Money transfer companies, used to send cash remittances overseas, face an Aug. 25 deadline to find a new bank or face closure, according to a board member with Jamaican National Money Transfer.
Cash transfer services could close by the end of the month since Cayman National Bank decided it no longer wanted to provide banking services for money transfer companies here.
Cash transfer businesses face multiple layers of regulation, mainly from authorities in the United States, to address concerns about cash-based services being used to fund terrorism and launder money.
Western Union closed suddenly in July when Fidelity Bank decided to no longer be involved in the highly regulated money transfer business. Since then, Cayman National has been the only bank in the country to offer what is called correspondent banking, the actual money wiring service. The decision impacts all cash transfer companies in the Cayman Islands.
Robert Hamaty, president of Tortuga Rum Company and board member of Jamaican National Money Transfer, said executives from Jamaican National will be in Cayman on Friday to meet with Cayman National to try to extend the deadline and see if they can come up with a new deal to continue the banking services.
Many people rely on services like Western Union or Jamaican National to send cash home to support their families, he said, adding, “You can’t have the population here in Cayman without a way to send money back.”
Mr. Hamaty said Jamaican National has not been able to find a new bank to handle the local cash transfers, and even if the company did find a new bank, it would take two months to get the services up and running.
“It’s of paramount importance that we find a solution,” Mr. Hamaty said. If no bank steps up, he said, they would “have to go back to the old days” by hiring a charter plane to carry cash to Jamaica.
People in Cayman sent almost US$180 million overseas in 2014 through cash transfers, with more than US$110 million going to Jamaica, according to Cayman Islands Monetary Authority data.
Jamaican National’s cash transfer business has branches here, the United States, United Kingdom and Canada. The company also has more than 100 agents working in Ghana and more than 8,500 in the Philippines. The company has several more agents spread around the Caribbean.
Cayman National has declined to comment on dropping the money transfer businesses.
Fidelity Bank (Cayman) CEO Brett Hill said his bank’s board of directors decided the cash transfer business was getting too expensive to comply with regulations, while income from the service has been dropping with increased competition.
“It’s getting harder and harder to bank this business,” Mr. Hill said just after the Western Union closure, noting, “Banks are trying to de-risk.”
“Banks don’t like to deal with cash,” Mr. Hamaty said. He said Jamaica National offered to increase the fees it pays to Cayman National if the increasing cost of complying with new rules is part of the decision, but he said the bank did not take that offer.
Earlier this month a Western Union representative in the United States said the company is working to reopen its money transfer counters in the Cayman Islands, calling the July 17 closure a “temporary service disruption.” A company spokeswoman would not say if they had found a new bank to handle the transactions.