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Leesa Kow GM, JN Money Services Ltd President, Jamaica Money Remitters Association October 1, 2015
Leesa Kow GM, JN Money Services Ltd President, Jamaica Money - - PowerPoint PPT Presentation
Leesa Kow GM, JN Money Services Ltd President, Jamaica Money - - PowerPoint PPT Presentation
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,
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Banks in the United Kingdom, Canada, the USA, and now the Caribbean, have been severing ties with money transfer
- perators due to the high cost and
numerous risks
- f
maintaining such relationships.
BACKGROUND
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The Cost…
- Human Resource
Employment of Compliance officers Constant training of employees & agents Establish Monitor and Reporting Department Extensive KYC and KYE programmes
- Audit Expense
Employment of independent auditors
- IT Infrastructure
- Implement software and systems to
monitor transactions
- Security of operations
- Emotional Fatigue
- Constant fear of hefty fines
- Fatigue from constant regulatory
scrutiny
“Remittance businesses are
regulated in the same manner as banks, although (they are) not as large or nearly as profitable… “
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The Impact…
- 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
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Th e Co ns eq ue nc e …
Hurt employment and entrepreneur- ism Reduce foreign exchange flows Choke the incomes of families Place excessive strain on state welfare programme Consider the increased levels of intra- migration 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…
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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
- Migrant workers demanding payment in US Dollars
- Creation of informal FX trading market
- Devaluation of the local currency
The Consequences…
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The Consequences…
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
Disruption to Remittance Industry
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Collaboration amongst groups to ensure that a carefully planned solution is executed
Offer remittances as a product of banks.