FUNDS transfers through domestic banks have skyrocketed in 2011 due to the global economic recovery, officials said.
Some of the country’s financial institutions reported significant growth in bank-to-bank transfers, from both consumers and companies, as businesses benefitted from a long-awaited uptick in economic activity.
“The growth was related to the increase in business transactions both locally and internationally,” said So Phonnary, ACLEDA Bank Executive Vice President and Chief Operating Officer.
ACLEDA, Cambodia’s largest bank, saw the number of its domestic transfers rise 24 percent, while the total of those transfers jumped 31 percent to US$1.4 billion in 2011 to the end of May, compared year on year.
At the same time, the number of overseas transfers to ACLEDA rose 26 percent and totalled $400 million in the five month period, up 57 percent year-on-year. The bank’s money transfers out of the country increased 9 percent for the period, climbing 59 percent to $422 million.
Migrant workers’ remittances have the potential to boost economic development in migrants’ home communities, according to a 2010 International Labour Organization report. However, development depends on workers’ access to safe and affordable money transfer channels. “Those who cannot send their money with friends or family members continue to use informal money transfer businesses, even though MoneyGram and Western Union offer services to most districts in Cambodia,” the report said.
The fees for these services are becoming less and less expensive, hence the increase in remittances between January and May, So Phonnary said.
“Households and entrepreneurs both understand the benefits of the system, and it can help the flow of money within the Kingdom’s financial system,” she said.
Canadia Bank also reported sizable increases in the number of remittances through its clients: a 25-percent increase totalling $318 million for transfers to Cambodia, versus a 12-percent gain totalling $309 million for payments leaving the country.
“This is one of the highest volumes ever for our bank,” said Canadia Bank Vice President Dieter Billmeier, adding the trend should continue along with the economic recovery.
ANZ Royal Bank saw a large expansion as well, with international transactions climbing almost 40 percent compared year on year to over $1 billion, according to Chief Executive Officer Stephen Higgins.
“There are a number of reasons for the increase, including a general up-tick in business activity in Cambodia, which is one of the reasons why I think GDP growth will be in the range of 7 to 8 percent this year,” he said.
The recovery of the global and national economy was also highlighted as a catalyst for growing remittance transactions by National Bank of Cambodia Director General and spokeswoman Nguon Sokha.
“The rise in money transfers reflects the improvement in business transactions, both inbound and outbound, as well as growth within the economy,” she said. “However, we need more cooperation regarding money transfers. They should be carefully audited, so we know the money is not laundered or terrorism-related.”
The prakas on anti-money laundering and combating financial terrorism requires banks and financial institutes to report the Financial Intelligence Unit transactions exceeding $10,000 within 14 days of the date of transfer.
The service is under strict supervision from the NBC to avoid terrorism and money laundering, said Nguon Sokha.
“Although we see the number of transactions and the amount of money increased, banks still need to be careful,” she said.