MONEYGRAM’S CFIUS SITUATION

Let’s first remember. In April 15, 2017, Alibaba’s financial affiliate Ant Financial (Ant) agreed to purchase MoneyGram International, Inc. (MGI) for $18 per share. Ant, which is controlled by the famous Alibaba CEO Jack Ma, increased its price from $13.25 to $18 after RIA’s Euronet put in a bid for $15.20. In order for the deal to pass, the companies need approval from CFIUS.

What is CFIUS? The Committee on Foreign Investment in the United States. Is CFIUS under the watchful eyes of Mr. Trump? Are his America First policies at play here? Yes, definitively.

And we know in the industry, that US RIA’s Euronet is keeping a close eye on that decision. We all are. If the deal goes through every company in the industry will be more valuable… But let’s analyze the situation…

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FROM DERISKING TO DETENTE

Key positive developments in banking for MSBs

It’s been a bleak period for money transmitters over the past several years. The specter of derisking —that business-killing policy of many banks in the US and globally—may be disappearing. At least in the US where other entities are stepping up. Our colleagues in other parts of the world are still seeing their local banks derisking yielding to the pressure of large global banks.

So, in preparing for the panel on “Derisking and MSB Friendly Banks” that I am coordinating with Hugo Cuevas-Mohr for IMTC WORLD 2017 I came up with 7 emerging factors that are giving hope to a strong, but beleaguered industry.

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Identity Matching in the Money Transfer & Payments Industry

I am going to venture myself to write this article on Compliance, with the disclaimer that I am not a compliance professional and that the idea behind this is to get compliance colleagues to comment and compliance officers to pay attention.

Talking last week to a fintech company about their payment processing services in Mexico, i.e. bank deposits, one of their key selling points was that they do identity matching on every bank deposit that they process through Mexico’s SPEI System. They explained why, using a technology solution, this fintech was the only institution in Mexico that could positively match the name of the account holder with the bank account number or CLABE.

Knowing this fact, it raised in my head all types of questions.

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A Shout-Out for a Great Event in Nairobi, Kenya

On Friday, September 22nd, we closed our first Africa Conference. As I mentioned to all participants, the whole process of developing the conference was, from the start, an uphill race, surmounting obstacles and convincing sceptics. But just days before the event, the pieces of the puzzle came in together and a bright and inspiring panorama opened.

Our pre-conference field trip day planned by the IMTC’s team of Paulina & Claudia and Olivia and Rachel from Safaricom M-Pesa and it was executed to perfection. Our aim was to give industry professionals a hands-on experience on the M-PESA product. Many of us have for years spoken about M-PESA with no real personal experience on the merits and details of the service.

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Blockchain-based solutions to the Caribbean derisking problem

De-risking was an acute illness for the Caribbean financial sector in 2015 and 2016. In 2017, the height of the fever has broken, but the patient is still sick. Though correspondent banks in developed countries are no longer dropping services to Caribbean banks at a rapid pace, the region’s economies remain encumbered with a residue of increased costs, forgone opportunities, and reduced efficiency.
The problem developed early in this decade, as a reaction on the part of banks to the heightened scrutiny and increased capital and liquidity requirements they faced in the wake of the 2008 financial crisis. Facing an increase in costs – particularly on account of the increased due diligence required by enhanced anti-money-laundering/countering the financing of terrorism (AML/CFT) risk management procedures – major banks took a close look at the bottom line associated with servicing the customers Caribbean banks and their customers, and decided that the relatively small amount of business wasn’t worth the hassle.

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DE-RISKING: THE RISK OF NO RISK

Daniel Trías, consultant and specialist in foreign trade, banking, finance and family remittances, founder of DT Consulting and Member of the IMTC Advisory Board and who has accompanied the “Cono Sur” (southern cone) Associations in their meetings, their initiatives to find solutions to De-Risking, such as Creation of CIASEFIM, presents this Document entitled: “De-Risking: The Risk of No-Risk”. This Document (in spanish) not only illustrates the problem faced by financial services companies in the region but also sets out a road map and suggests solutions for regulators, banks, the financial services industry, Multilateral agencies and even politicians, to participate in a constructive dialogue on the subject. Failure to do so will continue to deepen the impact to financial inclusion and transparency undertakings, fostering informality and many unintended consequences, not yet imaginable at this moment.

Read the document online, download it as a PDF for print, Tablet or Kindle read.

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DE-RISKING AND THE GREAT UNBANKING CHALLENGE

How De-Risking is changing the face of Financial Services worldwide

In July 6th & 8th the Economist published two articles that, again, raised the de-risking threat discussion to new levels. The July 6th article was entitled “The great unbanking [1] –  Swingeing fines have made banks too risk-averse – It is time to rethink anti-money-laundering rules” and the July 8th one: “Rolling up the welcome mat [2]  –  A crackdown on financial crime means global banks are derisking – Charities and poor migrants are among the hardest hit”. For us in the “low-income financial services provider’s sector” [3] the challenges, from regulatory pressures, rise in compliance costs and most of all, de-risking, are a survival issue.

This article is a broad view of de-risking, my opinions on some of the most recent developments that I have been reading, hearing and witnessing recently as we prepare for the “De-Risking Forum” on Nov 30 at IMTC WORLD 2017 in Miami. For detailed analysis on de-risking, its causes and the implications for FIs, you can find many great articles & documents online.[4]

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Family Remittances and “de-risking”: The Case of Mexico

Mexican migrants in the USA are first class Mexicans. They are in general the risk-taker population, hardworking, with a different work ethic compared to the average American worker. They give a different value to their labor and the remuneration that they receive for that effort. Some are prosperous entrepreneurs too. Success stories abound throughout the US. They are far removed from the political campaigns in Mexico, in which they are included, to their regret, in the political speeches with highly demagogic and populist content. They are generally skeptical of the political agendas of migrant associations in the USA. For these reasons, among others, they are most likely to repudiate acts of corruption. They are also highly reasonable users (consumers) of the electronic remittances market.

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Remittance Expert Leon Isaacs to Chair IMTC AFRICA 2017 in Nairobi in September

Leon is a seasoned expert and business leader in the payments, remittances and money transfer industry. He has over 25 years hands-on experience and since 2007 has led DMA, Developing Markets Associates, a development consultancy based in the UK that provides a broad range of services that helps to mobilise funds into developing markets.

Leon is very active in Mobile Payments policy design and data collection, research into remittance market trends, pricing and new product development, consumer remittance price and quality comparison, financial literacy programmes to remittance receivers, diaspora outreach and diaspora investment analysis and programme design.

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