INTERNATIONAL 

REMITTANCES

Actions Needed to 

Address Unreliable 

Official U.S. Estimate

Report to Congressional Requesters

February 2016

GAO-16-60

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-60, a report to 

congressional requesters

February 2016

INTERNATIONAL REMITTANCES 

Actions Needed to Address Unreliable Official U.S. 

Estimate

Why GAO Did This Study

For many countries, remittances 

represent a large and stable source of 

foreign currency. Remittances have 

received increasing attention from 

policymakers as the volume of funds 

transferred has increased over the 

years. Despite the global significance

of remittances, much remains unknown 

about the actual volume of remittances 

and the methods used to remit them.

GAO was asked to study the potential 

effects of a fine on certain remitters 

and estimates of U.S. remittances. 

GAO examined (1) the potential effects 

of a fine on remitters unable to provide 

proof of legal immigration status, and 

(2) BEA’s remittance estimate and the 

extent to which its revised estimation 

methodology met government-wide 

policies and best practices. GAO 

constructed a hypothetical scenario 

analysis to show the uncertainty 

associated with the effects of a fine.

GAO interviewed, among others, BEA, 

International Monetary Fund and World 

Bank officials, and researchers. GAO 

also analyzed BEA’s estimate of U.S. 

remittances and documentation of its

methodologies. 

What GAO Recommends

GAO recommends that BEA conduct 

analyses to improve the reliability of its

estimate and follow established 

policies for documenting its methods 

and analyses. BEA agreed to 

implement the recommendations but 

disagreed that its estimates are 

unreliable and not adequately 

documented. GAO disagrees and 

maintains that BEA’s revised 

estimation model produces unreliable 

estimates and BEA could not provide 

adequate documentation of its 

methodology.

What GAO Found

The Remittance Status Verification Act of 2015, S. 79, would require remittance 

transfer providers to request that all senders of remittances to recipients outside 

the United States provide proof of their legal status under U.S. immigration laws

and impose a fine on those unable to provide such proof. The funds collected 

would be submitted to the Consumer Financial Protection Bureau (CFPB) to pay 

for its administrative and enforcement costs in carrying out the act, and any

remaining funds would be used to pay expenses related to border protection. The

fine may raise money for border protection, but the exact amount is unknown and 

would depend on several factors, including

• the dollar amount of remittances sent by those without legal status, 

• changes in remitter behavior due to the fine, such as using unregulated 

transfer methods, and 

• CFPB’s administrative and enforcement costs to carry out the act. 

The first two factors above affect the volume of remittances that would be subject 

to a fine. The third factor affects the amount of net revenue from the fine 

remaining for border protection. Finally, remittance transfer providers told GAO

that the fine could have consequences for them, including potentially 

disproportionate costs for small providers. 

The Bureau of Economic Analysis (BEA) estimated that remittances from the 

United States were approximately $40 billion in 2014. However, BEA’s

methodology for estimating remittances is not consistent with government-wide

policies and guidance on statistical practices or with BEA’s own best practices

and thus produces unreliable estimates. GAO identified several weaknesses in 

BEA’s estimation methodology, illustrated by the following examples.

• BEA failed to use appropriate methodology that addressed questionable 

aspects of the data, such as missing information and measurement 

problems. This is inconsistent with National Research Council of the National 

Academies of Science guidelines for federal statistical agencies and 

government-wide policies.

• BEA also calibrated the output of the new model to match the estimate 

produced by BEA’s previous model. BEA did this because according to 

officials the new model produced substantially lower results than BEA had 

previously estimated. In a 2006 report GAO had questioned the reliability of 

BEA’s previous model; as a result BEA’s actions raise further concerns about 

the reliability of the new model’s results.

Moreover, BEA could not provide adequate, transparent documentation 

underlying its methodology or reviews of its methods and data. According to BEA

officials, BEA did not adhere to its own best practices for changing its 

methodology because they did not consider the remittance estimate to be 

influential information. However, BEA’s estimate is influential, as it is cited by 

national and international organizations and in some cases is incorporated into 

View GAO-16-60. For more information, the estimates of these organizations, including the World Bank.

contact Alicia Puente Cackley at (202) 512-

8678 or cackleya@gao.gov.
Page i GAO-16-60 International Remittances

Letter 1

Background 5

Potential Effect of a Fine on Remitters without Legal Status Is 

Uncertain and Depends on a Variety of Factors 10

BEA Does Not Follow Best Practices for Estimating Remittances, 

Leading to an Unreliable Estimate 21

Conclusions 39

Recommendations for Executive Action 40

Agency Comments and Our Evaluation 40

Appendix I Objectives, Scope, and Methodology 44

Appendix II Comments from the Department of Commerce 48

Appendix III GAO Contact and Staff Acknowledgments 57

Tables

Table 1: Remittance Rates from Bureau of Economic Analysis’s 

Model, with and without Outliers 33

Table 2: Comparison of Estimates from BEA’s Old and New 

Methodologies 36

Figures

Figure 1: Remittances Sent from the United States to Major 

Receiving Countries in 2014 6

Figure 2: Varying Selected Factors and Their Potential Effect on 

Revenue for Border Protection—A Hypothetical Scenario 

Analysis of the Proposed Legislation (S. 79) 15

Figure 3: Bureau of Economic Analysis’ Estimate of Total Volume 

of United States Personal Transfers (Outflows) as 

Reported to the International Monetary Fund, 2006-2014 22

Figure 4: Basic Inputs to BEA’s Current Remittance Estimation 

Model, as of 2012 24

Contents
Page ii GAO-16-60 International Remittances

Abbreviations

ACS American Community Survey 

AML anti-money laundering 

BEA Bureau of Economic Analysis 

BSA Bank Secrecy Act 

Census Bureau United States Census Bureau 

CFPB Consumer Financial Protection Bureau 

Commerce Department of Commerce

CPS Current Population Survey

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer

Protection Act 

EFTA Electronic Fund Transfer Act

FCSM Federal Committee on Statistical Methodology 

FinCEN Financial Crimes Enforcement Network 

IDB Inter-American Development Bank 

IARIW International Association for Research in Income

and Wealth 

IMF International Monetary Fund 

IQA Information Quality Act 

MESC Modernization and Enhancement Steering

Committee 

NRC National Research Council 

OECD Organization for Economic Co-operation and

Development

OMB Office of Management and Budget

R2 R-squared 

Treasury Department of the Treasury

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-16-60 International Remittances

441 G St. N.W.

Washington, DC 20548

February 16, 2016

The Honorable David Vitter

United States Senate

The Honorable Tom Price

Chairman

Committee on the Budget

House of Representatives

The United States is the largest remittance sending country in the world 

with an estimated $54.2 billion sent in 2014, according to the World 

Bank.1 For many receiving countries, remittances are the largest source 

of foreign currency, often amounting to more than official foreign 

assistance from international aid organizations and developed countries 

such as the United States. These transfers are generally considered a 

stable source of funds for receiving countries.

In a March 2006 report we examined various methods of estimating 

remittances from the United States and found that different 

methodologies had resulted in a range of estimates.2 We reviewed the 

model that the Bureau of Economic Analysis (BEA) used to estimate U.S. 

remittance flows and found that the estimate was uncertain because of 

issues with the quality and timeliness of the data.

According to the International Monetary Fund (IMF), remittances have 

received increasing attention from policymakers in many nations and 

international organizations as the volume of funds transferred has grown 

over the years. However, despite their global and economic significance, 

 1

The World Bank, World Development Indicators: Movement of People Across Borders,

2014. The World Bank defines personal remittances as the sum of personal transfers and 

compensation of employees. Personal transfers represent all current transfers in cash or 

in kind made between resident and nonresident individuals. Compensation of employees 

represents the income of border, seasonal, and other short-term workers who are 

employed in an economy where they are not residents and of residents employed by 

nonresident entities.

2

GAO, International Remittances: Different Estimation Methodologies Produce Different 

Results, GAO-06-210 (Washington, D.C.: March 2006).

Letter
Page 2 GAO-16-60 International Remittances

much remains unknown about the actual volume of remitted funds and 

the methods used to remit them. Concerns about the reliability and 

consistency of remittance estimates from the Group of Eight and other 

international observers have led to the creation of a guide that aims to 

substantially improve the quality of remittance data.3 In 2009, the 

Luxembourg Group on Remittances, which included representatives from 

the IMF, World Bank, Organization for Economic Co-operation and 

Development (OECD), Eurostat and national statistical offices and central 

banks from countries around the world, produced detailed guidance that 

includes recommendations for best practices in collecting information 

about and estimating remittances.4

In January 2015, the Remittance Status Verification Act of 2015 was 

introduced in the U.S. Senate.5 The proposed legislation would amend 

the Electronic Fund Transfer Act (EFTA) to require remittance transfer 

providers to request that all senders of remittance transfers to recipients 

outside of the United States provide proof of their legal status under the 

immigration laws.6 The proposed legislation would require remittance 

 3

The Group of Eight is a governmental political forum of industrial economies, including 

Canada, France, Germany, Italy, Japan, the United States, and the United Kingdom, as 

well as other countries in the European Union.

4

International Monetary Fund, International transactions in remittances: guide for 

compilers and users (Washington, D.C.: 2009). 

5

S. 79, 114th Cong. (1st Sess. 2015).

6

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 

Act) amended EFTA to add a new legal framework for remittance transfers. Pub. L. No. 

111-203, § 1073, 124 Stat. 1376, 2060 (2010) (codified at 15 U.S.C. § 1693o-1). The 

Dodd-Frank Act also transferred most rulemaking authority, including that related to 

remittance transfers, under EFTA from the Board of Governors of the Federal Reserve 

(Federal Reserve Board) to the Consumer Financial Protection Bureau (CFPB). CFPB 

amended Regulation E, under EFTA, to implement the requirements for remittance 

transfers. Regulation E requires remittance transfer providers to make certain disclosures 

to senders of remittance transfers, including, among other things, a pre-payment 

disclosure containing such information as fees, taxes and exchange rates. 12 C.F.R. § 

1005.31(b). Regulation E also includes specific procedures to be followed in the event of 

an error. See 12 C.F.R. § 1005.33. A remittance transfer provider is generally defined as 

any person that provides remittance transfers for a consumer in the normal course of its 

business, regardless of whether the consumer holds an account with such person. See 12 

C.F.R. § 1005.30(f). A remittance transfer is generally defined as the electronic transfer of 

funds requested by a sender (defined as a consumer in a state who primarily for personal, 

family, or household purposes requests a remittance transfer provider to send a 

remittance transfer) to a designated recipient that is sent by a remittance transfer provider, 

and does not include transfers in the amount of $15 or less among other exclusions. 12 

C.F.R. § 1005.30(e). 
Page 3 GAO-16-60 International Remittances

transfer providers to impose a fine on any sender unable to provide proof 

of immigration status and would also include a provision for GAO to study 

the act’s effects. In states that require proof of legal residence, acceptable 

documentation for showing proof of legal status under the proposed law 

would include a state-issued driver’s license or federal passport, or the 

same documentation as required by the state for proof of identity for the 

issuance of a driver’s license or as required for a federal passport.7 For 

those states that do not require proof of legal residence, under the 

proposed law the Consumer Financial Protection Bureau (CFPB) would 

define by rule what constitutes acceptable documentation of proof of legal 

status.

Each remittance transfer provider would be required to impose on any 

sender unable to provide proof of legal immigration status a fine equal to 

7 percent of the dollar amount to be transferred, excluding any fees or 

other charges imposed by the remittance transfer provider. The provider 

would then be required to submit all fines imposed and collected to CFPB 

to pay for the administrative and enforcement costs to CFPB of carrying 

out the act. Any funds remaining after paying for such costs would be 

transferred by CFPB to the Department of the Treasury (Treasury) to be 

used to pay expenses relating to U.S. Customs and Border Protection for 

border security fencing, infrastructure, and technology. The bill was 

referred to the Committee on Banking, Housing, and Urban Affairs on 

January 7, 2015.

You asked that we consider the potential effect on remitters and providers 

of the proposed Remittance Status Verification Act and the potential 

revenue the proposed act would generate, and that we update our 

previous work on estimates of remittances from the United States. This 

report (1) discusses the potential effects of assessing a fine on remitters 

unable to provide proof of legal U.S. immigration status, and (2) examines 

BEA’s remittance estimate and the extent to which its revised estimation 

methodology met government-wide policies and agency best practices.

To discuss the potential effects of assessing a fine on remitters unable to 

provide proof of U.S. immigration status, we summarized estimates of the 

number of immigrants without legal status from federal agencies and 

 7

A Matrícula Consular de Alta Seguridad (Consular Identification Card), issued by the 

Government of Mexico to its nationals residing outside of Mexico, would not constitute 

acceptable documentation under the proposed law.
Page 4 GAO-16-60 International Remittances

research organizations, including the Department of Homeland Security 

(DHS), Pew Research Center, and Center for Migration Studies (CMS). 

Collectively, DHS, Pew Research, and CMS are primary sources for the 

estimates of immigrants without legal status in the United States, 

according to researchers we interviewed. We used these sources to 

identify the size of the potentially affected group of immigrants without 

legal status. We also reviewed laws and regulations relevant to 

remittance transfer providers and interviewed providers. We spoke with 

regulators, including CFPB and the Financial Crimes Enforcement 

Network (FinCEN), and two industry associations to obtain their 

perspectives on compliance with the requirements of S. 79, should it 

become law.

In addition, we judgmentally selected a cross-section of remittance 

transfer providers that included five nondepository remittance transfer 

providers and four depository institutions based on a number of factors, 

including the volume of remittances and diversity of countries serviced.

We interviewed academic researchers with expertise in remittances and 

immigration to the United States. Finally, we constructed a set of 

hypothetical scenarios using factors that would affect the amount of 

revenue generated for border protection. We varied the following factors 

to highlight the uncertainty associated with estimates of net revenue from 

the fine: dollar amounts of remittances sent by immigrants without legal 

status, the percentage reduction in remittances in response to the fine, 

and administrative and enforcement costs associated with the fine. 

Together, these three factors demonstrate the wide variation in potential 

net revenue from the fine. We found insufficient literature upon which to 

base the values given to each factor, therefore dollar amounts or 

percentages in our scenario analysis are hypothetical.

To describe BEA’s estimate of remittances from the United States, we 

collected published estimates of personal transfers attributable to BEA. 

To examine BEA’s current estimation methodology, we reviewed BEA 

documentation, including components of its model, and interviewed BEA 

officials. We obtained documentation on the Census Bureau’s (Census) 

American Community Survey (ACS) and Current Population Survey 

(CPS) data to understand how they were used in BEA’s remittance 

estimation methodology and interviewed Census officials familiar with the 

surveys. As described in this report, we found that results from BEA’s 

estimation model are unreliable.

To obtain a variety of views about remittance estimation, including the 

challenges involved, we interviewed officials from Inter-American 
Page 5 GAO-16-60 International Remittances

Development Bank (IDB), IMF, World Bank, and selected central banks 

from among the top 10 recipient countries of U.S. outflows that use a 

formal methodology to track remittance inflows or outflows on at least an

annual basis, including Mexico and the Philippines. 

We conducted this performance audit from October 2014 to February

2016 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.

The United States is home to more immigrants than any other country in 

the world.8 Census estimated that 41 million foreign-born individuals 

resided in the United States from 2010 through 2014, making up 13 

percent of the population.9 According to the World Bank, the United 

States is also, by far, the largest source of remittances from foreign-born 

residents to their home countries, including Mexico, China, India, and the 

Philippines, among others (see fig. 1).

 8

See Phillip Conner, D’Vera Cohn, Ana Gonzalez-Barrerra, and Russ Oates, Changing 

Patterns of Global Migration and Remittances (Washington, D.C.: Pew Research Center, 

2013).

9

United States Census, Selected Characteristics of the Native and Foreign-Born 

Populations, 2010-2014, American Community Survey 5-year Estimates, accessed 

December, 11, 2015, 

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_14

_1YR_S0501&prodType=table.

Background
Page 6 GAO-16-60 International Remittances

Figure 1: Remittances Sent from the United States to Major Receiving Countries in 

2014

Note: According to the World Bank, the remittance amounts in the bilateral remittance matrix are 

unofficial estimates designed to capture country-specific, disaggregated bilateral remittance estimates 

and have been published by the Migration and Remittances program office since 2010. In contrast to 

the World Bank’s official remittance estimates, the World Bank’s bilateral remittance estimates use a 

different methodology, and have higher remittance estimate totals per country. World Bank bilateral 

remittance data for 2014 are disaggregated using host country and origin country incomes and 

estimated migrant stocks from 2013.

Remittance funds can be used for basic consumption, housing, 

education, and small business formation and can promote financial 

development in cash-based economies. In a number of developing 

economies, remittances have become an important and stable source of 

funds that exceeds revenues from exports of goods and services and 

financial inflows from foreign direct investment.

Remittances can be sent through formal transfer systems and informal 

methods. Formal systems typically include banks, credit unions, money 

transfer businesses such as wire services, and postal services. In the 

United States, providers of remittance transfer services (including bank 

and nonbank institutions) are subject to federal oversight and, depending 

on the state in which they operate, can be subject to supervision by 
Page 7 GAO-16-60 International Remittances

states.10 According to CFPB, nonbank remittance transfer providers sent 

an estimated 150 million individual transfers from the United States in 

2012. Informal remittance transfer methods include hand-carried cash, 

courier services, and agents known as hawalas.11

Individuals can transfer remittance funds in several ways, such as

1. cash payments to individuals and bank accounts;

2. prepaid debit or credit cards; and

3. online and through mobile devices.

Global remittance estimates are published annually by some international 

organizations on an annual basis. IMF collects data on components of 

remittances submitted by its member countries, including the United 

States, as part of its annual publication of balance of payments 

statistics.12 IMF’s Balance of Payments and International Investment 

Position Manual provides a framework for identifying individual remittance 

flows that benefit households. According to IMF, this framework can be 

applied by all countries and should lead to some level of comparability 

among them. The World Bank uses IMF statistics to produce an annual 

Migration and Remittances Factbook and monthly and annual remittances 

data on its website.13 Other international organizations, such as the IDB

through the Multilateral Investment Fund, also produce annual reports on 

 10We discussed the oversight and supervision of banks and nonbank remittance transfer 

providers, as it relates to anti-money-laundering requirements, in a recently issued report. 

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

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

Jan.15, 2016).

11Hawalas make up an informal value transfer system for transferring money that is often 

used in places where formal financial transactions are unavailable, expensive, or 

unreliable. Senders pay money to an agent, who then instructs a remote associate to pay 

the final recipient.

12The sixth edition of the Balance of Payments and International Investment Position 

Manual serves as the standard framework for statistics on the transactions between a 

country’s economy and the rest of the world.

13The data published by the World Bank is not fully consistent with the Balance of 

Payments and International Investment Position Manual, and therefore, caution should be 

taken in comparing different data sets. The World Bank’s most recent official data on 

remittances and other resources are available at 

http://www.worldbank.org/en/topic/migrationremittancesdiasporaissues/brief/migrationremittances-data.
Page 8 GAO-16-60 International Remittances

remittance estimates. In the United States, BEA is responsible for 

compiling the official U.S. estimates. Other nations may delegate the 

official estimation of remittances to central banks or specific government 

agencies.

In response to requests from policymakers, remittance data compilers, 

and other data users, IMF and the World Bank published a guide for 

compilers and users of remittances data.14 The purpose of the guide is to 

promote lasting improvements in remittances data, which it seeks to 

accomplish by summarizing the definitions and concepts related to the 

balance of payments framework and by providing practical compilation 

guidance. Two items in the guide that substantially relate to remittances 

are “personal transfers” and “compensation of employees,” both of which 

countries are required to report to IMF. Personal transfers are a measure 

of all transfers in cash or in kind made or received by resident households 

to or from nonresident individuals and households. Compensation of 

employees is a measure of the income of short-term workers in an 

economy where they are not resident and of the income of resident 

workers who are employed by a nonresident entity. The guide also 

defines additional measures related to remittances, which countries are 

encouraged but not required to report. For example, personal remittances 

represent the sum of personal transfers, net compensation of employees, 

and capital transfers between households, according to the guide.15

Institutions use different methodologies to produce estimates of 

remittances. For example, BEA uses demographic and household survey 

data and a model that calculates the remittance rates by demographic 

group to create the official estimate of remittances from the United States. 

The World Bank has developed its own methodology to create remittance 

estimates. Its research group produces country-specific development 

indicators and international development statistics. The World Bank then 

complements these data with information from the IMF’s Balance of 

Payments and International Investment Position Manual to create annual 

and semi-annual remittance estimates.

 14International Monetary Fund, International transactions in remittances: guide for 

compilers and users (Washington, D.C.: 2009).

15The guide defines net compensation of employees as the compensation of employees 

less (1) taxes and social contributions paid by nonresident workers in the economy of 

employment and (2) transport and travel expenditures related to working abroad. 
Page 9 GAO-16-60 International Remittances

Since 2010, researchers at the World Bank have also used United 

Nations population data to develop a bilateral migration matrix, which 

provides a second set of country-specific bilateral remittance estimates—

that is, estimates between sending and receiving countries. These 

estimates are based on the number of migrants in different destination 

countries and estimates of how changes in the income of migrants 

influence the remittances they send. IDB’s Multilateral Investment Fund 

has a different methodology, using estimates reported by central banks to 

IMF as a baseline for individual country estimates. The Multilateral 

Investment Fund then works with the Center for Latin American Monetary 

Studies to help refine remittance estimates for selected countries in the 

Latin America and Caribbean region.

Finally, some central banks use a combination of methods to estimate 

remittances. The central bank of Mexico, known as Banco de México, 

tracks remittance flows to Mexico with the help of regulatory reporting 

requirements on money transmitters. Since 2003, Mexico’s methodology 

for estimating remittances has required firms that receive remittances to 

report, on a monthly basis, the amount of money received and the 

number of transactions conducted between the United States and 

Mexico. To track remittances through informal channels, such as couriers 

that fall outside this regulatory framework, Banco de México conducts a 

survey at the U.S.-Mexico border of Mexicans entering the country. The 

central bank of the Philippines, known as Bangko Sentral Ng Pilipinas, 

estimates remittances that are channeled through banks. The Philippine 

government also has established a formal program for registering and 

tracking overseas Filipino workers. This program provides data to the 

government on the type of employment these workers obtain as well as 

their salaries. The Bangko Sentral Ng Pilipinas also uses the Survey of 

Overseas Filipinos to supplement data from the program. Using these two 

approaches, Bangko Sentral Ng Pilipinas is able to identify remittance 

funds sent by Filipinos overseas through friends and relatives and 

amounts brought in when these workers return home.
Page 10 GAO-16-60 International Remittances

A proposed fine on immigrants unable to show proof of legal status who 

send money through remittance transfer providers covered under EFTA 

could raise money for border protection, but the potential amount of 

revenue to be generated is unknown. Net revenue from the fine—the total 

of all fines collected less CFPB’s administrative and enforcement costs—

would depend on several key factors, namely the dollar amount of 

remittances sent by those without legal immigration status, changes in 

remitter behavior because of the fine, including a potential reduction in 

remittances through regulated providers, and the cost of enforcement. For 

example, the ability to raise money depends on a significant number of 

individuals without legal status using regulated remittance transfer 

providers and paying the fine. However, a fine could result in a decrease 

in remittances in the regulated market and an increase in remittances 

through informal methods of money transfer. The revenue raised by the 

proposed fine would first be used to pay CFPB for enforcement costs. We 

did not identify any estimates of the administrative and enforcement costs 

associated with the fine. Our hypothetical scenario analysis illustrates the 

sensitivity of potential net revenue estimates to these factors. CFPB and 

other federal regulators would enforce the requirements of the proposed 

legislation and CFPB identified some implementation challenges. Lastly, 

providers told us the fine could have consequences for them, and one 

provider said that smaller providers would likely be affected the most.

A fine could potentially generate net revenue for border control, but the 

following selected factors would influence the actual amount:

• The dollar amount of remittances sent by those without legal 

immigration status. The revenue raised by the fine would depend on 

the dollar amount of remittances sent by those individuals in the 

United States without legal immigration status and, specifically by 

those using regulated remittance transfer providers. According to 

three studies we identified during discussions with experts, estimates 

of unauthorized U.S. immigrants in 2012 ranged from 11.1 million to 

Potential Effect of a 

Fine on Remitters 

without Legal Status 

Is Uncertain and 

Depends on a Variety 

of Factors

Several Factors Could 

Affect the Amount of 

Revenue Generated from 

a Proposed Fine on 

Remitters without Legal 

Status, as Hypothetical 

Scenarios Show
Page 11 GAO-16-60 International Remittances

11.4 million people.16 Of that number, only those who conduct 

transactions through providers that are subject to EFTA would actually 

pay a fine, should they continue to use such providers, and that 

number is unknown.

• The response to the fine by individuals in the United States without 

legal status, including a reduction in remittances through regulated 

providers. If individuals without legal status respond to the fine by 

making money transfers that may not be subject to EFTA 

requirements, by remitting less, or leveraging connections with 

immigrants with legal status, the amount of revenue raised by the fine 

would be lower. Representatives from almost all of the organizations 

we spoke with, including providers, researchers, federal agencies, 

and community groups, stated that remitters without legal status may 

be deterred by the fine and the additional scrutiny around their 

immigration status. The amount of revenue generated by the fine 

would also depend on the extent to which those without legal 

immigration status continue to use regulated systems after the fine is 

imposed instead of switching to informal methods, such as hawalas. 

Two articles identified in our literature search noted that those without 

legal status may use methods that allow them to maintain a higher 

degree of anonymity. For example, those without legal immigration 

status may have relatives or friends who are authorized to be in the 

 16See Jeffrey S. Passel and D’Vera Cohn, Unauthorized Immigrant Totals Rise in 7 

States, Fall in 14 (Washington: D.C: Pew Research Center, 2014); Bryan Baker and 

Nancy Rytina, Estimates of the Unauthorized Immigrant Population Residing in the United 

States, Population Estimates, Policy Directorate (Washington, D.C.: U.S. Department of 

Homeland Security, Office of Immigration Statistics, 2013); and Robert Warren, 

“Democratizing Data about Unauthorized Residents in the United States: Estimates and 

Public-Use Data, 2010-2013,” Journal on Migration and Human Security, vol. 2, no. 4 

(Center for Migration Studies, 2014), 305-328. More recent estimates of unauthorized 

residents in the United States are available from the Pew Research Center and the Center 

for Migration Studies, which report 11.3 million and 10.9 million in 2014, respectively. See 

Jeffrey S. Passel and D’Vera Cohn, Unauthorized Immigrant Population Stable for Half a 

Decade (Washington, D.C: Pew Research Center, 2015), accessed on February 9, 2016,

http://www.pewresearch.org/fact-tank/2015/07/22/unauthorized-immigrant-populationstable-for-half-a-decade/; and Robert Warren, “US Undocumented Population Drops 

Below 11 Million in 2014, with Continued Declines in the Mexican Undocumented 

Population,” Journal on Migration and Human Security, vol. 4, no. 1 (Center for Migration 

Studies, 2016), 1-15.
Page 12 GAO-16-60 International Remittances

United States send remittances for them, potentially lowering the 

amount of revenue raised by a fine.17

Conversely, if most remitters continue to remit the same amount, and 

continue to remit through regulated channels, the total amount remitted 

may remain stable, and more revenue will be raised. Research experts, 

officials from industry, community groups, and some federal agencies 

with which we spoke suggested that some remitters unable to provide 

proof of legal status may send the remittance and pay the fine, but the 

exact percentage is unknown. While the effect of the fine depends heavily 

on the remitting behavior of individuals without legal immigration status 

and their response to the fine, limited information exists on how many of 

these individuals remit or the extent to which they rely on regulated 

methods.18 In the absence of definitive studies on remitting behavior, the 

 17For information on the use of informal networks by immigrants without legal status, see 

Catalina Amuedo-Dorantes, Cynthia Bansak, and Susan Pozo, “On the Remitting Patterns 

of Immigrants: Evidence from Mexican Survey Data,” Economic Review, Federal Reserve 

Bank of Atlanta, vol. 90, no. 1 (2005); and Raúl Hernández-Coss, “The U.S.–Mexico 

Remittance Corridor: Lessons on Shifting from Informal to Formal Transfer Systems”

(working paper, Series No. 47, Washington, D.C.: 2005).

18For example, one researcher suggested that if individuals are willing to cross the border 

without legal status, then they might be willing to use transfer systems that are not 

regulated. Similarly, two articles from our review of the literature suggest that not having 

legal status may also raise the demand for informal transfer services, given a desire to 

remain in the country undetected by public authorities. On the other hand, transferring 

money safely to family members abroad may be so important that immigrants may send 

money using regulated providers, even if doing so results in higher costs. AmuedoDorantes, Bansak, and Pozo, “On the Remitting Patterns of Immigrants: Evidence from 

Mexican Survey Data,” and Hernández-Coss, “The U.S.–Mexico Remittance Corridor 

Lessons on Shifting from Informal to Formal Transfer Systems.”
Page 13 GAO-16-60 International Remittances

extent to which immigrants use regulated or informal methods for 

remitting and how they will respond to price increases is unknown.19

If the costs of the fine, including costs for providers to implement the 

requirements of the proposed legislation, are passed on to the remitter in 

the form of a price increase, remitters might reduce the amounts or the 

frequency with which they remit. Information on price sensitivity—how 

senders respond to an increase in price—is limited. According to a CFPB 

report and a remittance transfer provider with whom we spoke, remitters’

response to higher prices may partly depend on knowledge of other 

available options, including access to information about fees charged by 

other providers.20 Behavioral changes could substantially limit the amount 

of revenue generated for border protection.

• Administrative and enforcement costs associated with the fine. 

Although the regulatory costs associated with the proposed legislation

are unknown, CFPB officials told us that the agency would incur 

expenses associated with implementing the legislation and ensuring 

compliance. According to CFPB, these expenses would include the 

costs of developing rules, examining remittance transfer providers, 

and cooperating with other federal agencies on enforcement actions 

against noncompliant institutions. Other federal regulators also 

enforce EFTA for their regulated entities, and state regulators also 

may play a role in oversight of remittance transfer providers. As the 

revenue for the fine would be used first to reimburse CFPB for 

 19For example, our search of the literature found one study on price sensitivity for 

remittances from the United States, which was limited to remittances sent to El Salvador 

and Guatemala. With regard to the likelihood of remittances, one study of Mexican 

migrants finds that unauthorized immigrants are more likely to remit, while another study 

of African migrants to Organization for Economic Co-operation and Development 

countries finds that unauthorized migrants are less likely to remit. For the study on price 

sensitivity, see Kate Ambler, Diego Aycinena, and Dean Yang, “Remittance Responses to 

Temporary Discounts: A Field Experiment Among Central American Migrants” (working 

paper 20522, Massachusetts, National Bureau of Economic Research, 2014). For the 

study on whether migrants from Mexico without legal status are more likely to remit, see 

Amuedo-Dorantes, Bansak, and Pozo, “On the Remitting Patterns of Immigrants: 

Evidence from Mexican Survey Data.” And for the contribution of legal status on 

remittances by African migrants, see Albert Bollard, David McKenzie, and Melanie Morten, 

“The Remitting Patterns of African Migrants in the OECD,” (working paper 5260, 

Washington, D.C.: World Bank, April 2010).

20Consumer Financial Protection Bureau, Report on remittance transfers: Report to the 

President, the Senate Committee on Banking, Housing, and Urban Affairs, and the House 

of Representatives Committee on Financial Services (Washington, D.C.: 2011).
Page 14 GAO-16-60 International Remittances

administrative and enforcement costs to carry out the proposed 

legislation, high costs to CFPB for these activities would mean less 

net revenue available for border protection.21 Uncertainty in these 

costs would contribute to uncertainty in how much revenue remains 

for border protection.

Given the uncertainty related to these important factors, we constructed a 

scenario analysis to illustrate how the revenue generated for border 

protection could vary based on the values we assume for the following, 

given our starting assumptions about the total volume of remittances and 

proportion of those in the formal sector:

1. the dollar amount of remittances sent by immigrants without legal 

status,

2. the reduction in remittances through regulated providers in response 

to the request to show proof of legal status or pay a fine, and

3. the magnitude of administrative and enforcement costs to CFPB.

The scenarios are hypothetical because the factors used to generate the 

results were selected solely to demonstrate the uncertainty in how much 

revenue would be collected. They are not supported by empirical 

research or evidence. The selected scenarios we illustrate are from a 

larger number that we analyzed to examine how sensitive net revenue 

from fines is to the factors. The three factors shown in figure 2 illustrate 

the potentially wide variation in net revenue from fines. In our analysis, we 

begin by assuming that the total volume of remittances is $50 billion and 

50 percent of the total volume of remittances is sent through regulated 

providers. The scenario analysis varies the three factors above, thereby 

demonstrating the breadth of uncertainty in potential net revenue.

 21Because it would amend EFTA, the proposed legislation would fall under the supervision 

and enforcement authority of other federal regulators, in addition to CFPB, depending on 

the institution being supervised or enforced against. CFPB generally has the authority to 

supervise very large banks and credit unions, as well as certain nonbank entities 

(including those currently defined by rule to be nonbank international money transfer 

providers that send at least one million international money transfers annually), for 

compliance with federal consumer financial law, including EFTA. Enforcement authority 

under EFTA depends on the institution. See 15 U.S.C. § 1693o(a). The proposed 

legislation, however, does not provide that any funds obtained from the fine would go to 

any of the other federal regulators.
Page 15 GAO-16-60 International Remittances

Figure 2: Varying Selected Factors and Their Potential Effect on Revenue for Border Protection—A Hypothetical Scenario 

Analysis of the Proposed Legislation (S. 79)

As figure 2 demonstrates, when the factors vary potential net revenue 

from fines can change significantly. For example, one scenario with no 

change in the amount of remittances and low administrative and 

enforcement costs could provide $0.41 billion in potential net revenue for 

border protection. In contrast, another scenario with a 75 percent 

reduction in remittances after the fine and high administrative and 

enforcement costs would generate potential net revenue of only $0.01 

billion. In some cases, the cost incurred by CFPB could be more than the 

revenue from the fine. For example, a small dollar amount of remittances 

sent by immigrants without legal status, large reductions in remittances, 
Page 16 GAO-16-60 International Remittances

and high administrative and enforcement costs could lead to negative net 

revenue.22 Obtaining reasonable estimates of net revenue would depend 

upon having accurate, reliable, and complete information on the amount 

immigrants without legal status remit and their response to a requirement 

for providers to request proof of legal status or assess a fine, as well as 

administrative and enforcement costs. In the absence of such information, 

the potential net revenue a fine would generate is unknown.

Officials from CFPB noted that in addition to creating uncertainty about 

administrative and enforcement costs, the proposed legislation, if passed, 

would require CFPB to address other issues, including issuing new rules 

to define what constitutes proof of legal status and to establish 

procedures for submitting fines, as well as coordinating with other 

regulators.

• As noted earlier, CFPB would be required to define by rule what 

constitutes acceptable documentation in states that do not require 

proof of legal status to obtain a state-issued driver’s license or a 

federal passport.

• CFPB would need to coordinate with other financial regulators. For 

example, the proposed legislation calls for remittance transfer 

providers to submit the fines to CFPB and for CFPB to then transfer to 

Treasury any remaining funds after the payment of CFPB’s 

administrative and enforcement costs. However as noted previously, 

other federal regulators have the authority to enforce EFTA for the 

entities they supervise, including enforcing the remittance provisions 

against those supervised entities that are remittance transfer 

providers under the act. The proposed legislation would provide CFPB 

with rulemaking authority, but does not state how CFPB would 

coordinate with other agencies. CFPB staff told us that it might need 

 22If CFPB incurred expenses that do not reduce proportionately with the volume of 

remittances, or the percentage of remittances not sent through regulated providers, then 

net revenue might be negative. For example, if the costs for rulemaking were large and 

subtracted from CFPBs expenses in the first year of implementation, then net revenue 

might be negative for that year.

Proposed Legislation 

Raises Other Issues for 

CFPB
Page 17 GAO-16-60 International Remittances

to develop procedures with others on examination and enforcement 

efforts.23

• CFPB would be required to issue rules establishing the form and 

manner in which fines would be submitted to CFPB. CFPB staff told 

us that CFPB does not currently levy fines on consumers. Instead, 

CFPB levies monetary sanctions and brings other enforcement 

actions against consumer finance businesses and other persons in 

connection with violations of Federal consumer financial law. But 

CFPB staff noted that collecting fines directly from institutions for 

noncompliance is different from a fine on remitters collected by 

remittance transfer providers that is then submitted to the agency.

• Finally, CFPB may have examination authority over nonbank 

remittance transfer providers that also may be overseen by state 

regulators. If the proposed legislation were to become law, CFPB 

might have to coordinate with state regulators.

If remittances decrease because the number of transactions or amounts 

remitted decline, the fee revenue associated with remittance transactions 

that providers receive would decrease. Without any corresponding 

reduction in cost, the decrease in remittances might decrease profits for 

some providers, but by how much is uncertain. Prior experience with 

legislation passed in Oklahoma in 2009 may demonstrate effects similar 

to those that could result from the proposed legislation though there are 

some key differences between the two.24 The Oklahoma law imposed a 

$5 fee on each wire transfer from a nondepository institution, and 1 

percent of the amount of the transaction, if any, in excess of $500.25

When making a transfer, all persons regardless of immigration status 

were required to pay the fee. Under the Oklahoma law, customers who 

paid the fee are entitled to an income tax credit equal to the amount paid 

when filing individual income taxes in Oklahoma with either a valid Social 

Security number or a valid taxpayer identification number. The tax credit 

 23Other regulators with enforcement authority under EFTA include the National Credit 

Union Administration, the Federal Reserve Board, Office of the Comptroller of the 

Currency, Federal Deposit Insurance Corporation, the Department of Transportation, and 

the Securities and Exchange Commission. See 15 U.S.C. § 1693o(a).

24As mentioned earlier, according to many stakeholders, the proposed legislation may 

result in remitters without proof of legal status requesting others with proof of legal status 

to make remittances on their behalf, therefore leaving the level of remittances potentially 

unchanged.

25Okla. Stat. Ann. tit. 63, § 2-503.1j.

A Requirement for Proof of 

Legal Status or Payment 

of a Fine Would Also Affect 

Providers
Page 18 GAO-16-60 International Remittances

in effect means that those customers without a Social Security or 

taxpayer identification number are not eligible for the state income tax 

credit and therefore will have paid the remittance fee without being able to 

obtain a credit or refund.

Statements of four remittance transfer providers with operations in 

Oklahoma suggest that the law has had mixed effects. According to two 

providers, revenues decreased once the law was in place. Two providers 

told us that transaction activity in the state had fallen. One other provider 

stated that their company had still not recovered from the decline in 

revenue. This provider told us that the decreased number of transactions 

was the result of remittances that moved to out of state providers or from 

regulated to informal channels. The other two providers we interviewed 

noticed decreases in remittances, although they noted they did not have a 

large presence in Oklahoma. Also, one official from a state audit 

association noted that fee revenues for the State of Oklahoma continued 

to increase after the first year of the imposition of the fee.26 Remittance 

transfer providers, industry associations, research experts, and some 

federal agencies we met with said that they expected to see revenues 

decrease in the regulated market if the proposed law (S.79) were passed, 

as it would send remittances to the informal market.

New proof-of-legal status requirements and fine collection could also 

increase remittance transfer providers’ costs. Such potential costs were 

noted by almost all providers, and representatives from industry 

associations we spoke to. Several providers noted that they might need to 

pay for new computer infrastructure and databases, staff training, and 

compliance. One provider pointed out that just to add a new variable 

listing information on customers to an existing information system was a 

9-month process that would involve testing and validation. 

Representatives of an industry association and one remittance transfer 

provider cited potential costs related to maintaining databases used to 

verify legal status.

Remittance transfer providers could also face increased compliance costs 

related to new requirements. In some cases, providers told us that 

compliance costs could be significant. For example, some providers said 

 26All the statements here are based on testimonial evidence. If there were other factors 

that affected remittances at the same time that the legislation was passed, it would have 

been difficult to isolate the effect of the legislation on remittances without proper analysis. 
Page 19 GAO-16-60 International Remittances

that they had made significant investments to comply with the fee and 

exchange rate disclosures and other requirements implemented through 

amendments to Regulation E after the passage of the Dodd-Frank Act, 

such as developing procedures to electronically disclose the fees charged 

by the provider. Another provider said that it had spent more than $3 

million on technology enhancements and customer service teams to 

satisfy the requirements of the rule. Still another provider noted that the 

company spent about 3 percent to 4 percent of its revenue on the legal 

compliance budget.

One representative of a transfer provider whom we interviewed said that 

the company might be able to incorporate compliance requirements into 

its Bank Secrecy Act (BSA)/anti-money-laundering (AML) efforts. 

BSA/AML requirements for institutions that provide money transfer 

services include, among other things, collecting sender identification for 

each transfer in the amount of $3,000 or more.27 Banks are also required 

to implement a customer identification program, under which they 

establish procedures specifying what identifying information they will 

collect when customers open accounts.28 However, other providers noted 

that collecting identification is not the same as verifying legal status. For 

example, several providers accepted the Matrícula Consular de Alta 

Seguridad, which is an official identity card that Mexican Consulates issue 

to nationals living outside Mexico. As previously discussed, under the 

Remittance Status Verification Act this card would not be an acceptable 

form of identification for proving legal status within the United States for 

purposes of the act. One provider we spoke with explained that not all 

states require proof of legal status before issuing a driver’s license or 

other form of identification. Forms of identification that demonstrate legal 

status may vary from state to state. It could be difficult for money transfer 

clerks to know what form of identification to collect, particularly when 

remitters may hold identification from other states.

Some providers and one trade association also noted that the proposed 

legislation would require additional staff training. For example, one 

provider said that the company operated through many retail outlets, such 

as grocery stores and gas stations, and it would not be practical to train 

 27See 31 C.F.R. § 1020.410(a) (recordkeeping requirements for banks); 31 C.F.R. § 

1010.410(e) (recordkeping requirements for nondepository financial institutions).

28See 31 C.F.R. § 1020.220(a)(2).
Page 20 GAO-16-60 International Remittances

all store clerks to determine the appropriate form of identification to show 

legal residency status. Another provider stated that it would be a 

significant challenge to train all agents—retail outlets that conduct 

transactions for the provider—on the documentation they would be 

responsible for collecting for proof of legal status. A trade association 

noted the difficulty and potential expense of training staff on how to 

properly check for proof of legal status; calculate, disclose, and collect the 

fine; and put the transaction in a database.

How much of the fine and added cost would be absorbed by the provider 

or retail outlet partly depends upon the competitiveness of the market. 

Remittance transfer providers stated that in competitive markets with a 

number of providers and a variety of methods for transmitting money, the 

demand for remittances is more sensitive to prices. For example, one 

provider indicated that it lost customers when its prices were only 

marginally higher than those charged by other providers. With the 

prospect of losing more customers and revenue, one provider with whom 

we spoke stated that it might choose to absorb some of the fine and 

added cost instead of passing it on. One provider we spoke with expected 

that the added costs would increase the costs passed on to consumers 

by 3 to 4 percentage points. If these costs were passed on in such a 

manner, all consumers, regardless of legal status, could experience an 

increase in the price of remittance transfers that are sent to a foreign 

country.

In addition, certain providers might be disproportionately affected by the 

requirements of the proposed legislation. According to representatives 

from two providers and a research expert, smaller providers generally 

operate at lower profit margins compared with larger providers.29

Providers with lower margins would find it more difficult to absorb costs 

imposed due to the fine and may be more adversely affected with a 

reduction in revenues.

 29Profit margins represent the ratio of profits to sales revenue. 
Page 21 GAO-16-60 International Remittances

BEA’s estimate of remittances from the United States totaled 

approximately $40 billion in 2014, and its estimates of remittances 

generally increased from 2006 to 2014. BEA changed its remittance 

estimation methodology in 2012 in order to incorporate new data on 

reported remittances. However, BEA’s methodology for estimating 

remittances is not consistent with government-wide policies and guidance 

on statistical practices or with BEA’s own best practices and thus 

produces unreliable estimates. For example, BEA did not follow the 

guidelines from the National Research Council (NRC) of the National 

Academies stating that data releases from a statistical program should be 

accompanied by appropriate methods for analysis that take account of 

variability and other sources of error in the data.30 In addition, we 

identified several errors in BEA’s analysis that led us to question the 

reliability of BEA’s estimates, including data that are censored, 

measurement and coding errors, and an estimation methodology that is 

subject to biases.31 Further, BEA calibrated its new model to match the 

estimates from BEA’s old model, whose accuracy we questioned in a 

March 2006 report on remittance estimates. On the basis of discussions 

with BEA officials, BEA’s failure to follow best practices appears to be due 

to the fact that the agency does not consider its remittance estimates to 

be “influential information” that is subject to a high degree of 

transparency. However, BEA’s estimate is cited by national and 

international organizations and in some cases is incorporated into the 

estimates of these organizations, including the World Bank.

 30National Research Council, Principles and Practices for a Federal Statistical Agency: 

Fifth Edition (Washington, D.C.: The National Academies Press, 2013), 18. The National 

Academies of Sciences, Engineering, and Medicine are private, nonprofit institutions that 

provide expert advice to the federal government. The principal statistical agencies of the 

federal government use this volume to guide their strategic planning, daily operations, and 

interactions with stakeholders. BEA is a signatory to the Statement of Commitment to 

Scientific Integrity by Principal Statistical Agencies, accessed November. 24, 2015, 

(https://www.bea.gov/_pdf/scientific_integrity_statement_of_the_principal_statistical_agen

cies.pdf), which identifies this NRC publication, among other documents, as the 

foundation for achieving and maintaining scientific integrity within and among the principal 

statistical agencies.

31Remittance data used by BEA are censored because for some households the value of 

reported remittances is only partially known. BEA also assigned all households within a 

given range of family income the same income leading to measurement errors to the 

extent that households within a given range of family income do not, in fact, have the 

same income. With these data limitations, the methodology adopted by BEA results in 

biased estimates for the remittance rates.

BEA Does Not Follow 

Best Practices for 

Estimating 

Remittances, Leading 

to an Unreliable 

Estimate
Page 22 GAO-16-60 International Remittances

BEA’s estimate of remittances from the United States (which it reports as 

personal transfers) totaled approximately $40 billion in 2014. As figure 3 

shows, BEA’s estimates of remittances generally increased from 2006 to 

2014.

Figure 3: Bureau of Economic Analysis’ Estimate of Total Volume of United States 

Personal Transfers (Outflows) as Reported to the International Monetary Fund, 

2006-2014

BEA’s estimates of remittances from the United States are based on 

demographic and household survey data and a model that calculates the 

remittance rates by demographic group. BEA assumes that the foreignborn population represents the relevant population of remittance senders 

in the United States, because this population is most likely to have a 

personal link to foreign residents. The estimates of personal transfers 

include all current transfers from resident to nonresident households, 

regardless of the means of transfer.

BEA’s Estimates of 

Remittances from the 

United States
Page 23 GAO-16-60 International Remittances

BEA changed its model for estimating remittances in 2012 by using new 

demographic variables and data on reported remittances from the August 

2008 migration supplement to the Current Population Survey (CPS) 

conducted by Census.32 For its revised model, BEA employed a 

multiplicative model—that is, a model whose results are the product of the 

combined effects produced by the individual variables. It used a 

nonstandard iterative technique to estimate the remittance rates.33 These 

rates show the proportion of income that is remitted. To obtain total 

remittances, the remittance rates for different demographic categories 

can be multiplied by the number of individuals in those categories and 

their incomes. In its new methodology, BEA combined the new remittance 

rates from its revised model with ACS data on foreign-born residents and 

their income to estimate total remittances sent annually from the United 

States (see fig. 4).

 32The CPS is sponsored jointly by Census and the U.S. Bureau of Labor Statistics. It is a 

primary source of labor force statistics for the population of the United States. In August 

2008, Census sponsored a supplement to the monthly CPS questionnaire. The CPS 

Migration Supplement contained a section on monetary transfers to collect data about the 

frequency and amount of money sent and received by households in the United States to 

and from friends and relatives living outside the United States. 

33A multiplicative model used by BEA expressed the remittance rates as a function of the 

product of various variables that BEA expected to have an effect on the remittance rate. In 

standard regression models, the remittance rate would have been expressed instead as a 

sum of these variables. Also instead of estimating the model using standard regression 

techniques, BEA adopted an iterative approach, which estimated the effect of one set of 

variables while assuming others to be held fixed at 1. In the second and third round, the 

effect of another set of variables was estimated using the results of the prior rounds fixed, 

and so on until all the estimates converged and stopped changing.

BEA Changed Its 

Remittance Estimation 

Methodology in 2012 to 

Incorporate New Data on 

Reported Remittances
Page 24 GAO-16-60 International Remittances

Figure 4: Basic Inputs to BEA’s Current Remittance Estimation Model, as of 2012

The availability of nationally representative data on remittances in the 

CPS with actual reported numbers on remittances provided BEA with an 

opportunity to revise the model it created in 2005.34 BEA first tested its 

previous demographic variables against CPS data and found that its 

assumptions about family structure and time in the United States were 

weak indicators of how much people reported to remit in CPS data and 

 34The previous model combined detailed data on immigrants from the ACS with remittance 

rates by demographic category to estimate total remittances. The demographic 

characteristics included the country of origin, the duration of stay in the United States, and 

the presence of the immigrants’ own children in the U.S. household.
Page 25 GAO-16-60 International Remittances

that its previous country tiers did not match remitting behavior very well.35

Therefore, in 2012 BEA changed the new model by,

• removing U.S. citizens born abroad of American parents, assuming 

that this group’s remittance behavior would be similar to the behavior 

of U.S. born who were not included in their study;

• replacing the “children/no children” category with “married, spouse 

absent/other marital,” because those in the latter category were more 

likely to send remittances to spouses abroad and were thus a better 

predictor of remittances;

• adding the category “living with roommates/other living 

arrangements,” assuming that people shared housing to save money 

and therefore could send more remittances;

• combining immigrants who had been in the United States for 16 to 30 

years with those who had been in the country for longer than 30 years 

into one category, “15 plus years,” as they found in CPS data that 

these two categories had similar remittance rates; and

• reallocating countries within pre-existing geographical tiers as BEA 

found that their previous country allocations were not the best match 

for the CPS data.36

 35The country tiers in BEA’s previous model were based on wealth and distance from the 

Unites States. The low tier was comprised of wealthy countries like Canada, Germany, 

and the United Kingdom. The middle tier consisted of middle-income countries like 

Argentina, Poland, and Thailand. The highest tier consisted of low-income countries 

throughout the world, including Latin American countries like Haiti, Honduras, and Mexico. 

The new geographical tier allocation is based on three immigration rules: whether the 

country a) is oversubscribed for applications for legal permanent residence, b) has 

temporary protected status, and c) has a visa waiver program with the United States and 

one “birth country characteristic” based on the World Bank’s scores for government 

effectiveness and regulatory quality.

36Rachel Soloveichik and Anne Flatness, “Modeling Personal Transfers from the United 

States” (paper prepared for the 32nd General Conference of the International Association 

for Research in Income and Wealth [IARIW], Boston, MA, August 2012). The IARIW 

conference is an international forum for research on the measurement of income and 

related problems of statistical methodology. BEA staff also presented their work at a large 

Federal Committee on Statistical Methodology (FCSM) conference. FCSM is an 

interagency committee dedicated to improving the quality of federal statistics.
Page 26 GAO-16-60 International Remittances

We found several issues with BEA’s methodology that resulted in 

unreliable remittance estimates. BEA also did not follow its own best 

practices and Office of Management and Budget (OMB) or NRC guidance 

on documentation and methods for analysis that could have ensured 

reliability of its methodology and limited the inaccuracy in its estimates.

Despite OMB and agency guidance and best practices that would provide 

that BEA should document its procedures for developing its new model 

for estimating remittances, BEA did not prepare adequate, transparent 

documentation of its efforts to develop its new model. BEA also did not 

prepare adequate documentation of management review and approval of 

the new model.

OMB’s Information Quality Act (IQA) guidelines, which are designed so 

that agencies will meet basic information quality standards, state that 

agencies should ensure that data and methods are documented and 

transparent enough to allow an independent reanalysis by a qualified 

member of the public.37 IQA guidelines also direct agencies to develop 

management procedures for reviewing and substantiating the quality of 

information before it is disseminated. According to BEA best practice 

 37The Information Quality Act (IQA) is the commonly used name for Section 515 of the 

Treasury and General Government Appropriations Act for Fiscal Year 2001. Pub. L. No. 

106-554, tit. V, § 515, 114 Stat. 2763, 2763A-153 (2000) (codified at 44 U.S.C. § 3516 

note). IQA requires OMB to provide guidance to federal agencies for ensuring and 

maximizing the quality, objectivity, utility, and integrity of information (including statistical 

information) disseminated by federal agencies. In accordance with the act, OMB 

developed policy and procedural guidance to federal agencies. 67 Fed. Reg. 8452 (Feb. 

22, 2002). Under OMB’s IQA guidelines, information deemed to be influential is to be held 

to a higher standard of quality; specifically, if an agency is responsible for disseminating 

influential scientific, financial, or statistical information, agency guidelines shall include a 

high degree of transparency about data and methods to facilitate the reproducibility of 

such information by qualified third parties. OMB defines influential, as used in the phrase 

influential scientific, financial, or statistical information, as meaning that the agency can 

reasonably determine that dissemination of the information will have or does have a clear 

and substantial impact on important public policies or important private sector decisions.

BEA’s Methodology 

Resulted in Unreliable 

Estimates, Partly Due to 

its Failure to Follow Best 

Practices and Guidelines 

for Federal Statistical 

Agencies

BEA Did Not Follow Its Own 

Best Practices for 

Documenting Its Procedures
Page 27 GAO-16-60 International Remittances

guidance, all changes in either methodology or data sources should 

receive documented management approval.38

In its own internal guidelines, BEA notes that it strives for the highest level 

of transparency about data and methods for its estimates to support the 

development of high-quality data and facilitate efforts to reproduce the 

information. Additionally, BEA best practices guidelines are designed to 

ensure the accuracy of input data; provide high-quality, timely analyses 

that document how estimates are made; and provide estimates that 

satisfy both internal and external customer needs. One BEA best practice 

is to enhance both transparency and replicability by instructing BEA staff 

to document each step or change in the methodology and document the 

rationale behind each decision.39 Another BEA best practice states that 

written analyses of the estimate should include a discussion of changes 

and revisions as well as deviations from standard methods. However, 

based on our analysis, BEA did not follow these guidelines, as the 

following examples illustrate.

• Documentation showing how the final remittance estimate is 

calculated was not maintained. When asked to provide records of 

analysis that supported the calculations of 2012 and 2013 remittance 

estimates (the most recent estimates available at the time of our 

review), BEA staff told us that the documents were created only when 

each year’s estimate was produced and were not saved. Unable to 

produce its original documents, BEA recreated the documentation to 

fulfill our request. However, BEA staff told us that the file could be 

missing some information required to successfully run the computer 

program that calculates total remittance estimates; for example, 

certain variables had been renamed and some fields were missing; 

their numbers were also multiplied by an arbitrary discount factor 

 38Bureau of Economic Analysis, internal document, “Best Practices for Approving and 

Incorporating Changes in Methodology or in Data Sources.”

39The best practice is included in the BEA internal document, “Best Practices for 

Approving and Incorporating Changes in Methodology or in Data Sources,” which 

presents 10 practices BEA staff should follow. The practices are: justify the change, 

explain and document the change, provide experimental estimates, check for 

reasonableness, assess the resources required to implement the change, assess the 

impact on table designs and suppression, identify the time period the change could and/or 

should cover, notify and/or consult with those, both inside and outside of BEA, who use or 

provide the data, obtain higher level approval, and follow best practices guidelines for 

implementation.
Page 28 GAO-16-60 International Remittances

whose use was explained to us only later as something done to avoid 

a break in the series.

40

• Changes and revisions were not sufficiently documented. When 

asked to provide documentation of the analyses completed to 

determine changes in the model, BEA provided a conference paper 

containing written descriptions of its regression analyses.41 BEA staff 

who completed these analyses told us that the regression files had 

not been saved in a way that would allow the staff to easily provide us 

with the files applicable to the model changes. The staff described 

saving them among many partially complete files and told us that it 

would be difficult to identify the files that led to the current version of 

the model. Unable to provide its original research, BEA attempted to 

recreate the steps that were used to create the model.42

• Management review of estimation methodology was insufficiently 

documented. BEA officials noted that staff adhered to internal 

guidance by obtaining both managerial and external reviews of the 

model’s revision but provided little documentation of them. BEA staff 

said the remittance model proposal was presented to the 

Modernization and Enhancement Steering Committee (MESC) for 

formal review.43 BEA provided minutes of the MESC meeting 

discussing the review of the model, but the minutes also indicated that 

BEA management was still considering changes. BEA staff could not 

provide documentation of additional management actions taken or of 

another MESC meeting held at a later date. BEA staff told us that the 

agency subjected the output of research that affected methodology 

changes to a full gamut of validity checks. However, the only 

documentation we received of a validity test was the MESC meeting 

minutes that contained a discussion of the model’s assumptions. BEA 

 40BEA told us that in 2011 or 2012 they had a slight change in their “logic” that caused the 

series to increase by 2 percent. BEA wanted to avoid a break in the series and did not 

want to revise previous years, so BEA put in this number as an adjustment factor.

41The descriptions were contained in the appendix of a research paper BEA used at 

professional conferences to describe the changes made to the model. Soloveichik and 

Flatness, “Modeling Personal Transfers.”

42BEA staff noted that some of the recreated regressions produced results that differed 

slightly from the results reported in the conference paper. BEA staff explained that the 

difference might be due to typographical errors in the conference paper or to differences in 

the original and recreated regressions.

43The MESC is made up of selected senior members of the division responsible for 

estimating remittances, the Balance of Payments Division, including its chief, who offers 

feedback to guide and refine the staff’s work. 
Page 29 GAO-16-60 International Remittances

staff told us that the personal transfers model had been subjected to 

additional scrutiny by BEA senior management resulting from the 

authors’ conference presentations.44 However, BEA did not provide us 

with either documentation of the conference feedback or the results of 

senior management’s additional scrutiny. BEA officials stated that the 

decision to publish a Survey of Current Business article about the 

model’s revision constituted verification of management review.45

However, BEA could not provide any documentation of the approval 

process for publication to demonstrate what the management review 

entailed.

• The rationale and appropriateness of its methodology for estimating 

remittances was not documented. According to NRC guidelines for 

federal statistical agencies data releases from a statistical program 

should be accompanied by assumptions used for data collection, and 

what is known about the quality and relevance of the data.46 The 

guidelines also mention appropriate methods for analysis that take 

account of variability and other sources of error and the results of 

research on the methods and data. We found BEA did not follow 

these guidelines, as illustrated by the following examples,

• Data. We were unable to verify the accuracy of the data because we 

were not provided with documents detailing the steps and analyses 

BEA undertook to convert CPS data to the dataset BEA actually used 

to estimate the model. A BEA best practice states that an analysis of 

the estimate should include a discussion of questionable aspects of 

the source data, including outliers.47 However, BEA could not provide 

us with documents showing analyses performed to deal with various 

 44Soloveichik and Flatness, “Modeling Personal Transfers.”

45BEA officials said that the review process culminated with a briefing to BEA’s executive 

staff but did not provide us with documentation of the review. Articles in the Survey

present BEA’s latest national, international, regional, and industry estimates; describe the 

methodologies used to prepare the estimates; provide information about major revisions; 

discuss ongoing innovations; and generally keep users up to date on relevant BEA issues 

and initiatives. 

46National Research Council, Principles and Practices for a Federal Statistical Agency, 18.

47BEA, internal document, “Best Practices Standards: BEA Data Handling and 

Documentation Standards.” Outliers are extreme observations or observations that do not 

follow the pattern in the data and usually have an undue influence on the results in a 

regression model.
Page 30 GAO-16-60 International Remittances

problematic aspects of the data and treatment of outliers.48 In 

addition, BEA conducts an analysis to assign a portion of the 

household’s income to each individual in the household. The income 

amount attributed to each individual is a critical component of the 

model and has a substantial effect on the result, yet BEA could not 

provide any documents showing sensitivity analyses of this critical 

assumption to see how the attribution of income affects its results.49

Further, for some households that did not have any family income in 

CPS data, BEA assigned them incomes but could not tell us how they 

calculated them. BEA also assigned all households within a given 

range of family income the same income.50 This approach introduces 

measurement error to the extent that households within a given range 

of family income do not, in fact, have the same income. BEA could not 

provide any documentation explaining these details or what 

implications the assigned incomes could have on its results.

• Estimation Technique. As described earlier, BEA used a nonstandard 

iterative technique to estimate its model. BEA staff acknowledged that 

the method was unusual and may be hard to comprehend. When we 

requested additional information on management review of the model, 

BEA staff stated that they had had the model reviewed by an outside 

 48BEA mentions in its paper that most of the households remit little or nothing while a few 

households give very large amounts and account for a significant fraction of total 

remittances. BEA staff stated that mean remittances drop by 60 percent if 175 households 

(out of more than 6,000) that remit $5000 or more are excluded. We do not know if and 

how BEA dealt with this issue. Moreover, we found that there were 51 households that 

were reported to have sent a remittance of $27,199. BEA staff told us that this was 

because the CPS top-codes the remittance variable so that any remittance value above 

$10,000 is coded as $27,199 as this is the mean of all remittances above $10,000. These 

instances, which are outliers in the data, significantly influence the resulting remittance 

rates but BEA could not provide documentation to show how influential these outliers 

actually are.

49BEA estimates remittances by using individual-level data from the ACS, but its 

estimation model is based on household data on remittances from the CPS. This poses a 

problem because CPS data reports remittances for the household as a whole and 

individual demographic characteristics as reported in the ACS can vary among individuals 

comprising a household. 

50For example, in CPS data, family income is only reported as being within a range (e.g., 

$40,000 to $49,999). BEA assigns to all households with family income in the $40,000 to 

$49,999 range, the same family income of $45,000.
Page 31 GAO-16-60 International Remittances

expert. However, officials later said the review was informal and no 

written opinion was provided.51

• Model specification. BEA did not follow IMF’s guide for compilers in 

two instances related to issues of model specification.52 First, the 

guide specifies that the variables used to explain and predict 

remittance rates may need to be converted to different forms to see if 

they generate a better model.53 BEA could provide no documentation 

showing it attempted to do this analysis. Second, the IMF guide states 

that statistical analyses are also needed to understand the 

relationship of different demographic variables to each other and to 

remittance rates in order to select the relevant variables. BEA could 

not provide us with any documentation showing they performed any 

tests on the relationship among different demographic variables.

• Goodness-of-fit. This term refers to how well a model represents the 

data.54 The IMF guide states that various statistics describing 

goodness-of-fit should be calculated to decide on the best model for 

determining the level of remittances. BEA presented the results of 

 51BEA staff also told us that for the work on remittances, a top BEA economist provided 

direct supervisory suggestions on modeling and econometric approaches. Staff added that 

the work was subject to normal examination by the reviewers in the supervisory chain. 

However, BEA could not provide documentation of reviews in the supervisory chain, other 

than the MESC meeting minutes, in response to our request. Staff added that because the 

results were presented in two research forums, both the results and the underlying 

estimation approach and programming were scrutinized by other interested researchers. 

The extent of any peer review the paper received at the conferences is unclear because 

the audience feedback was not documented.

52As mentioned earlier, the guide for compilers provides recommendations designed to 

improve the quality of remittance data. 

53International Monetary Fund, International transactions in remittances: guide for 

compilers and users. This publication provides guidelines for countries to improve the 

quality of remittance statistics by using suitable methodologies based on data availability 

and national circumstances. Variables can be converted in different forms such as 

quadratic or logarithmic to see if that better describes the relationship between dependent 

and independent variables.

54Goodness-of-fit indicators also allow for comparison between models as they give an 

indication of which model is better at representing the data.
Page 32 GAO-16-60 International Remittances

only one such test, namely the “R-squared (R2).”55 Moreover, BEA 

does not report standard errors for their models’ coefficients using 

their iterative method and does not document that this iterative 

method would produce correct standard errors for these coefficients.56

We identified several errors in BEA’s analysis that led us to question the 

reliability of BEA’s estimates. Moreover, BEA adjusted the new model to 

match results from its prior model, contributing to inaccuracy in its 

estimates. We found the following problems with BEA’s methodology.

• Presence of outliers in the data had a substantial influence on the 

model’s results. There are 6,136 households in BEA’s data. In its 

data, the CPS reported that 51 households (0.9 percent of all

households) remitted $27,199. The CPS averages remittances across 

all households that remit more than $10,000 annually and assigns the 

average (in this case, $27,199) to each of these households. BEA 

includes these 51 households in its data, all of which are assumed by 

BEA to remit $27,199 even though they differ in income levels. These 

households are outliers in BEA’s data, since all other households 

included remit between $0 and $10,000. These outliers are highly 

influential, as excluding them significantly changes the remittance 

rates that would have resulted using BEA’s own methodology. For 

example, BEA calculates that a person who is married with a spouse 

absent, lives with roommates, has been in the United States for less 

than 5 years, and belongs to the highest country tier remits 73.1

percent of his or her income (see table 1).57 If we remove the outliers 

from the data, this percentage changes to 14.9 percent. OMB’s 

 55The R2 test is a measure of the how well the proposed model fits the data. R2 is most 

commonly expressed as a percentage ranging from 0 to 100. A low R2 suggests that the 

model is a poor fit, while a high R2 indicates that the model very closely matches the data.

BEA’s model produced an R2 of 6.75 percent. BEA mentions an R2 of 7.93 percent in the 

paper. But, according to the notes in one of the files we received from BEA, the analyst 

mentions that the number reported in the paper is inaccurate due to miscoding of one of 

the variables and the correct number is 6.75 percent. In other instances, BEA has 

reported an R2 of 15.8 percent. BEA got this number when it ran the model again for us 

using a different dependent variable.

56The standard error is an estimate of the standard deviation of the coefficient and can be 

thought of as a measure of the precision with which the regression coefficient is 

measured. The standard error of the estimate thus can be thought of as a measure of the 

accuracy of predictions.

57Immigrants from a group of countries that remit the most compared to other immigrants 

are said to belong to the highest country tier.

BEA’s Methodology Resulted 

in Unreliable Estimates
Page 33 GAO-16-60 International Remittances

Statistical Policy Directive No. 1 states that where appropriate any 

known or potential data limitations or sources of error should be 

described to data users so they can evaluate the suitability of the data 

for a particular purpose.58 But BEA does not mention this aspect of 

the data in its publication even though it has significant influence on 

the results.

Table 1: Remittance Rates from Bureau of Economic Analysis’s Model, with and without Outliers

With outliersa Without outliersb

Country tier Family structure

0 to 5 

years

6 to 15 

years

15 plus 

years

0 to 5 

years

6 to 15 

years

15 plus 

years

Low Other marital, no roommates 1.1% 0.8% 0.5% 0.4% 0.3% 0.2%

Low Other marital, with roommates 3.9 2.9 1.6 0.8 0.7 0.3

Low MSA, no roommates 5.9 4.5 2.4 1.6 1.4 0.7

Low MSA, with roommates 11.2 8.5 4.6 1.4 1.2 0.6

Middle Other marital, no roommates 1.1 0.8 0.5 1.2 1.0 0.5

Middle Other marital, with roommates 3.9 2.9 1.6 2.5 2.2 1.0

Middle MSA, no roommates 5.9 4.5 2.4 5.0 4.3 2.1

Middle MSA, with roommates 11.1 8.5 4.6 4.3 3.7 1.8

High Other marital, no roommates 2.8 2.1 1.1 2.0 1.7 0.8

High Other marital, with roommates 9.7 7.3 4.0 4.1 3.5 1.7

High MSA, no roommates 14.8 11.2 6.1 8.2 7.0 3.4

High MSA, with roommates 28.0 21.2 11.5 7.0 6.0 2.9

Highest Other marital, no roommates 7.2 5.5 3.0 4.2 3.6 1.7

Highest Other marital, with roommates 25.4 19.2 10.4 8.8 7.5 3.6

Highest MSA, no roommates 38.6 29.3 15.9 17.5 14.9 7.2

Highest MSA, with roommates 73.1 55.5 30.1 14.9 12.7 6.1

Legend: MSA = married, spouse absent.

Source: BEA and GAO calculations | GAO-16-60

Notes: Outliers consist of those remitting over $10,000 but being assigned a value of $27,199. Out of 

6,136 households, 51 outliers were removed for this comparison.

a

Rates provided by BEA.

b

GAO calculation using BEA methodology after removing the outliers from the dataset.

• BEA’s model was not consistent with the data. BEA’s model 

assumption that all individuals within a demographic category remit on 

 58Statistical Policy Directive No. 1: Fundamental Responsibilities of Federal Statistical 

Agencies and Recognized Statistical Units, 79 Fed. Reg. 71,610 (Dec. 2, 2014). 
Page 34 GAO-16-60 International Remittances

average the same percentage of their income is inconsistent with its 

data, which show that 75 percent of households remit nothing at all.

Moreover, BEA’s model generates remittance rates for certain 

categories of households that have no individuals in them. For 

example, the model calculates that individuals in households with 

married persons with absent spouses who have roommates, who 

remit to low-tier countries, and who have spent 6 to 15 years in the 

United States, remit 8.5 percent of their income. However, there are 

no such individuals in the data.

59 BEA failed to point out these data 

deficiencies even though OMB’s Statistical Policy Directive No.4 asks 

agencies to clearly point out limitations of the data to users.60

• Failure to account for censored data leads to biased results. Because 

the value of reported remittances is only partially known, BEA’s 

remittance data are censored data. The remittance data are censored 

(at the bottom) because 75 percent of households remit $0 and all 

other households remit positive sums. The remittance data are 

censored (at the top) because, as noted earlier, the CPS assigns all 

households that remit over $10,000 a remittance value of $27,199. 

Estimating a model on censored data demands certain econometric 

techniques, which BEA has not adopted, in order to yield unbiased

estimates.61 The guidelines presented by NRC as mentioned above 

specifically ask agencies to use appropriate methods for analysis that 

take account of variability and other sources of error.62

• BEA’s model is incorrectly specified in its documentation, and the 

actual model specification may lead to biases. BEA’s documentation 

states that its model explains the total amount remitted by a 

household (in part) in terms of that household’s income level. 

However, BEA’s model assumes that the total amount remitted by a 

 59Similarly, BEA reports that individuals in households with ‘MSA & Has roommates,’ who 

remit to low-tier countries, and who have spent over 15 years in the United States remit 

4.6 percent of their income. However, there are no such individuals in the BEA data. In 

fact, 25 percent of categories in which BEA classifies individuals are populated by five or 

fewer individuals. Hence, 25 percent of the estimated remittance rates as a fraction of 

income that BEA reports are based upon very little to no data on the individuals who are 

attributed these remittance rates by BEA.

60Statistical Policy Directive No. 4: Release and Dissemination of Statistical Products 

Produced by Federal Statistical Agencies, 73 Fed. Reg. 12,622 (Mar. 7, 2008).

61BEA estimates its model using a series of Ordinary Least Squares (OLS) regressions. 

When the dependent variable (remittances in BEA’s model) is limited in some way, OLS 

estimates are biased.

62National Research Council, Principles and Practices for a Federal Statistical Agency, 18.
Page 35 GAO-16-60 International Remittances

household depends only on the income of the foreign-born individuals 

in the household.63 To the extent that U.S.-born individuals in a 

household do remit, BEA’s model overestimates the fraction of 

income remitted by foreign-born individuals in that household. BEA 

officials said that they excluded U.S.-born individuals from a 

household on the basis that they remitted very little. But we found that 

407 households with only U.S.-born individuals reported remitting 

almost 13 percent of total remittances, suggesting that the remittance 

rates of foreign-born individuals may be overestimated and, thus, 

biased.

• Measurement errors in a critical explanatory variable bias the results. 

As explained earlier, BEA’s assignment of household income to 

individuals within the household is critical to its analysis. Since this 

individual income variable is subject to measurement error, it biases 

the effect of this variable on the remittance rates, contributing to the 

unreliability of the remittance estimates calculated by BEA.

• Several coding and other errors also contributed to inaccuracy. BEA 

staff said that they considered the estimation of the personal transfers 

model a relatively straightforward task.64 As such, they did not 

consider independent programming of code by a reviewer necessary. 

We found several errors and unexplained adjustments in BEA’s code 

that might have been detected had a review been conducted.

• Calibration of this new model to match unreliable old estimates 

enhanced unreliability. BEA’s model predicts total remittance amounts 

that are substantially lower than those BEA has historically published. 

BEA handles this difference by multiplying the remittance rates from 

its model by an arbitrary calibration factor so that the total model’s 

estimated remittances equal those that BEA previously calculated for 

2008.65 BEA calibrated the model because an analysis of CPS data 

determined that remittance rates may have been underestimated 

because many immigrants were reluctant to report their precise 

 63In households that include both U.S.-born and foreign-born individuals, 50 percent of 

individuals in a household are U.S.-born, on average, and they account for 46 percent of 

the household’s income on average.

64BEA officials told us that the extent to which various operating procedures are used 

depends on the procedure in question, the complexity and importance of the model or 

estimates, and the expertise of the staff assigned to their preparation.

65The number BEA uses is 2.76.
Page 36 GAO-16-60 International Remittances

remittances.66 Because BEA calibrated the new model to old 

estimates, BEA estimated the same remittance amount for the year 

2008 that the old model had produced. For the years following 2008, 

the remittance estimates differed slightly from the previous estimates 

because of the different demographic characteristics used in the new 

model (see table 2).

In our March 2006 report on BEA remittance estimates, we questioned 

the accuracy of BEA estimates based on the model developed in 2005 

after finding that the remittance rates BEA used were primarily based on 

its own judgment.67 We found shortcomings in BEA’s model, specifically 

with regard to the assumptions BEA made about the percentage of 

income remitted and the percentage of foreign-born persons who remit.

We were unable to link the parameters that BEA used to capture the 

remitting behavior of foreign-born persons directly to the sources that 

BEA cited. We found that BEA used its own judgment to determine the 

proportion of the adult foreign-born population that sent remittances and 

the proportion of income they remitted. We concluded that the accuracy 

of these estimates was affected both by the quality of the underlying data 

as well as by these assumptions. Therefore, calibration of the new 

model—which may itself be unreliable—to the old estimates further 

affects the reliability of the final estimates.

Table 2: Comparison of Estimates from BEA’s Old and New Methodologies

Dollars in billions

Total annual remittances

Old methodology New methodology

2001 $26.5 $27.1 

2002 27.7 27.4 

2003 28.0 27.5 

2004 30.4 30.1 

2005 31.3 30.9 

2006 34.3 35.3 

2007 36.9 37.1 

 66G. Patricia de la Cruz, Luke J. Larsen, and Elizabeth M. Grieco, An Overview of the 

August 2008 CPS Migration Supplement, Working Paper No. 95, U.S. Census Bureau, 

May 2012.

67GAO-06-210.
Page 37 GAO-16-60 International Remittances

Dollars in billions

Total annual remittances

Old methodology New methodology

2008 38.5 38.5 

2009 37.4 36.1 

2010 37.1 35.6 

Source: GAO analysis of BEA data. | GAO-16-60

BEA officials told us that the personal transfers estimate was not a 

principal economic indicator. Therefore, BEA considered information 

related to the development of the estimate to be influential (as defined by 

OMB’s IQA guidelines) only in terms of the integrity of the estimate’s 

dissemination.68 Nonetheless, BEA’s Information Quality Guidelines state 

that at BEA the notion of data integrity goes beyond the maintaining of the 

security of its information. Integrity includes, among other things,

transparency that is ensured by providing certain information, such as 

assumptions for missing source data and discussions of revisions.69 BEA 

officials also noted that personal remittances were a relatively small 

component of the U.S. current account.70 According to BEA officials, over 

the past 5 years personal transfers accounted for an average of 0.59 

percent of gross current account transactions. Officials said that, as a 

result, resources devoted to improving the estimation of personal 

remittances had to be balanced with resources allocated to improving 

other estimates that could be more important to the balance of payments. 

However, a number of organizations use BEA’s estimates. BEA reports 

its personal transfer estimates to IMF, which publishes country estimates 

in its Balance of Payments Statistics Yearbook. In addition, the World 

 68As mentioned previously, OMB’s IQA guidelines define “influential” as meaning that an 

agency can reasonably determine that dissemination of the information will have or does 

have a clear and substantial impact on important public policies or important private sector 

decisions. 67 Fed. Reg. 8452, 8460. According to the guidelines, ‘‘integrity’’ refers to the 

security of information—the protection of the information from unauthorized access or 

revision, to ensure that the information is not compromised through corruption or 

falsification. 67 Fed. Reg. at 8460.

69U.S. Bureau of Economic Analysis, Information Quality Guidelines (Washington, D.C.: 

Updated September 2014), accessed July 6, 2015, 

http://www.bea.gov/about/infoqual.htm. 

70The current account consists of transactions between U.S. residents and nonresidents 

in goods, services, primary income, and secondary income (including personal 

remittances).

BEA Does Not Regard Its 

Remittance Estimate as 

Influential
Page 38 GAO-16-60 International Remittances

Bank uses BEA estimates submitted to IMF as part of its calculations on 

remittances. IDB’s Multilateral Investment Fund also uses estimates 

published by IMF as a baseline for its calculations of individual country 

estimates.

BEA officials also noted that OMB’s guidelines give agencies discretion in 

determining the level of quality to which information will be held.71

However, while the guidelines do afford agencies some discretion, the 

guidelines make it clear that agencies should not disseminate substantive 

information that does not meet a basic level of quality.72 As discussed 

earlier, by failing to follow its best practices, BEA has not met this basic 

quality level. BEA officials did not explain the reasons behind not 

following their own best practices or failing to maintain adequate 

documentation along the way. We have previously stated that appropriate 

documentation of a significant event or internal control, in a manner that

allows it to be readily available for examination, is an example of a control 

activity that can be taken by federal program management.73 This type of 

control activity allows management to achieve objectives and respond to 

risks in its internal control system. Such events would include supervisory 

review of methodological changes to BEA’s estimation model.

Moreover, BEA’s best practices require documentation of its methodology 

and data and supervisory and management review and approval of any 

changes. But BEA has not provided sufficient and transparent 

documentation of its procedures for developing its new personal 

remittance estimation model. The lack of documentation made our 

evaluation of BEA’s model and estimates difficult, and it was not possible 

for us to obtain reasonable assurance that BEA met federal guidelines 

 71OMB guidelines allow agencies to weigh the costs (for example, costs attributable to 

agency processing efforts, respondent burden, maintenance of needed privacy, and 

assurances of suitable confidentiality) and the benefits of higher information quality in the 

development of information, and the level of quality to which the information disseminated 

will be held.

72OMB guidelines state that it designed the guidelines so that agencies will meet basic 

information quality standards. OMB adds that agencies shall adopt a basic standard of 

quality (including objectivity, utility, and integrity) as a performance goal and should take 

appropriate steps to incorporate information quality criteria into agency information 

dissemination practices.

73GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Page 39 GAO-16-60 International Remittances

and its own internal standards. Because the documentation provided to 

us by BEA is lacking in both clarity and completeness, we cannot say that 

BEA has met the goal of IQA to ensure and maximize the quality, 

objectivity, utility, and integrity of its remittance statistics, which are public 

information disseminated by federal agencies. However, based on the 

information we were able to obtain, we were still able to determine that 

the model produces unreliable annual estimates.

BEA’s updated model for estimating remittances produces unreliable 

results due to underlying issues with the data, such as missing 

information and measurement problems. BEA did not satisfactorily 

explain why its methodology was appropriate, despite NRC’s guidance to 

do so. Moreover, BEA calibrated the new estimates to align with those 

from its old model, the accuracy of which we had previously called into 

question. Additionally, BEA could not provide us with sufficient 

documentation of the steps it took to test the model and ensure it 

received management review and approval—key quality assurance 

procedures.

Documentation of BEA’s processes of analyzing, testing, and reviewing 

its model should not be simply an act of memorializing events. 

Documentation also provides evidence of an agency’s adherence to 

procedures and policies that are part of its quality assurance framework. 

BEA’s methodology for estimating remittances is not consistent with 

guidelines prescribed by BEA’s best practices standards, the standards of 

IQA, OMB statistical directives, and NRC guidance. Had BEA subjected 

its model to these standards, it would have taken important steps toward 

obtaining reasonable assurance that it had produced reliable annual 

estimates of remittances.

Although BEA officials discount the importance of remittances as a 

component of international transactions statistics, the inability of BEA’s 

new model to produce more accurate remittances estimates is 

consequential, as BEA’s estimate is the official remittance estimate of the 

United States and is cited by both national and international 

organizations, and in some cases incorporated into the estimates of these 

organizations.

Conclusions
Page 40 GAO-16-60 International Remittances

We recommend that the Secretary of Commerce direct the BEA Director 

to take the following actions:

To improve the reliability of the annual official U.S. estimate of 

remittances, conduct additional analyses of BEA’s estimates using 

estimation techniques appropriate for dealing with the shortcomings of the 

data. Analyses should also be conducted to understand the effect of 

various assumptions behind and limitations of the data on the estimates.

To improve the transparency and quality of BEA’s international 

remittances estimate, follow established BEA best practices, OMB 

policies, and NRC guidance for documenting BEA’s methods and 

analyses used to revise its model for estimating remittances and for 

producing its annual estimates.

We provided a draft of this report to the Secretaries of Commerce, 

Homeland Security, State and the Treasury, the Chair of the Board of 

Governors of the Federal Reserve System, and the Director of Consumer 

Financial Protection Bureau (CFPB). Commerce provided a letter, 

including written comments the Bureau of Economic Analysis (BEA) on a 

draft of the report, which are reprinted in Appendix II. CFPB, Treasury 

and State provided technical comments, which we incorporated as

appropriate.

In its comment letter, BEA stated that it intends to implement our two 

recommendations to the extent possible consistent with resource 

limitations as it continuously improves its remittance (personal transfer) 

estimate and other estimates. However, BEA stated that it did not agree 

with our report’s conclusions that its remittance estimates are unreliable 

or that its documentation of changes to its estimation model or annual 

estimates is inadequate. More specifically, BEA commented that it 

believes that its remittance estimates are valid and reasonable for the 

purpose for which they are prepared and that the documentation provided 

to GAO was fully adequate. We recognize BEA’s resource constraints. 

However, we maintain that our findings related to the reliability of BEA’s 

remittance estimates and documentation of the methodology to produce 

such estimates are valid and support the recommendations we made in 

the report.

Regarding our conclusion that BEA’s remittance estimates are unreliable, 

in its comment letter BEA acknowledged the data limitations that GAO 

pointed out in the report but did not explain how these may affect its

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 41 GAO-16-60 International Remittances

estimates. The limitations described in BEA’s comment letter were not 

discussed in the documentation provided by BEA. Nor did BEA provide 

evidence showing that it conducted alternative analyses to conclude that 

these limitations did not affect the quality of its final estimates. For 

example, in its comment letter BEA mentions that the calculation of its 

income variable was problematic but during our review did not present us 

with analysis to show how sensitive its estimates were to various 

assumptions about income, including that of taking the midpoint of the 

range of income provided in its data. Even BEA’s choice of demographic 

variables included in their analysis depends on how it calculates 

individual income. BEA acknowledges that its data was censored—where 

the value of reported remittances for some households in its data set is 

only partially known—but during our review, it did not provide evidence 

that it conducted additional analyses using an alternative methodology to 

see how final estimates might be affected. BEA told us that these 

households were responsible for a substantial proportion of all 

remittances and we found that it had considerable influence on BEA’s 

estimates. Though these and other data limitations described in this 

report could have substantial impact on the estimates, in its comments 

BEA dismisses the limitations stating that they would only have marginal 

effect on the estimates. However, BEA does not present evidence of 

having tested the magnitude of the effects on the estimates. Moreover, 

calibrating the estimates resulting from BEA’s revised estimation model to 

its previous estimates, the accuracy of which was deemed uncertain in a 

previous GAO report, further undermines our confidence in these 

estimates. As a result of data limitations, BEA’s choice of methodology in 

light of those limitations, and other errors and corrections BEA made, we 

maintain that BEA’s revised estimation model produces unreliable 

remittance estimates.

Regarding our conclusion that BEA did not follow the best practices, 

policies, and guidance to which it is subject for documenting its methods 

and analyses, BEA stated that the documentation provided to GAO was 

fully adequate. We disagree. As discussed in this report, we identified 

several instances where BEA did not follow best practices, policies, and 

guidance. For example, we requested files that provided documentation 

of the analyses BEA conducted to determine changes to its estimation 

methodology. BEA provided written descriptions of its regression analysis 

in a conference paper. BEA staff told us that its analysis files had been 

saved among many partially complete files and that it would be difficult to 

identify the files that led to the current version of the model. BEA’s best 

practice standards require that all methodological changes and the 

rationale for the changes be clearly documented. As we describe in the 
Page 42 GAO-16-60 International Remittances

report, without documentation BEA could not effectively convey and 

support the rationale and appropriateness of its methodology. We were 

unable to verify, among other things, the accuracy of much of BEA’s data 

or fully understand the selection of its methodology.

As we stated in the report, documentation of analysis, testing, and 

evaluations of models should show evidence of adherence to procedures 

and policies that are part of an effective quality assurance framework. 

BEA did not provide documentation that reflected such a framework. For 

example, BEA officials described conducting managerial and external 

reviews of the model’s revision but provided only the minutes to one 

management review meeting indicating that the model had been 

discussed but was still under consideration. Though we requested 

documentation of final approval of the model by the management 

committee, BEA told us that it had nothing further to provide. BEA also 

described an external review of its model revision that was done by an 

external econometrician for quality assurance purposes. When we asked 

for documentation of this review, however, BEA told us that it had been 

informal and that no written opinion had been provided.

In addition, BEA stated that our ability to reproduce the agency’s 

estimates showed that its documentation was adequate. However, we did 

not attempt to reproduce BEA’s estimates. Rather, we ran the computer 

program that BEA provided on the data created by BEA to replicate a few 

intermediate steps in its methodology. By replicating these steps, we 

found inconsistencies between BEA’s description of the analysis and 

what was actually done, and other errors. We did not and would not have 

been able to reproduce the analysis, based on the documentation that 

BEA provided, that led to the final remittance estimates or even create the 

dataset used by BEA from its listed sources.

BEA noted that it provided us with new summaries to help explain certain 

aspects of its methodology, but asserted that we conflated this additional 

effort with an inadequacy of internal control and initial documentation. 

However, we maintain that in some cases, BEA provided these 

summaries because it was unable to provide us with original 

documentation. For example, we asked for records of analysis that 

supported the calculations of 2012 and 2013 estimates. BEA told us that 

the documents were created only when each year’s estimate was 

produced and were not saved. BEA also was unable to provide original 

documentation of the analysis that led to the current version of the model 

and attempted to recreate its steps in new documentation. 
Page 43 GAO-16-60 International Remittances

BEA also rejected the statement that it did not follow best practices 

because it did not consider remittances to be influential. During our 

review, BEA staff told us that information about BEA’s remittance

estimates was designated as influential only to prevent their disclosure 

before they were officially released. BEA also told us orally and in writing 

that as personal remittances were a relatively small component of the 

U.S. current account, resources devoted to improving the estimate of 

remittances had to be balanced with resources allocated to improving 

other estimates that could be more important to the balance of payments. 

Finally, BEA stated its remittance estimate was not designed to measure 

the potential impact of the WIRE Act (proposed Remittance Status 

Verification Act of 2015), and it understood that we would use its 

estimates as a basis for understanding the magnitude of cross-border 

transfers. BEA’s comment inaccurately described the purpose and scope 

of our review. As we describe in this report, our review focused on two 

separate objectives which were to (1) discuss the potential effects of 

assessing a fine on remitters unable to provide proof of legal U.S. 

immigration status, and (2) examine BEA’s remittance estimate and the 

extent to which its revised estimation methodology met government-wide 

policies and agency best practices. We used information on BEA’s 

remittance estimates solely to help us answer the report’s second 

objective.

We are sending copies of this report to interested congressional 

committees and the Secretaries of Commerce, Homeland Security, State,

and Treasury, as well as to CFPB and the Federal Reserve Board. In 

addition, the report will be available at no charge on GAO’s website at 

http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-8678 or cackleya@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs are listed on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix III.

Alicia Puente Cackley

Director, Financial Markets and

 Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-16-60 International Remittances

This report (1) discusses the potential effects of collecting information 

from and imposing a fine on remitters unable to provide proof of legal 

U.S. immigration status, and (2) examines the Bureau of Economic 

Analysis’ (BEA) remittance estimate and the extent to which the revised 

estimation methodology met government-wide policies and agency best 

practices.

To discuss the potential effects of assessing a fine on remitters unable to 

provide proof of U.S. immigration status, we summarized estimates of the 

number of immigrants without legal status from federal agencies and 

research organizations, including the Department of Homeland Security 

(DHS), Pew Research Center, and Center for Migration Studies (CMS). 

Together, DHS, Pew Research, and CMS are primary sources for the 

estimates of immigrants without legal status in the United States, which 

we determined by asking experts from each organization above to 

discuss all other similar estimates. Through interviews with immigration 

researchers, review of research articles, and comparison of the 

estimates, which ranged from 11.1 million to 11.4 million immigrants in 

the United States without legal status in 2012, we determined that the 

estimates were authoritative and sufficiently reliable for the purposes of 

this report. We used these sources to identify the size of the potentially 

affected group of immigrants without legal status.

To acquire information on the effects of the proposed requirement to 

provide proof of legal status or pay a fine, we reviewed relevant academic 

and industry studies based on a literature search. We reviewed and 

summarized the literature for factors that could be associated with the 

proposed legislation, including the number and remitting behavior of 

immigrants without legal status, changes in remittance flows in response 

to a price increase, the effect of requiring proof of legal status on 

remittances, and market competition between remittance providers.. We 

determined the studies to be reliable for our purposes.

To obtain perspectives on the potential effects of imposing a fine on 

remitters without proof of U.S. legal status, we interviewed researchers 

with expertise in remittances and immigration to the United States, 

financial institutions, remittance service providers, two industry trade 

associations, one state audit association, two community groups with 

knowledge of remitters’ concerns, and knowledgeable federal and 

international agencies. We judgmentally selected a cross-section of 

remittance transfer providers that included five nondepository remittance 

transfer providers and four depository institutions based on a number of 

factors, including the volume of remittances and diversity of countries 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-16-60 International Remittances

serviced. We spoke with regulators, including the Consumer Financial 

Protection Bureau (CFPB) and the Financial Crimes Enforcement 

Network (FinCEN), to obtain their perspectives on compliance with 

requirements of the proposed Remittance Status Verification Act of 2015, 

should it become law. We also reviewed laws and regulations relevant to 

remittance transfer providers. Researchers with expertise in remittance 

transfers were selected by contacting two recognized experts and asking 

for referrals. We interviewed the experts recommended and continued to 

ask for others until the referrals began to repeat with experts we already 

interviewed. To select community groups, we asked others we 

interviewed for recommended groups. 

To highlight the uncertainty associated with the effects of the fine, we 

constructed a scenario analysis of several factors that may affect net 

revenue from the fine, which is the amount of fine collected that remains 

available for border protection after payment of CFPB’s administrative 

and enforcements costs. We varied hypothetical amounts for the following 

three factors: dollar amount of remittances sent by immigrants without 

legal status, the percentage reduction in remittances in response to the 

fine, and the cost for administration and enforcement. We selected the 

three factors by analyzing them among other potential factors and we 

found that these three provided wide variability in net revenue from the 

fine. Other factors we considered included the volume of total 

remittances, the percentage transmitted through formal methods, and the 

percent of remittances sent by immigrants without legal status. Though 

we conducted a literature search for statistics for each factor in our 

analysis, any studies found were not generalizable or sufficient for our 

purposes. The data were limited to remittance flows between specific 

countries, for example remittances sent between the United States and 

Mexico, or were not recent. Therefore, the dollar amounts or percentages 

given to each factor in our scenario analysis are hypothetical and 

selected only to show the potential variability in net revenue from the fine.

To obtain information on BEA’s estimate of remittances (personal 

transfers) from the United States, we met several times with BEA officials 

responsible for developing the estimate. They provided us with an 

estimate of the total volume of remittances from the United States to the 

rest of the world from 2006 to 2014 that they provided to the IMF for 

inclusion in balance of payments statistics. In this report, we further 

assess BEA’s estimation model and find that its results are unreliable.

To understand BEA’s revised methodology for estimating remittances 

(personal transfers) we conducted multiple interviews with BEA staff 
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-16-60 International Remittances

responsible for developing the estimate. We obtained BEA documentation 

describing the agency’s approach to estimating remittances, including 

components of its model, related statistical program files, and its outputs. 

We reviewed BEA’s presentation and description of the model and 

checked for consistency with its statistical program files and other 

calculations. We provided BEA with numerous follow-up questions about 

the methodology, and BEA provided us with written responses and 

attended additional meetings to provide more clarity. We also obtained 

documentation on the Census Bureau’s (Census) American Community 

Survey and Current Population Survey data to understand how they were 

used in BEA’s remittance estimation methodology and interviewed 

Census officials familiar with the survey. We also reviewed BEA’s best 

practices, Office of Management and Budget (OMB) statistical directives, 

and the National Research Council (NRC) of the National Academies of 

Sciences’ manual for statistical agencies to determine the extent to which 

BEA’s methodological changes conformed with guidance on statistical 

practices.

To determine the extent to which BEA documented its changed 

methodology and its results and adhered to best practice standards, we 

met with BEA staff responsible for developing the estimate. BEA staff 

explained their documentation procedures to us. BEA staff also provided 

copies of BEA guidance on best practices regarding methodological 

changes. We also reviewed relevant law and regulations, as well as 

guidance from IMF, the Department of Commerce, OMB, and NRC. We 

reviewed documents provided by BEA for transparency and 

completeness. Additionally, we provided BEA with follow-up questions 

about the agency’s documentation processes and procedures, and BEA 

provided us with written responses. After receiving the responses, we 

again met with BEA staff to discuss these processes and procedures.

To obtain a variety of views on remittance estimation, we met with 

officials from IMF, World Bank, Inter-American Development Bank and 

their external consultant, as well as the Mexican and Philippine central 

banks. We selected these two countries because they were among the 

top 10 recipient countries of U.S. annual outflows and both countries use 

a formal methodology to track inflows and outflows on at least an annual 

basis. In meetings with these entities, we gained an understanding of the 

methodologies used to estimate remittances and challenges in remittance 

estimation.

We conducted this performance audit from October 2014 to February

2016 in accordance with generally accepted government auditing 
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-16-60 International Remittances

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: Comments from the Department 

of Commerce

Page 48 GAO-16-60 International Remittances

Appendix II: Comments from the Department 

of Commerce
Appendix II: Comments from the Department 

of Commerce

Page 49 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 50 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 51 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 52 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 53 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 54 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 55 GAO-16-60 International Remittances
Appendix II: Comments from the Department 

of Commerce

Page 56 GAO-16-60 International Remittances
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 57 GAO-16-60 International Remittances

Alicia Puente Cackley, (202) 512-8678, or cackleya@gao.gov

In addition to the contact named above, Marshall Hamlett (Assistant 

Director); Julie Trinder-Clements (Analyst-in-Charge); Namita BhatiaSabharwal; Tarik Carter; Emily Chalmers; David Dornisch; Lawrance 

Evans, Jr.; Donald Hirasuna; Cheryl Jones; Madeline Messick; Patricia 

Moye; Jungjin Park; Oliver Richard; and Jena Sinkfield made key 

contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250805)
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