Foreign currency exchange service leads on financial transactions tax
20 Jun 2012
Several trillion dollars is traded in currency around the world daily, with huge profits being pocketed by banks and traders. But one trader is bucking the trend by donating some of his company’s profits to charity, as well as giving a better rate of exchange to clients
In 2008, Alastair Constance, who had previously worked at currency exchange company Voltrex FX, was volunteering as a treasurer for international HIV charity Friends of Treatment Action Campaign. It got him thinking about providing a currency exchange service for charities and NGOs that offered them a better deal, but still made a profit for the trader.
The following year he set up Ethical Currency, the first company of its kind to pay a currency transaction levy, more commonly known as the Tobin tax. It means that 0.01% from all currency exchange transactions goes towards the Millennium Development Goals – to eradicate extreme poverty and reduce child mortality and Aids.
From the £25m worth of currency it changes each year, Ethical Currency donates 0.01% to Treatment Action Campaign, a support service for people with HIV, which has 267 branches in South Africa. Alastair believes that $30-$40bn could be raised each year for organisations like Treatment Action Campaign if all traders paid the levy.
The Tobin tax is not a legal obligation, but there is much campaigning to bring it into law. The scheme is similar to the Robin Hood tax also being proposed by campaigners, which covers a broader range of transactions made by the financial sector.
Ethical Currency trades in more than 40 currencies and only works with ethical customers, many of which are NGOs who need regular access to large sums of foreign currency. Customer Lucy Caslon, founder of Msizi Africa, which provides food and shelter for African orphans, says: “I’ve found it much easier dealing with them than the banks. They keep us in the loop with rates and as I’m often buying large amounts of Rand, I’ve saved thousands in the last few years.”
Alastair adds: “We have a good mix of clients in the third sector with annual currency requirements of anything from £10,000 to £1.5m.”
With the business now firmly established, the founder is working increasingly hard to get banks and traders to give back too. “We’ve worked closely with civil society partners to promote and advise on the global take-up of the levy,” he says. “I’ve advised the UN on how such a tax would work in practice. And, we’ve also worked in conjunction with high-level NGOs and been strong supporters of the adoption of a [general] financial transaction tax.”
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