Securing UK Remittance Market
Earlier today, in a written ministerial statement to the Commons, I provided an update on the action the Government is taking to secure the future of the UK remittance market, particularly in relation to the Somalia corridor.
Whilst we recognise that remittances play a vital role in supporting developing countries, enabling them to move from dependence on aid to self sufficiency and growth, there are considerable difficulties for payment institutions providing services into countries where regulatory and supervisory frameworks are in development. It is important that we ensure that the UK financial system is not a conduit for terrorist financing or money laundering, and that we protect the majority of remitters who are sending funds for legitimate purposes.
The action group on cross-border remittances, which brings together representatives of the banking and money remittance industries, consumer groups and Government agencies, has made the following progress:
HMRC and the joint money laundering steering group have developed guidance for financial institutions providing banking facilities for money service businesses (MSBs) and for MSBs themselves on complying with their anti-money laundering and counter financing of terrorism obligations. As part of the development of guidance, MSBs have committed to adopting best market practice, over and above meeting the minimum legal requirements;
the National Crime Agency has held workshops with banks and MSBs to help develop a better understanding of risk, to help them identify good practice and improve systems as well as detect warning signs and poor practice in the sector; and,
the safer corridor pilot for UK-Somalia remittances, led by the Department for International Development (DFID), is developing a series of co-ordinated interventions to address perceived risk at each stage of the remittance transaction and ensure remittances continue to flow through secure, accessible channels. The detailed design process has been initiated, supported by the World Bank, incorporating consultations with all relevant stakeholders in the UK and in Somalia. The pilot is steered by an advisory group composed of representatives from UK-Somali MSBs, UK-Somali community representatives, banks, NGOs and Government officials.
More details on the pilot can be found here, and you can read my full ministerial statement here.
It is vital for the continued flow of remittances that the banking sector engage with individual MSBs who are raising standards now, as well as the longer-term solutions provided by the safer corridor pilot. The UK Government will continue to urgently encourage and facilitate engagement between the banking sector and MSBs on this issue in the coming weeks.
