Executive Summary
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money, and information moving/travelling back and forth between the place of a migrant’s origin and the destination. The concept of a transnational bridge—bringing together senders and beneficiaries of the same origin—was the marketing strategy of one financial institution to promote their products and services through social corporate investment in education. Honduras faces an opportune time to strengthen transnational bridges with the assistance of many stakeholders. Only recently, financial institutions have started to look for ways to reach out to both senders and beneficiaries of remittances in order to cross sell financial products and promote financial inclusion. Lessons from case studies of transnational bridges suggest that understanding subnational remittance corridors and their underlying transnational migrant networks help design and implement more efficient outreach and financial inclusion even if on a low startup scale. A subnational perspective helps turn informal migration patterns to local development opportunities, builds trust, and engages key stakeholders at a local level.
Policy Recommendations As an outcome of the analysis in this report, key policy recommendations suggest actions for stakeholders with respect to the U.S. Honduras market for remittances, strategies for financial inclusions of senders and recipients, and development impact of remittances in rural Honduras. The U.S.-Honduras Market for Remittances
Develop distribution channels in rural areas. The development of a payment system infrastructure can facilitate efficient transactions, including remittances that then lead to reduced costs of payment transactions. Better access can ease remittance distribution on several levels in remote areas. First, it addresses security and cost issues by avoiding carrying cash to remote payment outlets in armored vehicles. Second, the private sector entities can utilize payment infrastructure to develop fast, inexpensive, and secured remittance products that meet users’ needs. Third, flexibility in access to certain payment systems, such as payment cards, by all new, authorized operators could facilitate further distribution of remittances. The Central Bank should continue to lead this effort. Clarify regulatory requirements and compliance. KYC requirements in Honduras appear unclear for the private sector. The CNBS and UIF and other authorities should clarify, in particular, the need for physical presence of a customer at the time of opening a bank account, among other requirements. This ambiguity allows migrants working in the United States to open accounts in Honduras without being present. The quality of enforcement of KYC requirements done by these banks is unknown. The CNBS, UIF, and other authorities should take a balanced approach between the mitigation of AML risks and the improvement of access to financial services. Regulate money transfer companies. The CNBS has drafted regulations for money transfer companies. The Honduran government authorities in collaboration with financial institutions should implement new regulations in a gradual manner in terms of requirements and timing. The regulatory framework should be sound, predictable, non discriminatory, and proportionate. It should address transparency, ensure
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