Fast Funds suspends service, others accepting only U.S. cash
With no new bank stepping forward by Tuesday’s deadline, cash transfer services that are still operating on island announced they would no longer accept Cayman Islands currency.
Jamaica National, which handles transactions for several cash transfer company brands in the Cayman Islands, said its operations will continue but the companies will accept only U.S. dollars as of this week.
Meanwhile, the Cayman Islands Monetary Authority and the Ministry of Financial Services confirmed that JN Money Services, MoneyGram and Quik Cash will remain open. Fast Funds suspended its cash transfer services as of Monday, according to a joint statement from the ministry and CIMA.
Cayman National Bank was the only bank in Cayman to offer services to the remittance companies since Fidelity Bank closed its Western Union franchises last month.
Cayman National gave JN and the others until Aug. 25 to find a new bank. Despite talks facilitated by the Financial Services Ministry and CIMA, Cayman National adhered to this week’s deadline to get out of the increasingly risky business of helping transfer cash around the world.
JN Money Services General Manager Leesa Kow told the Cayman Compass that the company’s account with Cayman National closed Tuesday. “Negotiations with other banks in Cayman continue,” she said by email.
JN handles transactions for MoneyGram and Quik Cash.
Many expatriates rely on services like MoneyGram and Western Union to send cash remittances home to support their families. Last year, people in Cayman sent more than $180 million overseas, according to CIMA data, with $110 million of that going to Jamaica. Workers here sent about $23 million to the Philippines in 2014 and more than $12 million each to Honduras and the U.S. over the year, according to CIMA.
The joint statement noted that the remaining companies “have established new arrangements that will allow them to continue providing remittance services for Cayman Islands customers; and Western Union remains in fruitful discussions with interested parties, with the view of re-establishing operations as soon as possible.”
Neither JN nor regulators said what those alternative arrangements are. Money transfer companies need a local bank to deposit the cash and transfer funds.
Cayman National has declined to comment on the negotiations or why it decided to close the accounts for the remittance companies.
Fidelity Group, which owns the local Fidelity Bank, closed its popular Western Union counters last month, along with its Western Union operations in the Bahamas and Turks and Caicos. Fidelity Group’s board voted on July 17 to close the remittance services and the next day shuttered the eight counters in Cayman, which were mainly in grocery stores.
Fidelity’s Cayman CEO, Brett Hill, said at the time that increasing regulation on cash transfer services was becoming more expensive to deal with while fees the bank collected were getting lower.
“Banks are trying to de-risk,” he said. “It’s getting harder and harder to bank this business.”
In a July interview, Ms. Kow of JN said the due diligence for banks can be onerous, but the ability to send cash back home is essential for countries that rely on expat labor. “There are serious implications for this country if immigrant workers can’t send money home,” she said.
Financial Services Minister Wayne Panton said in a statement last month, “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.”
The minister said that Cayman National initially gave the remittance companies until the end of July to find a new correspondent bank, but then pushed the deadline back until Aug. 25.