Drafting law to protect migrant workers from fraudsters
Tuesday, 10 July 2007
The recent First Solutions Money Transfer scam has come as a rude shock to thousands of Bangladeshi migrant workers. It was an act of fraudulence on the part of a private money transfer institution to misappropriate a large sum of money remitted by the Bangladeshis living in Britain. Scores of Bangladeshis were shell-shocked when they discovered that the money they had remitted through the First Solutions did not reach their near and dear ones back home and the officials of the agency concerned were missing. The scam bodes ill for private institutional money transfer agencies against the backdrop of dominance of unofficial hundi channels in remittance transfers, particularly from the Middle Eastern countries where majority of the Bangladeshi migrant workers are employed.
The measures taken by the central and other commercial banks to encourage the migrant workers to remit their hard earned money back home through official channels have been largely successful and the volume of remittance through legal channels has increased substantially in recent years. The inflow of remittance through legal means during the last financial year was estimated to be around $4.8 billion. But the First Solutions scam has the potential of reversing the trend since the expatriate workers, particularly those employed in the Middle East had found the services of hundi operators handy in reaching their remitted money to the beneficiaries back home.
However, it is time for the central bank to devise ways and means to protect the migrant workers from the risk of their money being embezzled by unscrupulous institutional money transmitting agencies. The Bangladesh Bank has done a good job by already engaging a team of consultants for drafting a unique law that aims at shielding the migrant workers and their families at home from any possible exploitation by remitting agents and money transfer agencies. The proposed law should incorporate provisions to bar remitting agents having no covering arrangements with local banks from receiving funds from the migrant Bangladeshi workers. Such arrangements are necessary to hold the counterpart banks responsible for any fraudulent practice by the remitting agencies abroad and for ensuring payment of the remitted money to the beneficiaries. The banks having arrangements with money transfer agents abroad, for the sake of protecting themselves, must not make delivery of any fund to beneficiaries without receiving confirmation from their correspondent banks about deposit of the money in their Nostro accounts.
A number of local banks, reportedly, had drawing arrangements with the scam-hit First Solutions. The extent of financial loss, if there was any, suffered by those banks, however, is yet to be known. Meanwhile, the central bank has asked all local commercial banks to make payments to beneficiaries only after receiving equivalent amount of foreign currency funds from overseas exchange houses to avoid financial risks. The central bank, while cautioning the banks about the possible financial risks involved in dealing with money transfer agents, does need to take appropriate steps to make the use of formal channels for remitting money by the migrant workers trouble-free. Failure to do so might put much of the gains achieved so far in motivating the blue-collar migrant workers to transfer their remittances through formal channels at the risk of being wiped out. The increased flow of remittances through legal means has largely contributed to the existing positive trend in the balance of payments situation. The country can hardly afford to witness any change in that situation.
The measures taken by the central and other commercial banks to encourage the migrant workers to remit their hard earned money back home through official channels have been largely successful and the volume of remittance through legal channels has increased substantially in recent years. The inflow of remittance through legal means during the last financial year was estimated to be around $4.8 billion. But the First Solutions scam has the potential of reversing the trend since the expatriate workers, particularly those employed in the Middle East had found the services of hundi operators handy in reaching their remitted money to the beneficiaries back home.
However, it is time for the central bank to devise ways and means to protect the migrant workers from the risk of their money being embezzled by unscrupulous institutional money transmitting agencies. The Bangladesh Bank has done a good job by already engaging a team of consultants for drafting a unique law that aims at shielding the migrant workers and their families at home from any possible exploitation by remitting agents and money transfer agencies. The proposed law should incorporate provisions to bar remitting agents having no covering arrangements with local banks from receiving funds from the migrant Bangladeshi workers. Such arrangements are necessary to hold the counterpart banks responsible for any fraudulent practice by the remitting agencies abroad and for ensuring payment of the remitted money to the beneficiaries. The banks having arrangements with money transfer agents abroad, for the sake of protecting themselves, must not make delivery of any fund to beneficiaries without receiving confirmation from their correspondent banks about deposit of the money in their Nostro accounts.
A number of local banks, reportedly, had drawing arrangements with the scam-hit First Solutions. The extent of financial loss, if there was any, suffered by those banks, however, is yet to be known. Meanwhile, the central bank has asked all local commercial banks to make payments to beneficiaries only after receiving equivalent amount of foreign currency funds from overseas exchange houses to avoid financial risks. The central bank, while cautioning the banks about the possible financial risks involved in dealing with money transfer agents, does need to take appropriate steps to make the use of formal channels for remitting money by the migrant workers trouble-free. Failure to do so might put much of the gains achieved so far in motivating the blue-collar migrant workers to transfer their remittances through formal channels at the risk of being wiped out. The increased flow of remittances through legal means has largely contributed to the existing positive trend in the balance of payments situation. The country can hardly afford to witness any change in that situation.