This report focuses on remittances, transfers of money and capital sent by migrants and foreign immigrant communities to their home county. Increasing migration is a defining feature of the current global economy. Migrants account for around 3.4% of the global population and the number of foreign-born residents in the United States is at its highest level in U.S. history, reaching 42.4 million in 2014. Foreign-born residents of the United States made up 13.3% of the U.S. population in 2010, approaching levels not seen since 1910 (14.8%). Foreign migrants and their communities in the United States sent $56.3 billion in remittances in 2014, around 13% of the worldwide total. As migrants have become increasingly integrated into the global economy, their involvement in the economic activities of their home countries has also increased. In 2015, worldwide remittance flows are estimated to have exceeded $601 billion. Of that amount, developing countries are estimated to receive about $432 billion, nearly three times the amount of official development assistance (ODA). Only foreign direct investment (FDI) is a larger source of foreign capital for the world's developing countries than remittances. The dramatic rise in the importance of remittances to global capital flows has led Congress and other policymakers to take a greater interest in these flows and how they are covered under U.S. and state regulation. Recent financial reform legislation, for example, P.L. 111-203 , the Dodd-Frank Wall Street Reform and Consumer Protection Act , provided federal consumer protections on remittance transactions. Remittances are also subject to federal regulation to prevent money laundering and terrorist financing. This report provides general background on remittances, analyzes global and U.S. remittance flows, examines the remittance marketplace and the regulatory regime for sending remittances from the United States, and discusses key issues for Congress. Remittances are cross-border migrant financial transfers. The primary source for international remittances data is the International Monetary Fund (IMF), which compiles statistics submitted by its member countries. Using IMF statistics, the World Bank publishes an annual Migration and Remittances Factbook , and monthly and annual remittances data on its website. There are ongoing efforts to improve remittance data. Remittances are currently defined as the sum of three entries in the IMF's annual Balance of Payments Statistics Yearbook: workers' remittances; compensation of employees; and migrants' transfers. W orkers' remittances are defined by the IMF as transfers (cash or in kind) by migrants who are employed and considered resident in another country. If the migrants live in the host country for one year or longer, they are considered residents, regardless of their immigration status. C ompensation of employees includes wages, salaries, and other benefits of border, seasonal, and other nonresident workers (such as local staff of embassies) away from their home country for less than a year. Migrants' transfers are the net worth of migrants' assets that are transfers from one country to another at the time of migration (for a period of at least one year), such as in the case of temporary workers. A remittance transaction typically involves a sender, a recipient, intermediaries in both countries, and a payment system used by the intermediaries ( Figure 1 ). Remittances can be sent through informal or formal channels. Informal channels have been labeled by various terms, including "alternative remittance systems," "underground banks," and "informal value transfer systems." The most well-known is hawala (hawala means "transfer" in Arabic), which originated in India and has been in use in South Asia and the Middle East for several hundred years. These services are less expensive than formal banking or money transfer arrangements, can provide anonymity for all parties involved, and can reach countries where there is no formal banking sector, in some cases even arranging for hand delivery of the cash. While most use these systems for legitimate purposes, their lack of documentation and anonymous, informal nature may make them attractive for money laundering and/or terrorist financing purposes. Formal channels involve intermediaries that are officially licensed to operate money transfer businesses. These consist of banks; non-bank financial institutions, such as credit unions, savings and loan institutions, and post-offices; and money service businesses such as Western Union or MoneyGram. Increased use of technology in developing countries has also facilitated the use of mobile and other alternative payment options. The price of sending a remittance can vary significantly. A number of factors affect the transfer fee charged, including the regulatory and administrative costs, the volume sent, the transfer mechanism, the receiving country's financial infrastructure, and the level of market competition (in both the sending and receiving country). In addition, the exchange rate used in the transaction can significantly affect the amount actually delivered to the recipient. For the most part, the cost of sending remittances has declined slightly in recent years, but substantial progress would need to be made to meet the G8 target of 5% of total cost set in 2009. According to World Bank analysis, the global average remittance cost has declined from 9.81% of the total transaction in 2008 to 7.53% during the first quarter of 2016. Among the major economies, the United States is among the least costly from which to send money ( Figure 2 ). For the first quarter of 2016, the average cost to send a remittance from the United States was 6.04% of the transaction. The World Bank also tracks the cost of sending remittances from the main remittance providers. Recent data show that banks continue to be the most expensive providers, followed by post offices. Money Transfer Operators (MTOs) such as Western Union and Moneygram are the cheapest ( Figure 3 ). Remittances have increased steadily over the past three decades. In 1990, remittances to developing countries totaled about $75 billion. At the time, remittances were a larger source of foreign capital to developing countries than both foreign direct investment and private capital flows (debt and equity). According to the World Bank, remittances to developing countries are estimated to have risen to $432 billion in 2015. Official remittance figures do not include informal remittance flows, which may account for an additional 35% to 75% of total remittance flows. In 2015, India was the largest remittance-receiving country ($69 billion), followed by China ($64 billion), and the Philippines ($28 billion). Figure 4 shows the geographical distribution of remittances since 2000. The emergence of large Indian, Chinese, and Philippine diaspora populations led to the explosive growth of remittances over the past 15 years. Between 2000 and 2014, remittances to developing countries in East Asia and Pacific increased by 370%, growing from $17 billion in 2000 to $79 billion in 2014. In South Asia, remittances increased by 571% over the time period, growing from $17 billion in 2000 to $116 billion in 2014. Despite accounting for a much smaller amount of global remittances, flows to Sub-Saharan Africa increased by 608% from 2000 ($5 billion) to 2014 ($34 billion). Table 1 presents the 40 largest recipients of remittances ranked by the total amount of remittances received and by the percentage share of GDP. India is the largest individual recipient of remittances followed by China, Philippines, and Mexico. While remittances serve as an important component of a diversified mix of external finance in emerging market and middle-income countries, for the poorest countries, remittances are an essential anti-poverty tool, comprising a significant share of national economic activity. Tajikistan, for example, has been dependent on remittances since an armed conflict between 1992 and 1998 claimed over 100,000 lives, destroying the economic infrastructure. Approaching 20 years after the end of the conflict, remittances account for around 42% of national GDP. In nine countries, the total value of remittances exceeds 20% of their total GDP. There are 12 countries on both lists, having large total volumes of remittances that also comprise a substantial share of GDP: Bangladesh, the Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Lebanon, Pakistan, the Philippines, Nepal, Serbia, Sri Lanka, and Tajikistan. The United States is the largest destination for international migrants and by far the largest source of global remittances. The World Bank records $56.3 billion in official remittance outflows from the United States in 2014. After the United States, the next largest sources of remittances in 2014 were Saudi Arabia ($36.9 billion); Russia ($32.6 billion); Switzerland ($24.7 billion); and Germany ($20.8 billion) and other advanced European economies. The IMF, World Bank, and the U.S. government do not compile and publish remittance flows from the United States (or other countries) to individual countries or regions. However, since 2010, the World Bank has estimated bilateral remittance flows between its member countries. Table 2 presents the World Bank's estimates for the largest recipients of remittances from the United States. Currently, the U.S. foreign remittance market is dominated by MSBs, a category of non-bank financial institutions that generally own proprietary, so-called "closed-loop" payment systems and operate largely outside of conventional banks. The capacities of MSBs include money orders, traveler's checks, money transmission, check cashing, currency exchange, currency dealing, and stored value. MSBs cover a broad variety of enterprises ranging from the small and simple to large firms with numerous branches or outlets. MSBs include the U.S. Postal Service, because it issues money orders.