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… “ The Cost… • Human Resource Employment of Compliance officers Constant training of employees & • IT Infrastructure agents • Implement software and systems to monitor transactions Establish Monitor and Reporting Department • Security of operations Extensive KYC and KYE programmes • Emotional Fatigue • Constant fear of hefty fines • Audit Expense • Fatigue from constant regulatory Employment of independent auditors 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…
The Consequences… Th e Hurt Reduce employment foreign Consider the increased levels of intra- Co and exchange migration within the region and the entrepreneur- ns flows implications for countries, which, ism unlike developed North American and eq European countries, have become ue Place dependent on migrant labour and are excessive Choke the likely to reel from the folding of money nc strain on incomes of transfer businesses. state welfare families e programme …
The Consequences… The Cayman Islands Experience Economy centred on financial services o Heavily dependent on migrant labour o Only two remittance companies remain in operation o JNMS (Cayman) lost its only bank relationship in o August 2015 6 new account applications declined • Can only conduct customer transactions in US • Dollars Excessive Vaulting and shipping Costs • Migrant workers demanding payment in US Dollars o Creation of informal FX trading market o Devaluation of the local currency 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 Collaboration amongst groups to ensure that a carefully planned solution is executed Offer remittances as a product of banks.
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