The legal and regulatory aspects of international remittances within the SADC region

Migrant labourers who cross borders often have to send money back to their various countries of origin. These monetary transfers are known as remittances. To send these funds migrants often opt to rely on informal mechanisms as opposed to the remittance services of formal financial institutions such as banks. Informal remittance mechanisms raise a number of concerns such as those related to consumer protection. In contrast to formal channels informal channels are not based on any legally binding agreements. They are highly based on trust and do not offer any legally binding guarantee that the funds will be delivered or that the remitter will be reimbursed in the event of non-delivery. Aside from consumer protection concerns, informal remittances also raise security related concerns. These channels are not subject to the supervision of any regulatory authority and usually offer a high level of anonymity. They can act as an attractive mechanism for terrorists and criminal organisations to launder and mobilise their illicit funds. Taking into mind the concerns mentioned above, as well as others, it would be preferable for more remittances to be channelled through formal financial mechanisms. In conducting research on remittance transactions financial, as well as other institutions and organisations, have outlined legal and regulatory provisions in sending and recipient countries as being a factor that often hinders migrants from accessing formal financial services. This dissertation examines how the South African legal and regulatory framework affects the formalisation of remittances by migrant labourers, with a focus on the context of low-income migrants. The study identifies the Exchange control, immigration, anti-money laundering and anti-terrorism legislative provisions as being the most significant provisions that affect the formalisation of migrant remittances. So as to make an analysis and gather recommendations were possible, a comparison of the South African legal and regulatory provisions is made to those of Zambia and Zimbabwe. The dissertation comes to the conclusion that South African legal and regulatory provisions hinder the formalisation of migrant remittances to a certain extent. They do so by collectively and individually restricting migrants who do not fulfil legislative requisites from accessing formal remittance channels. It is submitted that such migrants are inclined to rely on informal remittance mechanisms when the need to send money arises. Furthermore, South African law restricts competition within the remittance market by making it difficult for service providers to enter the market. The lack of an adequate competitive level fosters the prevalence of high remittance costs which can pose a significant barrier to low income migrants that wish to channel funds via formal means. Taking into mind the significance of formalising remittances as well as the objectives that the laws that hinder them seek to attain, which are equally significant, it is necessary for the regulatory authorities to investigate ways on how to possibly cater for both. It is submitted that if more remittances were to be channelled through official means the objectives sought to be attained by some of these legislative provisions would be attained more efficiently