On Bauer Business Focus—A conversation on the effects of recent bank fines over international transfers with Houston Public Media News 88.7 Business Reporter Andrew Schneider.
Many banks are getting out of the business of transferring money overseas as a precaution in light of recent remittance cases. Praveen Kumar, finance chair and professor at the C. T. Bauer College of Business at the University of Houston, recently stopped by Bauer Business Focus to discuss the effects this will have in the U.S. and abroad.
Banks are realizing that by continuing these transfers, they may be inadvertently scrutinized, Kumar said. The recent case of BNP Paribas’ U.S. sanctions violation resulted in a record fine of $9 billion.
“For many banks, the risk of being entangled into this kind of transaction, which could be just not be willful on their part but they could just get entangled in it,” Kumar said. “That risk is significantly large, so that they’re trying to now basically back off from allowing money remittances abroad.”
Banks pulling back on international transfers can have a global impact. Much of the money sent out of the country goes to developing countries, Kumar said.
“The remittances globally are huge. So for example, in 2013 the total transfers abroad, which were these remittances, are over $560 billion,” Kumar added. “More importantly, was that of the $560 billion, $430 goes to developing economies. That’s where I think the importance of these remittances lie.”
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