	Introduction

This report focuses on remittances, transfers of money and capital sent by migrants and foreign immigrant communities to their home county. Of that amount, developing countries are estimated to receive about $432 billion, nearly three times the amount of official development assistance (ODA). The dramatic rise in the importance of remittances to global capital flows has led Congress and other policymakers to take a greater interest in these flows and how they are covered under U.S. and state regulation. Remittances are also subject to federal regulation to prevent money laundering and terrorist financing. Remittances can be sent through informal or formal channels. At the time, remittances were a larger source of foreign capital to developing countries than both foreign direct investment and private capital flows (debt and equity). The United States is the largest destination for international migrants and by far the largest source of global remittances. The World Bank records $56.3 billion in official remittance outflows from the United States in 2014. MSBs include the U.S. "Dodd-Frank" Measures

In response to concerns from U.S. immigrant communities raised during the 110 th and 111 th Congresses over inadequate disclosure of remittance fees and insufficient consumer protection for remittance transactions, Congress created new consumer protections as part of the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd Frank) . At the same time, costs for remittance transactions may increase since bank fee income is capped elsewhere. Remittances and U.S. Development Policy

Various U.S. efforts in the past have attempted to harness remittances to promote foreign economic development by channeling remittances toward investment and by using remittances to bring a larger percentage of the remitting population into the formal financial sector. Between 50% and 100% of banks in developing countries provide remittance services, yet the number of remittance recipients in developing countries with access to other financial services (such as checking accounts or credit) remains low. Issues for Congress

Key issues on remittances that Members of Congress may want to consider include the following:

		Regulation of Remittances

Members may wish to explore the current federal and state regulatory regime for remittance providers and customers. Effective and proportional regulation of remittances reduces corruption, enhances transparency, and facilitates a more robust business environment. Members of Congress may also explore the impact of the current regulatory regime on the development of emerging payments systems for sending remittances, such as mobile, card, or Internet-based models. Remittances and U.S. Immigration Policy

Members may consider the interplay of U.S. remittance policy efforts and U.S. immigration policy. Some Members of Congress, however, have raised concerns that current customer identification policies, which do not require a remittance customer to provide documentation of legal U.S. immigration status, may undermine efforts to enforce U.S. immigration laws. In addition to increased AML/CFT risk related to informal money transfer systems, shifting remittance flows to informal channels may impede policy efforts to use remittances as a means to promote access to financial services.
This report focuses on remittances, transfers of money and capital sent by migrants and foreign immigrant communities to their home country. At over $432 billion in 2015, remittances sent home by international migrants to developing countries are larger than official development assistance (ODA) and more stable than private capital flows to these countries.
The United States is the largest destination for international migrants and by far the largest source of global remittances. The World Bank estimates $56.3 billion in official remittance outflows from the United States in 2014. As the market for remittances has ballooned, banks, traditional money transfer companies, and entrepreneurs have responded to increased demand by increasing the amount of remittance channels available to migrants, including mobile, Internet, and card-based options.
The dramatic rise in the importance of remittances to global capital flows has led Congress and other policymakers to take a greater interest in these flows. Key issues for Congress include:
Regulation of Remittances. Members may want to review the regulatory landscape for remittance providers. Effective and proportional regulation of remittances reduces corruption, enhances transparency, and facilitates a more robust business environment. At the same time, additional regulatory requirements, such as recent consumer protection requirements included in the Dodd-Frank Wall Street Consumer Protection Act, may raise concerns about the compliance costs for remittance providers and consumers.
Congress may also want to consider whether current federal and state regulation are appropriate for new and emerging payments systems such as mobile and card options, which are starting to capture part of the remittance market. Members may also want to review recent efforts to improve foreign regulatory and supervisory mechanisms. Remittances are often sent to recipients in developing countries with weak regulatory systems, increasing the risk of money laundering and possible financing of terrorism.
Impact on U.S. Development Policy. Remittances represent a substantial percentage of gross domestic product (GDP) in several developing countries. Whether remittances can be leveraged to support U.S. foreign development policy is another issue of concern to some Members of Congress. Some analysts argue that since remittances are comprised of private transfers between family members and friends, U.S. efforts should be directed to reducing the transaction costs involved in remittance transactions. Others note the potential beneficial development aspects of remittances, including promoting investment and access to financial services, and encouraging government programs to help stimulate these positive effects.
Remittances and U.S. Immigration Policy. Members may want to consider the interplay of U.S. remittance policy and U.S. immigration policy. A major goal of U.S. policy on remittances is increasing the attractiveness of regulated remittance systems to potential remittance customers, without regard to their legal status. Thus, U.S. Treasury officials allow remittance providers to accept certain foreign-issued means of identification to meet their customer identification requirements. Some Members argue that policies like these may undermine U.S. immigration laws and advocate restricting remittances to those with legal status under U.S. immigration laws. Others argue that more restrictive identification measures would only push remittance flows toward high-risk, unregulated, and underground channels.