Remittance companies will only take U.S. dollars starting Monday
Cash transfer companies, facing a Tuesday deadline, have not found a new bank or made a new deal with Cayman National. But a Jamaica National Money Services representative said over the weekend that the company will be able to continue offering services for people who need to send cash overseas.
JN Money Services released a statement Friday saying that Jamaica National, MoneyGram and Quick Cash will only accept U.S. dollars as of Monday in Cayman. JN Money Services managing director Leesa Kow said the move to U.S. currency will allow the cash transfer services to stay open. “We have also taken this decision in light of the changing environment, which has affected access to banking services for money transfer operators in Cayman,” she said in a written statement.
Cash transfer companies like JN, which also services MoneyGram, have been scrambling to find a new bank in the Cayman Islands since Cayman National Bank decided to stop offering banking services for the transfers. The news follows the sudden closure of Western Union last month when the board of that company’s local bank, Fidelity Bank, decided the business was too risky and shut the operations down in Cayman, Turks and Caicos, and the Bahamas.
Jamaica National spokesman Gareth Manning wrote in an email, “The discussions with CNB and the Cayman authorities continue and there are measures in place to maintain services to customers.” He did not say how those services will continue without a bank in the Cayman Islands.
Cayman National was the only bank in Cayman to continue to provide correspondent banking services to cash transfer companies after Fidelity Bank stopped offering Western Union services in July. Remittance services like Western Union and MoneyGram transfer cash around the world for customers, and need a local bank to take the cash and facilitate wire transfers. The bulk of the transfers are remittances by people living overseas and sending money back to their home countries to support their families.
Cayman National has repeatedly declined to comment on the ongoing talks with the cash transfer companies.
Fidelity Bank’s Cayman CEO Brett Hill told the Cayman Compass last month that the cash transfer business has become increasingly risky, with new regulations in the United States and Europe, and profits have gone down from increased competition.
“It’s been an increasingly marginal business for us,” he said. Dropping the cash transfer service significantly reduces the bank’s risk of unwittingly helping move money for illegal activities like drug smuggling or terrorism.
People in Cayman sent almost $180 million off island as remittances in 2014, according to data tracked by the Cayman Islands Monetary Authority. About $110 million of last year’s total went to Jamaica.
Robert Hamaty, a JN Money Transfer board member and president of Tortuga Rum Company, said cash transfer services are essential for many in the Cayman Islands. “You can’t have the population here in Cayman without a way to send money back,” he said.
CIMA and the Financial Services Ministry have been helping facilitate discussions between the money transfer companies and the bank. The parties met two weeks ago in what Jamaica National Building Society general manager Earl Jarrett called “very productive” talks.
In a statement late last month, Financial Services Minister Wayne Panton said, “While any commercial decisions regarding money-services businesses are a matter for the businesses and the banks to make themselves, Government and CIMA are arranging these discussions in order to address concerns on both sides, with the aim of ensuring that options remain open to consumers.”