A deal between Western Union, Scotiabank and Jamaica-based GraceKennedy Money Services means people can now use Cayman Island dollars to send remittances overseas, but it’s not without its critics.
A representative with Jamaica National Money Services, the biggest cash-transfer company in Cayman, accused government of giving Western Union a competitive advantage while JN can still only take U.S. currency.
Western Union, operated at the time by Fidelity Bank, closed abruptly over the summer, with customers finding out about the closure when they went to send money and found a notice on the window. The service picked back up Tuesday, with a new deal announced Wednesday by representatives of the companies involved and government ministers.
“This was a commercial problem and required a commercial solution,” said Financial Services Minister Wayne Panton at the press conference Wednesday. He said GraceKennedy, along with the bank and Western Union, brought the partnership to government as a solution to the cash transfer crisis that had plagued the country for three months.
“We are at an end of a very difficult period,” Mr. Panton said of the past few months, that saw a shortage of U.S. cash in the islands as people converted millions of Cayman dollars to U.S. currency to send overseas.
Fidelity Bank pulled out of the remittance business in July, closing its Western Union branches. A month later, Cayman National Bank, which gave banking services to JN Money Services, MoneyGram and others, closed their accounts, citing the risks of money laundering in the cash-transfer business and the rising costs of complying with international rules to ensure drug dealers and terrorists aren’t using money transfers to fund their activities.
Robert Hamaty, a board member for Jamaica National Building Society and JN Money Services, welcomed the move to allow people to use Cayman dollars for remittances, but said JN had been left out. “Nobody knew the fix was just going to be for Western Union,” he said.
“The biggest player has been left out,” he said, referring to JN’s cash transfer business. He added, “Government has given a competitive advantage to Western Union.”
Mr. Panton said, “We have not forgotten the other parties involved.” But, he noted, “We have someone with the right connections, relationships and leverage to make this work.”
The local bank account with Scotiabank is the key piece that allows Western Union to take local currency instead of U.S. cash, which the other companies still have to take.
Scotiabank CEO Sloane Muldoon said her company has had a long relationship with GraceKennedy, and GraceKennedy has more than 20 years experience operating Western Union branches in Jamaica, Trinidad and Tobago and seven other countries in the region.
“We have a strong risk and compliance culture,” Ms. Muldoon said, and she noted she was confident in GraceKennedy’s ability to minimize risk in the cash transfers.
Mr. Panton thanked JN Money Services for keeping its remittances windows open through the crisis. “Were it not for their ability to adapt and change their business model,” he said, the country could have been left without a way to send remittances.
Workers in Cayman sent almost $180 million in remittances last year, with about $110 million of that going to Jamaica, according to data from the Cayman Islands Monetary Authority.
“We had to be able to deliver this service to restore normalcy,” Mr. Panton said, especially with the holiday season coming up, the ability to send Cayman Islands dollars will make it easier to send money to family overseas.
“It is essential that these services are provided,” the minister said.