Financial Inclusion for Transit Migrants

Migrants in Latin America who've crossed oceans to get there face unique financial inclusion challenges. A new publication tells their stories.

The first half of Ghanshyam’s journey through Latin America toward the US. Credit: Conor Sanchez, Researcher and Co-Author, “The Other Migration.”

In 2014, Ghanshyam, a man in his forties, was barely making ends meet working in a farm he owned in his native Nepal when a landslide devastated his land and constrained the livelihoods of people living in the surrounding area. A year later, twin earthquakes destroyed his house, forcing him and his family to live like slum dwellers for nearly a year inside temporary tarps provided by humanitarian organizations.

As the Nepali government imposed new regulations for the construction of earthquake-safe housing, Ghanshyam found himself unable to afford the construction of a government-standard home. Getting a loan was also next to impossible, as financial institutions did not provide loans against land in the earthquake-affected areas. The elections soon followed and with them, threats to voters to cast ballots for a certain party. Facing political unrest and no hope for economic improvement, Ghanshyam opted to sell his land and pay an agency in Kathmandu $30,000 to get him to the US. He had no idea how difficult the journey ahead of him would be.

Ghanshyam opted to sell his land and pay an agency in Kathmandu $30,000 to get him to the US. He had no idea how difficult the journey ahead of him would be.

Ghanshyam traveled through eight countries before reaching Costa Rica. He was extorted in Peru multiple times by police officers, detained by immigration authorities in Ecuador for four days, extorted again by Colombian police officers three times, and had his money, passport, and other identity documents stolen while in Colombia. This series of unfortunate events all occurred before spending seven days crossing the Darién Gap, a thick mountainous jungle dividing Colombia and Panama riddled with venomous snakes, wild cats, and dangerous paramilitary groups. And yet, Costa Rica was only the half-way mark in a treacherous journey to the US.

Ghanshyam is one of 87 migrants interviewed as part of a study of long-journey migration titled The Other Migration: The Financial Journeys of Asians and Africans Traveling through South and Central America Bound for the United States and Canada. Led by Prof. Kim Wilson, alums and graduate students from the Fletcher School at Tufts University captured these individual migrant stories in Costa Rica and Colombia in 2018 and 2019.

The experiences shared by these migrants offer evidence of the financial exclusion they faced both in their countries of origin as well as en route to their country of destination. Among the patterns of exclusion uncovered by this study, access to funds before and during their journey and access to livelihood and work opportunities throughout their journey should be of concern to the financial inclusion community.

Availability of Funds

The availability of funds was a key determinant of safety. Having the resources to secure an “all-inclusive” smuggling package marked a stark difference between an uncertain and dangerous journey and a partially safe one. As in Ghanshyam’s case, most Nepalis were able to afford this all-inclusive package which included plane tickets, lodging, traditional Nepali meals, and designated smugglers along the way to guide the migrant’s journey. The circumstances of migrants from Africa was worse. They were easy targets for criminal organizations and were confronted with more risk throughout their travels. African journeys were also commonly longer and dependent on procuring work in transit, being gifted money by good Samaritans, or receiving money transfers from loved ones.

Unfortunately, whether traveling with appropriate identity documents or not, formal money transfers were inaccessible to migrants. Researchers of The Other Migration believe this was likely due to money transfer agents not understanding their corporate internal policies and therefore not recognizing certain identification documents as sufficiently compliant with their regulations. Migrants were forced to resort to locals to access their money, requesting these strangers receive the funds in their name. Locals provided their service for a fee that ranged between 10 percent and 20 percent of the transfer amount, in addition to the fees the sender was already incurring. In some cases, migrants told of their funds being stolen by the local who was lending their name and ID for the transaction.

As the report explains, these activities put into question the efficacy of AML/CFT (anti-money laundering/combating the financing of terrorism) standards. To comply with these standards, financial service providers follow a set of procedures called Know Your Customer (KYC). These procedures are supposed to establish the facts and the behaviors of a specific customer. Nevertheless, in this case the customer being examined is not the end customer but a third party serving simply as an identity lender. Such activities create three problems: First, migrants cannot get their money without relying on locals and paying an exorbitant fee. Second, locals – knowingly or unknowingly – become involved in criminal activity, and third, KYC procedures fail to fulfil their purpose.

Livelihood and Work Opportunities

Livelihood and work options in transit countries are highly valued by migrants whose travels are piece-meal. Many Africans and Indians found themselves stuck in a transit country after their funds were depleted or stolen. Some were able to request an injection of travel capital from family members back home or living in the US or Europe. Yet for others, the option of receiving remittances was unavailable and they quickly resorted to pleading for odd jobs – often carrying groceries for supermarket patrons – or relying once more on the mercy of locals for aid. African respondents shared their willingness to work with the researchers, expressing frustration at their inability to communicate in the local language and their lack of access to formal employment. The researchers found there is currently no country in the America’s corridor offering temporary work permits for transit migrants.


In order to overcome the problems faced by migrants in transit, the report suggests AML/CFT requirements for transferred amounts under $1,000 be relaxed. This would allow money transfer agencies to deal directly with the end customer, adhering to the spirit of KYC requirements and avoiding the excessive fees currently incurred by migrants. As an alternative solution, governments of the transit countries could create an identity corridor, thus supplying migrants with a temporary identification document that is recognized by all or most transit countries, providing for more orderly international mobility, and serving to comply with existing AML/CFT requirements. Including a digital component of such an ID would be important, as many migrants are robbed of IDs in the Darién jungle or during other legs of their journey.

The report also proposes issuing temporary work permits for people in transit. Since most migrants are entering through official ports of entry in Ecuador and Brazil, immigration officials could collect information on migrants’ skills, store these in a regional database, and, in partnership with the transit countries’ labor authorities, allocate labor in needed sectors. This initiative would then be carried out in collaboration with the identity corridor. Work permits would enable migrants to contribute to the formal economy and would allow governments to collect taxes on their labor, generating resources that could fund support services to migrants and their host communities.

Work permits would enable migrants to contribute to the formal economy and would allow governments to collect taxes on their labor, generating resources that could fund support services to migrants and their host communities.

In short, considering transit migrants in efforts towards financial inclusion would provide thousands like Ghanshyam with the opportunity to escape grinding poverty with dignity and safety, while also adhering to financial regulations and contributing to local economies along the journey.

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