In my recent visit to Chile, where I traveled to make sure the country would be the best site for our 2019 IMC LATAM conference, I was very surprised by the large number of migrants entering the country, the growing number of agents & branches of established money transfer companies such as AFEX, MORE Money Transfers, RIA Money Transfers, Western Union, Latin, MoneyGram, Argenper, Peru Services and the opening of new companies entering the outbound remittance market.

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He is one of more than 100,000 Haitians that have arrived in Chile in the last two years[1] and he has been 17 months in Santiago. He is satisfied with the amount of work he has found, the money he has sent home and the luck he has had in finding a way to express his artistic side by starting Rich-Arte, a group that is developing Haitian music & dance shows. He needs musical instruments for the group that I promised I’ll find a way to get or helping get them. He was part of the January 1^st Haitian Independence Festival, held for the first time in Santiago a month ago.  A joint mass was also celebrated that day between Mons. Pierre-André Dumas, Bishop of Port-au-Prince and Cardenal Ricardo Ezzati, Archbishop of Santiago[2].

[2]Haitianos celebran día de la Independencia – Arzobispo de Santiago – https://www.iglesiadesantiago.cl/arzobispado/noticias/otros/haitianos-celebran-dia-de-la-independencia/2017-12-27/154759.html – It is important to note that the Catholic Church believes that the arrival (and care of migrants by the church) is revitalizing the parishes in Santiago. See touching stories here: Migrantes y la revitalización de la Iglesia – July 2017 – https://iglesiadesantiago.cl/arzobispado/noticias/otros/migrantes-y-la-revitalizacion-de-la-iglesia/2017-07-11/161615.html

EPICENTRO

I met Pierre at Centro Cultural para Inmigrantes EPICENTRO, a meeting center in Calle Catedral where José Miguel Manriquez has been trying to gather around the migrant communities and offer courses, an art gallery to encourage artists, legal help, etc. After many years traveling the world and retaining the long shirts that he wore in the many years he lived in India, José Miguel is pouring his heart over this work: “I came back to Chile and I found my call: helping migrants”. The first National Migrant Conference in Santiago took place at Epicentro in October 2017[1].

Pierre Moulite studied theatre in Haiti and he longs for it. He is struggling with Spanish, which he is learning in Epicentro. Now, he has been chosen as an actor in an upcoming film in Chile “Fiebre Amarilla” where a Haitian was needed for key roles. Is not his first film. He is happy, hopeful, but his future is uncertain. Sending money home is something he is proud of and finding the name of CAM & Unitransfer in Chile, Haitian Money Transfer Companies partnering with Chilean companies, has been important for him.

[1] Primera Conferencia Nacional de Inmigrantes: “Desafíos y horizontes del Movimiento migrante en Chile” – El Ciudadano, Octubre 2017 – http://bit.ly/2G70NZv

Colombians & Peruvians

While Haitians & Venezuelans have been disembarking at record numbers in the last two years, Colombians have been arriving for some years now. Colombians are probably 120-150,000 now, being the second largest group after Peruvians which might be close to 200,000. While Colombians are in the Services sector, Peruvians are drawn to construction, cleaning sectors and own many shops around the Cathedral in downtown Santiago. Peruvians are also opening restaurants at a fast pace in recent years in many areas around town. It is important to highlight a Chilean study that shows that Haitians that were going to Brazil are now choosing Chile but that in 2015 1 of 2 Haitians arriving where sent back at the port of entry[1]. This proportion seems to have decreased as Haitians are entering “more prepared”.

Bolivians & Mining

There are mining towns in the north of the country where Bolivians out-number any other migrant group. There might be about 100,000 in the country now and being the third largest group. The northern mining city of Antofagasta with the recent wave of Peruvians and Bolivians has acknowledged a critical housing shortage with migrants being pushed into slums on the outskirts of the city, 25 different slums in its last count noted the International Organization for Migration. The number of immigrants has grown 41% over the last five years in Antofagasta, to nearly 38,700 families, according to Techo Chile, an NGO[2].

[1] Migración Haitiana en Chile – Boletín Informativo del Departamento de Extranjería y Migración – Septiembre 2016 – http://bit.ly/2EiJ2Kq
[2] Affluent Chile draws migrants but it’s no picnic for them –  USA Today – September 2016 – https://usat.ly/2EjAUoC

Visas & moving stories

Even if most migrants come on tourist visas and over-stay, the average wait time for the initial temporary visa is widely different for migrant groups. For Venezuelans is about 60 days, same as Argentinians, US citizens, Spaniards and Brazilians. However, the wait times for Ecuadorians and Haitians is more than 3 months while for Peruvians and Colombians is about six months. The increase in granted visas from 2014 to 2015 was, for Venezuelans 97%, Cubans 77%, Italians 63%, Colombians 56%, Haitians 55%, Spaniards 50%, Dominicans 49%, Bolivians 43% and Peruvians only 18%, information that is part of a very comprehensive study by OBIMID (Observatorio Iberoamericano sobre Movilidad Humana, Migraciones y Desarrollo)[1]. This study is also a good source for understanding the complexities of the Migration Regulation in Chile and the need for a new law.

There are moving stories of migrants coming by land from Ecuador to Chile and crossing the desert, which is still full of mines from long-gone 1970 Chile-Peru hostilities. Dominicans are arriving in Chile by this route and about 10-15,000 might be in the country now. Another moving story was the death of Haitian migrant Joseph Polycart who died of hypothermia after he was twice turned away from a local hospital on a freezing night[2].

[1] La Migración en Chile: Breve Reporte y Caracterización, Nicolás Rojas Pedemonte y Claudia Silva Dittborn – August 2016 – http://bit.ly/2ElpgxG
[2] Caribbean migrants risk danger and discrimination for a new life in Chile – The Guardian – June 2017 – http://bit.ly/2BnI4tw

Remittances to Chile (inflows & outflows)

Remittances to Chile (inflows), according to the World Bank Remittance Data[1], have been fairly stable in the last 5 years, around 100 Million a year. Remittances from Chile (outflows) have been growing to about 300 Million in 2016 and I am sure, estimating the number of migrants and the figures that have been informally given to me by colleagues in the industry, that the amount has surpassed the 500 Million dollar mark in 2017.

It is not easy for money transfer companies to work in Chile even though there are more than a dozen, some well known and some just looking to gain a market share in a very competitive market. As most everywhere in the world, derisking has been hurting the provision of services, with banks closing bank accounts or refusing to open bank accounts of companies providing money transfer services. A local bank official told me that his bank has no problem working with MTOs but their US correspondent bank has refused to send or receive wire transfers from companies in the industry.

Antimonopoly & Derisking

In a recent case, a local company filed a claim with the Antimonopoly Division of the National Economic Prosecutor Office (División Antimonopolios de la Fiscalía Nacional Económica – FNE) denouncing seven banks of denying the opening of a bank account to conduct foreign exchange and money transfer business. The head of the Antitrust Division, Gaston Palmucci, investigated the banks and came to the conclusion that the Chilean Central Bank (regulator) needed “to work on the improvement of the current regulation that would allow to fulfill the GAFI recommendations to avoid that banking institutions leave risky clients (“de-risking”) out of the financial system, reduce the operations in the informal financial system and facilitate the UAF’s monitoring work of suspicious activities…” Besides it ordered the investigated banks to modify the account opening policies to “…avoid the discriminatory and unjustified denial of bank account services to exchange offices and remittance companies. This modification consists in setting a series of objective requirements that would allow, under certain conditions, to accept and provide access to bank accounts.[2]”

[1] Migration and Remittances Data – November 16, 2017 – http://bit.ly/2nSE9gO
[2] The Antimonopoly Prosecutor in Chile sides with MSBs on Bank Account Closures – IMTC Blog – Hugo Cuevas-Mohr – IMTC Blog – November 2017 – http://bit.ly/2G5TDVb

Need for regulation

The need for regulation is not something that all companies in the sector agree, fearing that the regulation will create gray markets as it has happened in other countries. My position has always been that some regulation is better than no regulation at all and that a registration/reporting/background checking regulation, negotiated with the industry, is the best approach. When you have the regulator granting licenses you have a way to better demand fairness and demand banking channels. I agree that this is not happening in regulated countries like the US, Costa Rica, Brazil, where license money transmitters are also derisked left & right. But I still think that the industry in Chile must urgently create an association and propose a regulation before a rogue market player gets involved in questionable behavior and the whole sector is painted with the same malicious brush.

Foreign Exchange – Casas de Cambio

The Foreign Exchange Market in Chile serving tourists – and migrants, is also very active with offices at airports, downtown locations and malls. Established since the 1980’s with AFEX being one of the leaders of this sector and a leading contender in the money transfer market too, closely working with MoneyGram for some time now. CIS Latam is Western Union Master Agent and a leader in the industry in Chile, even after loosing its exclusivity agreements with Correos (the Post and Tour Bus, a bus company). We have already mentioned MORE Money Transfers with agents with conspicuously placed orange signs, RIA Money Transfers, Latin, Argenper and Peru Services with their own branches actively attracting clients.  As far as transportation companies go, is worth mentioning GOMoney, a new player in the money transfer market and the local arm of Andesmar, a market leader in the international movement of passengers in the region, with a large number of its passengers being migrants and their families from neighboring countries.

Foreign Exchange Firms, still called Casas de Cambio, have always been active in the B2B cross-border market, competing with Banks for the smaller companies that need their services and offering services to exotic markets where exchange rates of banks are not competitive. It is a market that fintechs might go after. Bitcoin settlement services of Bitcoin Exchange Firms are also offering excellent exchange rates, especially when there is good liquidity and demand for bitcoin in destination market of these transactions. Investment in Bitcoin by Chileans seems to be also on the rise. The Latin American Bitcoin/Blockchain Conference will take place in Chile this year, after successful events in Buenos Aires, Rio, Mexico and Bogota, this one last December, with a record crowd where I was invited to moderate a panel in Bitcoin Remittances[1].

[1] https://2017.labitconf.com/

The fintech sector in Chile

The fintech sector in Chile is also booming. A report by Finnovista[1], a Spanish/Mexican fintech accelerator, citing Fintech Radar Chile, positioned Chile as the fourth largest Fintech ecosystem in Latin America ahead of Argentina, Perú and behind México, Brazil and Colombia, with a growth of 34% since mid 2016. In these 18 months 11 Chilean Fintech startups ceased operations while another 30 Fintech startups emerged. Of the surveyed startups, 81% have been created during the last 4 years. It is important to note that 30% of the total number of Fintech startups is in the Payments and Remittances sector (23 start-ups), followed by Enterprise Financial Management with 16% (12 start-ups). In terms of internationalization a high percentage of startups are operating beyond its national frontiers (22%) in comparison with other markets (Mexico& Brazil is 10%); these Chilean startups are mainly operating in Mexico (33%) and Colombia (17%). We hope the Fintech community is able to gather around the Fintech Association in Chile, FinTech Chile[2] (Asociación de Empresas de Innovación Financiera) headed by Jose Santomingo, to address the main challenges of the industry, like access to banking, sector-specific regulation, etc.

Remittances & Financial Inclusion

It is important to add that CEMLA team has launched a very impressive program on Remittances & Financial Inclusion[3] that was unveiled in a Seminar in November in Madrid where a representative from the Central Bank of Chile was present. In my presentation at the event I insisted on finding new ways to team up with the remittance sector to find partnerships in every country, so we could work together in finding ways to tackle the elusive field of matching remittances with financial inclusion goals. Thinking outside of the box might lead to better results than past programs that some banks jumped to develop but failed to carry through long-term.

IMTC LATAM 2019 in Santiago

As you might see, all of these and other reasons, make Chile the chosen country for the 2019 IMTC LATAM International Money Transfer & Cross-Border Payment Conference in March-April next year. Hope to see you there.

[1] The Fintech ecosystem in Chile grows by 34% in the past 18 months and positions itself as the fourth largest Fintech ecosystem in Latin America – December 2017 – https://www.finnovista.com/fintech-radar-chile-actualizacion/?lang=en
[2] https://www.fintechile.org/
[3] Seminario sobre Remesas, Migración e Inclusión Financiera – CEMLA – Banco de España – 22, 23 y 24 de noviembre de 2017, Madrid, España – https://cemla.org/actividades/2017/2017-11-remesas-migracion-if.html – For Information & presentations at this seminar contact René A. Maldonado (Info in link)