09 Jul 2024
According to a report by the Ambasciata d’Italia Dhaka, the number of Bangladeshis working in Italy is around 200,000. These Bangladeshis earn a living while enjoying the Italian culture and send money to Bangladesh online from Italy to offer financial support back home.
The actual and available figures, according to the same report, quoting the Italian Ambassador to Bangladesh, is 175,000. But the figure reaches 200,000 considering the irregular and recent arrivals. These migrants have been contributing to the Bangladesh economy through the remittances they send back. But did you know that the financial policies of the Bangladeshi government are deeply impacting the flow of inward remittances? Learn below how!
No matter how much the Bangladeshi diaspora community abroad, about 2 million, is earning and sending back to the country in remittances, the government’s support is crucial. Economies are basically of two types:
· The formal economy (regulated and documented)
· The informal economy (unregulated and undocumented)
These two types operate uniquely and offer the same operations but with a different modus operandi. Therefore, you have your government's support if you conduct your financial activities within the formal economy.
However, if you are performing your financial activities informally, you are most likely to become part of the black economy that lacks government support. This can land you in grave trouble and legal implications to varying degrees. But the formal economy keeps you protected from these challenges and problems.
For example, if you send money online to Bangladesh from Italy using formal and regulated channels, your funds will be safe. Therefore, given below is a detailed account of the impact the government of Bangladesh’s financial policies have created on the flow of remittances to Bangladesh from Italy.
The first impact of the country’s financial policies came out in the form of a crackdown on Hundi and Hawala. These two are the centuries-old illegal and informal remittance transfer methods originating in Asia.
Since the exchange rates in Hundi and Hawala are not determined by the government and the market, these are most attractive to the migrants. However, such transactions remain underground and do not add to the formal, recorded, and regulated remittances. Therefore, the first impact is seen on Hundi and Hawala operators.
Bangladesh is a developing country with a relatively small economy. This means that the country’s economy has not brought a majority of its people into its fold, leaving them financially excluded. However, the government is creating policies that aim to increase financial inclusion.
As a result, more and more people are finding it easy to access the financial services and products offered by different financial institutions. The particular focus is on the people living in rural settings across the country. This has boosted the country’s economy as more and more people contribute financially.
Every financial institution in Bangladesh is innovating its financial services and products. This is being done to cater to the evolving trends in the global remittance industry. It is also to ensure that the financial institutions are responding to the changing needs and requirements of customers. Moreover, Bangladesh's monetary policies are creating an environment of healthy competition within the remittance industry. This means that you can easily find the best and most cost-effective deals for your money transfer from Italy to Bangladesh.
Both the governments of Italy and Bangladesh have mandated their respective financial regulatory bodies to ensure that service providers follow the Know Your Customer (KYC) guidelines. Know Your Customer (KYC) guidelines require a service provider to ascertain basic details like:
· Customer’s name
· Recipient’s name
· Source of income
· Source of transaction
· Purpose of transaction
This is done to ensure that the transaction is legal and that a transaction initiated from Italy for Bangladesh does not constitute money laundering. Any service provider not following KYC guidelines is punished severely.
As part of the broader financial policies, the Bangladeshi government has relaxed tax regulations for remittance operators. As a result, the cost of transactions has been reduced substantially. These lax taxation policies and the ensuing cost-effective transactions are drawing more and more people to the legal channels to make remittances to Bangladesh from Italy.
The Bangladeshi government is creating more strict anti-money laundering (AML) policies to curb money laundering, of which online money transfers are the biggest source. In the wake of a spike in terrorism across the world, different countries and their respective governments are creating stricter AML policies and monitoring online money transfers more closely.
Learn more: How to protect your online money transfers from money laundering.
A remittance transfer service provider, or any financial institution, for that matter, cannot operate in a vacuum. Different financial institutions have to liaise and cooperate. Therefore, the government of Bangladesh is overseeing the professional partnerships between different financial institutions. These partnerships are happening rapidly as government policies are encouraging institutions to enter such partnerships to offer optimal benefits.
As a result of the government of Bangladesh's financial policies, remittance operators are offering competitive exchange rates. Exchange rates are either fixed or flexible. Bangladesh’s financial regulatory bodies require most financial institutions to offer customers flexible and competitive currency exchange rates.
The most practical solution most financial institutions have devised is to link their currency exchange rates to the international market. Currency exchange rates fluctuate in the international market, allowing you to initiate a transaction right away if the rates are high or wait until they spike in your favor.
You are required to conduct Customer Due Diligence (CDD) at the time of choosing a service provider. As mentioned earlier, different operators offer services in both formal and informal economies. Their service areas are the same. Therefore, the lack of due diligence on your part can lead you to an unscrupulous service provider. Once this happens, you should then brace up for legal and financial complications of varying degrees and at different levels.
Given the impact of financial policies on the flow of remittances to Bangladesh, more legal remittance operators are coming to Bangladesh. Several financial institutions have started operating in Bangladesh owing to the relaxed policies of the government.
Due to the impacts explained above, more and more people are drawn to the legal ways to transfer remittances which have given a boost to the country’s economy.
Consider all the impacts on the flow of remittances to Bangladesh the next time you send money to Bangladesh from Italy. Choose a service provider whose services are designed to help the government create the impacts explained above. To get the best and most cost-effective money transfer deals, find a service provider that charges you a low fee and offers you live and market-competitive currency exchange rates. Such rates serve as a recovery amount that you have already paid as fees for the transaction(s).
The financial policies of the Bangladeshi government have impacted the flow of inward remittances in several ways. Some of the impacts are a crackdown on Hundi and Hawala, fostering digital innovation, driving financial inclusion, following KYC guidelines, lax taxation policies, following AML protocols, and so on.
The Know Your Customer (KYC) protocol is a set of guidelines for any service provider to ascertain their customer’s details. In most cases, these details include the name of the customer, the recipient’s name, the purpose of the transaction, the source of income, and the source of the transaction.
The Italian government has implemented specific policies to oversee the flow of remittances from Italy to Bangladesh. The most important of these policies is the Anti-Money Laundering (AML) policy. Cross-border money transfers are the most significant source of money laundering, so the Italian government is pretty particular about AML policies.
Bangladeshi migrants work in Italy because the robust Italian government can accommodate job-seekers from around the world. Italy's job market is expansive, which means that you can find jobs in any sector. Not only are jobs available in every sector, but the salaries and wages are also relatively high.
First, you have to determine what benefits you are seeking in the process. If you are seeking financial benefits, you should find a service provider that charges you a low fee, as the process is repetitive. Moreover, consider that you are offered live and market-competitive currency exchange rates, which can compensate you for the fee you pay.
