Regulating Remittances to Post-Conflict Africa: The Dodd-Frank Act and the Law of Unintended Consequences
Posted: 18 Jul 2013
Date Written: July 18, 2013
Recent regulatory changes surrounding remittance transfers have a potential to severly interrupt remittance flows to conflict-affected regions. The Dodd-Frank Act amendments to the Electronic Funds Transfer Act, and the implementing regulations issued by the Consumer Financial Protection Bureau (CFPB), are intended to provide enhanced consumer protections to U.S. residents sending funds to foreign countries. The legislation and regulations were designed for a model in which the remittance transfers are subject to known rules and regulations, all fees can be determined beforehand, and exchange rates and timing can be predicted with near certainty. This model does not exist for remittances sent to many post-conflict countries in Africa. In these nations, the financial regulatory structure tends to be weak and the political and legal infrastructure unstable. Under these circumstances, it is difficult to know with certainty many of the facts that the regulation requires remittance providers to disclose when the remittance is initiated. At the example of cases from West Africa, the paper discusses the shortcomings of the funds transfer amendments to post-conflict African societies, and recommends measures to assure that the new rules will not inhibit remittance transfers.
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