Matt Oppenheimer spoke to Congress about the importance of remittances and why they should remain accessible, affordable and secure.

Good afternoon. My name is Matt Oppenheimer and I am the Co-Founder and CEO of Remitly, an online remittance provider based in Seattle, Washington.

I thank the Subcommittee for the opportunity to explain why our country has an interest in ensuring that legitimate remittance services are accessible, affordable, and safe. Remittances matter, for the millions who rely on these services, but equally as a matter of national security.

I founded Remitly in 2011 after living in Kenya and seeing firsthand how difficult it was to send money across borders.  Not only that, but it was expensive — costing 8 to 10% of the total transfer just to send the money.  Looking at the technology available to solve this problem, I knew there had to be a better way.

When I moved back, I started Remitly to make remittances easier, faster, and more transparent. By replacing the cash-based brick-and-mortar model with a purely digital one we sought to build a better, more affordable service for customers.

By focusing on that vision, we have cut the cost of service from 8% to under 2% — putting hard-earned money back into customers’ pockets while delivering a better overall user experience.  I am humbled to say that our team of over 400 employees now helps customers send $3 billion a year to recipients in India, Mexico, Latin America, and the Philippines.

While our technology has improved remittances, the basic reasons for sending haven’t changed. Our customers send to pay for basic needs of their family members – housing, food, water, electricity, medical care, and education – things we take for granted here but can be unattainable for millions abroad.

Our customers are heroes.They sacrifice to provide a better life for their families. When they send, it’s more than money, it’s a lifeline – paying their family’s rent or their child’s tuition.  Add all these transfers up and you will find that remittances contribute nearly four times the funds provided by all foreign aid.

Beyond the human impact, when remittances are sent through modern, legitimate channels, they strengthen our national security. As a regulated provider, we invest heavily to comply with AML laws and other requirements, using the latest technology to detect and report suspicious activity. Digital providers like Remitly provide additional security by serving only customers with U.S. bank accounts and by embedding compliance features like OFAC screens and advanced risk scoring directly into our product. This creates a more secure and lower risk product compared to traditional remittance services.

This approach also provides a powerful weapon against illegal activity. When our machine-learning systems or trained staff spot something suspicious, we report it. This provides law enforcement with a high resolution view into global money flows, an invaluable tool in the fight against illegal activity, money laundering, and terrorism.  Licensed remittance companies keep money “in the light” by processing legitimate transactions, while detecting and reporting those that are not.

By contrast, there is an underground market of unlicensed remittance providers that do not comply with any of these obligations. These informal networks operate without oversight and can be associated with black market activity. If policies are enacted that raise the costs of legitimate remittance services, money will be pushed towards these shadowy alternatives.

That is why I am troubled by recent proposals to tax remittances to fund a Border Wall. A“2%” tax would radically increase the costs of sending money, far more than you might expect.  Remitly charges less than 2% for our service, so this tax would more than double prices.  Do that and you are going to push money into underground channels and fund the very activities we want to stop. The worst thing Congress could do to our customers and to border security would be to tax remittances to build a wall.It’s just bad policy.

Congress should focus on low-risk means to reduce regulatory burdens and enhance competition. While there is no silver bullet to AML reform, a few “lead bullets” include revisiting SAR reporting thresholds, aligning the Travel Rule and KYC requirements with international trends, and improving OFAC sanctions lists to reduce the operational burden posed by false positives.

These improvements would focus private sector and law enforcement resources on higher risk activities.  It is only natural that we reality check our risk-based approach from time to time, so I applaud the Subcommittee’s focus on these issues.

Making legitimate remittance services more accessible, affordable, and secure benefits consumers and strengthens national security. With sound policy and continued innovation, this goal is within reach.

I welcome any questions the Committee may have.

Matthew Oppenheimer,
Co-Founder & CEO, Remitly, Inc.