Money
remittances,
do you know
enough about
them?
10 things to know about
money remittances
Document developed as part of UniCredit’s Framework Agreement with 12 subscribing Consumer Associations
Money Remittances
What is a money
remittance?
1
A money remittance is a specific form of transferring funds between individuals to and from foreign
countries. It is generally money for family members who have remained in their country of origin or the
lifetime plans of individual immigrants. The transfer is made through intermediaries who provide a service for the “transfer” of the money from one country to the other.
There are different ways to transfer money and each has different characteristics, costs, times and risks.
The main difference is between informal and formal channels.
ALERT
Transfers in cash cannot be more than 999.00 €, because of the limit imposed by the anti-laundering laws in force (this limit is not applicable to transfers
done through Banks and Post Offices).
What are informal
channels?
2
Informal channels are the methods used to send money which do not use operators or instruments
subjected to control by the authorities supervising financial flows and instruments. An informal
channel is used for example when money is assigned to a friend, relative or vehicle driver (minibus, bus,
etc.) going/originating to/from their own country of origin.
ALERT
Informal channels are the most commonly used and often cheapest, but involve
significant risks and limits concerning for example security and delivery
times. There is no certainty concerning the delivery time for the money and no
form of protections whether something went wrong during the transfer, such as
theft or confiscation by the police at the border post or simply the money is not
delivered to the stated addressee, for example.
What are formal
channels?
3
Formal channels are methods used to send money which use operators or instruments regulated by
the law and controlled by the supervisory authority for financial flows and instruments. There
are three main operators in Italy which provide money remittance services abroad belonging to the
category of formal channels:
- Banks
- Money Transfer Operators
- Post Offices.
When money is sent through a formal operator, a receipt is issued containing information on the single
operation, including the identification code of the transaction.
ALERT
Money remittances done through formal channels are safe both because they
are controlled by the supervisory authority and because a receipt is issued
certifying the completion of the transaction. It is good to keep the receipt with
care, as it can be used as proof in case of any disputes.
What do you need to
make a transfer?
4 A valid identification document is obligatorily required to send money through formal channels. It
is also necessary to communicate the details of the beneficiary and the country of destination.
Whether you decide to go through a bank, you may also need a current account or prepaid card. Whoever receives the money must show a valid identification document for recognition in order to withdraw it.
ALERT
One of the requirements necessary to make money remittances is that the
requestor must be over 18.
Care must be taken when sending money on behalf of another person. This
can be risky, because whoever is sending the money is responsible by law. The
money could derive from illicit activities and one could therefore be accused of
the crime of money laundering.
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Money Remittances
What methods can
be used to send the
money?
5
There are different ways of sending money:
- Cash to cash: is the easiest way. Whoever send the money delivers it in cash and the recipient receives it in cash.
- Cash to prepaid-card: in this case, whoever receives the money must have a prepaid card which can
be used in their own country. Whoever makes the transfer accredits the amount in cash to the prepaid
card and whoever receives the money can spend or withdraw it using the card.
- Account to cash: whoever sends the cash must do so using a current account, while the recipient
receives it in cash.
- Account to prepaid-card: the sender uses a current account and the money is deposited on the
prepaid card of the recipient.
- Account to account: in this case, the money is transferred from the current account of the sender to
the current account of the recipient.
ALERT
In choosing the operator, it must be taken into consideration that not all operators offer all the methods of sending money.
How does a bank
transfer work?
6
Sending money abroad is one of the typical activities of a bank. Any bank can send money to any one of
the banks connected through an inter-bank agreement or indirectly using a corresponding/intermediary
bank. When money is transferred on the basis of a direct inter-bank agreement, the transfer in
question is regulated on the basis of the agreement itself.
When there is no agreement, a wire transfer is made, which is a method regulated by the law about
any transferring of money abroad.
ALERT
The entry into force of European SEPA regulations enables individuals, companies and government and other authorities to make and receive payments
in Euros or the official currency of a European Union member state not in the
Euro zone or of a country belonging to the European Economic Space, order
commercial receipts and use payment cards with basic conditions, rights and
obligations that are the same in all countries. Within this common payment
area, anyone can make and receive payments in Euros or the official currency
of a European Union member state not in the Euro zone or of a country belonging to the European Economic Space in a simple and safe way, with the same
cost and efficiency with which wire transfers are made within national borders.
The maximum time for a SEPA wire transfer to be made is one working
day. In the case of orders in paper form, the time required is one additional working day.
34 countries are part of the SEPA area:
- the 18 countries in the Euro zone: Italy, Austria, Belgium, Cyprus, Estonia,
Finland, France, Germany, Greece, Ireland, Latvia, Luxembourg, Malta, the
Netherlands, Portugal, Slovakia, Slovenia and Spain;
- the 10 EU member states which use currencies other than the Euro but
accept payments in Euros: Bulgaria, Croatia, Denmark, Lithuania, Poland, the
United Kingdom, Czech Republic, Romania, Sweden and Hungary
- the 3 countries in the European Economic Space: Iceland, Liechtenstein
and Norway;
- Switzerland, the Principality of Monaco and San Marino (the commissions applied to wire transfers to and from these three countries may be different to those applied to members of the European Union and the European
Economic Space).
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Money Remittances
What are Money
Transfer Operators?
7 Money Transfer Operators (MTO) are currently the principal operators in the field of money remittances.
An authorisation by the Bank of Italy is required in order to carry out this sort of activity. In Italy, there
are 55 authorised Money Transfer Operators registered in an appropriate register kept by the
Bank of Italy and also available for consultation on-line. It is always possible to verify previously
whether the operator providing the money remittance service is authorised in Italy.
ALERT
In order to verify if the operator is authorised, the exact name (business
name) of the operator must be requested, because sometimes that displayed in the window is the trade logo while the business name appears in
the Bank of Italy register.
What are the main
differences between
a bank transfer and a
remittance through a
MTO?
8 Both methods are formal systems, and therefore safe, and the main differences concern the costs
sustained, time taken to receive the transfer and the distribution of branches in the country of origin.
In general terms, bank transfers have a lower initial cost but take longer to arrive at their destination while remittances through a MTO can arrive immediately at a definite cost which is
higher than that through a bank.
ALERT
The choice of the channel and the instrument through which to send money
must also take into account additional costs at destination. Not all the intermediaries or instruments used are capable of ensuring that the stated costs
will be the same as the final costs.
How much does a
money remittance
cost?
9 The total cost of the remittance is given by the difference between the sum of money paid in and the
effectively withdrawn by the recipient at destination. Generally, the total cost of a remittance is composed of several elements:
•the commission, which can be either a fixed amount or a percentage of the amount sent. The
commission usually depends on the operator and the quantity of money that is to be sent (generally,
there are ranges of amounts than can be sent to which different commissions are applicable);
•the spread applied to the exchange rate. Each operator applies its own exchange rate which may
differ from the official exchange rate. The difference between the two rates generates an additional
cost on top of the commission.
ALERT
In the case of very advantageous offers, it is advisable to ask information
from the operator to verify that there are no costs that have been notified in
an unclear manner.
How do I know the
costs applied by the
various operators?
10 www.mandasoldiacasa.it is a comparative website produced thanks to the contribution and interest
of the Ministry of Foreign Affairs (directorate General for development cooperation and Directorate General for multilateral economic and financial cooperation) with the objective of ensuring greater transparency and clarity of information and stimulating the operators to improve their offers. The site is
supported by numerous partners, such as OIM (International Migration Organization), ACLI, ARCI, ARCS,
Banca Etica, CeSPI (International Policy Studies Centre), ETIMOS, IPSIA, UCODEP and WWF Italia.
ALERT
All the cost components must be taken into account when choosing the
operator and not merely the commission stated by the intermediary. It is also
important to consider other factors such as the speed with which the money
is sent, security and the capillary nature of the network for withdrawing the
money in the country of origin.
May 2014 04