Use of Money or Value Transfer Services by Non-Governmental Organisations

Published 09. Jun 2023
The worsening phenomenon of bank derisking is decreasing the number of banking channels available for humanitarian financial transfers into some countries. Non-governmental organisations (NGOs) now rely on value transfer services as a tool of last resort to make financial transfers into countries suffering from bank derisking but challenges exist using these mechanisms.

This report is the second in a series examining potential solutions to bank derisking. It is based on the outcome of an expert dialogue held in December 2022 on the use of value transfer services by NGOs as a legitimate tool of last resort to make payments in countries suffering from bank derisking.

The dialogue brought together experts from governments and academia as well as the financial and humanitarian sectors to discuss the challenges NGOs face in using money or value transfer services and to identify concrete policy solutions, technical innovations, and guidance that could mitigate the key challenges.

The report finds:

  • The terminology used to describe these financial transfer mechanisms can have significant consequences. Hawala is often used to refer to these transfer systems, but the term can carry negative associations among some stakeholders. The paper suggests that ‘money or value transfer services’ could be a suitable alternative that captures the wide range of mechanisms available.
  • Donor stances on the use of value transfer services in the humanitarian sector vary across countries and tend to lack clarity or tailored guidance, including on permissible activities.
  • Financial institutions’ risk appetite for humanitarian transactions that involve value transfer services vary widely, but many refuse to service payments or close accounts if transactions involve money or value transfer services.

Recommendations are provided that could improve NGO’s ability to use value transfer services and address some of the current challenges they face.

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