ON JANUARY 13, Parliament passed an amendment to the Bank of Jamaica (BoJ) act giving that body greater power to monitor remittance companies.
In the Memorandum of Objects and Reasons, the Minister of Finance and Planning, Dr. Omar Davies, states, "Because of the nature of their operations, there exists a genuine risk of these money transfer and remittance agencies being used as vehicles for the carrying out of money laundering activities. Consequently an order has been made under the Money Laundering Act declaring them to be financial institutions for the purposes of that Act."
Throughout the amendment, fines for non-compliance with regulations are outlined and the caution included that ministerial approval is needed to operate a remittance company.
However, the amendment immediately stirred up controversy and prompted Prime Minister Patterson to speak on the matter on January 19.
Speaking to the press, Mr. Patterson stated that the amendment was not a back door attempt by the Government to tax remittances from overseas or retreat from the Government's liberalisation policy.
Major players in the remittance industry have taken these statements at face value.
It is the consensus that the Government is seeking to get in line with international trends to tightly regulate money transfer businesses and to clamp down on money laundering. In terms of the spectre of taxation on remittances, it is also widely believed that the Minister of Finance would not do anything to kill this business.
TAXES INDIRECTLY
According to the experts interviewed, the Government already earns taxes indirectly from remittances in the following fashion GCT on fees to send money, GCT on the items purchased with remittances and income tax from the remittance companies themselves.
States Kenarthur Mitchell, managing director of Quick Cash Sun Money Transfer, "I think that regulation in itself cannot be seen as bad. The remittance business is an important industry that continues to grow. There is a tendency to think of the industry as one to facilitate money laundering so this must be dealt with. Regulation of itself should bring creditability to the industry."
However, Mr. Mitchell notes that there should be continuing consultation between the Minister of Finance and the remittance industry.
Brian Goldson, chief operating officer of Grace, Kennedy Remittance Services, adds, "I don't think that greater regulation of the industry will have a material affect on our business. The regulation is not expected to increase the bureaucracy or paperwork."
Andrew Cocking, managing director of Capital and Credit Remittances also is comfortable with the expected increase in regulations. "From Capital and Credit's point of view, we are used to regulation. We already report to the BoJ and the Financial Services Commission. Each month we send Balance of Payment reports to the BoJ that outlines the volume of business and the country of origin that money comes from. Additionally, our remittance company is audited internally so we always practice good governance. I don't expect any dramatic change in the way we do business."
