Leesa Kow GM, JN Money Services Ltd President, Jamaica Money Remitters Association October 1, 2015
PRESENTATION OUTLINE The Cost… The Impact… The Consequence… The Solution…
BACKGROUND
Banks in the United Kingdom, Canada, the USA, and now the Caribbean, have been severing ties with money transfer operators due to the high cost and numerous risks of maintaining such relationships.
“Remittance businesses are
regulated in the same manner as banks, although (they are) not as large or nearly as profitable… “
• Human Resource Employment of Compliance officers Constant training of employees & agents Establish Monitor and Reporting Department Extensive KYC and KYE programmes
The Cost… • IT Infrastructure • Implement software and systems to monitor transactions • Security of operations
• Emotional Fatigue
• Audit Expense Employment of independent auditors
• Constant fear of hefty fines • Fatigue from constant regulatory scrutiny
• Most of the $65.4 billion in remittances sent to Latin America and the Caribbean in 2014 was used for basic consumption. • In Jamaica, some 85% of remittances is used buy groceries, pay for utility bills, education, cover medical expenditure and housing and construction • Remittances account for about 3% of the GDP of LAC countries •
Account for 17% of Jamaica’s GDP
The Impact…
Th e Co ns eq ue nc e ‌
The Consequences‌ Hurt employment and entrepreneurism
Reduce foreign exchange flows
Place excessive strain on state welfare programme
Choke the incomes of families
Consider the increased levels of intramigration within the region and the implications for countries, which, unlike developed North American and European countries, have become dependent on migrant labour and are likely to reel from the folding of money transfer businesses.
The Consequences… The Cayman Islands Experience Economy centred on financial services Heavily dependent on migrant labour Only two remittance companies remain in operation JNMS (Cayman) lost its only bank relationship in August 2015 • 6 new account applications declined • Can only conduct customer transactions in US Dollars • Excessive Vaulting and shipping Costs o Migrant workers demanding payment in US Dollars o Creation of informal FX trading market o Devaluation of the local currency o o o o
The Consequences… Disruption to Remittance Industry Reduced remittances could derail economic targets Government spend more on social safety net programmes due to rising unemployment and neediness by families Fewer remitters likely to remain in business which could increase the price of money transfers Senders could find less suitable means to transmit funds across borders A resurgence of the black currency market
The Solution
Offer remittances as a product of banks.
Collaboration amongst groups to ensure that a carefully planned solution is executed