BOJ studying how to map mobile remittances
The pace at which remittances have been flowing to Jamaica continues to slow, a trend the Bank of Jamaica (BOJ) says is linked, in part, to the tightening of Know Your Customer rules, which are affecting remittance companies that are required to police against scams and other illicit money transfers.
But the central bank also notes that there is a new avenue for remittances opening up through mobile wallets. However, it has no way at present to measure the depth of that market, and so does not currently include those flows in its monthly remittance estimates.
The central bank is regulator of both the remittance and mobile money markets.
BOJ Senior Deputy Governor John Robinson says mobile options, which do not require cash-in or cash-out through the formal financial system, may represent a new source of inflows.
“The BOJ is currently in the process of examining this phenomenon,” he said.
While remittances to Jamaica have been growing nominally, Robinson commented that there has been a slowdown in the annual growth rate, especially since 2017.
Total remittance inflows into Jamaica for 2016 grew by 2.9 per cent relative to 2015, but slowed to 0.6 per cent and 0.7 per cent for 2017 and 2018, respectively.
Over those same years, remittance inflows rose from US$2.29 billion to nearly US$2.35 billion.
Robinson said the slowdown is partly a result of enhanced Know Your Customer requirements implemented by remittance companies in sending jurisdictions, in response to strengthened anti-money laundering regulations by the Financial Action Task Force from as early as 2012.
“Remittance companies in the US and elsewhere face heavy fines – as high as US$60 million – for failing to put proper security measures in place to deter and report transactions involving suspected criminal fraud and money laundering,” the central banker said.
That has seen persons seeking out alternative channels for money transfers
The BOJ itself is examining the different channels that might have opened up and whether the flows through the alternate routes are sufficiently large to count.
“Bank of Jamaica continuously assesses the feasibility of capturing data on alternative channels and will publish this data when and if they become available,” Robinson said.
The remittance-related and other cross-border financial transactions of companies such as Payoneer and Paypal are currently captured in consolidated data submitted to the BOJ by deposit-taking institutions, as these companies typically use the formal financial system to settle customer-related transactions, the central banker noted.
On the issue of changes occurring in the market, he said the slowdown was greatest among remittance companies.
The BOJ tracks remittances sent through licensed remittance companies, which are the largest source of inflows, as well as relatively smaller flows through the banking system. Companies, on average, handle 85 per cent of remittance inflows.