110th CONGRESS, LEGISLATIVE ISSUES A - Z
Credit Unions and Remittances:
An Alternative to Underground and High-Cost Transactions
The United States is facing its highest level of immigration since the Depression era with over 28.4 million foreign-born individuals residing in the United States who send home an estimated $40 billion per year, $23 billion of which goes to Latin America and the Caribbean.
Many of these individuals provide a constant flow of dollars back into their home countries that have enabled their family members to improve their standard of living. According to the Inter-American Dialogue, “there is no flow of capital that more surely and directly benefits Latin American’s poor than remittances…”
Many argue that remittances may be used to finance terrorist activities, and that financial institutions should not be encouraged to facilitate such transactions.
Bringing immigrant workers into the formal banking system is good for national security. Credit unions using IRnet provide real-time monitoring of remittance transactions against the Specially Designated Names (SDN) list from the Office of Foreign Asset Control (OFAC). Additionally, over 50% of remittances go to Latin America and the Caribbean—countries which are not the breeding grounds of terrorism.
Many argue about the legal status of immigrants, and whether or not they should have access to US government and financial services.
It is not the place of financial institutions to determine the legal status of an individual. However, credit unions and financial institutions can offer these services to immigrants to the benefit of the community—promoting overall economic security and stability in communities while ensuring individuals, who may otherwise carry large amounts of cash and may be victims of street crimes and thefts, have access to basic financial services.
Our nation’s financial infrastructure has failed to modernize and offer efficient services needed by this immigrant population. As a result, there is a growing population of unbanked individuals, especially immigrants, and a costly and inefficient money transfer process that has been created.
CUNA and WOCCU offer credit unions a remittance product called IRnet (International Remittance Network), that offers safe, reliable and affordable wire transfer services to over 40 countries worldwide. More than 200 credit unions are signed up for the IRnet service, with over 650 points of service available throughout the United States. By encouraging immigrants to utilize remittance services through the credit union, it will open the door for them to a full array of financial services. Additionally, WOCCU is working to ensure recipients of remittances in developing countries have access to credit unions services, providing them access to savings, microcredit and other services.
