Jamaica's money-services businesses are being denied banking services overseas, especially in the United States and United Kingdom, where accounts are being closed because they are viewed as high risk, says the chief spokeswoman for the sector.
The result has been further declines in money transfers to Jamaica and the Caribbean, says president of the Jamaica Money Remitters Association, Leesa Kow.
Regulations aimed at tighter controls for money laundering and financing of terrorists are taking a toll on remittance companies operating in the US, including those which remit funds to the Caribbean and Latin America, forcing some money-services firms to conduct their banking services through credit unions, the remittance association said.
"These are not new regulations, but regulators of banks are becoming more agile and aggressive in terms of ensuring that they know their customers, which means that they also have to know the customers of their customers," said Kow.
Barclays Bank in the UK, which the remittance association said was one of the last British financial institutions to provide services to remittance firms, recently closed the accounts of 250 agents. The clampdown has hurt remittances flowing to East Africa.
Kow, who is the general manager of JN Money Services, declined comment on the extent to which her firm was affected by Barclays' decision.
"There is pressure from banking regulators for financial institutions to take greater steps to tighten their controls - and there is a belief that money-transfer businesses do not have stringent controls, hence, the basis for banks to limit or withdraw services to money-transfer businesses to ensure compliance," she said.
The problem Kow describes mimics that faced internally by cambios, which have been denied some services by at least two large banks - National Commercial Bank Jamaica and RBC Royal Bank Jamaica - both of which cited risk associated with the operations of the foreign exchange traders.
NCB, which reduced services to cambios this year, cited the concerns of its overseas banking partners for its policy shift.
Money-services businesses are deemed high-risk, and "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," NCB said at the time.
The International Monetary Fund has predicted that remittances to Latin America and the Caribbean are expected to rise 3.5 per cent this year, while the World Bank is predicting growth of about eight per cent.
Jamaica's remittances are down 1.8 per cent so far this year, according to the most current central bank data up to April.
Jamaica receives in excess of US$2 billion in remittances from overseas annually.
Locally, inflows have been affected by curtailment of the lottery scam, which companies are attempting to lance from the system, as well as the tighter controls imposed on money transfers by large remittance companies to block illicit flows.