XM -Blog

The Role Of Regulators In The Remittance Industry

November 5th, 2019

The role of regulators in the remittance industry

Today, cross-border money transfer has become increasingly intertwined with illegal activities as legitimate money transfer operations too, have become vulnerable to misuse.

Hence it is imperative for the remittance industry to work in close collaboration with regulators across jurisdictions, adhere to the compliance frameworks of these jurisdictions to prevent misuse of the platforms.

As responsible money transfer operators, at Xpress Money we recognise that while it is incumbent upon us to ensure customer satisfaction, we must do so within the ambit of compliance regulations that must be adhered to at all times.

Customer identification

Financial Action Task Force (FATF) requires signatories to implement effective currency transaction reports and reporting of suspicious transactions. Different countries have their own regulations and mechanisms in place to prevent misuse, and this is the broad common thread.

In the African market, operators are expected to abide by the Anti-Money Laundering Know Your Customer, or the AML KYC norms. On its part, Xpress Money takes responsibility for the required AML KYC, thereby adhering to the regulatory compliance.

In Hong Kong, the government has amended relevant provisions of the Organised and Serious Crimes Ordinance to lower the threshold for customer identity verification to meet FATF standards on following regulatory guidelines for international transactions and record keeping. Thus, remittance and money exchange transactions have been brought down from HKD 20,000 to HKD 8,000.

Anyone remitting from or receiving or exchanging HKD 8,000 or more (or its equivalent in any other currency) in Hong Kong through a remittance agent or a money changer will now need to produce his or her Hong Kong Identity Card (or Certificate of Identity, Document of Identity or travel document), along with the address and telephone number, to the remittance agent or money changer, for identity verification. This information is to be retained by the remittance operator, agent or money changer.

Similarly, in India, the RBI has issued the KYC Anti-Money Laundering Guidelines that requires authorised banks – which play a prominent role in inter mediating remittances flowing into India – to monitor existing accounts on a regular basis and report suspicious activities.

Essence of adhering to regulations

The FATF admits it is challenging for remittance and currency exchange businesses to continually identify and monitor cases of misuse of their services. Firstly, it is difficult to find a link between different persons using money remittance services as keeping trail of the transactions is not easy.

Also Read: Regulations In Remittances – Challenge Or Opportunity?

This, in turn, means that unlike banks, remittance service providers cannot monitor the financial behaviour of their customers. At best they can conduct stringent identification and verification of a customer however there is no way to monitor the customer’s activities. Money transfer organisations have no way of knowing the final destination or origin of the funds transferred through their channels; they can only verify the sender and receiver at their end.

Hence money transfer operators must step up and ensure all compliance frameworks and regulations are adhered to. While the regulatory bodies recognise the challenges faced by money transfer operators there is no question about the fact that the future of remittances is dependent on money transfer operators committing to a strict regulatory environment.


Written by – Sudhesh Giriyan, CEO – Xpress Money.