Introduction
The following report is a country profile that analyses the money transfer marketplace to the Dominican Republic. In particular, the report looks at competition in the market.
The report includes a general profile of the migrant population in several countries like the United States and Spain, characteristics of sending money, as well as an in-depth analysis of the remittance marketplace.
Among the findings of the study are the following:
- The Dominican Republic receives an average of 1.5 million person-to-person transactions a month—that’s 40 percent of all households in the country;
- Over 80 percent of these transfers originate in the United States, reflecting higher value sent relative to the population;
- The average transaction amount is US$300, sixteen times a year;
- There is a competitive landscape between different money transfer operators encompassing at least 10 companies, and a payment network of banks, cash payments at non-banking financial institutions, as well as motorized home delivery.
- Online or digital origination occurs in 60 percent of the volume, and less than 25 percent of payments are transferred into bank accounts or a digital wallet.
- Less than 15 percent of payments occur in rural Dominican Republic, with less than two thirds deposited into accounts.
- Transfer cost ranges from US$7 (according to migrants) to US$9 (as per the cost of sending US$200),
- Relative to the average remitted of US$300 or US$200 benchmark, transfer costs are below the Goal 10.c of 3 percent by 2030.
- Transaction cost may be higher than 3 percent when it is sent in cash and paid in Pesos, which applies to 40 percent of recipients
- Overall, this is a competitive market where key performance indicators are shared similarly among the leading companies.
The newsletter is based on Central Bank available data, proprietary company data as well as a dataset of 1800 records on transaction cost, including 100 payer institutions, 12 remittance service providers and the services they offer.
Macro Picture of Remittance Transfers
The Dominican Republic is a country with a longstanding trajectory of migration with an engaged diaspora as far back as the 19th century. Since the democratic transition of the 1980s migration from the Dominican Republic increased in economies of scale, forming transnational ties that have now consolidated across the globe. Since the 1990s nearly 80 percent of migration is to the United States, with an important percentage to Puerto Rico, and since the 2000 expanding to Europe, predominantly to Spain.
Dominicans like other nationalities living abroad, are engaged with their homeland through their families and communities, and even in the political landscape. Economically, more than 80 percent of Dominicans send money back home.
This volume has practically doubled in ten years between 2015 and 2024. Part of the reason of the increase relates to the fact that Dominicans in the US are sending more money in the principal remitted and the frequency sent since 2020.
Source: DR Central Bank and World Bank
Source: DR Central Bank
About Remittance Senders
The demographic profile of senders varies from different nationalities. For example, female Dominicans in Europe represent between sixty six percent (71 percent in Switzerland), whereas those in the US are 58 percent. The gender distribution is different if not unique relative to all other migrant nationalities, where males represent a higher share, yet one that is changing with increasing demand of female foreign labor and increased females participating in the labor force.
Other important characteristics of the Dominican remittance sender include that they remit more than 16 times a year, and on averages of $300. In 2005 Dominicans would remit $200 and 20 years later they are sending $300.
Source: Remittance Service Provider data
According to the Central Bank of the Dominican Republic, the country received just over 30 million transactions during 2024. These number of transactions are typically 85 percent person-to-person transfers carried out by adults,[1] in which, at least among Dominicans in the U.S., they send 16 times a year. The table below provides a summary of the month-to-month estimate of family remittance transfers from each location.
Source: Central Bank of the DR and author’s calculations (person to person transactions controls for non-remittance related transactions (typically 15 percent of all transfers) and the annual number of remittance transfers performed (16 times a year)).
About Money Transfers and Intermediation
Family remittances are connected to a marketplace of intermediation for transfers. The transferring process is treated as a commodity for which a service is provided to ensure an amount of money is delivered from one point of origination to its destination. This process connects with development at various segments, including regulations, competition, and financial inclusion.
Remittance transfers are shaped by rules and the existing marketplace that intermediates the transactions. These rules as well as supply and demand in this remittance marketplace significantly shape the transfer process. The migrants’ share of income occurs in the form of a transaction of money in exchange for money to be delivered to a relative. Immigrants buy [foreign] currency to send to relatives at a certain price; in this context, money is treated as a commodity, or a good for which people have a demand.
The purchase of such currency is regulated through
legislation pertaining to foreign currency controls of different kinds (authorized entities, financial crimes, consumer protection, sovereignty). These rules are one component of the transfer process, as intermediaries must deal with different issues relating to development.
Other aspects of the money transfer include, the legal position of the transfer (licensed or unlicensed), the sending methods (cash or account), the mechanisms utilized (front-end technology or ancillary tools), the extent of competition in the origin by remittance sending providers and the destination by payers (banks exchange houses, microfinance institutions, etc.).
In addition, there are value added elements in the transfer, such as its leveraging potential for migrants to achieve financial access.
Key Characteristics of the Marketplace
Remittance intermediation to the Dominican Republic has been a matter of interest for many years partly because in the early 2000 the transfer costs to that country were among the most expensive. There were also at that time allegations that the intermediation process was managed through oligopolistic practices.
Today the marketplace today is far more competitive. There are more than 20 intermediaries who handle more than 30 million transactions a year.
This section is based on data collected on the number of intermediaries, payment locations, type of remittance service provider, payer institution, payment method and client support.
The number of companies has shifted over time due to changes in competition. Some companies that prevailed in the market in the early 2000 are no as active or very active and others continue to be dominant in the market like Western Union, the remittance business outfit owned by the Banco Hipotecario Dominicano or DolFintech /Quisqueyana, partly Dominican owned business.
Newer remittance service providers include those in the digital transfers market such as Xoom, Remitly and Boss Revolution.
The table below offers an estimate of transactions originated by key remittance service providers, largely money transfer operators. There have been changes in the landscape with some companies increasing their participation in the market over others. Overall, 60 percent of transfers are performed through some form of electronic account relying on mobile applications.
These companies offer a wide range of services for sending money, excluding other financial services like small dollar loans, payroll deposits, airtime, or bill payments. Most RSPs offer services with financial depository and non-depository intermediaries, accept the origination of transfers in cash as well as through bank accounts or use of debit and credit cards, and pay in local or foreign currency, including account deposits in either currency.
The range of services offered is important for both the sender and recipients. Most companies offer cash or account originated transfers, with few exceptions. All businesses offer to pay for the transfer in pesos or in dollars. And the majority partners are a mix of depository financial institution, such as banks or credit unions, and non-banking cash payer, including home delivery.
On the destination, payments are mostly paid in cash. The table below presents the number of payout locations, in total there are more than 6,000 payment points spread out through 100 different banking and nonbanking financial institutions, each with their payment network, including subagents.
In addition, there are at least two home delivery providers, Caribe Express and Banco Union, which together include a network of more than 1300 motorized home delivery providers. Together these payers handle 60 percent of payments, half of which is home delivery. In fact,the Central Bank estimates that 76 percent of payments are handled by money transfer companies.
The majority of these funds are paid in US dollars.
Financial Access Among Remittance Recipients and Digital Payments
Remittances typically have a positive effect on increasing financial access either through the long term effect of people’s collecting money through a financial institutions or to marketplace incentives to enter the financial sector. Access varies, however.
According to interviews with financial institutions that work as remittance payers at least half of recipients own a bank account. This number represents a 15 percent increment from 35 percent in 2015 (a 1.1 percent annual growth rate) as per a previous study carried out by the author in the Dominican Republic.[2] The figure is in correspondence with Findex data which pointed that in 2021 54 percent of people own a bank account, against 43 percent in rural areas—see section below.
Moreover, the Bank Superintendency data points that 40 percent or 3.4 million adults are registered in mobile financial applications (3 million of which through mobile banking applications). However, there is no indication of that for rural areas or among remittance recipients.
However, company data among remittance payment institutions showed that only 24 percent of payments were performed into an account. The BHD and Banreservas continue to capture the largest share of deposits. However, even among those institutions, the preferred choice is cash pickup among almost half of recipients. In other words, half of those with bank accounts, still cashed the money rather than getting it deposited. It is important to note that even though there are more than 60 Fintech institutions, they still do not have substantive paying presence. BHD and Reservas Mobile banking platforms are the most popular vehicle when remittance deposits occur.[3]
See Table 8 below.
The Dominican Republic exhibits an important percentage of people with financial access and use of mobile devices. The Central Bank and the World Bank’s Findex estimates that more than half of the population has financial ownership of an account (bank, credit union, fintech), though some of it include government subsidies used only for cash transfers. A lot of this bankarization is attributed to the country’s strong urban concentration.
In the remittance payment ecosystem however, there is a disconnect between fund origination and remittance deposited into bank accounts or digital wallets.
While just over 60 percent of remittances originate using an online payment platform (digital application, mostly), on the destination, less than one in four payments are deposited in some form of an account.
The table below presents a matrix of remittance origination and payment account deposits into the country.
Geographic Location of Payments
As with the population, which is 85 percent urban, remittances go primarily to urban areas. Five provinces capture 67 percent of all flows, and 12 percent of flows go into rural areas of the country encompassing more than 14 provinces.
Because there are no differences in principal amount sent to urban or rural areas, this would indicate that rural recipient households (182,000) are one in three rural households (558,000) in the country.
Digital payments are largely performed in urban areas, and according to payment institutions, the percentage of transfers deposited into a digital account is under one fifth. [4]
Remittance behavior in rural areas: income contribution and financial access
One of the key effects of remittances among recipients is the increase of total and disposable income, in turn increasing savings capability. In rural areas, the impact is greater. Typically, the income dependence of remittances, that is remittances as percent of total income, represent between 40 percent-60 percent of all income in a remittance receiving household.
Using the average salary in 2024 in the Dominican Republic (RD$21,504 or US$338)[5], remittances increase household income to US$800 and represent 43 percent of total income. In rural areas, the impact of remittances is greater. First, remittance sending companies and remittance payers confirm
that the average remitted of US$300 applies to areas like Valverde, Cibao Norte or Monte Cristi.[6] Second, rural income is at least 15 percent (US$287) lower than the nation’s average. That means that remittances are 51 percent of total income. Therefore, those households receiving remittances in the rural areas are more benefited from the inflow than those in urban areas.
In terms of remittance recipients with bank accounts, or financial access, there is no survey data available, however, company executives working on the payment side stress that they see the same trend with rural remittances as with urban transfers: account deposits in rural communities are low or about half of those with a bank account. It is uncertain what percentage of rural remittance recipients own a bank account, however, it may be possible that their number is close to the rural average reported by Findex—40 percent.
On the Uses of Remittances—there is an often used term “uses of remittances” which is based on the assumption that remittance recipients make use of the income in a separate way to the remunerated income earned from someone working within the household. However, income is fungible, that is, all sources of income (rent, like remittances, remunerated work, gifts, inheritances, or shares of business earnings) in a household are fungible. What remittances do is to increase total household income, as was shown when comparing the income dependence on remittances. The fact that in rural areas disposable income increases due to remittances, it means that people may be able to buy and save more than others. For example, according to a recent study of rural Cibao Norte,[7] current formal income is only 62 percent of total household expenditures (US$732), which means that through remittances rural Dominicans may be able to afford those costs and have money left to save.
Transfer Costs to the Dominican Republic
Sending money to the Dominican Republic has been a matter of interest to migrants as consumers and diaspora, as well as to the development policy community. This section reviews the cost of remitting to this country.
Using the World Bank pricing database, the graph below shows that sending money to the Dominican Republic is typically above the average transfer cost to Latin America and the Caribbean. That is, to send $200 in 2024 costs $12 in combination between the foreign exchange and the fee charge for sending the transfer or six percent.
Source: World Bank Pricing database
However, it is important to consider some important caveats. First, the average amount remitted by Dominicans is $300. Second, according to the Central Bank of the Dominican Republic, 60 percent of transfers are paid in US dollars. Therefore, average transfer costs for US$200 drops to 2.8 percent, that is below the SDG Target 10.c. “by 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent.”
Third, survey interviews with migrants in the U.S. reported that they pay an average of US$7 per transaction (Orozco 2021). So they are paying far less than what unweighted averages point to.
However, it is still important to understand the composition of these costs if pricing is a function of the type of service provided (an operation originated in an account or in cash, paid in US dollars, etc.).
A closer look to the data shows that the changes occur as it relates to the type of service provided on the money transfer method, cash or account based. The table below shows that either getting the money paid in US dollars or using a debit card to originate a transaction in pesos will have the lowest transaction cost. In the first case, having money paid in US dollars will yield an average cost of 3 percent (with some companies offering lower transfers at US$6). In the second case, for that 30 percent of consumers who still want transfers paid in Dominican Pesos, their best option is to use their debit cards.
A Regional Comparison with Central America
The Dominican Republic exhibit characteristics similar to Central American counterparts. Its total volume historically has been above 10 percent. The principal remitted is somewhat lower than the Central Americans. The principal difference from the Central America region is the rural-urban difference.
In absolute terms, the volumes remitted were comparable to those of El Salvador, however, in 2020 Dominican flows have increased in larger numbers, in part due to remitting behavior among Dominicans: they tend to remit up to 17 times a year. Dominican growth has been higher than most Central American countries, except in the last five years due to the growth of Central American migration.
Source: Central American Banks
Beyond macroeconomic indicators, it is important to understand remittances in its various dimensions, particularly in terms of the number of senders and the transactions that accompany them to households.
Each migrant remits 16 times a year more or less on an average of US$240 per send until 2016. However, since 2020 that amount has been growing every year in higher numbers, above $300 per send.[8] In the majority of cases, the money is transferred through a mix of cash or digital transactions, but paid in cash at local financial banking or depository institutions. The Table below points out that the principal amount sent has increased at an annual rate of 5 percent.
In the same way that the principal amount remitted increased, so has the number of remittance senders. This increase is more noticeable during the post Covid19 period when an influx of migration to the United States took place. In four years, the number of senders grew almost to two million people. Nicaragua alone, and due to its political crisis, showed an increase of almost 400,000 new senders during that same period.
The extent to which these person-to-person flows are relevant is more visible in regards to the number of households receiving money relative to all households in the region. In practical terms, while remittances may be 23 percent of GDP for all of Central America, today half of households in Central America are receiving these flows. Note that the Dominican Republic share of receiving households is as large of Guatemala and Honduras (this latter a country of the same population size).
In turn, money has a far greater distributive impact than GDP, which often stems from enclave economies with limited labor force occupation. In the current economic model, where growth is shaped by global commerce through free trade handled by a handful of companies on one side, and an informal economy on the other side, remittances are the missing middle in the economy mitigating the obsolescence and deficient growth approach.
Finally, the impact of remittances in rural areas may be greater in Central America than the Dominican Republic due to its strong urban concentration. A comparison of the D.R. with Central American counterparts shows that nearly 60 percent of remittances go to three main cities, only pairing with Nicaragua, whose capital captures a large share of its population. As a comparison to the most rural country in the set, 56 percent of Guatemalans in rural areas receive remittances.
These trends reflect, among other dynamics connected to social capital, an opportunity to increase and deepen financial access among recipients, and particularly among those in rural areas.
One observation from the Bank Superintendency about use of financial services is that rural communities tend to rely more on subagents because there are less bank branches present—Hato Mayor has 7 branch offices whereas Distrito Nacional 273 (DN is 10 times the population of Hato Mayor).[9]
Digital financial access could facilitate in part this deficit. However, clarity in understanding the use of electronic or stored based financial vehicles (such as bank accounts, digital wallets, or online platforms) depends on learning about the significance of financial practices and the opportunity value of storing funds to increase disposable income.
Is It Possible to Have a More Competitive and Cost-Effective Marketplace?
Remittances as a matter of financial transfers play an instrumental role in development so far as the inflow of money into households increases disposable income and in turn increases savings capability. Ensuring that flows are directly connected into the financial ecosystem can have a more direct impact on development.
Therefore, transfers are important for both senders and recipients, among senders, remittance services can increase financial access to migrants so far as they can use financial instruments that are affordable, convenient and offer value to their transaction (you can build credit history and perform other financial transfers through an account and through the same payment vehicle [a mobile application or an internet web based platform).
The overview of the remittance market to the Dominican Republic shows quite a competitive scheme with wide service offering and low transaction costs for the average transfer provided.
To make the market more efficient in the payout and in turn increase financial access and lower costs is important therefore to consider financial education for senders and recipients with a focus on ensuring transfers are performed in one currency and through electronic account systems in the origin and destination.
Accompanied by this effort is important to consider developing a remittance calculator as well as a scorecard on money transfers. These alternatives are to be further developed in a second report about recommendations for transfer reduction and competition in the industry. Here we list the range of possible alternatives.
Financial Advising to Sender
Migrants have several financial needs, of which sending money is one. Providing them with feedback and input on the best sending methods, the options to consider when sending money is central to ensure migrants get a better return on their expenses.
However, this type of advice needs to be accompanied with broader financial education about migrants’ financial needs, specifically, about budgeting, savings, credit, risk mitigation strategies and cost-effective transfers and other financial services.
Financial Advising to Recipients
Also, remittance recipients need a better understanding of the relationship between their personal finances and remittances. Specifically, data shows that remittances increase disposable income and in turn, increase the ability to save. However, savings formalization through financial advising contributes to improving money management and asset building.[10] Central to financial advising is to integrate understandings of remittance deposits into accounts, mostly in dollars, as a means to more quickly capitalize on the funds received and increase the personal or household stock of savings.
Remittance Calculator
Another important diaspora outreach tool to maximize cost efficient remittance transfer uses is the creation of an automated clearinghouse that reproduces information on transfer costs and is published in the form of a remittance calculator. The information should contain development indicators such as payout locations in rural areas, access to various digital or electronic deposit options, for example.
Industry Scorecard and Working Group Engagement
This report proposes creating a working group on remittance transfers and financial inclusion that includes incentives to competition in the marketplace and a discussion on financial inclusion. The input for the dialogue in the working group should include evidence-based research, including analysis of key factors of competition, and financial access.
Another actionable activity of the working group would consider conducting a nationwide study on remittances and financial access that serves as a key piece to set a policy agenda and in support for the ENIF. As of now, there is no existing study, survey or other evidence based analysis on remittances that may have been produced in the past 20 years.
ENIF set out a few goals including setting out financial inclusion policies that contribute to access to products and services in the financial system. ENIF’s divides inclusion as four prong components: Access, use, quality and welfare.[11]
ENIF’s priorities have focused on increasing the number of accounts owned and digital access. It has yet to establish any recommendations on financial inclusion among remittance recipients. But given the scale and size of this group, it is important to include conversations between this working group and the ENIF’s Commission on Financial Inclusion in order to deepen the options, expand their initiatives [12] by considering remittances within their strategy.
Providing Agricultural Workers with Remittance Transfer Options
Many experts in the Dominican Republic coincide that while the number of Dominican workers in agriculture has diminished with urbanization, the agricultural production has been picked up by the Haitian workforce, particularly in rural areas, and in the northern parts of the country. However, most Haitians do not send money back to Haiti through regular payment rails, instead if they send money, they do so through informal or unlicensed remitters. The number of Haitians in the Dominican Republic is said to scale to at least one million. Looking at the data provided by the Central Bank of Haiti, which reports US$154 million received in the Dominican Republic on an average of US$13 million monthly transfers of no more than US$50, the number of personal senders may be at most 200,000.[13] Haiti like the Dominican Republic has a well-established payment network and tying them together would reduce transaction costs and make it easier for Haitians to send money.
Endnotes
[1] Based on interviews with industry officials and survey data.
[2] Survey to 2,000 transactional clients of La Nacional de Ahorro y Prestamo, 2015.
[3] Interviews with Bank and Fintech executives
[4] Company data from leading remittance payers and interviews with company executives
[5] Directorio de Empresas, 2024. Boletin Trimestral, Tercer Trimestre 2024, Oficina Nacional de Estadística (ONE). We use 1.2 as a factor for household income, that is, 1.2 people in a household have a remunerated income in a remittance receiving household because one member is already working abroad and sending money.
[6] The amount reportedly paid by one remittance payer was US$8 more than in Santo Domingo. It does not represent more than 1 percent higher than the national average.
[7] Voorend, Koen, Daniel Alvarado, Richard Anker, y Martha Anker, Cibao Norte Rural, República Dominicana (Contexto: Zonas Productoras De Banano) MARZO DE 2022.
[8] Orozco, Manuel. A commitment to family: remittances and the Covid19 pandemic (2021)
[9] Ranking de digitalización, Superintendencia de Bancos, 2024, República Dominicana
[10] Orozco, Manuel. Understanding…
[11] https://sb.gob.do/innovacion/inclusion-financiera/
[12] https://sb.gob.do/innovacion/inclusion-financiera/#iniciativas
[13] Many transactions from the DR to Haiti using existing platforms such as those of Western Union are business payments rather than personal remittances.
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Ahmed, Junald and Mazhar Yasin Mughal, 2019. “Cost of Remitting to Pakistan Across Major Corridors.” Pakistan Institute of Development Economics (PIDE) Research Brief, 4(2019): 1-4.
Beck, Thorsten and María Soledad Martínez Pería, (2011). “What Explains the Price of Remittances? An Examination Across 119 Country Corridors.” The World Bank Economic Review, 25(1): 105:131.
Freund, Caroline and Nikola Spatafora, 2008. “Remittances, transaction costs, and informality,” Journal of Development Economics, 86(2008): 356-366.
GSMA, 2016. “Driving a Price Revolution: Mobile Money in International Remittances,” Authors: Saad Farooq, Nika Naghavi, Claire Scharwatt, GSMA: London.
Isaacs, Leon, Sarah Huge, Nana Boakye Adjei and Gemma Robson, 2017. “Reducing Costs and Scaling Up UK to Africa Remittances Through Technology,” DMA Global: London.
Kakhkharov, Jakhongir, Alexandr Akimov and Nicholas Rohde, 2017. “Transaction costs and recorded remittances in the post-Soviet economies: Evidence from a new dataset on bilateral flows.” Economic modeling, 60(2017): 98-107.
Overseas Development Institute (ODI), 2014. “Lost in intermediation: How excessive charges undermine the benefits of remittances for Africa,” Authors: Kevin Watkins and Maria Quattri. ODI: London.
Orozco, Manuel, 2015. “The Remittance Marketplace in Europe: Competition and Pricing,” Inter-American Dialogue: Washington, DC.
Orozco, Manuel, 2006. “International Flows of Remittances: Cost, competition, and financial access in Latin America and the Caribbean – toward an industry scorecard.” Inter-American Dialogue: Washington, DC.
Orozco, Manuel, Laura Porras and Julia Yansura, 2016. “The Costs of Sending Money to Latin America and the Caribbean,” Inter-American Dialogue: Washington, DC
Orozco, Manuel. 2016. Understanding Income, Remittances and Financial Access in Latin America and the Caribbean: the case of El Salvador. Washington, DC. IAD.
Orozco, Manuel. 2021. A Commitment to Family: Remittances and Covid-19. Washington, DC. IAD-Creative Associates
Rodima-Taylor, Daivi and William Grimes, 2019. “International remittance rails as infrastructures: embeddedness, innovation and financial access in developing economies,” Review of International Political Economy, 26(5): 839-862.
Schmitz, Kai and Isaku Endo, 2011. “Lower the Cost of Sending Money Home,” Finance and Development, 48(2): 34-35.
Suki, Lenora, 2007. “Competition and remittances in Latin America: Lower Prices and More Efficient Markets.” Inter-American Development Bank and OECD.
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Methodology
This report includes data collection from the Central Bank of the Dominican Republic and United Nations migrant population data as well as the US Census.
In addition, it uses includes a dataset composed of 1135 records that include data from 13 remittance service providers, services offered, transfer costs, client support. The data was collected for the United States and Spain corridor with the purpose to conduct an in-depth review of the determinants of transaction costs.
The data analysis explaining 33 percent of the data shows that transactions are lower when paid in dollars and when client support is positive. Although not statistically significant, cost increases among locations with higher-than-average payment locations per provider (meaning that MTOs need to raise costs in order to transfer commissions to more payers). Using cash transfers is more expensive than using electronic based accounts such as bank accounts or debit cards.
Appendix – Financial System and Regulation in the Dominican Republic
The Dominican Republic’s financial system is supervised by the Monetary Board, which regulates the Central Bank and the Superintendency of Banks. In accordance with Monetary and Financial Law Num. 183-02 of 2002, the Financial and Monetary Administration enjoys functional, organizational, and budgetary autonomy. The Central Bank and the Superintendency of Banks jointly supervise and regulate operations and agencies related to remittances.
In total, 113 financial entities operate in the remittance market in the Dominican Republic, including Financial, Foreign Exchange, and Trust Intermediaries. These include 31 banks, 6 credit companies, 34 exchange bureaus and 6 foreign exchange and remittances agents.[1]
A variety of laws and regulations that govern and supervise currency exchange also have an effect remittance agents and the remittance industry.
Article 28 of the Monetary and Financial Law states that the Dominican financial system operates under a floating exchange rate which enables financial entities to conduct foreign exchange transactions under freely agreed-upon conditions. The entities authorized to carry out currency exchange include financial entities (i.e. banks and credit unions), foreign exchange agents and remittance agents, and to do so, they require prior authorization from the Monetary Board, according to articles 29 and 30 of the Monetary and Financial Law.
Anti-money laundering (AML) and terrorism finance laws are also in place, and remittance companies are supervised for compliance using frameworks such as the “Know your Customer” procedures. These require, for example, that agents request customer identification and report transactions equal to or greater than US$10,000 to Banking Superintendency.[2]
The Dominican Republic was classified a country with “medium” of money laundering risk, scoring 64.7 out of 100 on the Know Your Customer risk ranking.[3] As of 2018, the country is not on the Financial Action Task Force (FAFT) list of AML deficient countries and its KYC an STR regulations are considered comprehensive.[4] In 2017, national legislation against money laundering and terrorism was updated to include stronger penalties for crimes falling within the scope of the legislation. Legislative weaknesses include a lack of safe harbor protection for Safe Task Force filers and does not criminalize those who provide tips.
Source: Dominican Republic Census; Perfiles Productivos Provinciales para la Promoción de las Exportaciones y la Atracción de Inversión para el Desarrollo, ProDominicana, 2022. The most rural provinces do not export more than $30 million in agricultural commodities and employ less than 2,000 people through the free trade zone. Integration in the global economy is very low.
[1] Dominican Central Bank https://www.sb.gob.do/entidades-autorizadas-sib/entidades
[2] Manual “Conozca su cliente,” Superentindente de Bancos, Dominican Republic. http://www.sb.gob.do/pdf/lavado/TERCERA-EDICION-Instructivo-Conozca-Su-Cliente-Ready.pdf
[3] https://www.knowyourcountry.com/country-ratings-table
[4]“Dominican Republic Risk and Compliance Report 2018”, http://www.knowyourcountry.info/files/domrepaug2014_4.pdf
