BOJ to meet with the parties
National Commercial Bank Jamaica (NCB) says it will continue dealings with Jamaica's cambios and remittance companies, but will not accommodate some foreign-exchange transactions.
The bank said it does not plan to close cambio accounts — clarifying concerns in a draft letter by the Cambio Association of Jamaica that raised the prospect — but that it would no longer accommodate outgoing wire transfers and other foreign-currency business.
"It is relevant to point out that we have taken no decision that we would close cambios' or remittance businesses' accounts," said NCB, through spokeswoman Belinda Williams, in response to Sunday Business queries.
NCB declined to speak in detail on the new policy because of its "sensitivity" and the bank's desire to first have dialogue with its account holders.
In the meantime, NCB shared with Sunday Business a portion of its response sent to the affected parties regarding changes to its procedures for foreign-currency transactions.
"In so far as cambios and remittance companies are concerned, you would be aware that globally these businesses are considered to be very high risk for money laundering, and this is an important part of the context. This has affected the perspective of some of our correspondent bankers on transactions for these businesses, notwithstanding the fact that the businesses are regulated in Jamaica," said NCB to its money services account holders.
"It is consequent on these changes that we have advised our branches and units that they should not issue foreign-currency drafts or process outgoing wire transfers for cambios and remittance companies. The position is similar in respect to deposits of foreign cleared cheques. However, we will continue to maintain banking relationships and accommodate other banking transactions for these businesses."
The Cambio Association is again seeking the intervention of the authorities to have NCB rescind its decision, although it was unsuccessful in the past at convincing the finance ministry, then under different leadership, to take action. Then it was RBC Jamaica that had dropped the cambios in 2011.
Former Cambio Association President Dennis Hickey has said the finance ministry is now willing to meet with the group.
The Bank of Jamaica confirmed with Sunday Business that it will be meeting with cambios and remittance companies this week, but also signalled that the effort might be futile.
The correspondent banks have the latitude to be non-accommodating to local businesses, even those that are in compliance with the regulators, said BOJ Deputy Governor Myrtle Halsall.
"Each company does their own risk assessment, so they can do that and close the accounts if they want," said Halsall.
"Those correspondent banks come under the guideline of other jurisdictions. It is for us to prove to them that we meet their requirements; not for them to examine what we have," she said.
The central banker said the foreign banks have tightened up because of anti-money laundering and anti-terrorism funding laws.
"What they might be saying is that, this business is small so we don't mind losing it. I don't know if that is what they are saying about us, but that is what I am hearing from other jurisdictions," said Halsall.
"We have a system that works; they (local institutions) are meeting our standards. This not about Jamaica, this is happening all over the world," she said.
Hickey said on Friday that his initial comments on the issue to the Financial Gleaner should not, as reported, be seen as dismissive to the press. Rather, he said, he was conveying that the issue was still developing and needed time to be discussed before engaging the media.
Hickey said he is hoping that intervention by the authorities will lead to recognition that money services in Jamaica are already "heavily regulated" to avoid money laundering.
The Cambio Association is pushing for the issue to be resolved at the level of Government and the regulators under existing treaties and agreements.
"If a correspondent bank is punished for doing business with us, then it links back to government regulatory systems. As government we should use these linkages to get regulations and treat the sector as one that is regulated," Hickey said.
Halsall, however, has said resolution of the issue more rests with local banks, saying it is up to them to demonstrate to their correspondent banking partners that the latter's requirements have been met.