Informal money transfer systems: oppportunities and challenges for development finance

Informal money transfer systems: oppportunities and challenges for development finance

Published Jan 2002

Authors

L. Buencamino, S. Gorbunov

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Protecting informal money transfer systems from abuse by criminals

This paper reviews the main types of informal money transfer systems (IMTS), which are the preferred remittance vehicle among migrant communities. Characteristics, such as low transactions costs, speed, and little paperwork, render them more attractive than banking institutions.

After September 11, IMTS were suspected of being used for terrorist purposes, leading some to call for their prohibition. The authors think such a response is too drastic and instead propose measures to make IMTS less prone to possible abuse by criminal elements and encourage the development of formal sector alternatives.

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