In 2013, developing countries were expected to receive $414 billion in remittances – money sent back home by migrant workers. Remittances have been extolled in academic literature for having a substantial positive impact on development and poverty reduction. This paper will explain the link between remittances and development and argue against a quick, causal link between the two. There are three crucial factors that affect the development potential of remittances: Firstly, the literature suffers from a lack of remittance data in developing countries. Secondly, domestic and international politics mediate and curtail the positive impacts of remittances, which may result in adverse effects, such as public moral hazard. Finally, micro-level studies show that remittances can lock in existing household inequalities. Since development includes not only economic growth, but also includes equitable human welfare and poverty reduction, the impact of remittances on development are complex and may be adverse. Policy makers must not perceive remittances as a panacea for the poorest of the world; instead, they need to be cognizant of how remittances interact with particular socio-cultural and political economy factors.