THE EDITOR, Sir:
There is a dangerous power that exists among commercial banks. Recently, they decided not to do business with cambios, almost unilaterally, irrespective of the cambio's size, clientele and location.
The banks collect around 0.75% as a fee to deposit your one US dollar, which means that for one US dollar, you realise 99.25 US cents in value. Looking at it another way, were you to get J$100 for a US dollar, you would realise 99.25 cents; or in US$10, you realise J$992.25 instead of J$1,000; almost a J$8 loss.
But the bank's buying rate is J$5 less than the average cambio rate, so on US$100, where a cambio pays J$106.00, you get J$10,600 from the cambio, and you receive less than J$10,020
The banks also charge the same percentage in pounds, euros, or Canadian dollars, and with some banks a little more for these currencies.
A cambio needs to obtain Jamaican dollars in cash to pay your customers for the foreign exchange they sell to you. You get the cash funds from a bank, and they will charge you $1,500 to $3,000 for every million you take from them.
Banks suggest some Jamaican cambios may be trading with criminals, terrorists, drug dealers, and so on. They are afraid that having done business with a local cambio, this will bring suspicion on their own operations for similar reasons.
The US Government has fined many banks in amounts of billions of dollars; BOA, Wells Fargo, HSBC, Wachovia, and other players, so therein is the basis for not dealing with many cambios.
Local cambios are audited regularly by the Cambio Unit of the Bank of Jamaica - at least twice a year - to ensure that there are no illegal transactions. What the banks want to do is regain the perceived profitable trading of foreign exchange, and to bypass the cambios, which have successfully increased their market share in Jamaica from zero to 47 per cent.
This height of selfishness is what prevails throughout the Jamaican commercial banking system; and an inclination to overcharge more than other banks in other countries for services.