JAMFIN convenes caucus to tackle de-risking
The Jamaica Association of Micro Financing (JAMFIN) said it sees the de-risking policy being pursued by at least one commercial bank as a threat to bona fide micro finance companies that have been in business for years and have substantial lending portfolios.
Under the de-risking policy, commercial banks across the Caribbean have been closing the accounts of cambios, remittance companies and now micro finance companies, JAMFIN’s chair Blossom O’Meally-Nelson said in a release.
It said commercial banks maintain that those are high-risk operations that open them up to substantial fines from regulators should there be any breach of anti-money laundering laws or laws against the financing of terrorism.
Correspondent banks mostly located in the United States act as clearing houses for funds that are in transit and they put pressure on commercial banks to get rid of accounts that they deem risky.
“It is difficult to ignore the existence of a sub-theme here in that if these types of money services are crippled it means more business for the very commercial banks that are crying wolf,” O’Meally-Nelson said.
The release said there are large numbers of ‘unbankable’ persons who use money services and to deprive them of the facility would serve to drive the informal economy.
JAMFIN said money services are targeted because large amounts of cash are moved daily outside of the commercial banking system.
The micro financing body said it has taken the step to convene a caucus of financial service providers, including micro finance companies and money service providers, as well as remittance companies and cambios who now have a common cause, which is to push back against the threat to their survival.
The caucus will utilize a multi-pronged strategy to lobby for dialogue with all major players locally and internationally, including policymakers, regulators, banks and private sector companies.
The group will also push for the development and use of alternative mechanisms to the settlement of cash transactions to include a regional clearing house for the Caribbean and the use of alternative currencies.
“The caucus group recognizes that the issue is a very complex one that pits business against politics while facilitating sustained economic dominance of one set of players and dimming the chances of other smaller players to gain market share, facilitate economic growth in their countries and in so doing strengthen democracies across the region,” the release said.