REMITTANCES TO 

FRAGILE 

COUNTRIES

Treasury Should 

Assess Risks from 

Shifts to Non-Banking 

Channels

Report to Congressional Requesters

March 2018

GAO-18-313

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-313, a report to 

congressional requesters

March 2018

REMITTANCES TO FRAGILE COUNTRIES

Treasury Should Assess Risks from Shifts to NonBanking Channels

What GAO Found

Stakeholders, including money transmitters, banks, and U.S. Department of the 

Treasury (Treasury) officials, reported a loss of banking access for money 

transmitters as a key challenge, although remittances continue to flow to 

selected fragile countries. All 12 of the money transmitters GAO interviewed, 

which served Haiti, Liberia, Nepal, and particularly Somalia, reported losing 

some banking relationships during the last 10 years. As a result, 9 of the 12 

money transmitters reported using channels outside the banking system 

(hereafter referred to as non-banking channels), such as cash couriers, to move 

funds domestically or, in the case of Somalia, for cross-border transfer of

remittances (see figure). Several banks reported that they had closed the 

accounts of money transmitters because of the high cost of due diligence actions 

they considered necessary to minimize the risk of fines under Bank Secrecy Act 

regulations. Treasury officials noted that despite some money transmitters losing 

bank accounts, they see no evidence that the volume of remittances is falling. 

Example of a Cash-to-Cash Remittance Transfer Using a Cash Courier 

U.S. agencies have taken steps that may mitigate money transmitters’ loss of 

banking access. For example, several agencies have issued guidance to clarify 

expectations for providing banking services to money transmitters. In addition, 

Treasury is implementing projects to strengthen financial institutions in some 

fragile countries. However, U.S. agencies disagreed with other suggestions, 

such as immunity from enforcement actions for banks serving money 

transmitters, since those actions could adversely affect goals related to 

preventing money laundering and terrorism financing.

Treasury cannot assess the effects of money transmitters’ loss of banking 

access on remittance flows because existing data do not allow Treasury to 

identify remittances transferred through banking and non-banking channels.

Remittance data that U.S. agencies collect from banks do not include transfers

that banks make on behalf of money transmitters. Additionally, the information 

Treasury collects on transportation of cash from U.S. ports of exit does not

identify remittances sent as cash. Therefore, Treasury cannot assess the extent 

to which money transmitters are shifting from banking to non-banking channels

to transfer funds due to loss of banking access. Non-banking channels are 

generally less transparent than banking channels and thus more susceptible to 

the risk of money laundering and terrorism financing.

View GAO-18-313. For more information, 

contact Thomas Melito at (202) 512-9601 or 

MelitoT@gao.gov.

Why GAO Did This Study

The United States is the largest source 

of remittances, with an estimated $67 

billion sent globally in 2016, according 

to the World Bank. Many individuals 

send remittances through money 

transmitters, a type of business that 

facilitates global money transfers. 

Recent reports found that some money 

transmitters have lost access to 

banking services due to derisking—the 

practice of banks restricting services to

customers to, in part, avoid perceived 

regulatory concerns about facilitating 

criminal activity. 

GAO was asked to review the possible 

effects of derisking on remittances to 

fragile countries. This report examines 

(1) what stakeholders believe are the 

challenges facing money transmitters

in remitting funds from the United 

States to selected fragile countries, (2) 

actions U.S. agencies have taken to 

address identified challenges, and (3)

U.S. efforts to assess the effects of 

such challenges on remittance flows to 

fragile countries. GAO selected four 

case-study countries—Haiti, Liberia, 

Nepal, and Somalia—based on factors 

including the large size of U.S. 

remittance flows to them. GAO 

interviewed U.S.-based money 

transmitters, banks, U.S. agencies, 

and individuals remitting to these 

countries and also surveyed banks. 

What GAO Recommends

Treasury should assess the extent to 

which shifts in remittance flows to nonbanking channels for fragile countries 

may affect Treasury’s ability to monitor 

for financial crimes and, if necessary, 

should identify corrective actions. 

GAO requested comments from 

Treasury on the recommendation, but 

none were provided.
Page i GAO-18-313 Remittances to Fragile Countries

Letter 1

Background 5

Stakeholders Identified Money Transmitters’ Loss of Banking 

Access as a Key Challenge, Although Remittances to Fragile 

Countries Continue to Flow 16

U.S. Agencies Have Taken Certain Steps That May Mitigate 

Banking Challenges Related to Remitting Funds to Fragile 

Countries but Disagreed with Other Proposed Actions 26

Existing U.S. Agency Information on Remittances Does Not Allow 

Treasury to Assess the Effects of Money Transmitters’ Loss of 

Banking Access on Remittance Flows to Fragile Countries 34

Conclusions 38

Recommendation for Executive Action 39

Agency Comments 39

Appendix I Objectives, Scope, and Methodology 42

Appendix II Selected Results from the GAO Survey of Banks on Money 

Transmitter Account Terminations 49

Appendix III GAO Contact and Staff Acknowledgments 58

Tables

Table 1: Key Guidance Issued by Treasury and Other Federal 

Regulators Addressing BSA/AML Risk Posed by Money 

Service Businesses, including Money Transmitters, and 

Foreign Banks 28

Table 2: U.S. Department of the Treasury’s Office of Technical 

Assistance (OTA) Projects in Three of Our Case-Study 

Countries 30

Table 3: Between January 1, 2014, and December 31, 2016, did 

the bank have money transmitters as customers? (Check 

one.) (Question 24) 50

Table 4: Between January 1, 2014, and December 31, 2016, did 

the bank have money transmitters as customers? (Check 

one.) (Question 24) – grouped by bank asset size 50

Contents
Page ii GAO-18-313 Remittances to Fragile Countries

Table 5: Does the bank restrict the number or percentage of 

money transmitter checking, savings, and money market 

accounts it manages? (Check one.) (Question 26) 50

Table 6: Does the bank restrict the number or percentage of 

money transmitter checking, savings, or money market 

accounts it manages for the following reasons? (Question 

27) 51

Table 7: Between January 1, 2014, and December 31, 2016, did 

the bank terminate any money transmitter checking, 

savings, or money market accounts? (Check one.) 

(Question 28) 51

Table 8: Between January 1, 2014 and December 31, 2016, did 

the bank terminate any money transmitter checking, 

savings, or money market accounts for the following 

reasons? (Check all that apply.) (Question 29) 51

Table 9: Between January 1, 2014, and December 31, 2016, did 

the bank have any money transmitter customers whose 

business involved remitting funds to Haiti, Liberia, Nepal, 

or Somalia? (Check one.) (Question 31) 52

Table 10: Which of the following countries did the bank’s money 

transmitter customers serve? (Check all that apply.) 

(Question 32) 52

Table 11: Between January 1, 2014, and December 31, 2016, did 

the bank terminate any checking, savings, or money 

market accounts for money transmitters whose business 

involved remitting funds to Haiti, Liberia, Nepal, or 

Somalia? (Check one.) (Question 33) 53

Table 12: For which of the following countries that money 

transmitters remit funds to did the bank terminate any 

checking, savings, or money market accounts? (Check all 

that apply.) (Question 34) 53

Table 13: Between January 1, 2014, and December 31, 2016, did 

the bank terminate any checking, savings, or money 

market accounts for money transmitters whose business 

involved remitting funds to Haiti, Liberia, Nepal, or 

Somalia for the following reasons? (Check all that apply.) 

(Question 35) 53

Table 14: Between January 1, 2014, and December 31, 2016, did 

your bank rely on a correspondent bank to facilitate the

transfer of funds to Haiti, Liberia, Nepal, or Somalia? 

(Check one.) (Question 37) 55
Page iii GAO-18-313 Remittances to Fragile Countries

Table 15: For which of the following countries has your bank relied 

on a correspondent bank to facilitate the transfer of 

funds? (Check all that apply.) (Question 38) 55

Table 16: Between January 1, 2014, and December 31, 2016, did 

your bank lose access to respondent banks facilitating 

transfer of funds to Haiti, Liberia, Nepal, or Somalia 

because the correspondent bank terminated those 

relationships? (Question 40) 56

Figures

Figure 1: Example of Money Transmitter Cash-to-Cash 

Remittance Transfer Using a Bank Account 7

Figure 2: Example of Bank-to-Bank Remittance Transfer 8

Figure 3: Example of a Remittance Transfer Using Multiple 

Intermediary Correspondent Banks 9

Figure 4: Estimated Total U.S. Remittances, and Corresponding 

Percentage of GDP, to Case-Study Countries in 2015 16

Figure 5: Example of Money Transmitter Cash-to-Cash 

Remittance Transfer Using a Cash Courier 18
Page iv GAO-18-313 Remittances to Fragile Countries

Abbreviations

AML anti-money laundering

BSA Bank Secrecy Act

BSA/AML Bank Secrecy Act anti-money laundering

Call Reports Consolidated Reports of Condition and Income

CMIR Report of International Transportation of Currency or

Monetary Instruments

FDIC Federal Deposit Insurance Corporation

Federal Reserve Board of Governors of the Federal Reserve

FinCEN Financial Crimes Enforcement Network

GDP gross domestic product

IRS Internal Revenue Service

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

OTA Office of Technical Assistance

Treasury Department of the Treasury

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Page 1 GAO-18-313 Remittances to Fragile Countries

441 G St. N.W.

Washington, DC 20548

March 8, 2018

Congressional Requesters

The United States is the largest source of remittances to other countries,1

with an estimated $67 billion sent globally in 2016.2 Remittances are the 

largest source of foreign currency for many receiving countries, often 

exceeding official development assistance from developed countries, 

according to the World Bank. Remittances can be sent through money 

transmitters as well as depository institutions, such as banks and credit 

unions, among other methods.3

In recent years, the World Bank and others have reported that some 

money transmitters have been losing access to banking services with 

depository institutions due to derisking.4 In a prior report,5 we identified 

derisking as the practice of banks limiting certain services or ending their 

relationships with customers to, among other things, avoid perceived 

regulatory concerns about facilitating money laundering, or other criminal 

 1

For purposes of this report, we define remittances as the transfer of funds from 

consumers in the United States to persons or businesses in a foreign country. The World 

Bank defines personal remittances as the sum of personal transfers and compensation of 

employees. 

2

This estimate is a World Bank staff calculation based on data from the International 

Monetary Fund Balance of Payments Statistics database and data releases from central 

banks, national statistical agencies, and World Bank country desks.

3

The Department of the Treasury’s (Treasury) Financial Crimes Enforcement Network 

(FinCEN) regulations define a money transmitter as a person or organization that provides 

money transmission services, which means the acceptance of currency, funds, or other 

value that substitutes for currency from one person and the transmission of currency, 

funds, or other value that substitutes for currency to another person or location by any 

means. The definition of money transmitter also includes any other person engaged in the 

transfer of funds. 31 C.F.R. § 1010.100(ff)(5). 

4

See the following reports: The World Bank, Report on the G20 Survey on De-risking 

Activities in the Remittance Market, 2015; International Monetary Fund, The Withdrawal of 

Correspondent Banking Relationships: A Case for Policy Action, 2016; and Center for 

Global Development, Unintended Consequences of Anti–Money Laundering Policies for 

Poor Countries, 2015.

5

GAO, Bank Secrecy Act: Derisking Along the Southwest Border Highlights Need for 

Regulators to Enhance Retrospective Reviews, GAO-18-263 (Washington, D.C.: Feb. 26, 

2018).

Letter
Page 2 GAO-18-313 Remittances to Fragile Countries

activity, such as financing to terrorist groups.6 Further, the International 

Monetary Fund has raised concerns that large depository institutions may 

be reducing correspondent banking relationships due to fear of risk 

exposure, which in turn may limit the ability of smaller depository 

institutions to provide remittance transfer services to their customers, 

including money transmitters. According to Oxfam America, constraints 

on money transmitters’ access to banking services may have significant 

humanitarian, economic, and security implications, effectively cutting off a 

stable source of funds and isolating communities from the global financial 

system.

Financial institutions that provide international money transfers are 

subject to regulations to prevent financial crimes such as money 

laundering or terrorist financing. In a 2016 report, we described money 

laundering risks related to remittances, including risks involving agents, 

customers, geographic location, and products.7 Remittances can be used 

to launder proceeds from different types of criminal activities, including 

drug trafficking, human smuggling, and consumer fraud.8 Money 

transmitters and depository institutions are subject to the Bank Secrecy 

Act (BSA), an important tool in federal law enforcement efforts to detect 

and deter the use of financial institutions (including those that send 

remittances) for criminal activity, including money laundering and terrorist 

financing.9 In another 2016 report, we found that from January 2009 to 

December 2015 the U.S. government collected over $5 billion in 

 6

The term “derisking” can be defined in a variety of ways. For example, according to the 

Financial Action Task Force, derisking can be the result of various drivers, such as 

concerns about profitability, prudential requirements, anxiety after a global financial crisis, 

and reputational risk. See “FATF Clarifies Risk-Based Approach: Case-by-Case, Not 

Wholesale De-risking,” accessed February 28, 2018, http://www.fatfgafi.org/documents/documents/rba-and-de-risking.html. 

7

GAO, International Remittances: Money Laundering Risks and Views on Enhanced 

Customer Verification and Recordkeeping Requirements, GAO-16-65 (Washington, D.C.: 

Jan.15, 2016).

8

Treasury has identified risks related to money transmitters in the following reports: 

National Money Laundering Risk Assessment, 2015; and National Terrorist Financing Risk 

Assessment, 2015.

9

Bank Secrecy Act, Titles I and II of Pub. L. No. 91-508, 84 Stat. 1114 (1970) (codified as 

amended at 12 U.S.C. §§ 1829b, 1951-1959, and 31 U.S.C. § 5311 et seq.).
Page 3 GAO-18-313 Remittances to Fragile Countries

penalties, fines, and forfeitures for various BSA violations, including the 

failure to identify or report suspicious activity.

10

This is one of four reports addressing your request that we review the 

various effects of derisking, including on remittance senders in the United 

States.11 This report examines (1) what stakeholders believe are the 

challenges facing money transmitters in remitting funds from the United 

States to selected fragile countries, (2) what actions U.S. agencies have 

taken to address identified challenges, and (3) U.S. efforts to assess the 

effects of such challenges on remittance flows to fragile countries.

To address our objectives, we identified four case-study countries: Haiti, 

Liberia, Nepal, and Somalia. We selected these countries based on their 

inclusion in the Organisation for Economic Co-operation and 

Development’s States of Fragility reports from 2013 to 2015.12 In addition, 

we limited our selection to countries that have a foreign-born population 

of 50,000 or more living in the United States. Finally, we considered the 

size of estimated total remittances from the United States relative to the 

recipient countries’ gross domestic product (GDP). We rank ordered the 

17 countries that met these criteria and selected the top four.

To identify what stakeholders believe are the challenges facing money 

transmitters in remitting funds from the United States to fragile countries, 

we interviewed officials from the U.S. Department of the Treasury 

(Treasury) and held semi-structured interviews with six small groups of 

remittance senders in the United States who remit to our case-study 

countries. The results of our interviews are not generalizable to all 

remittance senders to these countries. We interviewed 12 of the 18 

money transmitters that the World Bank’s Remittance Prices Worldwide 

database indicates account for about at least 80 percent of the market 

 10See Financial Institutions: Fines, Penalties, and Forfeitures for Violations of Financial 

Crimes and Sanctions Requirements, GAO-16-297 (Washington, D.C.: Mar. 22, 2016). 

Over that time period, the U.S. Department of Justice, FinCEN, and federal financial 

regulators assessed about $5.2 billion against several financial institutions for Bank 

Secrecy Act (BSA) violations. 

11Our other reviews related to derisking are on account terminations and bank branch 

closures in the U.S. southwest border region, access to banking services for money 

transmitters, and the provision of U.S. humanitarian assistance. 

12According to the Organisation for Economic Co-operation and Development, “a fragile 

region or state has weak capacity to carry out basic governance functions, and lacks the 

ability to develop mutually constructive relations with society.” 
Page 4 GAO-18-313 Remittances to Fragile Countries

transfers from the United States to each of our case-study countries. 

Eight of the 12 money transmitters we interviewed provided remittance 

services from the United States to one of our case study countries. Four 

larger money transmitters we interviewed provided remittance services 

from the United States to three or more of our case-study countries.

In addition, we used two methods—a web-based survey instrument and 

semi-structured interviews—to collect information to evaluate the extent 

to which banks are terminating accounts for money transmitters serving 

fragile countries, among other things. We administered the survey to a 

nationally representative sample of banks.13 We also interviewed 

representatives of eight banks considered to be extra-large by asset size. 

These banks reported about 47 percent of all remittances by U.S. banks 

in their 2016 Consolidated Reports of Condition and Income (Call 

Reports).14 In addition, we interviewed representatives of two credit 

unions that had terminated accounts of at least one of the money 

transmitters we interviewed.

To determine what actions U.S. agencies have taken to address identified 

challenges, we analyzed pertinent U.S. agency information, including 

relevant documentation and public statements, and interviewed officials 

from the Federal Deposit Insurance Corporation (FDIC), the Board of 

Governors of the Federal Reserve System (Federal Reserve), the U.S. 

Department of State, the U.S. Agency for International Development, and 

key offices in Treasury including the Office of Financial Crimes 

Enforcement Network (FinCEN), the Office of the Comptroller of the 

Currency (OCC), and the Office of Technical Assistance (OTA). 

Additionally, we interviewed officials from the World Bank, as well as 

nongovernmental organizations including the Center for Global 

Development and Oxfam America.

 13See app. I for additional information about our survey methodology and app. II for 

aggregate responses for all close-ended survey questions related to this report. The 

survey included 44 questions, 16 of which were directly applicable to the research 

objectives in this report. The remaining questions will be published in related work we are 

conducting on account terminations and bank branch closures in the U.S. southwest 

border region and access to banking services for money transmitters.

14According to the Federal Deposit Insurance Corporation (FDIC), banks and savings 

associations are required to file Call Reports each quarter. These reports assist agencies 

in fulfilling their missions of ensuring the safety and soundness of financial institutions, 

among other things, and are the source of the most current statistical data for identifying 

areas of focus for on-site examinations and off-site monitoring.
Page 5 GAO-18-313 Remittances to Fragile Countries

To examine U.S agencies’ efforts to assess the effects of such challenges 

on remittance flows to fragile countries, we analyzed data on remittances 

and interviewed relevant agency officials. Specifically, for available data 

on remittance flows through the banking channel, we analyzed Call 

Report data from the Federal Financial Institutions Examination Council.15

For data on remittance flows through non-banking channels,16 we 

obtained and analyzed data from filings of FinCEN’s Form 105 – Report 

of International Transportation of Currency or Monetary Instruments 

(CMIR). We obtained the tabulated data from FinCEN by arrival country, 

state of U.S. exit port, and calendar year for 2006 through 2016. We also 

interviewed officials from FDIC, the Federal Reserve, OCC, and FinCEN. 

See appendix I for additional details about our scope and methodology.

We conducted this performance audit from September 2016 to March 

2018 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Remittances can be sent through money transmitters and depository 

institutions,17 among other organizations. A typical remittance sent 

through a bank may be in the thousands of dollars, while the typical 

remittance sent by money transmitters is usually in the hundreds of 

 15The Federal Financial Institutions Examination Council is a formal interagency body 

empowered to prescribe uniform principles, standards, and report forms for the federal 

examination of financial institutions by its member agencies and to make 

recommendations to promote uniformity in the supervision of financial institutions. The 

member agencies are the FDIC, Federal Reserve, National Credit Union Administration 

(NCUA), OCC, Consumer Financial Protection Bureau, and State Liaison Committee, 

which consists of representatives from state regulatory agencies that supervise financial 

institutions. 

16For the purposes of this report, we refer to money transmitters’ transfer of funds through 

any means that operate outside the banking system as “non-banking channels.” 

17For the purpose of this report, we will refer to depository institutions as banks, although 

the definition includes banks and credit unions. 

Background

Remittance Transfer 

Methods
Page 6 GAO-18-313 Remittances to Fragile Countries

dollars. International remittances through money transmitters and banks 

may include cash-to-cash money transfers, international wire transfers, 

some prepaid money card transfers, and automated clearinghouse 

transactions.18

• Transfers through money transmitters. Historically, many consumers 

have chosen to send remittances through money transmitters due to 

convenience, cost, familiarity, or tradition. Money transmitters typically 

work through agents—separate business entities generally authorized 

to, among other things, send and receive money transfers. Most 

remittance transfers are initiated in person at retail outlets that offer 

these services. Money transmitters generally operate through their 

own retail storefronts, or through grocery stores, financial services 

outlets, convenience stores, and other retailers that serve as agents. 

In one type of common money transmitter transaction—known as a 

cash-to-cash transfer—a sender walks into a money transmitter agent 

location and provides cash to cover the transfer amount and fees. 

Generally, for transfers at or above $3,000,19 senders must provide 

basic information about themselves (typically a name and address, 

among other information) at the time of the transfer request.20 The 

agent processes the transaction, and the money transmitter’s 

headquarters screens it for BSA compliance. The money is then 

transferred to a recipient, usually through a distributor agent in the 

destination country. The money may be wired through the money 

transmitter’s bank to the distributor agent’s bank (see fig. 1), or 

transferred by other means to a specified agent in the recipient’s 

country. The distributor agent pays out cash to the recipient in either 

U.S. dollars or local currency.

 18The automated clearinghouse is a system that clears and settles batched electronic 

transfers for participating depository institutions. International automated clearinghouse 

transactions make up a small but growing portion of remittance transfers. See GAO-16-65.

19Money transmitters and depository institutions are not required to routinely obtain this 

information for established customers.

20According to Treasury officials, most companies request identifying information from 

remittance senders for amounts lower than $3,000. In addition, Treasury officials stated

that the typical remittance involving senders and money transmitters were for less than 

$3,000. 
Page 7 GAO-18-313 Remittances to Fragile Countries

Figure 1: Example of Money Transmitter Cash-to-Cash Remittance Transfer Using a Bank Account

Note: The figure presents a stylized illustration of a remittance transfer. In actual terms, the U.S. and 

foreign money transmitters compensate each other on a periodic basis to settle any outstanding 

balances reflected after netting individual transactions. A settlement of any net balance owed by the 

money transmitter located in the United States or the recipient country will result in transfer of funds. 

According to the U.S. Department of Treasury, for fragile countries it is normal to expect that 

remittances mostly flow from the United States to those countries, creating a net outflow of funds from 

the United States after settlement. 

Money transmitters also offer other transfer methods, including online or 

mobile technology, prepaid money cards or international money orders 

sent by U.S. Postal Service, cash courier services, or informal value 

transfer systems such as hawala.21

• Transfers through banks. Another method which remittance senders 

use to send funds is through bank to bank transfers. Figure 2 is an 

example of a simple funds transfer between two customers with only 

the remittance sender’s and remittance recipient’s banks involved.

 21Under an informal value transfer system, a customer hands cash to a person known as 

a broker and requests that an equivalent amount be delivered in local currency to a 

recipient in a different country. The broker in the sending country then contacts a broker in 

the receiving country and asks that the funds be disbursed to the recipient. In most cases, 

fees are factored into the exchange rate or the amount that is disbursed. Settlements of 

debts between hawala brokers can take a variety of forms (such as goods, services, 

properties, transfers of employees, etc.), and need not take the form of direct cash 

transactions.
Page 8 GAO-18-313 Remittances to Fragile Countries

Figure 2: Example of Bank-to-Bank Remittance Transfer

If a remittance sender’s bank does not have a direct relationship with the 

remittance recipient’s bank, the bank-to-bank transfer scenario becomes 

more complicated. In such cases, one or more financial institutions may 

rely upon correspondent banking relationships to complete the 

transaction, as illustrated in figure 3.22

 22According to the International Monetary Fund, correspondent banking consists of a 

bilateral agreement, often involving a reciprocal cross-border relationship in multiple 

currencies. Consistent with the definition of a correspondent account in the PATRIOT Act, 

a correspondent account is any account established for a foreign financial institution to 

receive deposits from, or to make payments or other disbursements on behalf of, the 

foreign financial institution, or to handle other financial transactions related to such foreign 

financial institutions. See 31 U.S.C. § 5318(k)(1)(B) incorporating by reference 31 U.S.C. 

§ 5318A(e)(1)(B).
Page 9 GAO-18-313 Remittances to Fragile Countries

Figure 3: Example of a Remittance Transfer Using Multiple Intermediary Correspondent Banks

Both federal and state agencies oversee money transmitters and banks. 

In general, money transmitters must register with FinCEN and provide 

information on their structure and ownership.23 According to Treasury, in 

all states except one, money transmitters are required to obtain licenses 

from states in which they are incorporated or conducting business.24

Banks are supervised by state and federal banking regulators according 

to how they are chartered, and the banks provide related information 

when obtaining their charter.25 The key federal banking regulators include 

 2331 U.S.C. § 5330; 31 C.F.R. § 1022.380. 

24Money transmitters are not required to obtain a license to operate in the state of 

Montana. 

25As part of the process for obtaining a charter from a federal or state chartering authority, 

a depository institution typically provides information about its structure and ownership, as 

well as financial and managerial information and plans for compliance with applicable 

laws, including the BSA. 

Federal and State 

Oversight of Money 

Transmitters and Banks
Page 10 GAO-18-313 Remittances to Fragile Countries

OCC, FDIC, the Federal Reserve, and National Credit Union 

Administration (NCUA).26

FinCEN often works with federal and state regulators. For example, as 

administrator of the BSA, FinCEN issues BSA regulations and has 

delegated examination authority for BSA compliance to the federal 

banking regulators for banks within their jurisdictions. Further, the federal 

banking regulators have issued regulations requiring institutions under 

their supervision to establish and maintain a BSA compliance program.27

FinCEN has also delegated examination authority for BSA compliance for 

money transmitters to the Internal Revenue Service (IRS).28 Money 

transmitters are subject to the BSA but are not examined by federal 

regulators for safety and soundness.29

To ensure consistency in the application of BSA requirements, in 2005 

the federal banking regulators collaborated with FinCEN on a BSA 

examination manual that was issued by the Federal Financial Institutions 

Examination Council for federal bank examiners conducting BSA 

examinations of banks.30 Similarly, in 2008 FinCEN issued a BSA 

 26For the purposes of this report, we use “federal banking regulators” to refer collectively 

to these regulators of depository institutions (federally insured banks and credit unions). 

Although the Consumer Financial Protection Bureau also has supervisory and 

enforcement authority over federal consumer financial law for certain entities, including 

large banks and certain non-depository institutions, we did not include the bureau in our 

definition of federal banking regulators because it does not examine for compliance with or 

enforce the BSA. See 12 U.S.C. §§ 5514, 5515. 

27The appropriate federal regulators are to prescribe regulations requiring the insured 

depository institutions under their supervision to establish and maintain procedures 

reasonably designed to assure and monitor the institutions’ compliance with the BSA. 12 

U.S.C. §§ 1786(q), 1818(s). Regulations requiring the establishment of BSA compliance 

programs are codified at 12 C.F.R. § 21.21 (OCC); 12 C.F.R. § 208.63 (Federal Reserve); 

12 C.F.R. §§ 326.8, 390.354 (FDIC); 12 C.F.R. § 748.2 (NCUA). 

28Certain entities are specifically excluded from the IRS’s examination authority, including 

brokers or dealers in securities, mutual funds, futures commission merchants, introducing 

brokers in commodities, and commodity trading advisors. 31 C.F.R. § 1010.810(b)(8). 

29Federal and state banking regulators conduct safety and soundness examinations of 

depository institutions. These on-site examinations are done periodically and assess an 

institution’s adherence to laws and regulations such as the BSA, among other things. 

State regulators may examine depository institutions chartered within their jurisdiction. 

State regulators may also conduct safety and soundness examinations of non-depository 

financial institutions, such as money transmitters. The authority of states to regulate 

money transmitters varies from state to state. 

30According to FDIC, state examiners were included in the drafting of this BSA 

examination manual, which state examiners also use to conduct examinations.
Page 11 GAO-18-313 Remittances to Fragile Countries

examination manual to guide reviews of money transmitters, including 

reviews by the IRS and state regulators. The manual for BSA 

examinations of banks was updated in 2014 to further clarify supervisory 

expectations and regulatory changes.31

FinCEN has authority for enforcement and compliance under the BSA 

and may impose civil penalties and seek injunctions to compel 

compliance.32 In addition, each of the federal banking regulators has the 

authority to initiate enforcement actions against supervised institutions for 

violations of law and also impose civil money penalties for BSA 

violations.33 Under the BSA, the IRS also has authority for investigating 

criminal violations.34 The U.S. Department of Justice prosecutes 

violations of federal criminal money laundering statutes and violations of 

the BSA, and several law enforcement agencies can conduct BSA-related 

criminal investigations.

 31Federal Financial Institutions Examination Council, Bank Secrecy Act/ Anti-Money 

Laundering Examination Manual (2014). 

32For the source of FinCEN’s overall enforcement and compliance authority, see 31 

U.S.C. §§ 5320, 5321; 31 C.F.R. § 1010.810(a),(d). See 31 U.S.C. § 310; 67 Treasury 

Order 180-01, Fed. Reg. 64,697 (Sept. 26, 2002). 

33See 12 U.S.C. §§ 1786(b), (q) (federally insured credit unions), 1818(b), (c), (s) 

(depository institutions other than credit unions) and 12 U.S.C. §§ 1786(k)(2) (federally 

insured credit unions), 1818(i) (depository institutions other than credit unions). 

3431 C.F.R. § 1010.810(b)(8), (c)(2), (g). The authority to enforce certain provisions has 

been delegated from FinCEN to the Commissioner of Internal Revenue by means of a 

Memorandum Agreement between FinCEN and the IRS, which provides that the IRS has 

the authority to, among other things, assess and collect civil penalties under 31 U.S.C. § 

5321 and 31 C.F.R. § 1010.810; investigate possible civil violations of these provisions; 

and issue administrative rulings under 31 C.F.R. pt. 1010, subpt. G. See 31 C.F.R. § 

1010.810(g). The IRS’s Small Business/Self-Employed Division conducts BSA compliance 

examinations of money transmitters, and can refer cases to IRS Criminal Investigations if 

the examiners believe that a willful criminal violation may be involved. IRS Criminal 

Investigations investigates, among other types of criminal violations, BSA criminal 

violations. 
Page 12 GAO-18-313 Remittances to Fragile Countries

Money transmitters and banks are subject to requirements under the 

BSA. They are generally required to design and implement a written antimoney laundering (AML) program, report certain transactions to Treasury, 

and meet recordkeeping and identity documentation requirements for 

funds transfers of $3,000 or more. All financial institutions subject to the 

BSA—including banks and money transmitters—are required to establish 

an anti-money laundering program.35 At a minimum, each AML program 

must

• establish written AML compliance policies, procedures, and internal 

controls;

• designate an individual to coordinate and monitor day-to-day 

compliance;

• provide training for appropriate personnel; and

• provide for an independent audit function to test for compliance.

Bank Secrecy Act anti-money laundering (BSA/AML) regulations require 

that each financial institution tailor a compliance program that is specific 

to its own risks based on factors such as the products and services 

offered, customers, and locations served. BSA/AML compliance 

programs are expected to address the following:

• Customer Identification Program. Banks must have written procedures 

for opening accounts and must specify what identifying information 

they will obtain from each customer. At a minimum, the bank must 

obtain the following identifying information from each customer before 

opening the account: name, date of birth, address, and identification 

number. In addition, banks’ Customer Identification Programs must 

also include risk-based procedures for verifying the identity of each 

customer to the extent reasonable and practicable.

• Customer Due Diligence. These procedures enable banks to predict, 

with relative certainty, the types of transactions in which a customer is 

likely to engage, which assists banks in determining when 

transactions are potentially suspicious. Banks must document their 

process for performing Customer Due Diligence.

• Enhanced Due Diligence. Customers who banks determine may pose 

a higher risk for money laundering or terrorist financing are subject to 

 3531 U.S.C. § 5318(h)(1). For specific AML program requirements for banks, see 31 

C.F.R. § 1020.210.

Components of AntiMoney Laundering 

Compliance Programs for 

Money Transmitters and 

Banks under the Bank 

Secrecy Act 
Page 13 GAO-18-313 Remittances to Fragile Countries

these procedures. Enhanced Due Diligence for higher-risk customers 

helps banks understand these customers’ anticipated transactions 

and implement an appropriate suspicious activity monitoring system. 

Banks review higher-risk customers and their transactions more 

closely at account opening and more frequently throughout the term of 

their relationship with the bank.

• Suspicious Activity Monitoring. Banks and money transmitters must 

also have policies and procedures in place to monitor and identify 

unusual activity. They generally use two types of monitoring systems 

to identify or alert staff of unusual activity: manual transaction 

monitoring systems, which involve manual review of transaction 

summary reports to identify suspicious transactions, and automated 

monitoring systems that use computer algorithms to identify patterns 

of unusual activity. Large-volume banks typically use automated 

monitoring systems.

Banks and money transmitters also must comply with certain reporting 

requirements, including:

• Currency Transaction Report. Banks and money transmitters must 

electronically file this type of report for each transaction in currency—

such as a deposit, withdrawal, exchange, or other payment or 

transfer—of more than $10,000.36

• Suspicious Activity Report. Banks and money transmitters are 

required to electronically file this type of report when (1) a transaction 

involves or aggregates at least $5,000 in funds or other assets (for 

banks) or at least $2,000 in funds or other assets (for money 

 36Certain types of currency transactions need not be reported. For example, money 

transmitters are not required to report transactions in excess of $10,000 between the 

money transmitter and its bank (see 31 CFR 1010.315). Additionally, banks may exempt 

certain types of customers from currency transaction reporting requirements in 

accordance with 31 CFR 1020.315.
Page 14 GAO-18-313 Remittances to Fragile Countries

transmitters), and (2) the institution knows, suspects, or has reason to 

suspect that the transaction is suspicious.37

Remittances from the United States are an important source of funds for 

our case-study countries—Haiti, Liberia, Nepal, and Somalia. The 

Organisation for Economic Co-operation and Development identified 

these countries as fragile states because of weak capacity to carry out 

basic governance functions, among other things, and their vulnerability to 

internal and external shocks such as economic crises or natural disasters.

• Haiti. Currently the poorest country in the western hemisphere, Haiti 

has experienced political instability for most of its history. In January 

2010, a catastrophic earthquake killed an estimated 300,000 people 

and left close to 1.5 million people homeless. Haiti has a population of 

approximately 11 million, of which roughly 25 percent live on less than 

the international poverty line of $1.90 per day. Nearly 701,000 

Haitians live in the United States.38 In 2015, estimated remittances 

from the United States to Haiti totaled roughly $1.3 billion, or about 61 

percent of Haiti’s overall remittances. Official development assistance 

for Haiti in 2015 totaled slightly more than $1 billion.

• Liberia. In 2003, Liberia officially ended a 14-year period of civil war 

but continued to face challenges with rebuilding its economy, 

particularly following the Ebola epidemic in 2014. Liberia has a 

population of nearly 5 million people, of which roughly 39 percent live 

on less than $1.90 per day. There are roughly 79,000 Liberians in the 

United States. In 2015, remittances from the United States to Liberia 

were estimated to be roughly $328 million, which represented over 

 37A transaction is suspicious and requires reporting if (1) it may involve potential money 

laundering or other illegal activity, is designed to evade the BSA or its implementing 

regulations, has no business or apparent lawful purpose, or is not the type of transaction 

that the particular customer would normally be expected to engage in, and (2) the 

institution knows of no reasonable explanation for the transaction after examining the 

available facts, including the background and possible purpose of the transaction. 31 

C.F.R. § 1020.320(a)(2). Depository institutions are also required to file suspicious activity 

reports for criminal violations involving insider abuse of any amount, as well as violations 

aggregating $5,000 or more when a suspect can be identified and $25,000 or more even 

without a potential suspect. See 12 C.F.R. §§ 21.11(c)(1)-(3), 163.180(d)(3)(i)-(iii) (OCC); 

12 C.F.R. § 208.62(c)(1)-(3) (Federal Reserve); 12 C.F.R. § 353.3(a)(1)-(3) (FDIC); 12 

C.F.R. § 748.1(c)(1)(i)-(iii) (NCUA) .

38The foreign born population in the United States for Haiti, Liberia, Nepal, and Somalia 

are based on the 2015 American Community Survey by the Census Bureau on the size of 

U.S.-based foreign-born population.

Remittances to CaseStudy Countries
Page 15 GAO-18-313 Remittances to Fragile Countries

half of that country’s estimated total remittances. In 2015, Liberia 

reported roughly $1.1 billion in official development assistance.

• Nepal. In 2006, Nepal ended a 10-year civil war between Maoist and 

government forces, which led to a peace accord, and ultimately a 

constitution that came into effect 9 years later. In April 2015, Nepal 

was struck by a 7.8 magnitude earthquake, which resulted in 

widespread destruction and left at least 2 million people in need of 

food assistance from the World Food Programme 6 weeks following 

the earthquake. Nepal has a population of nearly 29 million people, of 

which 15 percent live on less than $1.90 per day. In 2015, the foreignborn population of Nepalese in the United States was nearly 125,000, 

and roughly $320 million in remittances flowed from the United States 

to Nepal. For 2015, Nepal received over $1.2 billion in official 

development assistance.

• Somalia. Since 1969, Somalia has endured political instability and civil 

conflict, and is the third largest source of refugees, after Syria and 

Afghanistan. According to a 2017 State report, Somalia remained a 

safe haven for terrorists who used their relative freedom of movement 

to obtain resources and funds to recruit fighters, and plan and mount 

operations within Somalia and neighboring countries.39 Somalia has 

an estimated population of over 11 million people, of which about half 

the population live on less than $1.90 per day,40 and roughly 82,000 

Somalis reside in the United States. Oxfam estimated global 

remittances to Somalia in 2015 at $1.3 billion, of which $215 million 

originated from the United States. In 2015, Somalia received nearly 

$1.3 billion in official development assistance.

Figure 4 shows the estimated U.S. remittances to each of our case-study 

countries as a total amount in U.S. dollars and as a percentage of the 

country’s GDP.

 39U.S. Department of State, Country Report on Terrorism (Washington, D.C.: 2017).

40For the population living on $1.90 per day in Haiti, Liberia, and Nepal, see World Bank 

indicator “Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population).” For 

Somalia, see UNICEF, Somali Poverty Profile 2016: Findings from Wave 1 of the Somalia 

High Frequency Survey (June 2017). Data for this indicator for Haiti, Liberia, Nepal, and 

Somalia range from 2010 to 2016.
Page 16 GAO-18-313 Remittances to Fragile Countries

Figure 4: Estimated Total U.S. Remittances, and Corresponding Percentage of GDP, to Case-Study Countries in 2015

Money transmitters serving Haiti, Liberia, Nepal, and especially Somalia 

reported losing bank accounts or having restrictions placed on them, 

which some banks confirmed. As a result, some money transmitters have 

relied on non-banking channels, such as cash couriers, to transfer 

remittances. All of the 12 money transmitters we interviewed reported 

losing some banking relationships in the last 10 years. Some money

transmitters, including all 4 that served Somalia, said they relied on nonbanking channels, such as moving cash, to transfer funds, which 

increased their operational costs and exposure to risks. Further, in our 

interviews some banks reported that they had closed the accounts of 

money transmitters because of the high cost of due diligence actions they 

considered necessary to minimize the risk of fines under BSA/AML 

regulations. Treasury officials noted that despite information that some 

money transmitters have lost banking accounts, Treasury sees no 

evidence that the volume of remittances is falling or that costs of sending 

remittances are rising. In addition, U.S.-based remittance senders who 

send money to our case-study countries reported no significant difficulties 

in using money transmitters to remit funds.

Stakeholders 

Identified Money 

Transmitters’ Loss of 

Banking Access as a 

Key Challenge, 

Although Remittances 

to Fragile Countries 

Continue to Flow
Page 17 GAO-18-313 Remittances to Fragile Countries

All 12 money transmitters we interviewed reported that they or their 

agents had lost accounts with banks during the last 10 years. All 4 Somali 

money transmitters and many agents of the 2 Haitian money transmitters 

we spoke with had lost bank accounts and were facilitating remittance 

transfers without using bank accounts. Additionally, all 4 large money 

transmitters that process transfers globally (including to our case-study 

countries of Haiti, Liberia, and Nepal) also reported that their agents had 

lost accounts.41 Almost all of the money transmitters said they also faced 

difficulties in getting new accounts. Somali money transmitters were most 

affected by the loss of bank accounts, as 2 of the 4 Somali money 

transmitters had lost all corporate accounts. While some money 

transmitters said the banks that closed their accounts did not provide a 

reason, in other cases, money transmitters said the banks told them that 

they had received pressure from regulators to terminate money 

transmitter accounts.42

As a result of losing access to bank accounts, several money 

transmitters, including all of the Somali money transmitters, reported that 

they were using non-banking channels to transfer funds. In some cases 

the money transmitter was forced to conduct operations in cash, which 

has increased the risk of theft and forfeitures, and led to increased risk for 

agents and couriers. Nine of the money transmitters that we interviewed, 

including 3 of the 4 Somali money transmitters, some agents of one 

Haitian money transmitter, and some agents of the 4 larger money 

transmitters, rely on couriers or armored trucks to transport cash 

domestically (to the money transmitter’s main offices or bank) or 

internationally (see fig. 5). Money transmitters use cash couriers either 

because the money transmitter or their agents had lost bank accounts or 

because it was cheaper to use armored trucks than banks to move funds. 

In addition to the safety risks money transmitters face when they only 

accept cash, customers who remit large sums of money also face safety 

risks because they must transport cash to the money transmitter. For 

example, in our interviews with remittance senders to Somalia, some of 

them shared concerns about having to carry cash to money transmitters.

 41One of the large money transmitters also facilitates remittances to Somaliland, a semiautonomous region of Somalia.

42GAO is reviewing federal banking regulators’ examination practices as part of its 

ongoing work reviewing money transmitters’ access to banking services.

All Money Transmitters We 

Interviewed Had Lost 

Bank Accounts, Which for 

Many Resulted in Higher 

Costs and a Shift to NonBanking Channels
Page 18 GAO-18-313 Remittances to Fragile Countries

Figure 5: Example of Money Transmitter Cash-to-Cash Remittance Transfer Using a Cash Courier

Money transmitters we interviewed reported increased costs associated 

with moving cash and bank fees. For example, one Haitian money 

transmitter reported that use of couriers and trucks has increased its cost 

of moving money from its agents to its primary bank account by about 

$75,000 per month (increasing from approximately $15,000 per month 

using bank transfers to move funds, to $90,000 per month with the 

addition of couriers and trucks). Two of the money transmitters we spoke 

to stated that they did not have options other than to pay any fees the 

bank required due to the difficulty in finding new bank accounts. Money 

transmitters with access to bank accounts reported that bank charges for 

services such as cash counting, wire transfers, and monthly compliance 

fees had in some cases doubled or tripled, or were so high that it was 

less expensive to use a cash courier. For example, some money 

transmitters stated that their banks charged a monthly fee for compliance 

related costs that ranged from $100 a month to several thousand dollars 

a month.

Over half of the money transmitters we interviewed said the loss of bank 

accounts limits their growth potential. The 4 larger money transmitters 

reported that in some cases, the relationship between the agent and 

money transmitter was terminated, either by the agent or the money 

transmitter, if the agent no longer had a bank account. In other cases, 

some large money transmitters compensated for their agents’ lost bank 
Page 19 GAO-18-313 Remittances to Fragile Countries

accounts by using armored vehicles to transfer cash from the agents’ 

locations to the bank. However, the agents need to have a high volume of 

transactions in order to make the expense of a cash courier worthwhile.

The money transmitters that we spoke with said that they have not 

passed their increased operational and banking costs on to remittance 

senders. Most said that they have not increased their fees for sending 

remittances or have increased fees only slightly. Some of the money 

transmitters said that they have compensated for higher costs by finding 

cost-savings in other areas or that they have reduced their profit margin.

Most of the banks we interviewed expressed concerns regarding account 

holders who are money transmitters because they tend to be low-profit, 

high-risk clients. Some banks in our survey reported that constraints in 

accessing domestic and foreign correspondent banks were also a reason 

for restricting the number or percentage of money transmitter accounts.

• Banks have closed accounts of money transmitters serving our casestudy countries. Some banks we surveyed reported terminating 

accounts of money transmitters who transfer funds to Haiti, Nepal, 

and Somalia. While 7 of the 193 banks that responded to our survey 

noted that during the 3-year period from 2014 to 2016 they provided 

services to money transmitters that facilitated transfers to at least one 

of our case-study countries, 3 of these 7 banks also reported closing 

at least one account of a money transmitter serving at least one of the 

case-study countries. Risks associated with the countries or regions 

that the money transmitter served was given as one reason (among 

others) for the closure of the account by 2 out of the 3 banks.

• Money transmitters are generally low-profit clients for banks. Most of 

the banks we interviewed that currently offer money transmitter 

services stated that BSA/AML compliance costs have significantly 

increased in the last 10 years due to the need to hire additional staff 

and upgrade information systems to conduct electronic monitoring of 

all transactions that are processed through their system. Some banks 

indicated in our survey and interviews that the revenue from money 

transmitter accounts was at times not sufficient to offset the costs of 

BSA/AML compliance, leading to terminations and restrictions on 

money transmitter accounts. A few banks we interviewed stated that 

they do not allow money transmitters to open accounts because of the 

BSA/AML compliance resources they require. Moreover, according to 

one credit union we interviewed, money transmitters require laborintensive banking services—such as counting cash and processing 

Some Banks Reported 

Closing or Denying 

Accounts for Money 

Transmitters and Foreign 

Correspondent Banks, 

Citing Insufficient Profit to 

Offset Risks and Costs
Page 20 GAO-18-313 Remittances to Fragile Countries

checks—that are more expensive for the banks than providing basic 

services to businesses that are not cash intensive.

• Banks expressed concerns over the adequacy of money transmitters’ 

ability to conduct due diligence on the money transmitter’s customers.

In our survey, one bank stated that being unable to verify the identity 

of beneficiaries, the source of the funds, or the subsequent use of the 

funds was a challenge the bank faced in managing accounts for 

money transmitters that remit to fragile countries such as Haiti, 

Liberia, Nepal, and Somalia. Another bank in our survey noted that it 

closed some money transmitter accounts because it was unable to 

get any detail on the purpose of individual remittances. In addition, 

another bank noted that unlike bank clients, money transmitters’ 

customers may not have ongoing relationships with them, so money 

transmitters tend to know less about their customers than banks know 

about theirs. A few banks we interviewed expressed concern that they 

would be held responsible if, despite the bank carrying out due 

diligence, authorities detect an illicit transaction has been processed 

through the bank on behalf of a money transmitter. In addition, one 

extra-large bank indicated that differences in state regulators’ 

assessments of money transmitters are a challenge for the bank.43

• Banks we surveyed reported reduced access to correspondent banks. 

Banks responding to our survey cited reduced access to 

correspondent banks as a reason for restricting the number of money 

transmitter accounts. Out of the 193 banks that answered our survey, 

30 indicated they have relied on a correspondent bank to transfer 

funds to our case-study countries (25 to Haiti, 16 to Liberia, 23 to 

Nepal, and 9 to Somalia). While not specific to our case-study 

countries, of the 29 banks in our survey that said they had restricted 

the number or percentage of money transmitter accounts, 8 said that 

they did so because of difficulty in maintaining correspondent banking 

relationships, while 3 said they did so due to loss of a correspondent

banking relationship.

The absence of direct relations with foreign banks can cause electronic 

money transfers to take longer to process or in some cases to be 

 43Money transmitters are regulated by federal and state regulators, and generally must be 

licensed in each state in which the money transmitter operates. According to the 

Conference of State Bank Supervisors and the Money Transmitter Regulators 

Association, the regulations vary from state to state; federal officials noted that at a 

minimum, state regulations must meet the federal BSA/AML requirements. In 2008, 

FinCEN issued a BSA/AML manual to guide reviews of money transmitter exams to 

ensure consistency of application of BSA requirements. 
Page 21 GAO-18-313 Remittances to Fragile Countries

rejected. One bank official told us that the reduction in correspondent 

banking relations may not stop funds from being transferred but may 

increase the cost or time to process the transfer. However, one bank that 

responded to our survey identified multiple transactions with our casestudy countries in recent years that were terminated because a 

correspondent bank could not be located or had closed.

• Customer due diligence is a challenge for correspondent banks.

Some banks told us that exposure to risk related to the customers of 

banks they serve was a key challenge to providing foreign 

correspondent banking services. Some banks expressed concern that 

violations of anti-money laundering and terrorism financing guidelines 

by a customer’s customer may result in fines for the bank even when 

the bank has conducted enhanced due diligence and monitoring of 

transactions. Two extra-large banks that do not provide foreign 

correspondent banking services cited due diligence concerns as one 

reason they choose not to offer such services. Some of the banks that 

provide correspondent banking services said they conduct more due 

diligence on the customers of the banks they serve than regulatory 

guidance requires. Several of the correspondent banks noted that this 

additional due diligence was challenging to conduct due to the 

distance between the correspondent bank and the customers of the 

banks they serve.44 For example, one bank told us that the farther 

removed a customer is from being its direct customer, the greater the 

risk to the bank due to a lack of confidence in the originating 

institution’s procedures to conduct due diligence on its customers.

• Banks identified country-level risk as a factor. For banks that 

responded to our survey, country-level risk was noted as a factor in 

account closures. Two out of the three banks that had closed 

accounts for money transmitters serving at least one of our casestudy countries noted that risks associated with the countries or 

regions that the money transmitter served was a contributing reason 

for the account closures.

Additionally, in our interviews with extra-large banks that serve as a 

correspondent bank for foreign banks all said that they consider risk 

related to the country served by a foreign bank when deciding whether to 

allow the foreign bank to open and maintain accounts. However, most of 

 44Correspondent banks may process transactions that have passed through multiple 

intermediary banks. As the number of intermediary banks increases, the “distance” 

between the remittance sender and the correspondent bank also increases.
Page 22 GAO-18-313 Remittances to Fragile Countries

these extra-large banks also said that the country or region where a 

foreign bank is located is only one of several factors in determining 

whether the foreign bank is considered high risk. One of the extra-large 

banks noted that Somalia was an exception because the lack of a 

banking infrastructure, which compounded concerns that money 

transmitters serving Somalia pose a higher risk to the bank.

While banks in general told us that they did not make exit decisions 

regarding correspondent banking at the country level, seven of the eight 

extra-large banks we interviewed did not currently have correspondent 

banking relationships with any of our case-study countries, and the one 

remaining bank served only one country (Haiti).45 Two of the extra-large 

banks mentioned closing correspondent banking relationships during the 

last 10 years in Haiti, Nepal, or Somalia. One extra-large bank indicated 

that, with the exception of Somalia, funds can still be sent to foreign 

countries with limited correspondent banking access through banking 

channels; however, the transaction may need to be routed through 

multiple banks in order to be processed.

Treasury officials reported that remittances continue to flow to fragile 

countries even though money transmitters face challenges, including 

some evidence of money transmitter bank account closures. Furthermore, 

U.S.-based individuals we interviewed who send remittances to Haiti, 

Liberia, Nepal, and Somalia told us that they are still able to send funds to 

these countries using money transmitters.

• Treasury reported money transmitters’ banking access difficulties 

have not affected the estimated volume of remittance flows to fragile 

countries. Treasury has collected information through engagement 

with money transmitters and banks about closures of money 

transmitter bank accounts and foreign correspondent banking 

relationships. Treasury officials indicated that remittance flows to 

fragile countries have not been impacted by such account closures. 

According to Treasury officials, World Bank estimates of remittance 

flows show that the volume of international transfers from the United 

 45We classified banks by asset size from small to extra-large. Extra-large banks have 

assets of $50 billion or greater, while small banks have less than $1 billion in assets; 

medium banks, between $1 billion and less than $10 billion in assets; and large banks, 

between $10 billion and less than $50 billion in assets.

According to Treasury 

Officials, Remittance 

Flows to Fragile Countries 

Have Not Declined; U.S.-

Based Remittance 

Senders Report Being 

Generally Satisfied with 

Their Ability to Remit
Page 23 GAO-18-313 Remittances to Fragile Countries

States has continued to increase.46 At the same time, World Bank 

data indicate that the global average cost of sending remittances has 

continued to decrease. In regards to our case study countries, 

Treasury officials noted that they were not aware of any decrease in 

remittance volume to any of these fragile countries. Citing these 

trends, and anecdotal evidence from Treasury’s engagement with 

banks, the officials stated that there are no clear systemic impacts on 

the flow of remittances from closures of money transmitter bank 

accounts and correspondent banking relations.

Treasury officials added that the scope of money transmitter bank 

account closures is largely unknown, but they acknowledged that such 

closures can be a significant challenge for money transmitters that serve 

certain regions or countries, including Somalia. Regarding a possible 

reduction in the number of correspondent banks, which can make it more 

challenging to transfer remittances, Treasury officials noted that to the 

extent there has been consolidation in this sector, it could be a natural 

process unrelated to correspondent banking risk management processes. 

Moreover, if consolidation results in stronger banking institutions and 

lower compliance costs, that would be a positive development for the 

sector, according to these officials.

• Treasury officials noted unique challenges in remitting funds to 

Somalia. Officials acknowledged that U.S.-based money transmitters 

transferring funds to Somalia have lost accounts with U.S.-based 

banks. According to Treasury, Somalia’s financial system is uniquely 

underdeveloped, as the country has not had a functioning government 

for about 20 years, and the terrorist financing threat is pronounced. 

Officials said that some Somali money transmitters have in the past 

moved money to assist al-Shabaab, a terrorist organization, 

increasing the need for stringent controls specific to anti-money 

laundering and combating terrorist financing efforts. As a result of 

these and other factors, Treasury officials stated that difficulties 

remitting to Somalia are not generalizable to other countries.

Further, Treasury officials said they were aware that some Somali money 

transmitters have resorted to non-banking channels by carrying cash 

 46With the exception of Somalia, for which the World Bank does not publish remittance 

estimates, the World Bank estimates of remittance flows for the other fragile countries in 

our study show that the volume of international transfers from the United States to these 

countries has generally increased from 2010 to 2015. The World Bank estimates on 

remittances do not include the extent to which these funds are sent through banking or 

other channels.
Page 24 GAO-18-313 Remittances to Fragile Countries

overseas. They noted that although physically moving cash is risky, it is 

not unlawful. Additionally, Treasury officials stated that the use of cash 

couriers to remit funds has not been a concern for regulators because this 

practice has not increased the remittance fees that money transmitters 

charge their consumers.
Page 25 GAO-18-313 Remittances to Fragile Countries

• U.S.-based remittance senders we interviewed are generally satisfied 

with their money transmitters. The U.S.-based remittance senders we 

spoke with from each of our case-study countries reported that they 

frequently use money transmitters and have not encountered major 

difficulties in sending remittances. In general, these senders 

expressed satisfaction with their money transmitters and stated that 

they had not experienced major problems in sending money via 

money transmitters. Senders told us that they generally preferred 

using money transmitters because money transmitters were cheaper 

than banks and were quicker in delivering the funds. In addition, 

money transmitters were often more accessible for recipients 

collecting the remittances because the money transmitters had more 

locations than banks in recipient countries. However, some remittance 

senders told us that they experienced delays or were unable to send 

large amounts of money through money transmitters. In addition, 

some Somali senders told us that they were dissatisfied with being 

unable to use personal checks or online methods due to a 

requirement to pay in cash.

Reasons Senders Reported General 

Satisfaction with Money Transmitters

The remittance senders for Haiti, Liberia, 

Nepal, and Somalia told us that they are 

generally satisfied using money transmitters 

over other methods to transfer money abroad 

because money transmitters

• quickly deliver the funds to recipients;

• are cheaper than banks;

• can be used even if the recipient lacks a 

bank account; and

• tend to have more locations in recipient 

countries compared to banks.

Somali remittance senders told us that they 

preferred money transmitters that specialize 

in transfers to Somalia because

• specialized Somali money transmitters 

cost less than transmitters that serve 

many countries, and

• overseas agents of the Somali money 

transmitters are knowledgeable about 

the communities where they operate and 

have earned the trust of the community 

members.

Remittances Provide Critical Support

Remittance senders told us that their families 

and friends use the money sent for many 

purposes, including to meet basic survival 

needs as well as to improve the quality of 

their lives.

Survival needs:

• Food

• Rent

• Medicine

• Medical care

Life improvements:

• School fees

• Business construction

• Purchasing property

Source: GAO. | GAO-18-313
Page 26 GAO-18-313 Remittances to Fragile Countries

U.S. agencies, including Treasury, Federal Deposit Insurance 

Corporation (FDIC), the Federal Reserve, and National Credit Union 

Administration (NCUA), have issued guidance to the financial institutions 

they regulate to clarify expectations for providing banking services to 

money transmitters. In addition, Treasury’s Office of Technical Assistance 

(OTA) is engaged in long-term capacity building efforts in Haiti, Liberia, 

and Somalia to improve those countries’ weak financial institutions and 

regulatory mechanisms, factors that may cause banks to consider money 

transmitters remitting to these countries to be more risky clients. 

However, agency officials disagreed with some suggestions for 

government action proposed by banks and others because such actions 

would contravene agencies’ Bank Secrecy Act anti-money laundering 

(BSA/AML) compliance goals.

Treasury, including FinCEN and OCC, as well as FDIC, the Federal 

Reserve, and NCUA have issued various guidance documents intended 

to ensure BSA/AML compliance while mitigating negative impacts on 

money transmitter banking access.47 Since 2011, Group of Twenty (G20) 

leaders,48 including the U.S. government, have committed to increasing 

financial inclusion through actions aimed at reducing the global average 

cost of sending remittances to 5 percent. According to Treasury officials, 

financial inclusion and BSA/AML compliance are complementary goals. In 

 47On their websites, Treasury and the World Bank define financial inclusion as access to 

financial products and services that are useful, affordable, and delivered in a responsible 

and sustainable way. Treasury’s website states that access to these services “enables 

individuals and businesses to transfer money, make payments, manage income volatility, 

save for specific financial goals, access credit, and insure against risks.”

48The G20 is a forum for international cooperation on global economic and financial 

issues. Its members include 19 countries and the European Union. The G20’s objectives 

are to coordinate policy among its members to achieve global economic stability and 

sustainable growth; promote financial regulations that reduce risks and prevent future 

financial crises; and modernize the international financial architecture.

U.S. Agencies Have 

Taken Certain Steps 

That May Mitigate 

Banking Challenges 

Related to Remitting 

Funds to Fragile 

Countries but 

Disagreed with Other 

Proposed Actions

Agencies Have Taken 

Certain Steps That May 

Address Money 

Transmitters’ Difficulties in 

Maintaining Banking 

Access

Treasury and Other Agencies 

Have Issued Guidance 

Intended to Prevent 

Widespread Termination of 

Banking Services for Money 

Transmitters, Among Other 

Goals
Page 27 GAO-18-313 Remittances to Fragile Countries

published statements, Treasury has affirmed that money transmitters 

provide essential financial services, including to low-income people who 

are less likely or unable to make use of traditional banking services to 

support family members abroad. Treasury has also acknowledged that 

leaving money transmitters without access to banking channels can lead 

to an overall reduction in financial sector transparency to the extent that 

money transmitters resort to non-banking channels for transferring funds.

Nonetheless, Treasury officials we spoke to noted that in implementing 

BSA/AML regulations, banks retain the flexibility to make business 

decisions such as which clients to accept, since banks are in the best 

position to know whether they are able to implement controls to manage 

the risk associated with any given client. These officials indicated that 

Treasury pursues market-driven solutions and cannot order banks to 

open or maintain accounts. Treasury officials noted that Treasury works 

through existing multilateral bodies to promote policies that will support 

market driven solutions to banking access challenges and deepen 

financial inclusion globally.49

To clarify how banks assess BSA/AML risks posed by money transmitters 

and foreign banks, Treasury and other regulators have issued various 

guidance documents that, among other things, describe best practices for 

assessing such risks (see table 1). Some of the guidance emphasizes 

that risk should be assessed on a case-by-case basis and should not be 

applied broadly to a class of customers when making decisions to open or 

close accounts.

 49Treasury engages with international bodies such as the Financial Stability Board and 

Financial Action Task Force to address difficulties money transmitters and depository 

institutions face in remitting funds, including remitting to fragile countries. The board is an 

international body that promotes international financial stability by coordinating national 

financial authorities and international standard-setting bodies, encouraging coherent 

implementation of supervisory and regulatory policies, and monitoring and making 

recommendations about the global financial system. Treasury officials stated that 

Treasury has been involved in the board’s Correspondent Banking Coordination Group, 

with some of its actions aimed at understanding and addressing the scope and drivers of 

correspondent banking decline by collecting data on the decline in correspondent banking, 

clarifying regulatory expectations for correspondent banking, providing technical 

assistance related to correspondent banking, and lowering BSA/AML compliance costs for 

banks. The Financial Action Task Force is an inter-governmental body that sets standards 

and promotes effective implementation by its members of regulations to counter money 

laundering and the financing of terrorism. 
Page 28 GAO-18-313 Remittances to Fragile Countries

Table 1: Key Guidance Issued by Treasury and Other Federal Regulators Addressing BSA/AML Risk Posed by Money Service 

Businesses, including Money Transmitters, and Foreign Banks

Date Guidance Summary

Mar. 2005 FinCEN and Federal Banking Agencies’ 

“Joint Statement on Providing Banking 

Services to Money Services Businesses”

FinCEN and the Federal Banking Agencies, including the Federal 

Reserve, OCC, FDIC, and NCUA, advised banks that the risk posed by 

money services businesses should be assessed on a case-by-case basis. 

The agencies noted that these businesses provide valuable financial 

services to individuals without access to the formal banking sector.

Mar. 2010 FinCEN, Federal Banking Agencies, and 

Securities and Exchange Commission 

Joint Release “Guidance on Obtaining and 

Retaining Beneficial Ownership 

Information”

FinCEN, the Federal Banking Agencies, and the Securities and Exchange 

Commission, in consultation with staff of the Commodity Futures Trading 

Commission, described how banks should approach BSA/AML customer 

due diligence for beneficial owners of certain legal entities, i.e., individuals 

who own, directly or indirectly, 25 percent or more of the legal entity, or 

with significant responsibility to control, manage, or direct the legal entity.

Nov. 2014 FinCEN “Statement on Providing Banking 

Services to Money Services Businesses”

FinCEN cautioned against wholesale termination of money services 

business accounts, warning that such action could lead to a reduction in 

financial sector transparency, and noting that money services businesses 

often provide remittance services and financial services to populations that 

do not use traditional banking services.

Nov. 2014 OCC BULLETIN 2014-58 “Statement on 

Risk Management Associated With Money 

Services Businesses”

OCC confirmed that while it does not direct banks to open, close, or 

maintain individual accounts, it expects OCC-regulated banks to assess 

the risk of each money services business client on a case-by-case basis 

and implement appropriate controls to manage the relationship.

Dec. 2014 NCUA SL 14-05 “Supervisory Letter on 

Money Services Businesses”

NCUA listed indicators of higher and lower risk for money services 

businesses that maintain accounts with credit unions. NCUA named 

money transmitters remitting funds to countries with weak anti-money 

laundering controls as potentially higher-risk clients. NCUA listed minimum 

expectations for credit unions in conducting risk assessment of money 

services businesses, including money transmitters.

Jan. 2015 FDIC FIL-5-2015 “Statement on Providing 

Banking Services”

FDIC encouraged financial institutions to take a risk-based approach 

toward customers on a case-by-case basis and implement controls 

necessary to manage the risk. FDIC noted that isolated violations did not 

generally prompt serious regulatory concern if the bank’s controls were 

otherwise adequate.

Jan. 2016 NCUA 16-CU-01 “Supervisory Priorities 

for 2016”

NCUA reminded credit unions that money services businesses (including 

money transmitters) can pose unique risk exposure and established 

minimum expectations for controls to mitigate the risk of banking such 

clients.

Aug. 2016 Treasury and Federal Banking Agencies’ 

“Joint Fact Sheet on Foreign 

Correspondent Banking: Approach to 

BSA/AML and OFAC Sanctions 

Supervision and Enforcement”

Treasury and other federal banking agencies, including the Federal 

Reserve, FDIC, NCUA, and OCC, clarified that they do not expect banks 

to know their correspondent banks’ customers. However, these agencies 

expect banks to follow up on specific suspicious transactions that are 

processed through their foreign correspondent banks for details on such 

transactions.
Page 29 GAO-18-313 Remittances to Fragile Countries

Date Guidance Summary

Oct. 2016 OCC 2016-32 “Risk Management 

Guidance on Periodic Risk Reevaluation 

of Foreign Correspondent Banking”

OCC noted that in some cases, closures of foreign correspondent 

accounts may result in financial inclusion concerns by negatively affecting 

access to financial services in the foreign bank’s home country. OCC 

identified best practices for banks including (1) treating foreign 

correspondent accounts based on periodic risk reevaluation; (2) 

considering financial inclusion concerns and access to financial services 

when making decisions to terminate such accounts; and (3) as risk allows, 

providing sufficient time for foreign banks to establish alternative banking 

relationships before closing correspondent accounts.

Legend: BSA/AML=Bank Secrecy Act anti-money laundering; FinCEN= Financial Crimes Enforcement Network

Source: GAO summary of guidance issued by the Department of the Treasury (Treasury), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Board 

of Governors of the Federal Reserve System (Federal Reserve), and the Office of the Comptroller of the Currency (OCC). | GAO-18-313

The agencies issuing these guidance documents have taken some steps 

to assess the impact of guidance on bank behavior. For example, 

Treasury officials told us that Treasury periodically engages with banks 

and money transmitters on an ad hoc basis to learn their views and gain 

insight into their concerns. According to Federal Reserve officials, 

anecdotal information suggests that some money transmitters lost bank 

accounts after issuance of the 2005 joint guidance summarized above in 

table 1, and that outcome was contrary to the regulators’ intent. To 

address concerns about the guidance, according to these officials, 

Treasury held several public discussions on money transmitter account 

terminations. OCC officials stated that they have not conducted a 

separate assessment of the effects of their October 2016 correspondent 

banking guidance on banks’ risk assessment practices. However, they 

noted that OCC examiners evaluate banks’ policies, procedures, and 

processes for risk reevaluation, including processes for assessing 

individual foreign correspondent bank customer risks, as a part of OCC’s 

regular bank examination process.

Bank officials we spoke to noted that while the guidance from regulators 

provides broad direction for banks’ risk assessments of foreign banks and 

money transmitter clients, the guidance does not provide specific details 

to clarify how banks can ensure BSA/AML compliance for specific higherrisk clients.

According to Treasury officials, there is no feasible short-term solution to 

address the loss of banking services facing money transmitters involved 

in transferring funds to certain fragile countries, especially Somalia. 

These officials explained that U.S. banks may be reluctant to transfer 

funds to fragile countries because key governmental and financial 

institutions in these countries have weak oversight and therefore may 

face difficulties in detecting and preventing money laundering and 

Treasury Is Providing 

Technical Assistance to Build 

Financial Capacity in Haiti, 

Liberia, and Somalia
Page 30 GAO-18-313 Remittances to Fragile Countries

terrorism financing. As of September 2017, Treasury’s OTA is providing 

capacity building support to fragile countries,50 including Haiti, Liberia, 

and Somalia, with some of its efforts aimed at addressing long-term 

factors affecting these countries’ BSA/AML supervisory capability.

Table 2 identifies and describes the status of OTA projects in our casestudy countries of Haiti, Liberia, and Somalia. OTA does not currently 

have a project in Nepal.

Table 2: U.S. Department of the Treasury’s Office of Technical Assistance (OTA) Projects in Three of Our Case-Study 

Countries

Location Project description Project start date and duration

Haiti Assisting the government’s tax collection agency to 

improve information technology, strengthen strategic 

planning, improve management practices, and 

implement a new revenue management system.

OTA’s engagement signed a Terms of Reference (TOR) with 

the government of Haiti in February 2011 and is scheduled to 

conclude at the end of calendar year 2018.

Liberia Assisting Liberia in effectively implementing its antimoney laundering and countering the financing of 

terrorism regime; in particular, improving the operation 

of the financial intelligence unit and financial sector 

supervision.

OTA signed a TOR with the government of Liberia in February 

2016 and OTA’s Economic Crime Team will seek additional 

funding to continue the project in 2018.

Somalia Providing assistance to the Central Bank of Somalia in 

bank supervision; in particular, improving bank staff’s 

capacity to understand financial institution operation 

and management and examine financial institutions.

OTA signed a TOR with the government of Somalia in June 

2015. As of December 2017, the project is operating under its 

second interagency agreement. To date, OTA has conducted 

eight training sessions and will conduct another five sessions 

over the next 11 months. OTA’s next training session was

delayed until at least January 2018 due to the Kenyan 

presidential election re-run. 

Source: GAO summary of information provided by the Department of the Treasury. | GAO-18-313

 50OTA only carries out activities at the request of host countries. If the host government 

request is deemed to fall within OTA’s mandate, OTA analyzes the request based on an 

on-the-ground needs assessment that considers whether the financial needs of the 

country are consistent with the support OTA provides, and whether there exists sufficient 

political will to implement reforms. OTA monitors project performance through a variety of 

methods, including monthly or trip reports, an end-of-tour report to capture specific 

advisors’ feedback, and an end-of-project report to evaluate long-term impact. OTA also 

evaluates impact of ongoing projects through an annual exercise and “customer surveys” 

given to host country counterparts, U.S. embassy staff, and other stakeholders.
Page 31 GAO-18-313 Remittances to Fragile Countries

Banks, money transmitters, trade associations, and state regulators we 

interviewed,51 as well as third parties such as the World Bank and Center 

for Global Development,52 have proposed several actions to address 

banking access challenges money transmitters face in transferring funds 

through banks from the United States to fragile countries.

• Use of public sector transfer methods. Most banks we spoke to 

mentioned regulatory risk as a challenge to creating or maintaining 

money transmitter accounts. These banks stated that the ultimate risk 

for conducting transactions for money transmitter accounts falls on the 

bank, and that banks face substantial risk of regulatory action for such 

transactions. Therefore, one extra-large bank and one credit union we 

spoke to suggested using public sector transfer methods such as the 

Fedwire Funds Service (Fedwire) or FedGlobal Automated Clearing 

House Payments (FedGlobal)53 to process remittances to fragile 

 51Some money transmitters, money transmitter associations, and regulators we 

interviewed suggested that federal regulators should consider ways to reduce the 

pressure on banks to not have money transmitters as clients. They suggested options to 

limit the banks’ risk exposure due to money transmitter clients, such as by establishing 

uniform customer identification requirements for money transmitters, developing a money 

transmitter certification process, establishing conditions to provide banks regulatory 

immunity for certain remittances transfers, and establishing clearer guidance to help 

banks balance BSA/AML compliance and financial inclusion. However, some money 

transmitters stated that federal regulators are fulfilling their duties and that lack of 

harmonization among the various state regulators contributes to banks’ hesitancy to bank 

money transmitters.

52In its March 2016 brief “Financial Regulations for Improving Financial Inclusion,” the 

Center for Global Development suggested that less onerous know-your-customer 

regulations be applied to accounts processing small transactions. The center also 

suggested the establishment of safe corridors for pre-approved financial intermediaries 

and recipients involved in transferring money to particular countries deemed to pose 

severe risks to global financial integrity. In its November 2015 report Unintended 

Consequences of Anti-Money Laundering Policies for Poor Countries, the center 

recommended that national governments provide best practices documents on indicators 

of lower-risk money transmitters, in conjunction with clearer guidance from the Financial 

Action Task Force.

53The Fedwire Funds Service is the Federal Reserve’s wire transfer service. Fedwire 

allows for immediate settlement of wire transfers between domestic institutions. In its 2015 

report to Congress on Remittance Transfers to Foreign Countries, the Federal Reserve 

decided not to pursue an option to allow Fedwire Funds Service customers to send crossborder payments based on an analysis of the costs, benefits, and risks of this option. 

FedGlobal Automated Clearing House Payments (FedGlobal) is a Federal Reserve Bank 

service to process international remittance transfers and other cross-border payments. As 

of 2016, FedGlobal provided service to 25 countries in North America, Central America, 

and Europe. None of our case-study countries are served by FedGlobal.

U.S. Agency Officials 

Disagreed with Several 

Actions Proposed by 

Banks and Others, for 

Reasons Including 

Agencies’ BSA/AML 

Compliance Goals
Page 32 GAO-18-313 Remittances to Fragile Countries

countries, thereby mitigating the regulatory risk posed to banks that 

transfer such funds.

• Providing regulatory immunity, given appropriate oversight. To 

mitigate the regulatory risk to banks posed by money transmitter 

clients that send remittances to fragile countries, one extra-large 

bank, one credit union, and several money transmitters we spoke to 

suggested that regulators provide forms of regulatory immunity or 

regulator assurances that banks would not face enforcement actions if 

they carried out a specified level of due diligence to process 

remittances to fragile countries.

• Issuing more specific guidance. About half of the banks we spoke to 

mentioned fear of regulatory scrutiny due to ambiguities in regulatory 

agencies’ guidance or examiner practices. This fear of regulatory 

scrutiny served as a disincentive for these banks to maintain money 

transmitter accounts. While officials from about half of the banks we 

spoke to stated that additional guidance issued by Treasury and other 

agencies was helpful to clarify regulatory expectations and that 

examiner practices were consistent with guidance, others stated that 

they were uncertain about how much due diligence constituted 

enough for regulatory purposes, because regulations incorporated 

ambiguous language or because examiner practices exceeded 

regulations.54 These bank officials suggested that regulators could 

provide more specific guidance for banks on risk management, for 

instance, by including example scenarios and answers to frequently 

asked questions. The World Bank recommended in 2015 that 

regulators provide banks with additional guidance on assessing the 

risk of different money transmitter clients.55

U.S. agency officials stated that they disagreed with implementing these 

proposals for reasons specific to each one, as discussed below.

• Use of public sector transfer methods. Treasury officials told us that 

they prefer market-based solutions to the challenges of transferring 

 54We have ongoing work on bank examiner practices and money transmitter accounts 

with banks.

55In its October 2015 Report on the G20 Survey on De-Risking Activities in the 

Remittance Market, the World Bank recommended that regulators provide banks with new 

guidance on differentiating between higher- and lower-risk money transmitters and 

corridors to assist banks in providing and managing money transmitter accounts. In its 

November 2015 report Withdrawal from Correspondent Banking: Where, Why, and What 

to Do About It, the World Bank recommended that national supervisors provide detailed 

guidance to clarify the extent of due diligence on the customer’s customer.
Page 33 GAO-18-313 Remittances to Fragile Countries

remittances to fragile countries, rather than a solution in which the 

U.S. government assumes the risk in transferring these remittances, 

such as using the Federal Reserve to directly transfer payments from 

money transmitters. Federal Reserve officials told us that Fedwire is 

reserved for domestic wire transfers, and while the Federal Reserve 

continues to evaluate the scope of the FedGlobal service, no 

decisions have been made to expand the service to additional 

countries at this time. Federal Reserve officials told us they seek to 

increase remittance flows to the countries the program already 

serves.

• Providing regulatory immunity, given appropriate oversight. Treasury 

officials told us that while they would need to see the suggested 

duration and conditions pertaining to any proposal for regulatory 

immunity or exemptions in order to judge its feasibility, implementing 

this suggestion could raise a number of legal and policy concerns. 

Officials told us that while Treasury has the authority to provide 

regulatory exemptions,56 creating particular conditions for regulatory 

immunity would stray from Treasury’s intended risk-based approach 

to BSA/AML compliance, and bad actors might take advantage of any 

such exemptions for criminal activity.

• Issuing more specific guidance. OCC informed us that it is not 

currently considering implementing more specific guidance. Treasury 

officials told us that existing guidance clarifies that Treasury does not 

have a zero tolerance approach to BSA/AML compliance and that

Treasury does not expect banks to know their customers’ customers. 

These officials told us that they prefer not to issue further amplifying 

guidance with very specific examples as to what constitutes 

“compliance” by financial institutions, because Treasury does not wish 

to institute a “check the boxes” approach to regulatory compliance.

 5631 U.S.C. 5318(a) (7).
Page 34 GAO-18-313 Remittances to Fragile Countries

Treasury cannot assess the effects of money transmitters’ loss of banking 

access on remittance flows because existing data do not allow Treasury 

to identify remittances transferred through banking and non-banking 

channels. Recent efforts to collect international remittance data from 

banks and credit unions do not include transfers these institutions make 

on behalf of money transmitters. Since these data collection efforts are 

designed to protect U.S. consumers, the remittance data that banks and 

credit unions report are limited to remittances individual consumers send 

directly through these institutions. Additionally, a few state regulators 

recently began requiring money transmitters to report remittance data by 

destination country, but these data do not distinguish money transmitters’ 

use of banking and non-banking channels to transfer funds. Finally, while 

Treasury has a long-standing effort to collect information on travelers 

transporting cash from U.S. ports of exit, this information does not to 

identify cash transported for remittances. Without information on 

remittances sent through banking and non-banking channels, Treasury 

cannot assess the effects of money transmitter and foreign bank account 

closures on remittances, especially shifts in remittance transfers from 

banking to non-banking channels for fragile countries. Non-banking 

channels are generally less transparent than banking channels and thus 

more susceptible to the risk of money laundering and other illicit financial 

transactions.

Federal regulators recently began collecting data on international 

remittances from banks and credit unions by requiring these institutions to 

provide more information in pre-existing routine reports. However, these 

reports do not require banks and credit unions to include information on 

remittance transfers these institutions make on behalf of money 

transmitters, among other business clients. According to officials from the 

Office of the Comptroller of the Currency (OCC) and from the Consumer 

Financial Protection Bureau, the additional reporting requirements for 

remittances were intended to help regulators monitor compliance with 

rules aimed at protecting U.S. consumers who use remittance services 

offered by banks and credit unions. Furthermore, banks and credit unions 

Existing U.S. Agency 

Information on 

Remittances Does 

Not Allow Treasury to 

Assess the Effects of 

Money Transmitters’ 

Loss of Banking 

Access on 

Remittance Flows to 

Fragile Countries

Remittance Data from 

Financial Institutions Do 

Not Capture Money 

Transmitters’ Use of 

Banking Channels to 

Transfer Funds

Banks and Credit Unions Do 

Not Report on Remittances 

They Transfer for Money 

Transmitters
Page 35 GAO-18-313 Remittances to Fragile Countries

are not required to report on destination countries for remittance flows. 

Specifically:

• Beginning in 2014, Federal banking regulators—FDIC, the Federal 

Reserve, and OCC— required banks to provide data on international 

remittances in regular reporting known as the Consolidated Reports of 

Condition and Income (Call Reports). These reports, which are 

required on a quarterly basis from FDIC-insured banks, generally 

include banks’ financial information such as assets and liabilities, and 

are submitted through the Federal Financial Institutions Examination 

Council, a coordinating body. Specifically, the agencies required 

banks to indicate whether they offered consumers mechanisms, 

including international wire transfers, international automated 

clearinghouse transactions, or other propriety services, to send 

international remittances. The Consumer Financial Protection Bureau 

uses the remittance data in Call Reports to better understand the 

effects of its rules regarding remittance transfers including its rules on 

disclosure, error resolution, and cancellation rights.

57 Additionally, 

according to bureau officials, they also use the data for other 

purposes, for example, to monitor markets and to identify banks for 

remittance exams and, if needed, additional supervision.

The Call Reports do not require a bank to report remittances for which the 

bank is providing such service to business customers, including money 

transmitters. According to OCC officials, because the remittance 

regulation that the Consumer Protection Financial Bureau enforces 

originated in response to consumer-focused legislation, a bank is required 

to report only those remittances for which the bank is the direct service 

provider to the individual consumer. Consequently, remittances reported 

in the Call Reports do not include remittances for which the banks served 

as a correspondent bank or as a provider for a money transmitter. 

Furthermore, banks are not required to report remittance data by 

destination country.

 57The Federal Financial Institutions Examination Council Task Force on Reports, of which 

the Consumer Financial Protection Bureau is a member, established a requirement for 

banks and credit unions to report remittance data in the bank Call Report and the credit 

union Call Report, respectively, after the Consumer Financial Protection Bureau 

implemented the remittance rule in subpart B of Regulation E. This regulation implements 

the Electronic Fund Transfer Act, which establishes a basic framework of the rights, 

liabilities, and responsibilities of participants in the electronic fund and remittance transfer 

systems. The added requirement to report remittance data in bank and credit union Call 

Reports is intended to aid with supervisory oversight and market monitoring as well as to 

inform any later policy decisions regarding remittance transfers, according to the Federal 

Register Notice in 78 Fed. Reg. 12,141 (Feb. 21, 2013).
Page 36 GAO-18-313 Remittances to Fragile Countries

• In 2013, the National Credit Union Administration (NCUA) began 

requiring credit unions to provide data on the number of remittance 

transactions, but not data on the dollar amount transferred, in their 

Call Reports to NCUA.58 Similarly, and consistent with its treatment of 

banks, the Consumer Financial Protection Bureau uses the remittance 

data submitted by credit unions in Call Reports, for example, to better 

understand the effects of its rules and for market monitoring. The 

credit unions are also not required to include transactions they 

process on behalf of business clients, such as money transmitters, 

and do not provide remittance data by destination country.

In 2017 some states began collecting remittance data from money 

transmitters by state and destination country through the Money Services 

Business Call Report. The purpose of these reports is to enhance and 

standardize the information available to state financial regulators 

concerning the activities of their Money Services Business licensees to 

effectively supervise these organizations.59 However, money transmitters 

are not required to distinguish whether the remittances they transferred 

were sent through banking or other channels. Additionally, while these

reports collect remittance data by destination country, these data are not 

comprehensive because, according to the Nationwide Multistate Listing 

System,60 as of the first quarter of 2018, about half the states (24) had 

adopted the reports for money transmitters and of these 12 states had 

made it mandatory to report the remittances by destination country.

Due to a lack of reporting on money transmitters’ use of banking channels 

to transfer remittances, Treasury cannot assess the extent of the decline 

in money transmitters’ use of banking channels to transfer remittances to 

fragile countries, including the four we selected as case-study countries: 

Haiti, Liberia, Nepal, and Somalia.

 58Starting in 2013, the NCUA included a question on the number of international transfers 

originated year-to-date in the Call Report required of credit unions; however, information 

on the amount of those transfers is not collected.

59Licensees can complete the report directly in the Nationwide Mortgage Licensing 

System & Registry. The report includes information on national and state-specific Money 

Services Business activity that is submitted on a quarterly and annual basis.

60The Nationwide Multistate Licensing System is the system of record for non-depository 

financial services licensing or registration in participating state agencies, including the 

District of Columbia and U.S. Territories of Puerto Rico, the U.S. Virgin Islands, and 

Guam. In these jurisdictions, this system is the official system for companies and 

individuals seeking to apply for, amend, renew, and surrender license authorities 

managed through the system by 62 state or territorial governmental agencies.

Money Transmitters Are Not 

Required to Report Whether 

the Remittances they Transfer 

are Through Banking or Other 

Channels
Page 37 GAO-18-313 Remittances to Fragile Countries

While Treasury has a long-standing effort to collect information on 

travelers transporting cash from U.S. ports of exit, this information is not 

designed to enable Treasury to identify cash transported for remittances 

or the intended final destination of the cash. For financial transfers 

through non-banking channels, Treasury requires persons or businesses 

to report the export of currency and monetary instruments at ports of exit, 

which include remittances sent through money transmitters carried out in 

cash. Specifically, Treasury requires persons or businesses, including 

money transmitters, who physically transport currency or other monetary 

instruments exceeding $10,000 at one time, from the United States to any 

place outside of the United States, to file a Report of International 

Transportation of Currency or Monetary Instruments (CMIR) with U.S. 

Customs and Border Protection at the port of departure.61 The CMIR 

collects information such as the name of the person or business on 

whose behalf the importation or exportation of funds was conducted, the 

date, the amount of currency, U.S. port or city of arrival or departure, and 

country of origin or destination, among other information. The forms are 

filled out manually by individuals carrying cash. U.S. Customs and Border 

Protection officers collect the forms at ports of exit, and that agency’s 

contractors manually enter the data reported on these forms into a central 

database.

Money transmitters and their agents who carry cash in excess of $10,000 

from the United States are required to submit the CMIR to U.S. Customs 

and Border Protection upon departure. Thus, to some extent, CMIR data 

include data on remittances transferred by money transmitters in cash; 

however, the CMIR is not intended to capture information specific to 

remittances, and thus its usefulness is limited for agencies in tracking the 

flow of remittances through non-banking channels. First, the destination 

country reported on the CMIR may not be the final destination of the cash 

or other monetary instrument being transported. For example, money 

transmitters we interviewed told us that they use cash couriers to transfer 

funds to Somalia via the United Arab Emirates, where the funds may 

enter a clearinghouse that can transfer the funds to Somalia. While the 

ultimate destination of the remittances is Somalia, the CMIR may list the 

 61Title II, Chapter 2 of the Bank Secrecy Act of 1970 introduced three different and 

complementary reporting requirements: the CMIR, the Currency Transaction Report, and 

the Foreign Bank Account Report. The threshold for CMIR reporting was fixed by statute, 

initially at $5,000 and then, in 1984, at $10,000 in order to narrow the focus of law 

enforcement efforts to relatively large transactions. 

U.S. Agency Efforts to 

Collect Data on Physical 

Transportation of Cash Are 

Not Designed to Track 

Flow of Remittances 

through Non-Banking 

Channels
Page 38 GAO-18-313 Remittances to Fragile Countries

United Arab Emirates as the destination because it is the first destination 

out of the United States. Second, FinCEN officials acknowledged they do 

not know the extent of underreporting in general with regard to the CMIR; 

however, money transmitters we interviewed indicated that they have 

incentives to file CMIR for their own protection in case they have to file an 

insurance claim. Finally, CMIR does not ask if the currency or monetary 

instruments are remittances, which makes it difficult if not impossible to 

separate out the data on remittances from the overall data.

Existing data do not enable Treasury to identify remittances transferred 

by money transmitters through banking and non-banking channels. Nonbanking channels are generally less transparent than banking channels 

and thus more susceptible to the risk of money laundering and terrorist 

financing. FinCEN’s mission is to safeguard the financial system from 

illicit use, combat money laundering, and promote national security by, 

among other things, receiving and maintaining financial transactions data 

and analyzing that data for law enforcement purposes. Additionally, 

federal standards for internal control state that agency managers should 

comprehensively identify risks and analyze them for their possible 

effects.62

A lack of data on remittances sent through banking and non-banking 

channels limits the ability of Treasury to assess the effects of money 

transmitter and foreign bank account closures on remittances, in 

particular shifts of remittances to non-banking channels for fragile 

countries. The risks associated with shifts of remittances to non-banking 

channels may vary by country and are likely greater for fragile countries 

such as Somalia where the United States has concerns about terrorism 

financing.

Remittances continue to flow to fragile countries, but the loss of banking 

services for money transmitters, as well as a decline in foreign banking 

relationships, has likely resulted in shifts to non-banking channels for 

remittances to some of these countries. While money transmitters who 

have lost bank accounts may adapt by moving remittances in cash or 

other non-banking channels, the lack of a bank account presents 

operational risks for these organizations. Moreover, the flow of funds such 

 62GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014). 

Conclusions
Page 39 GAO-18-313 Remittances to Fragile Countries

as remittances from banking to non-banking channels decreases the 

transparency of these transactions. While U.S. regulators have issued 

guidance to banks indicating that they should not terminate accounts of 

money transmitters without a case-by-case assessment, several banks 

we contacted remain apprehensive and are reluctant to incur additional 

costs for low-profit customers such as money transmitters. At the same 

time, senders of remittances still prefer to use money transmitters to send 

funds, which the senders regard as a critical lifeline for family and friends 

in fragile countries. Although federal and state regulators have 

undertaken recent efforts to obtain remittance data from financial 

institutions such as banks and money transmitters, these efforts are 

designed for consumer protection and the regulatory supervision of 

financial institutions, rather than to track remittances sent by money 

transmitters using banking channels. As a result, the available data are 

not sufficient for the purposes of tracking changes in money transmitters’ 

use of banks to transfer funds. Similarly, while Treasury has a longstanding effort to collect information on large amounts of cash physically 

transported by travelers at U.S. ports of exit, this information collection is 

not intended to track the flow of remittances through non-banking 

channels. Consequently, to the extent money transmitters losing banking 

access switch to non-bank methods to transport remittances, Treasury 

may not be able to monitor these remittance flows. This, in turn could 

increase the risk of terrorism financing or money laundering, especially for 

remittances to fragile countries where risks related to illicit use of funds 

are considered higher.

We are making one recommendation to Treasury.

The Secretary of Treasury should assess the extent to which shifts in 

remittance flows from banking to non-banking channels for fragile 

countries may affect Treasury’s ability to monitor for money laundering 

and terrorist financing and, if necessary, should identify corrective 

actions.

We provided a draft of this product for comment to Treasury, FDIC, the 

Federal Reserve, CFPB, U.S. Customs and Border Protection, 

Commerce, NCUA, State, and USAID. Treasury, FDIC, the Federal 

Reserve, CFPB, and U.S. Customs and Border Protection, provided 

technical comments, which we have incorporated, as appropriate. We 

requested that Treasury provide a response to our recommendation, but 

Recommendation for 

Executive Action

Agency Comments
Page 40 GAO-18-313 Remittances to Fragile Countries

Treasury declined to do so. Commerce, NCUA, State, and USAID, did not 

provide comments on the draft of this report.

We are sending copies of this report to the appropriate congressional 

committees; the Secretary of the Treasury; the Chairman of the Federal 

Deposit Insurance Corporation; the Chair of the Board of Governors of 

the Federal Reserve System; the Acting Director of the Consumer 

Financial Protection Bureau; the Secretaries of Commerce, Homeland 

Security, and State; the Administrators of the U.S. Agency for 

International Development and the National Credit Union Administration; 

and other interested parties. In addition, the report is available at no 

charge on the GAO website at http://www.gao.gov.

If you or your staff have questions about this report, please contact me at 

(202) 512-9601, or melitot@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributions to this report are 

listed in appendix III.

Thomas Melito

Director, International Affairs and Trade
Page 41 GAO-18-313 Remittances to Fragile Countries

List of Requesters

The Honorable Wm. Lacy Clay 

Ranking Member

Subcommittee on Financial Institutions and Consumer Credit

Committee on Financial Services

House of Representatives

The Honorable Gwen Moore

Ranking Member

Subcommittee on Monetary Policy and Trade

Committee on Financial Services

House of Representatives

The Honorable Jeff Flake

United States Senate

The Honorable Catherine Cortez Masto

United States Senate 

The Honorable Keith Ellison

House of Representatives

The Honorable Tom Emmer

House of Representatives

The Honorable Adam Smith

House of Representatives

The Honorable Juan Vargas

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-18-313 Remittances to Fragile Countries

This report examines (1) what stakeholders believe are the challenges 

facing money transmitters in remitting funds from the United States to 

selected fragile countries, (2) what actions U.S. agencies have taken to 

address identified challenges, and (3) U.S. efforts to assess the effects of 

such challenges on remittance flows from the United States to fragile 

countries.

To address the objectives, we identified four case-study countries: Haiti, 

Liberia, Nepal, and Somalia. We selected these countries based on their 

inclusion in the Organisation for Economic Co-operation and 

Development’s States of Fragility reports from 2013 to 2015. In addition, 

we limited our selection to countries that have a foreign-born population 

of 50,000 or more living in the United States. Finally, we considered the 

size of estimated total remittances from the United States relative to the 

recipient countries’ gross domestic products (GDP). We rank ordered the 

17 countries that met these criteria and selected the top four.

For our first objective, to understand the challenges that stakeholders 

believe money transmitters face in remitting funds from the United States 

to fragile countries, we surveyed banks and interviewed U.S. agency 

officials, money transmitters, banks, credit unions, and remittance 

senders. To obtain insights from U.S agency officials, we interviewed and 

received written responses from officials of the Department of the 

Treasury (Treasury)—including the Office of Technical Assistance (OTA), 

the Financial Crimes Enforcement Network (FinCEN), the Office of 

Terrorism and Financial Intelligence, and the Office of the Comptroller of 

the Currency (OCC).

To obtain insights from money transmitters, we used the World Bank’s 

Remittance Prices Worldwide database to select U.S.-based money 

transmitters serving our case-study countries. The World Bank database 

includes a sample of money transmitters, which the World Bank reported 

it selected to cover the maximum remittance market share possible and 

survey a minimum aggregated market share of 80 percent for each 

country. We attempted to contact the 18 money transmitters that the 

World Bank identified as the major service providers for our case-study 

countries. We interviewed 12 of these 18 money transmitters, of which 8 

provided services to only one of our case-study countries (2 money 

transmitters provided services to Haiti, 4 provided services to Somalia, 

and 2 provided services to Nepal) and 4 provided remittance services 

from the United States to at least three of our case-study countries.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-18-313 Remittances to Fragile Countries

To obtain insights from individuals that remit to fragile states, we 

conducted six small-group interviews, and one additional interview, of 

individuals that remit to our selected case-study countries. From 3 to 6 

individuals participated in our small group interviews. We interviewed one 

Haitian small group, one Liberian small group, one Nepali small group, 

and three Somali small groups.

To set up these interviews, we identified community-based organizations 

(CBOs) and other groups that work with remittance senders to these 

countries and obtained contact information for these groups. We identified 

the CBOs through searching Internal Revenue Service (IRS) lists of taxexempt community organizations for the names of our case-study 

countries or their populations. To focus our search efforts, we 

concentrated on the five areas in the United States with the largest 

populations of immigrants from each case-study country. The five areas 

were identified using information on immigrant populations from the U.S. 

Census Bureau’s 2015 American Community Survey 1-year Public Use 

Microdata Samples. We sent emails outlining our research goals and 

soliciting interest in participating in interviews to 287 CBOs and related 

groups and obtained positive responses from 46. Of the 46 that 

responded positively, we were able to schedule meetings with seven 

CBOs covering the four case-study countries. The groups that agreed to 

participate in our interviews cannot be considered representative of all 

CBOs and remittance senders to the four selected countries, and their 

views and insights are not generalizable to those of all individuals that 

remit to these four countries. We asked the CBO points-of-contact to 

invite individuals with experience remitting funds to the case-study 

countries to participate in telephone interviews.

We pre-tested our methodology by emailing contacts at the CBOs and 

requesting they provide feedback on the questions. We also pre-tested 

the questions with a group located in Virginia because the location was 

close to the GAO headquarters and allowed for in-person testing. In the 

interviews, we asked semi-structured questions about the ease or 

difficulty of remitting funds to the participants’ home countries, the costs 

of remitting, and any recent changes they had noticed. We asked the 

participants to provide us with their personal experiences rather than to 

speak for their CBO, group, or community.

We used two methods—a web-based survey of a nationally 

representative sample of banks and semi-structured interviews of bank 

officials—to examine what banks identify as challenges, if any, in offering 

bank accounts for money transmitters and correspondent banks serving 
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-18-313 Remittances to Fragile Countries

fragile countries. In the survey, we asked banks about limitations and 

terminations of accounts related to BSA/AML risk, the types of customer 

categories being limited or terminated, and the factors influencing these 

decisions. We administered the survey from July 2017 to September 

2017, and collected information for the 3-year time period of January 1, 

2014 to December 31, 2016. Aggregate responses for the close-ended 

survey questions that are related to this report are included in appendix II. 

The survey also collected information for two additional GAO reports: one 

reviewing closure of bank branches along the southwest border of the 

United States, and another assessing the causes of bank account 

terminations involving money transmitters.

To identify the universe of banks, we used the bank asset data from 

FDIC’s Statistics on Depository Institutions database. Our initial 

population list contained 5,922 banks downloaded from FDIC’s Statistics 

on Depository Institutions database as of December 31, 2016. We 

stratified the population into five sampling strata, and used a stratified 

random sample. In order to meet the sampling needs of related reviews, 

we used a hybrid stratification scheme.1 First, banks that did not operate 

in the Southwest border region were stratified into four asset sizes (small, 

medium, large, and extra-large).2 Next, by using FDIC’s Summary of 

Deposit database we identified 115 Southwest border banks as of June 

30, 2016.

Our initial sample size allocation was designed to achieve a stratum-level 

margin of error no greater than plus or minus 10 percentage points for an 

attribute level at the 95 percent level of confidence.3 Based upon prior 

surveys of financial institutions, we assumed a response rate of 75 

 1

Sampling strata are two or more mutually exclusive subdivisions of a population defined 

in such a way that each sampling unit can belong to only one subdivision or stratum.

2

We classified non-southwest border banks by asset size where small banks have less 

than $1 billion in assets; medium banks, between $1 billion and less than $10 billion; large 

banks, between $10 billion and less than $50 billion; and extra-large banks, $50 billion or 

greater in assets.

3

We applied a finite population correction factor as part of the sample size calculation for 

the three asset-based size strata that were not certainty take-all strata.
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-18-313 Remittances to Fragile Countries

percent to determine the sample size for the asset size strata.4 Because 

there are only 17 extra-large banks in the population, we included all of 

them in the sample. We also included the entire population of 115 

Southwest border banks as a separate certainty stratum.5 We reviewed 

the initial population list of banks in order to identify nontraditional banks 

not eligible for this survey.6 We treated nontraditional banks as out-ofscope. In addition, during the administration of our survey, we identified 

27 banks that were either no longer in business or that had been bought 

and acquired by another bank, as well as 2 additional banks that were 

nontraditional banks and, therefore, not eligible for this survey. We 

treated these sample cases as out-of-scope; this adjusted our population 

of banks to 5,805 and reduced our sample size to 406. We obtained a 

weighted survey response rate of 46.5 percent.7

Because we followed a probability procedure based on random 

selections, our sample is only one of a large number of samples that we 

might have drawn. Since each sample could have provided different 

estimates, we express our confidence in the precision of our particular 

sample’s results as a 95 percent confidence interval (for example, plus or 

minus 7 percentage points). This is the interval that would contain the 

actual population value for 95 percent of the samples we could have 

drawn. Confidence intervals are provided along with each sample 

estimate in the report. For survey questions that are not statistically 

 4

To encourage survey participation, we conducted pre-administration notification and 

followed up with banks. Before administering the survey, we obtained contact information 

(phone numbers and e-mail addresses) for the sample of banks from their primary bank 

regulators. We then sent notification letters and e-mails to these banks, and for those 

whose e-mails were undeliverable, we called representatives to correct the e-mail 

addresses and confirm the points of contact. During survey administration, we called 

sampled banks that had not completed the survey (nonrespondents) to update their 

contact information, answer any questions or concerns they had about taking the survey, 

and obtain their commitment to take the survey. We also sent e-mails and letters to 

nonrespondents with reminders and instructions for taking the web-based survey.

5

A certainty sample is a sample for which information is gathered or analyzed for the 

entire population. Since the southwest border banks were selected based on geographic 

criteria, this stratum contains banks from all four categories of asset size. 

6

We considered banks nontraditional if they did not offer the types of accounts that we 

were surveying banks about: checking, savings, or money market accounts. 

7

The overall response rate is weighted to take into account unequal sampling rates 

between strata. 
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-18-313 Remittances to Fragile Countries

reliable, we present only the number of responses to each survey 

question and the results are not generalizable to the population of banks.8

The practical difficulties of conducting any survey may introduce errors, 

commonly referred to as nonsampling errors. For example, difficulties in 

interpreting a particular question or sources of information available to 

respondents can introduce unwanted variability into the survey results. 

We took steps in developing the questionnaire, collecting the data, and 

analyzing the results to minimize such nonsampling error. We conducted 

pretests with four banks. We selected these banks to achieve variation in 

geographic location and asset size (small, medium, large, extra-large). 

The pretests of the survey were conducted to ensure that the survey 

questions were clear, to obtain any suggestions for clarification, and to 

determine whether representatives would be able to provide responses to 

questions with minimal burden.

To supplement the results of the survey, we conducted interviews with 

eight extra-large banks regarding correspondent banking and money 

transmitter accounts and with two credit unions regarding money 

transmitter accounts. We selected the eight banks to interview using the 

following criteria: (1) the bank was in the extra-large asset size group 

(banks with greater than $50 billion in assets), and (2) the bank was 

mentioned by at least one of the money transmitters that we interviewed 

as terminating accounts with them or the bank was listed in an internal 

Treasury study on correspondent banking.9 Of the banks in the extralarge asset size group, 7 were mentioned in our interviews with money 

transmitters as having closed accounts with them. Nearly all of these 

banks, plus one additional bank were also mentioned as correspondent 

banks in the Treasury study. In addition, we selected two credit unions to 

interview based on information from our interviews with money 

transmitters. Money transmitters identified four credit unions in our 

interviews; of these, we selected for interviews two that were mentioned 

as closing accounts with money transmitters. We did not contact the other 

two credit unions that currently have money transmitter accounts. The 

results of the survey and the interviews only provide illustrative examples 

and are not generalizable to all banks or credit unions.

 8

Any estimate with a margin of error larger than plus or minus 15 percentage points at the 

95 percent level of confidence was deemed to be statistically unreliable.

9

Office of the Comptroller of the Currency, BSA/AML Risk Evaluation Range of Practices 

Executive Summary (unpublished memorandum dated July 22, 2016).
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-18-313 Remittances to Fragile Countries

For our second objective, we analyzed U.S. agency information and 

documentation about relevant projects and activities. We also interviewed 

officials and obtained relevant guidance documents from Treasury, 

including OCC, OTA, FinCEN, and Terrorism and Financial Intelligence; 

the Federal Deposit Insurance Corporation (FDIC); the U.S. Department 

of State; the U.S. Agency for International Development; the Board of 

Governors of the Federal Reserve System (Federal Reserve); and the 

National Credit Union Administration (NCUA). Additionally, we also 

interviewed officials from the World Bank and International Monetary 

Fund to understand the data, methodology, and findings contained within 

reports by those organizations, as well as to understand the International 

Monetary Fund’s role in technical assistance in our case-study countries. 

To gather information on solutions proposed by banks and others to 

address challenges money transmitters face in transferring funds through 

banks from the United States to fragile countries, we interviewed banks 

and credit unions as noted above. We also reviewed reports by the World 

Bank, the Center for Global Development, and Oxfam to gather 

recommendations addressing challenges in transferring remittances to 

fragile countries. We interviewed officials from Treasury, FDIC, the 

Federal Reserve, and the U.S. Agency for International Development to 

gain their perspectives on these proposed solutions.

For our third objective on U.S. agencies’ efforts to assess the effects of 

challenges facing U.S. money transmitters on remittance flows to fragile 

countries, we interviewed agency officials and analyzed available data on 

flows going through banking and non-banking channels. For available 

data on flows through the banking channel, we analyzed the Consolidated 

Reports of Condition and Income (Call Report) data from the Federal 

Financial Institutions Examination Council, which started collecting these 

data in 2014. These remittance data are reported on a semiannual basis. 

We also reviewed Call Report data on remittances for credit unions, 

which started to be collected in 2013, as well as data collected from 

Money Service Businesses, which some states started collecting in 2017. 

For data on remittance flows through non-banking channels, we obtained 

and analyzed data on filings of FinCEN’s Form 105 – Report of 

International Transportation of Currency or Monetary Instruments. This 

report is required of individuals who physically transport currency or other 

monetary instruments exceeding $10,000 at one time from the United 

States to any place outside the United States, or into the United States 

from any place outside the United States. The paper form is collected by 

the Department of Homeland Security’s U.S. Customs and Border 

Protection at the port of entry or departure. We obtained the tabulated 

Form 105 data from FinCEN by arrival country, state of U.S. exit port, and 
Appendix I: Objectives, Scope, and 

Methodology

Page 48 GAO-18-313 Remittances to Fragile Countries

for calendar years 2006 through 2016. We also interviewed officials and 

obtained written responses from FinCEN and the Federal Financial 

Institutions Examination Council. We compared the results of our data 

analysis and information from interviews with agency officials against 

FinCEN’s mission to safeguard the financial system from illicit use by, 

among other things, obtaining and analyzing financial transactions data. 

Additionally, we also compared the results of our analysis and information 

obtained from agencies against the federal standards for internal control, 

which state that agency managers should comprehensively identify risks 

and analyze them for their possible effects.

We conducted this performance audit from September 2016 to March

2018 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 49 GAO-18-313 Remittances to Fragile Countries

From July 2017 to September 2017, we administered a web-based 

survey to a nationally representative sample of banks. In the survey, we 

asked banks about the number of account terminations for reasons 

related to Bank Secrecy Act anti-money laundering (BSA/AML) risk; 

whether banks are terminating, limiting, or not offering accounts to certain 

types of customer categories; and the factors influencing these decisions. 

We collected information for the 3-year period from January 1, 2014, to 

December 31, 2016. We obtained a weighted survey response rate of 

46.5 percent.1 The survey included 44 questions, 16 of which were 

directly applicable to the research objectives in this report.

Responses to the questions that were directly applicable to the research 

objectives in this report are shown below (see tables 3 through 16).2

When our estimates are from a generalizable sample, we express our 

confidence in the precision of our particular estimates as 95 percent 

confidence intervals. Survey results presented in this appendix are 

aggregated for banks of all asset sizes, unless otherwise noted. Results 

for some of the survey questions were not statistically reliable.3 In those 

cases we present only the number of responses to each survey question. 

These results are not generalizable to the population of banks. Our 

survey included closed- and open-ended questions. We do not provide 

information on responses provided to the open-ended questions. For a 

more detailed discussion of our survey methodology, see appendix I.

 1

The overall response rate is weighted to take into account unequal sampling rates 

between strata. Dividing the number of respondents by the total sample size will not result 

in the response rate due to weighting.

2

Questions 1-23, and questions 25, 30, 42, 43, and 44, are not addressed in this report.

Question 44 asks respondents if the survey is complete and ready for submission. The 

remaining questions will be published in related work we are conducting on account 

terminations and bank branch closures in the U.S. southwest border region and reduced 

access to banking services for money transmitters.

3

Any estimate with a margin of error larger than plus or minus 15 percentage points at the 

95 percent level of confidence was deemed to be statistically unreliable.

Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 50 GAO-18-313 Remittances to Fragile Countries

Table 3: Between January 1, 2014, and December 31, 2016, did the bank have 

money transmitters as customers? (Check one.) (Question 24)

Response Number of 

responses

Estimated 

percentage

95 percent 

confidence 

interval—lower 

bound 

(percentage)

95 percent 

confidence 

interval—upper 

bound 

(percentage)

Yes 91 32.3 21.9 42.7

No 97 67.7 57.3 78.1

Source: GAO. | GAO-18-313

Notes: Estimated percentages are calculated using the sample weights. The survey defined a money 

transmitter as “a person that provides money transmission services, which means the acceptance of 

currency, funds, or other value that substitutes for currency from one person and the transmission of 

currency, funds, or other value that substitutes for currency to another person or location by any 

means. Our definition of money transmitters includes a business that acts as an agent for a principal 

or principals engaged in money transmitter activities.”

Table 4: Between January 1, 2014, and December 31, 2016, did the bank have 

money transmitters as customers? (Check one.) (Question 24) – grouped by bank 

asset size

Asset size group Response Number of 

responses

Small banks Yes 27

No 53

Medium banks Yes 42

No 26

Large banks Yes 10

No 11

Extra-large banks Yes 12

No 7

Source: GAO. | GAO-18-313

Notes: All the percentage estimates for this question are not statistically reliable. Small banks have 

less than $1 billion in assets; medium banks, between $1 billion and less than $10 billion in assets; 

large banks, between $10 billion and less than $50 billion in assets; and extra-large banks, $50 billion 

or greater.

Table 5: Does the bank restrict the number or percentage of money transmitter 

checking, savings, and money market accounts it manages? (Check one.) 

(Question 26)

Response Number of responses

Yes 29

No 61

Source: GAO. | GAO-18-313
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 51 GAO-18-313 Remittances to Fragile Countries

Notes: This question was only asked to banks that responded “Yes” to having money transmitters as 

customers (question 24). All the percentage estimates for this question are not statistically reliable.

Table 6: Does the bank restrict the number or percentage of money transmitter 

checking, savings, or money market accounts it manages for the following 

reasons? (Question 27)

Response Number of 

responses

27e. Difficulties maintaining correspondent 

banking relationships

Yes 8

No 17

Don’t know 2

27f. Loss of correspondent banking relationships Yes 3

No 21

Don’t know 3

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having restricted money 

transmitters accounts (question 26). Those banks that selected “Other” (27j) were prompted to 

answer the open-ended question: What was the other reason(s) the bank limits the number or 

percentage of money transmitter accounts? Responses 27a through 27d and 27g through 27i were 

not addressed in this report. All the percentage estimates for this question are not statistically reliable.

Table 7: Between January 1, 2014, and December 31, 2016, did the bank terminate 

any money transmitter checking, savings, or money market accounts? (Check one.) 

(Question 28)

Response Number of responses

Yes 40

No 46

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having money transmitters as 

customers (question 24). All the percentage estimates for this question are not statistically reliable.

Table 8: Between January 1, 2014 and December 31, 2016, did the bank terminate 

any money transmitter checking, savings, or money market accounts for the 

following reasons? (Check all that apply.) (Question 29)

Response Number of 

responses

29g. Difficulties maintaining correspondent 

banking relationships

Yes 4

No 29

Don’t know 3

29h. Loss of correspondent banking relationships Yes 1

No 32
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 52 GAO-18-313 Remittances to Fragile Countries

Response Number of 

responses

Don’t know 3

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having restricted money 

transmitters accounts (question 28). Those banks that selected “Other” (29m) were prompted to 

answer the open-ended question: What was the other reason(s) related to BSA/AML risk that the 

bank terminated money transmitter personal or business accounts? Responses 29a through 27d\f 

and 27i through 27l were not addressed in this report. All the percentage estimates for this question 

are not statistically reliable.

Table 9: Between January 1, 2014, and December 31, 2016, did the bank have any 

money transmitter customers whose business involved remitting funds to Haiti, 

Liberia, Nepal, or Somalia? (Check one.) (Question 31)

Response Number of 

responses

Estimated 

percentage

95 percent 

confidence 

interval—

lower bound 

(percentage)

95 percent 

confidence 

interval—

upper bound 

(percentage)

Yes 7 2.3 0.7 5.4

No 59 n/r n/r n/r

Don’t Know 21 n/r n/r n/r

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having money transmitters as 

customers (question 24). The “n/r” indicates that we are not reporting an estimate because it was not 

considered statistically reliable. Estimated percentages are calculated using the sample weights.

Table 10: Which of the following countries did the bank’s money transmitter 

customers serve? (Check all that apply.) (Question 32)

Response Number of responses

Haiti 4

Liberia 4

Nepal 6

Somalia 4

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having money transmitter 

customers whose business involved remitting funds to Haiti, Liberia, Nepal, or Somalia (question 31). 

All the percentage estimates for this question are not statistically reliable.
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 53 GAO-18-313 Remittances to Fragile Countries

Table 11: Between January 1, 2014, and December 31, 2016, did the bank terminate 

any checking, savings, or money market accounts for money transmitters whose 

business involved remitting funds to Haiti, Liberia, Nepal, or Somalia? (Check one.) 

(Question 33)

Asset size Response Number of responses

Medium banks Yes 2

Extra-large banks Yes 1

Total Yes 3

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having money transmitters as 

customers (question 24). All the percentage estimates for this question are not statistically reliable.

The following open-ended question was only asked to banks that 

responded “Yes” to question 33: Please provide any additional comments 

or challenges the bank may face in managing accounts for money 

transmitters that remit to fragile countries such as Haiti, Liberia, Nepal or 

Somalia. (Question 36)

Table 12: For which of the following countries that money transmitters remit funds 

to did the bank terminate any checking, savings, or money market accounts? 

(Check all that apply.) (Question 34)

Response Number of responses

Haiti 1

Liberia 0

Nepal 2

Somalia 1

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having terminated any 

accounts for money transmitters whose business involved remitting funds to Haiti, Liberia, Nepal, or 

Somalia (question 33). All the percentage estimates for this question are not statistically reliable.

Table 13: Between January 1, 2014, and December 31, 2016, did the bank terminate 

any checking, savings, or money market accounts for money transmitters whose 

business involved remitting funds to Haiti, Liberia, Nepal, or Somalia for the 

following reasons? (Check all that apply.) (Question 35)

Response Number of 

responses

35a. Suspicious Activity Reports filed associated 

with the accounts

Yes 1

No 2

Don’t know 0
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 54 GAO-18-313 Remittances to Fragile Countries

Response Number of 

responses

35b. Cost of BSA/AML [Bank Secrecy Act antimoney laundering] compliance made the 

customer type unprofitable

Yes 0

No 2

Don’t know 0

35c. Customer type drew heightened BSA/AML 

regulatory oversight

Yes 2

No 1

Don’t know 0

35d. Inability to manage the BSA/AML risk 

associated with the customer type (e.g., resource 

constraints)

Yes 1

No 2

Don’t know 0

35e. Customer failed to provide information for the 

bank to conduct adequate BSA/AML due 

diligence

Yes 1

No 2

Don’t know 0

35f. Potential personal liability for BSA/AML 

compliance professionals

Yes 0

No 3

Don’t know 0

35g. Difficulties maintaining correspondent 

banking relationships

Yes 1

No 1

Don’t know 1

35h. Loss of correspondent banking relationships Yes 0

No 2

Don’t know 1

35i. Compliance with Office of Foreign Assets 

Control (OFAC) requirements

Yes 0

No 2

Don’t know 1

35j. Risks associated with the 

country(ies)/corridor(s) that the money transmitter 

serves

Yes 2

No 1

Don’t know 0

35k. Bank’s reputational risk Yes 2

No 1

Don’t know 0

35l. Negative news associated with the customer Yes 1

No 2

Don’t know 0

35m. Compliance risks other than BSA/AML 

associated with the customer type

Yes 0

No 3

Don’t know 0
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 55 GAO-18-313 Remittances to Fragile Countries

Response Number of 

responses

35n. Other Yes 1

No 1

Don’t know 0

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having terminated any 

accounts for money transmitters whose business involved remitting funds to Haiti, Liberia, Nepal, or 

Somalia (question 33). Those banks that selected “Other” (35n) were prompted to answer the openended question: What was the other reason(s) related to BSA/AML risk that the bank terminated 

personal or business accounts of money transmitters whose business involved remitting funds to 

Haiti, Liberia, Nepal, or Somalia? All the percentage estimates for this question are not statistically 

reliable.

Table 14: Between January 1, 2014, and December 31, 2016, did your bank rely on a 

correspondent bank to facilitate the transfer of funds to Haiti, Liberia, Nepal, or 

Somalia? (Check one.) (Question 37)

Response Number of 

responses

Estimated 

percentage

95 percent 

confidence 

interval—

lower bound 

(percentage)

95 percent 

confidence 

interval—

upper bound 

(percentage)

Yes 30 8.8 3.8 16.9

No 149 90.6 82.6 95.7

Don’t know 7 0.6 0.2 1.3

Source: GAO. | GAO-18-313

Notes: For Somalia, banks were asked to include transfers to banks in other locations (such as the 

United Arab Emirates) if Somalia was the final destination of the funds. Estimated percentages are 

calculated using the sample weights. The survey instructions defined a correspondent banking 

relationship as “a relationship in which one financial institution provides services on behalf of another 

financial institution, such as facilitating wire transfers, conducting business transactions, accepting 

deposits and gathering documents on behalf of another financial institution.”

The following open-ended question was only asked to banks that 

responded “Yes” to question 37: Please provide any additional comments 

on how changes (increase or decrease) in correspondent banking 

services facilitating the transfer of funds to Haiti, Liberia, Nepal or 

Somalia has impacted your bank’s ability to provide services to money 

transmitters. (Question 41)

Table 15: For which of the following countries has your bank relied on a 

correspondent bank to facilitate the transfer of funds? (Check all that apply.) 

(Question 38)

Response Number of responses

Haiti 25
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 56 GAO-18-313 Remittances to Fragile Countries

Liberia 16

Nepal 23

Somalia 9

Source: GAO. | GAO-18-313

Notes: This question was only asked to banks that responded “Yes” to having relied on a 

correspondent bank to facilitate the transfer of funds to Haiti, Liberia, Nepal, or Somalia (question 37). 

For Somalia, banks were asked to include transfers to banks in other locations (such as the United 

Arab Emirates) if Somalia was the final destination of the funds. The percentage estimates for this 

question are not statistically reliable.

The following open-ended question was only asked to banks that 

responded “Yes” to using a correspondent bank to facilitate the transfer of 

funds Somalia (question 38, response d): If your bank relied on a 

respondent bank to facilitate the transfer of funds to Somalia, in what 

country was the respondent bank located? (Question 39)

Table 16: Between January 1, 2014, and December 31, 2016, did your bank lose access to respondent banks facilitating 

transfer of funds to Haiti, Liberia, Nepal, or Somalia because the correspondent bank terminated those relationships? 

(Question 40)

Response Number of responses Estimated 

percentage

95 percent 

confidence 

interval—lower 

bound 

(percentage)

95 percent 

confidence 

interval—upper 

bound 

(percentage)

Haiti Yes 0 0.0 0.0 9.5

No 21 n/r n/r n/r

Don’t know 4 n/r n/r n/r

Not applicable 5 8.7 1.9 22.9

Liberia Yes 1 0.4 0.0 1.9

No 16 n/r n/r n/r

Don’t know 2 2.5 0.1 11.2

Not applicable 10 n/r n/r n/r

Nepal Yes 1 0.4 0.0 1.9

No 20 n/r n/r n/r

Don’t know 3 3.0 0.3 11.3

Not applicable 6 n/r n/r n/r

Somalia Yes 1 0.4 0.0 1.9

No 9 10.5 2.8 25.4

Don’t know 3 3.0 0.3 11.3

Not applicable 16 n/r n/r n/r

Source: GAO. | GAO-18-313
Appendix II: Selected Results from the GAO 

Survey of Banks on Money Transmitter 

Account Terminations

Page 57 GAO-18-313 Remittances to Fragile Countries

Notes: This question was only asked to banks that responded “Yes” to having relied on a 

correspondent bank to facilitate the transfer of funds to Haiti, Liberia, Nepal, or Somalia (question 37). 

The “n/r” indicates that we are not reporting an estimate because it was not considered statistically 

reliable. Estimated percentages are calculated using the sample weights. The survey instructions 

defined a respondent bank as “a bank for which another bank establishes, maintains, administers, or 

manages a correspondent account relationship.”
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 58 GAO-18-313 Remittances to Fragile Countries

Thomas Melito, (202) 512-9601, or melitot@gao.gov.

In addition to the contact named above, Mona Sehgal (Assistant 

Director), Kyerion Printup (Analyst-in-Charge), Sushmita Srikanth, 

Madeline Messick, Ming Chen, Lilia Chaidez, Natarajan Subramanian, 

Carl Barden, James Dalkin, David Dayton, Martin De Alteriis, Mark 

Dowling, Rebecca Gambler, Tonita Gillich, Stefanie Jonkman, 

Christopher Keblitis, Jill Lacey, Michael Moran, Verginie Tarpinian, and 

Patricia Weng made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101111)
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