The British people voted to leave the European Union which is being hailed as brexit. It came as a real shock to various economic pundits, politicians and businessmen alike. It took place on June 24th 2016 when a UK referendum on membership of the EU came to a conclusion of ending its relationships with the European union. Like all change, it will be both advantageous and disadvantageous. Money Transfer Operators are also to be affected a lot by this move of United Kingdom. They will need to take certain measures to retain their business and attract new customers and opportunities.
Things that may change
The main area of uncertainty, as said before is for overseas fund transfer service providers and cross border financial institutions. This may affect a MTO which generally operates under a SPI licence. It might also affect those who operate with an API licence instead of an SPI license.
For example, if you have an EU based bank account for fund transfer overseas from UK to Nigeria then it may be problematic now. Similarly, if you have a UK bank account but use it for transferring funds from France to Algeria then again you may have a problem.
However, the impact on the wider financial services market across the world is less likely to be affected. It is just the UK and European banks that havepass porting regulations for money trading in the European union that will be affected. Therefore, there is likely to be significant efforts on keeping these services intactto maintain stability for the easier transfer of funds overseasand from UK‘s interests, to preserve the role of the city of London.
Brexit, however may affect international transfers the volatility of exchange rates increased because of various doubts about the trade and financial relationships between UK and the European Union. For overseas fund transfers, it’s critical that the rates remain same and visibility and transparency is maintained throughout.
What can be done?
- You could make plans to change your UK/EU’s bank pass porting services: Matching your bank account to SPI licence domain is important. But if you want to operate across both the UK and EU then you should go for an API licence soon. In the latter case, you should acquire more bank accounts for operating in both United Kingdom and European Union.
- Get your compliances in an ordered manner: You need to have a full and transparent compliance which will basically help you get through the various changes that Brexit may embark. The regulators across the European Union are going to become more difficultfor the safety of their own financial transactions. If you want to operate with an API licence then having full compliance will increase the chances of success.
3) Have a modern technology platform: It is certain that some things will transform and business opportunities will emerge. The recent dip in Sterling may decrease the flow of transactions from the UK but will definitely increase the inflow of transactions into the UK. Hence, more sophisticated technology will be needed to process such bidirectional fund transfer overseas.
Till then working on mitigating risks from various Brexit talks is the only option that the overseasfund transfer service providers, have left.