“Diaspora Bonds” – Remittances as a new source of development finance?

Nigerian banks can create Diaspora bonds as a financial tool to bridge financing gaps in the country, Vicky Johnston, Senior Regional Director, Middle East and Africa, Moneygram International, has said.

Johnston said this in an interview with newsmen on the sidelines of the Banking Outlook Africa conference 2010 in Johannesburg. She stated that Nigeria, with US$10 billion annual remittances, was well positioned to develop Diaspora bonds to stimulate its economy.

"Diaspora bonds are a mechanism whereby developing countries can borrow from their diaspora community abroad to raise financing," she said. She noted that official aid alone was not adequate to bridge the financing gaps in developing countries

Johnston said that Nigeria was one of the highest receivers of remittances in sub-Saharan Africa and should use this for economic development.

It is being done in Ethiopia and Rwanda at the moment and not many other countries are utilizing it around the world, but it could be an interesting thing for the Nigerian market," Johnston said. Shedding more light on the bonds, she said it was developed when the community of the Diaspora abroad provides money as a source of funds or capital that could be used to help in the financing gaps.

"In other words, we are using the Diaspora abroad who have their natural links to their home country of Nigeria, to bridge financing gaps. When you take debt to export ratio and this is a key measure in terms of sovereignty ratings, and factor into that, the foreign exchange that is derived from the remittance business, you can see a decrease of debt to export ratio," she said. Johnston said similar effect would occur when remittances were factored into current account deficit placing the nation in better stead.

She said Nigerian banks have the potential to become number one in the continent in the future. She explained that remittance business is very large in Africa, with funds coming mainly from the USA, and Canada which account for "at least 50-60 per cent of remittances into Anglophone Africa" .Johnston said other countries from where huge remittances come are the UK, Germany, Italy and Spain. Globally, she said the remittance business was worth about US$330 billion.

Unskilled foreign workers are highest remittance senders

The Philippines National Statistics Office (NSO) says laborers or unskilled overseas Filipino workers were the biggest source of remittances in the country last year.

In a statement, the NSO said laborers or unskilled workers posted the highest cash remittance of P18.03 billion from April to September last year among the different occupation groups. However, this was lower compared to the cash remittance sent home in the same period in 2008 of P19.5 billion.

Cash remittances of professional OFWs during the period amounted to P16.5 billion, higher than the P15.12 billion for the period April to September 2008.

The total remittance sent by OFWs during the period April to September 2009 was estimated at P138.5 billion, down by 2.4 percent compared to the same period in 2008 amounting to P141.9 billion.

Cash sent amounted to P102.5 billion, cash brought home P31.4 billion and remittance in kind, P4.5 billion.

Of the total cash remittance sent for the period April to September 2009, about P78 billion were sent through banks, P12.4 billion through other means, P8.6 billion through door-to-door and P3.5 billion pesos through agency or local office and friends or co-workers.

UK fraud losses reach record £1bn

BDO a major accountancy firem says fraud in the United Kingdom has hit a record of £1bn in the first six months of 2010. BDO has been monitoring fraud levels for the past seven years.

The main types of financial crimes, says BDO, include mortgage fraud, under-reporting of revenue and VAT avoidance. Mortgage fraud now accounts for 20% of all reported cases.

The average amount of each type of fraud had increased to almost £6m, up from £5m last year. About 16% of all reported fraud came from management falsifying the accounts of their own companies.

Simon Bevan, head of the fraud services unit at BDO, said the increase could not be blamed on the economic downturn. He said fraud continued throughout good and bad times, but austerity brought greater scrutiny and a higher number of laid-off employees prepared to blow the whistle on illegal practices.

Another growing trend identified by BDO is where managers of companies commit fraud by either setting up "companies within companies" or diverting lucrative contracts away to accomplices.

"Linked to this unethical activity is an increase in insider dealing where management don't directly defraud their own employer but their actions leave them open to stringent, and often public, enforcement action by financial regulators," Mr Bevan said.

About 49% of all fraud occurs in finance or insurance, according to the figures.

The BDO data, published every six months, may understate the scale of the problem, because only cases that have been publicly reported to authorities are included.

PayPal boosts online shopping protection in Asia-Pacific region

PayPal has launched newly enhanced buyer protection policy, in a move to strengthen the growing consumer confidence in e-commerce and online shopping sweeping across Asia-Pacific. The new policy targets to protect the over 785 million internet users who buy goods from over 8 million merchants worldwide, accepting PayPal as a payment method on their site.

Moreover, PayPal's Buyer Protection policy can also support online sales growth of SMEs PayPal merchants in the region. Thus, 84 million active PayPal users from over 190 markets worldwide will be more comfortable purchasing on small, unfamiliar sites.

Any eligible PayPal merchant can thus add the Buyer Protection logo to their website to give consumers more confidence in shopping on their site.

PayPal aims to help making online shopping safer and more secure as its Buyer Protection policy enables buyers who have purchased eligible items via PayPal to get a full refund if they do not receive the items from the seller. That’s fine as when shopping with a new or unfamiliar online retailer, especially on overseas websites, consumers are usually worried about the risks involved, like fraud, security and the goods not being delivered.

PayPal’s Buyer Protection policy is now applicable to all its registered users in Asia Pacific, including Australia, China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, and Thailand.

Bank of America to launch online-only bank account

Bank of America is set to make available a new type of cheque account starting early August 2010, according to reports.

The new eBanking account is set to charge a monthly fee of USD 8.95 for account holders wishing to obtain paper statements or else opt for access to tellers for other routine bank statements. For users who chose to access the account via Bank of America’s ATM network, online banking platform or mobile banking service, the USD 8.95 charge does not apply.

Consumers can open the new Bank of America online-only cheque accounts directly online, as well as by visiting a bank branch or over the phone. According to the same source, starting fall 2010, the new type of account is set to replace the bank's CollegeEdge cheque offering.

New apps added to JPMorgan Chase mobile banking platform

JPMorgan Chase & Co. has added two new features to its application for the iPhone that allow users to deposit checks and conduct person-to-person payments.

The bank hopes that clients who use their phones to deposit cheques would also want to use the devices to transfer funds on a person-to-person basis. “The more people start using their phone and seeing their phone as a payment…or a banking device, you’re going to get adoption of a broader array of services,” said Jack Stephenson, director of mobile, e-commerce and payments for JPMorgan Chase.

Early results indicate both payment services have “very high adoption” rates, but Stephenson said it would take time to figure out if the uses would overlap. “Our strategy is around convenience,” he said. “You want to allow customers to do business in the channel of their choice.”

JPMorgan Chase developed the apps for the iPhone and iPad initially because of the higher user rates those devices have. The company has plans to enlarge its mobile services to other phones and devices, although Stephenson declined to name which ones or how soon those apps would be launched.

Money Laundering – New methods pose new threats

One tends to think of Money Laundering as just that – integrating illegal funs into the legal economy.

Seldom do we think beyond this. Question like “how is it done?” or “what should I be aware of?” just never seem to come to mind.

US Anti-money laundering expert Kevin Sullivan speaks about the latest - and pending - fraud schemes. Bulk cash smuggling and the use of mobile technologies are among the latest, money laundering risks to banking institutions not only in the US but across the globe.

You can read and listen to Kevin Sullivan in an exclusive interview by CLICKING HERE