MoneyGram network shrinks with NCB exit
Avia Collinder, Business Reporter
MoneyGram Services will lose close to 40 of its retail locations in Jamaica when National Commercial Bank Jamaica cancels its agent relationship with the remittance service provider.
NCB has announced that starting this month, it will exit the remittance market.
The banking group operates in the money transfer sector in the United Kingdom through NCB Remittance Services UK Limited (NCBRSUK) and in Jamaica via NCB Remittance Services Jamaica Limited (NCBRSJ).
The move follows other steps taken by the bank to put distance between itself and the money services sector after facing pressure from its banking partners overseas.
In its statement Monday, NCB again said the continued provision of remittance services has negatively impacted global risks facing the group.
JAN 22 PULL-OUT DATE
Its exit from the UK market is scheduled for January 22, at which date only pension payments will be remitted through NCBRSUK. NCB will exit the business in Jamaica on March 31. The Bank of Jamaica website indicates that NCB operates 38 MoneyGram locations in this market.
Internationally, banks which have lost ground in the multi-billion dollar remittance market to remittance companies recouped some income by acting as agents of these independent companies.
Now however, several banks - including Barclays - have been shutting out remittance companies, claiming that the know-your-customer protocols of these companies were lacking and that the risk attached to money laundering were high.
Still, Leesa Kow, president of the Jamaica Money Remitters Association, says she is unaware of any specific pressure on local banks to put distance between themselves and the remittance market.
NCB itself said last night that it faced no penalty or warnings in responses from Belinda Williams, manager of Group Corporate Communications, who also said the business line was profitable for the group.
"The decision is based on our own internal assessment," she said.
Kow, who works with mortgage banking group, Jamaica National Building Society, as general manager of subsidiary JN Money Services Limited, says NCB accounts for less than one-tenth of the Jamaican remittance market.
Bank of Jamaica currently values the market at about US$2 billion annually.
"NCB was one of the smaller players in the market, accounting for less than 10 per cent of Moneygram inflows," Kow told Wednesday Business.
"Moneygram itself accounts for roughly 20 per cent of the total inflows into Jamaica."
NCB's exit from the market is unlikely to be disruptive, according to Kow, who says the bank's customers have a "plethora" of other MoneyGram agents to choose from.
The three main MoneyGram agents are Lasco Financial Services, Alliance Investment Management, and JN Money Services.
"With the exit of a market player and given the nature of remittances, it is very likely that the share of market once held by NCB will move to the other players remaining in operation," said the remitters association president.
MoneyGram's Jamaican agents operate more than 200 outlets between them.
The current move by NCB follows the planned closure of cambio accounts this month, which was announced by the bank in October 2013.
NCB then stated that its correspondent bankers overseas had asked that it refrain from transacting businesses through them on behalf of the cambios.
On Monday, NCB said that "to further mitigate against these risks, which include money laundering, financing of terrorism and lottery scam activities", it would shutter its own remittance operations.
The bank is yet to provide an update on the particular events which led to the latest decision. Attempts to reach MoneyGram for comment were also unsuccessful.
Jamaica's remittance sector accounts for US$2 billion of annual inflows.
The BOJ, which regulates the sector, reports that remittance inflows to September 2013 amounted to US$1.53 billion, up by an annual 0.4 per cent.
However, remittance companies, which handle the bulk of the business saw a decline of 1.5 per cent in inflows to US$1.3 billion.