Mon | Nov 29, 2021

Three-year rule for agent bankers eliminated

Published:Wednesday | May 28, 2014 | 12:00 AM

Avia Collinder, Business Reporter

The Joint Select Commit-tee reviewing the proposed Banking Services Act has decided to eliminate as qualifying criteria for 'agent banker' that the applicant must have been in business successfully for three years.

The committee agreed to the adjustment after State Minister Julian Robinson pointed out that the banking system supervisor, the Bank of Jamaica (BOJ), could find other means to ensure an agent's fit and proper status.

In pursuit of greater financial inclusion, the banking regulator plans to allow traditional banking institutions to partner with third parties, as agents, to offer banking services in the hopes of reaching more of the unbanked in places where they tend to frequent.

The banking services legislation will allow for certain banking transactions, such as cash deposits and withdrawals within certain monetary limits, to be done at third-party locations, including retail outlets.

"In the area of mobile money, agents are likely to be new, in which case they would not have been operating for three years," Robinson pointed out to committee members at its sitting on

Thursday, May 22.

"In most cases, a new entity will be formed to become the agent. Partners will have experience, but the new entity will not," he said.

DISCRETION USED

Acceding to the request, BOJ Governor Bryan Wynter said, "We would not lose much if we deleted it from the statute." The deal was sealed when committee chairman Finance Minister Dr Peter Phillips said that although the agent bankers could not be, for example, like an ice-cream parlour, "we don't want to make the barriers to entry so high, you eliminate other persons who are qualified. We could allow the discretion of the supervisor to be exercised".

Otherwise, to qualify for agency licence, the applicant business must meet minimum fit and proper criteria for owners with 10 per cent or more voting power, and be legally registered as a corporate body in Jamaica.

The agent must also "demonstrate the capacity to carry out certain aspects of basic AML/CFT measures - such as collection of relevant customer data - on behalf of the bank" whose services it is selling.

The central bank said last year that it was reviewing the types of entities that may be permitted to serve as agents; the specific roles and functions of, as well as the types of services that may be performed; the extent of an agent's liability; and consumer-protection measures.

The agents will not be allowed to outsource their banking responsibilities. And large transactions must be done directly with a bank, said BOJ. The size of transactions will be curtailed by law, and agents will not be allowed to undertake foreign-exchange transactions.

Research conducted by the University of the West Indies found that 34 per cent of the adult population in Jamaica do not own bank accounts. Of the 66 per cent that own a bank account, only 12 per cent own transactional accounts - that is, they are considered highly banked. The numbers also show that more than 80 per cent of adult Jamaicans have limited access to low-cost, efficient and easily accessible payment channels.

The Banking Services Bill, which is a structural benchmark under the IMF agreement, is on a fast track for passage into law in early June.

avia.collinder@gleanerjm.com