible so that there is no question of the predatory nature of the enterprises and how various actors played their roles in thwarting fair and just pricing.
(2) Regulation: We have to determine why such institutional anarchy exists. Is there any force to global financial bodies like the World Bank or International Monetary Fund or G8 and other deliberations? And, if so, can it be applied to remittances for immigrant families and migrant workers? If global institutions are inadequate, what is the role, if any, being played by national central banking institutions in either developed or developing countries or their states and provinces? How can we get movement for accountability, regulation, and reform?
(3) Pressure: We and our partners have to encourage and enforce negotiations, pursing both agreements with institutions and the promulgation of policies and programs wherever possible with regulators to achieve reform.
