Banking services for migrants, an instrument to fight poverty and the financing of terrorism

Alain GAUVIN Lawyer (Avocat au Barreau de Paris) World Bank Consultant

 

Professor André Cartapanis highlights, in an interesting column[1], the efforts required to “direct European savings to Africa”. African countries are asked to design economically viable projects and implement clear rules in relation to calls for tenders. Rating agencies, investors and “international institutions” are also required to review the constraints applicable to the debt of African countries. All of this concerns those who are usually grouped into the category of institutional investors.

But, in addition to these institutional investors, the dynamism shown by the African diasporas, made up of simple individual savers, to finance the economy of their home country should be pointed out, as it is remarkable: according to the World Bank, in 2018, transfers of money to North Africa and the Middle East amounted to USD 62 billion and USD 46 billion to sub-Saharan Africa or about 10% more than in 2017[2]. Globally, money transfers far exceed FDI (foreign direct investment). Above all, remittances are a more sustainable, less volatile source of financing than FDI. Yet, this economic loyalty of the diasporas to their home country is all the more commendable in that it is not without difficulties, among them the reluctance of the national authorities of the countries and the indifference of the European Union (EU).

Reluctance of the national authorities because, in order to ensure a continuous stream of remittances, the role of the banks of African countries in Europe, and of the few European banks still active in Africa, is essential: they make it possible for the African populations residing in Europe to obtain access to banking services. Without bank accounts for migrants, there is a serious risk that the source of the remittances would dry up. These bank accounts require that African banks offer their banking services in the territory of the EU countries where the diasporas are located. However, in many EU countries, there is no rule clearly governing this situation and, where a rule exists, the authority of the country in question applies it with such severity that the action of African banks in favor of migrant bank accounts is short-lived and, pathetically, brings with it the risk that they will be accused of violating as many criminally sanctioned laws as those relating to the banking monopoly, solicitation, intermediation and consumer protection.

Indifference of the EU because it has so far not taken any action to harmonize the national laws of the EU countries to promote migrant banking services, despite the determination of the Aquila G8 summit in 2009 and of the Cannes G20 summit in 2011.

However, this situation, in the words of Prof. Cartapanis, is “a win-win game“: if migrant banking services are favorable to African countries by the financing of their economy that they promote, they also benefit EU countries by helping to combat money laundering and the financing of terrorism, since transfer traceability is guaranteed because remittances are integrated into the banking circuit.

Shackling the activity of African banks in Europe, for various reasons, whether on administrative or other less honorable grounds, essentially promotes the suitcase as a money transfer instrument and deprives development aid of a source of financing that costs the EU nothing.