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African and Asian Diaspora communities who support relatives by sending money back home will benefit from a new charter for money transfer companies announced yesterday by International Development Minister Shahid Malik.

People in the UK send an estimated £2.3 billion a year to loved ones in over 50 developing countries – a key source of overseas funds for many economies. Yet many find the process difficult and insecure. Charges vary widely and the total cost to send £100 to some countries can range from less than £4 to as much as £40.

Black and Asian communities in the UK send around £2.3 billion a year to relatives in more than 50 developing countries. Africans are the most likely to send money back home, whilst Asians send the largest amounts. The biggest recipient countries of money transfers are India, Pakistan, Nigeria, Jamaica and Ghana.

According to research by the Department for International Development (DFID), the biggest worry for those sending money is whether it will arrive safely, followed by excessive charges and delays to relatives receiving the money. The new charter, developed by the DFID-supported UK Remittances Task Force, commits participating firms to giving clear, transparent information in a standard format, including:

• total fees to the sender, and any fees payable by the receiver;
• the exchange rate that applies to the transaction;
• how much money will be received;
• how long the transfer will take, where and how the receiver can collect it; and
• what to do if things go wrong.

Signing up to the charter is voluntary for money transfer organisations. Already businesses covering over half of the money transfer locations in the UK have agreed to comply with the charter. These include the Post Office, MoneyGram, Coinstar Money Transfer, Chequepoint, Ria Envia and many smaller businesses represented by the UK Money Transmitters’ Association making a total of over 18,000 outlets.

Moneygram International is one of the largest providers of money transfer services, operating through 14,000 post offices and is one of the founder signatories to the charter. Commenting on the charter, its CEO John Hempsey said: “Our endorsement and sign up to the new charter signifies our commitment to ensuring customers have complete confidence they will receive the highest levels of service and security when sending money abroad by MoneyGram”

Each money transfer location that has signed up to the charter will display the charter on their premises to provide a further degree of confidence for customers. Each organisation will undertake an annual renewal process to ensure ongoing compliance. Further to these safeguards, HM Treasury is now consulting on the implementation of the Payment Services Directive which will bring regulation to the money remittance sector.

International Development Minister Shahid Malik said: “By promoting competition and transparency in the remittances sector we ensure a better deal for consumers in the UK and their families, and also help the fight against poverty in the developing world. We will continue to work with the financial sector to make sure payments are easy, affordable, on time and go through registered channels.”