Presentation Prepared for the 

FDIC Advisory Committee on Economic Inclusion

Providing Access to Financial Services:  The Roles of Banks and Money Transfer Organizations

Washington, DC, October 24, 2007

SLIDE 1 - 	SLIDE: 20 SECONDS	MARK: 0:00 START –  0:20 END

Viamericas is a leading money transfer company serving the $4 billion Latin American market. 

We provide a low cost, high value service through an efficient technological platform and superior distribution network.

Summary
        - Remittances are radically different international payment flows.
        - Licensed Remittance Companies (LRCs) play a critical role in channeling remittance payments. 
        - LRCs face a crisis due to lack of access to US bank accounts
        - Money Transfer Operators are in a unique position to serve transnational families.

Remittances are Different

A steady, non-volatile, growing source of balance of payments support          

Source: World Bank (Dilip Ratha). 2003. “Workers’ Remittances—An Important and Stable Source of External Development Finance.” In Global Development Finance 2003 (chapter 7). Washington, D.C.: World Bank. 

US billion,

 worldwide figures

Remittances are Different

FDI, Capital Market Flows          

Official Flows          

Family Remittances  

Account Discontinuance
        - Access to Bank accounts for Licensed Remittance Companies (LRCs) is extremely limited
        - Most large national banks are completely closed to the industry
        -  No case by case review, no due process:  banks are simply closed to the sector
        -  Zero account access in some geographic areas; problem is nationwide in scope
        - The largest, publicly traded LRCs are able to maintain corporate accounts: This is a significant competitive issue. 

MTOs are easy targets

The combination of historical regulatory hostility and some banks’ desire to enter the market makes it tough to be a competitive LRC with an account at a large bank.

“Bummer of a birthmark, Hal.”

The Emperor Has No Clothes

Accounts are closing left and right.  Why?
| Fallacy:                                                                                                                                                                                                                                                                                                                  | Fact:                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| It is good bank supervisory policy to encourage banks to provide money transfer services directly, and to do nothing to stem the tide of LRC account closures, because: Consumers benefit by having their transfers made through banks. Bank-based transfer programs are more secure against money laundering operations. | LRCs are faster, cheaper and better through specialization.  Highly technical bank programs have floundered.  Banks have not been competitive, are adopting MTO models. Banks require a face-to-face meeting once (or never, with card programs); thereafter the service can be totally remote and is wide open for abuse.  LRCs see customers every time. Account closures drive customers to unlicensed operators, thwarting all control. |
| Providing accounts to LRCs presents great risk to banks.                                                                                                                                                                                                                                                                  | Bank AML sanctions have been based on bank misconduct, on continued control failures and on banking UNLICENSED remittance operations.   Not one bank fine has been based on alleged misconduct of a client that is a LICENSED REMITTANCE COMPANY.                                                                                                                                                                                           |

Competition
        - Competition drives down prices, increases innovation
        - Role of Government to assure competitive landscape
        - Examples of other subsidized/regulated networks where governmental intervention in favor of competition had a huge impact on development and innovation: Railroads and Telephony
        - Account discontinuance impedes competition, and is therefore bad for the consumer.

Closing accounts: bad policy
        - The trend toward account discontinuance is bad regulatory policy on several levels
        - Impedes competition:  bad for consumers (senders and recipients)
        - Drives money transfer activity underground:  bad for law enforcement
        - Encourages marginal players to disguise accounts at banks:  bad for banks

Money  Transfer Services
        - Cost
        - Convenience
        - Speed
        - Safety / security
        - Financial democracy
        - Empowering options for the use of funds

How do LRCs stack up?

The Factors:

Lower fees, better forex

Open nights, weekends

Faster than bank wires

Licensed, bonded, examined

Specialized Compliance

Recipients have a voice

We’re in touch with both the  sender and the recipient, and are truly in a position to do this.

Example:  Health Care

Public and private health care systems in developing countries can come under severe pressure from non-participation or from premium payment arrears.

Remittance senders effectively self-insure against sickness of their families.

Offering remittance senders the option of directing partial payment to ensure that their recipient is up to date on health care premiums is a win-win-win proposition:
        -  Senders win; no major bills as a self-insurer
        -  Recipients win; medical care when they need it
        -  System wins; greater participation

LRCs, with sender/receiver relationships, are in a unique position to offer this specialized payments service.

Calls to Action
| Needs:                                                                              | Call to Action:                                                                                                                                                                                                |
|-------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The myth of extreme risk for banks offering accounts to LRCs needs to be dispelled. | FDIC should publicize the fact that no bank has been fined for alleged illicit activities of a client LRC.Legislative solutions seeking to mitigate banks’ risk (or perception of risk) should be supported.   |
| Line level bank examiners need to be more friendly to LRC accounts.                 | Permit LRC industry to address examiners’ training sessions, in order to show that we are regulated, controlled and disciplined.                                                                               |
| Banks need specific incentives to serve LRCs                                        | Extend CRA credit to banks that serve remittance customers indirectly, by serving LRCs.                                                                                                                        |

Unique Joint Opportunity
        - Licensed Remittance Companies are in a unique position to serve transnational families, and should be permitted to do so in partnership with US banks. 
        - This Committee is in a unique position to help assure that competition in the remittance industry survives.

Together, we can make sure that remittance customers are well served, and that the massive capital flows that remittances represent can have the greatest poverty alleviation and development impact possible.

CONTACT INFORMATION

Paul Dwyer, CEO

pdwyer@viamericas.com

(301) 215-9294 ext 102

SLIDE 1 - 	SLIDE: 20 SECONDS	MARK: 0:00 START –  0:20 END

Viamericas is a leading money transfer company serving the $4 billion Latin American market. 

We provide a low cost, high value service through an efficient technological platform and superior distribution network.

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