paid directly by non-bank financial institutions – such as money transfer companies, exchange bureaus, credit unions, post offices, etc -- are frequently not covered in balance of payment statistics.<sup>3</sup> As shown in Table 2, in all 40 countries covered in the survey commercial banks participate in the payment of remittances. 90% of countries collect remittance data from commercial banks. In 20 of 40 countries, exchange bureaus, credit unions, and other non-bank financial institutions pay remittances, but only 65% of those countries collect remittance data from those institutions. In 39 of 40 countries, money transfer companies pay remittances, but only 38% of central banks collect data from them. Finally, in 26 of 40 countries post offices pay remittances, but only in 35% of those countries remittance data is collected from post offices.<sup>4</sup>

**Table 2. Central Banks' Sources of Data on Remittance Inflows**

|||**Commercial**<br>**Banks**|**Exchange**<br>**bureaus and**<br>**other inst.**|**Money**<br>**Transfer**<br>**Companies**|**Post**<br>**Offices**|
|---|---|---|---|---|---|
|**a. **|**Countries where remittances**<br>**are paid by:**|40|20|39|26|
|**b. **|**Central banks that collect data**<br>**on remittance payments made**<br>**by:**|36|13|15|9|
|**c.**|**Percent of central banks that**<br>**collect data from: (b / a)**|90%|65%|38%|35%|

Because not all countries collect data from all the financial and non-financial institutions that pay remittances, the official data in many countries do not reflect the full value of remittance inflows that they receive every year. What is the value of remittances not covered in official statistics is a difficult question to answer due to lack of data at both international and country levels. In fact, one of the questions central banks were asked was whether they knew the market share among all the different service providers paying remittances in their countries, even if they did not capture this information in their official statistics. As shown in chart 1, only 28% of central banks responded positively. Interestingly, all countries that responded 3 There is no universally accepted definition of remittances. The fifth edition of the IMF’s Balance of Payments Manual (BPM5) provides definitions for “compensation of employees”, “workers’ remittances” and “migrants’ transfers”. All the above three categories are frequently considered “remittances” by analysts and data users. A detailed review of these three categories and some of their limitations can be found at (Neil Patterson and Jens Reincke, 2005).

4 In some countries, a number of money transfer companies and non-bank financial institutions settle their remittance transactions through local commercial banks. In those cases, it is possible that remittance transactions conducted by these institutions are reported by commercial banks to the central bank. Unfortunately, this study did not have the resources to investigate what percentage of non-bank financial institutions in developing countries settle their remittance transactions through local commercial banks. Moreover, it was not possible to examine the existing data reporting procedures in commercial banks – in some countries banks are only required to report individual remittance transactions above a certain threshold amount -- to verify that transactions are properly recorded as remittances. Without doubt, all these topics require further research.

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