Colin C. Richard[*]
International remittances—"cross-border person-to-person payments of relatively low value" sent primarily by international migrants to family members in developing countries—alleviate poverty, support entrepreneurship, and foster the development of financial systems. Until recently, aside from prohibitions on financial interactions with countries such as Cuba or Burma, U.S. regulators have only indirectly addressed these monetary transfers. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) changes this, providing direct, substantive regulation of the industry for the first time. Dodd-Frank calls on the Board of Governors of the Federal Reserve System (Board) to craft more than a dozen regulations to enforce Dodd-Frank's remittance provisions within eighteen months. These regulations can either stifle progress in the remittance industry or help it become more efficient.
This Article recommends regulations that would enable a thriving business environment for transfer providers and preserve reasonable consumer protections. Part I describes the international remittance industry, including its role in enabling economic development and in alleviating poverty. Part I then predicts the changes that the industry is likely to undergo in the near future. Part II explains Dodd-Frank's remittance provisions. Part III provides recommendations to the Board on how it can design regulations that best enable global economic development.