JUNTA and Yale Law School Release Report on Remittance Practices in New Haven’s Immigrant Community

Troubled by persistent barriers to financial stability faced by New Haven’s immigrant community, Junta for Progressive Action and Yale Law School’s Transnational Development Clinic (TDC) initiated a first-of-its kind study of remittance and banking practices among immigrants in New Haven. The research has culminated in a report released Tuesday titled Supporting Transnational Families: Improving Remittance and Banking Services for Immigrants in New Haven. The report provides the first meaningful study of how New Haven’s immigrants send millions of dollars to family members abroad every year and the barriers they face in doing so. It proposes a series of policy recommendations to make the process of remitting money fairer in New Haven and more effective in combating poverty abroad.

Some of the key findings from the report include:
• Survey respondents typically remit money once or twice a month and send an average of around $200 each time.
• Remitted funds are used to meet basic needs of family members in the receiving country, such as food, healthcare, education, and home maintenance.
• 52% of survey respondents do not have a bank account, and 27% use no financial products at all.
• Barriers to remitting money include high costs as well as unclear disclosure and dispute resolution requirements.
• Barriers to banking include lack of Spanish-language materials, lack of Spanish-speaking staff, and prohibitively high minimum account balances, all of which increase immigrants’ vulnerability to theft and money loss and prevent access to savings and credit instruments.

Some of the report recommendations include:
• Educating consumers around new rights relating to cost disclosure and dispute resolution under the Dodd-Frank Act;
• Requiring fuller disclosure of remittance costs by remittance service providers;
• Educating consumers about banking options, particularly smaller, community-oriented banks; and
• Advocating for banks to reach out to immigrant communities with dual-language staff and materials.

Worldwide, remittances—cross-border transfers of money from migrant workers to their family members—to developing countries are larger than overseas development aids inflows. Remittances originating in New Haven every day form a vital lifeline for recipients in low-income countries and regions. The Junta/TDC study surveyed 145 community members and found that they sent about $200 per month, for a total of $348,000 a year. This suggests that New Haven’s large immigrant community remits millions of dollars each year.

Last week, at the community-based offices of Junta, non-profit, business and government leaders discussed the report findings as well as possible initiatives that could improve banking and remittance practices in immigrant and low-income communities in New Haven, as well as other communities. “Remittances are vital for the survival of families across the globe and can be a financial burden for those who send them,” said Sandra Trevino, Executive Director of Junta. “Barriers to banking still exist within the immigrant community. This report is a first step in creating dialogue on how remittance rates and banking affect immigrant communities, advocating for better regulation that ensures immigrants are not vulnerable to remittance costs, and creating access to banking.” Trevino added, “We look forward to continuing our work with the Transnational Development Clinic at Yale Law to make this happen.”

Ariel Stevenson ’14, one of the law students who worked on the project, said, “This is an especially important time for this kind of research because of the new Dodd-Frank remittance regulations that come into effect early next year. Understanding the money-sending habits of New Haven immigrants will be crucial to ensuring that the new regulations protect consumers as effectively as possible.”

Banks and other financial institutions are responsible for implementing the new remittance regulations and therefore are in a position to benefit from this kind of research. “This report gave us valuable insights to the needs of our community,” said Lynn Smith, Senior Vice President of Business and Community Development at START Community Bank, a local, community bank in New Haven that has a branch in the Fair Haven community, where many of New Haven’s immigrants reside. “Our local families value their extended families and feel that it is the right thing to do to help them with the basic necessities of life. We at Start Bank feel that we need to continue to do the right thing, too: provide a reliable, reasonably priced remittance service with clear upfront costs, and to educate our customers about their rights.”

Copies of the report are available upon request. Read the report here.