Blog post written by Dr Tugba Basaran (Cambridge University) and forms part of a series of blog posts examining the implementation of the Global Compact for Safe, Orderly and Regular Migration.
Objective 20 commits to faster, safer and cheaper remittances, and more broadly the financial inclusion of migrants and their families. It is important to underline that this does not solely require a lower average rate for remittances, as many international financial organizations have emphasized, but that this objective requires that every person has access to faster, safer and cheaper remittances and is financially included. Herefore, it is important to consider important variations amongst migrants, i.e. that different groups of migrants are exposed to different financial conditions to their legal status, gender or lack of sufficient documentation. It is also important to take into account that financial access of migrants and their families may be substantially different in home, host and transit countries. This blog proposes five indicators to assess whether Objective 20 is on track with its financial and human rights obligations.
1. Equality and non-discrimination based on migratory status in host countries (ICESCR Art. 2; ICCPR Art. 2; MWC Art. 1)
Legal status continues to shape access to financial services and provide for differential access to the economic, social and cultural sphere. Particularly for migrants in vulnerable situations, including irregular migrants and temporary migrants, but also refugees and stateless persons, their legal status may exclude them from access to payment and remittance services (see objective 7). Requirements such as legal identification (see objective 4) and proof of a permanent address force migrants in vulnerable situations to resort to inconvenient and expensive option for remitting money home. Hereby, the type of work and the visa status are also of importance. Migrant that work in isolation, such as domestic workers, in rural areas on plantations or who incur seasonal or project-related movements may find it more challenging to access financial services. Ending discrimination based on legal status (see objective 17) or the working place and type of work is crucial to accelerating financial inclusion and reducing the excessive cost of remittances. National human rights bodies should ensure that financial institutions do not discriminate on the basis of migratory status, directly or indirectly.
2. Legal identity and documentation (UDHR Art. 6)
Know your Customer (KYC) measures require effective customer identification, verification and due diligence procedures. They are particularly difficult to fulfill for those who do not have a legal identity and documentation (see objective 4) and hence have to rely on the few available, often inconvenient and expensive, alternative payment options. KYC requirements may exclude migrants and their families, in home, host and transit countries from access to financial services. The Financial Action Task Force’s (FATF) anti-money laundering (AML) and combatting the financing of terrorism (CFT) measures (FATF Recommendations 2018) with their emphasis on KYC have limited payment services, including remittances, for those without sufficient forms of documentation. Over the last years, a number of states have moved towards digital identification and e-KYC, which provide quick forms of inclusionary infrastructure. This is laudable, but needs to address and respect arising data and privacy concerns, particularly for minorities (see objective 1). States in host and home countries, that all people have legal identity and documentation. Regulatory bodies should ensure that financial institutions do not discriminate against migrants on the basis of their capacity to obtain specific documents. National human rights bodies should be given competence to monitor access by migrants to financial institutions.
3. Derisking remittances
The Financial Action Task Force’s (FATF) anti-money laundering (AML) and combatting the financing of terrorism (CFT) measures (FATF Recommendations 2018) have led to derisking strategies of financial institutions, that is the restriction of business relations with clients perceived as potentially risky. This has led to a number of account closures on the one hand in particular regions perceived as risky and on the other for cash-based remittance service providers, together narrowing possibilities to receive remittances. It is important that financial institutions do not provide blanket risk assessments and withdraw from particular clients and regions altogether. Regulatory bodies should ensure that small-scale cross-border payment, labeled remittances, are not unduly scrutinized and that organizations dedicated to money transfer are not perceived as a risk due to their business.
4. Fair employment (ICSECR Art. 11, 12 and 13)
To be able to remit, workers should have access to fair employment policies, including equal pay for equal work (see objective 6), but also associated rights, such as right to change employment, freedom of association, social security coverage and unemployment insurance. Equality in wages and working conditions should be monitored by the national human rights bodies, trade unions and labour inspectors, and coordinated by ILO.
5. Fair remittances (MWC Art. 47)
I use the ‘fair remittances’ to target policies that ensure that migrants have sufficient income to send money home on a regular basis. This requires looking beyond remittances and financial inclusion towards fair employment policies and reducing the total cost that migrant workers bear (compared to their national counterparts) pay to live and work abroad (Basaran and Guild, eds., Global Labour and the Migrant Premium: The Cost of Working Abroad). Recruitment costs alone amount in most migration corridors to anywhere between one and ten months of foreign earning and migrants may well lose up to two years of earnings, if all costs are considered (recruitment costs, wage differentials, health and social costs, return costs). Fair remittances are based on the reduction of the migrant premium and supported through international human rights, labour laws and generally fundamental economic and social rights (ibid, p. 6). States must ensure, under the guidance of international bodies such as ILO, that migrants are provided with ‘fair remittances’. National bodies (these could also be independent bodies, such as trade unions) must document the migrant premium, that is the costs that migrants are exposed to solely due to their status. OHCHR and ILO could serve as coordinators of the progress towards global elimination of the migrant premium.
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