Foreign workers are sending more money back to their home countries than they have in at least the last 10 years.
According to the latest Cayman Islands Monetary Authority data, workers sent nearly $235 million home last year, compared to $217.7 million in 2017. The previous high for remittances had been nearly $229 million in 2008.
Most of the money, about $133 million, was sent home to Jamaica. Filipinos sent home nearly $40 million, Hondurans sent some $17 million, and Americans sent about $12 million back to the U.S.
Robert Hamaty, a former board member of Jamaica National Money Services, said the record outflow of remittances in 2018 is likely due to a growing expatriate population, particularly a growing Jamaican population that has come here to work in the booming construction industry.
“I can tell you as an ex-board member that it’s due to the construction on the island,” said Hamaty, who left the JN Money Services board two years ago and was replaced by his daughter, Monique Hamaty. “Because whenever that occurs, there are a lot of Jamaicans who work for the construction industry.”
Remittances are indeed correlated to the number of foreign workers in Cayman.
After the 2008 financial crisis, for instance, remittances fell from $228.97 million in 2008 to $184.76 million in 2010. During that same period, the number of Jamaican workers in the Cayman Islands declined by nearly 3,500 to 7,998 (-30.2 percent) at the end of 2010. The number of Honduran work permit holders also fell during that period by -29.5 percent to 792, as did workers from the Dominican Republic (-13.7 percent) and the Philippines (-7.6 percent).
Remittances have also been on the rise since reaching a 10-year low of $169,545,865 in 2015. That year, many Cayman cash-transfer companies had difficulties with local banks, who were limiting their services, 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 were not using money transfers to fund their activities.
In July 2015, Western Union abruptly closed, with customers finding out about the closure when they went to send money and found a notice on the window. At the time, Western Union was operated by Fidelity Bank, which also pulled the money transfer service from Turks and Caicos and the Bahamas.
Fidelity Bank (Cayman) CEO Brett Hill said at the time the bank had been considering dropping Western Union because the risks have increased while fees have declined.
“It’s been an increasingly marginal business for us,” he said.
A month later, Cayman National Bank, which provided banking services to JN Money Services, MoneyGram and others, closed their accounts. Cayman National had previously given bank accounts, needed to access international currency markets, to JN and other remittance companies.
Instead of closing when the company lost its bank account, JN decided to accept only U.S. currency and fly the cash directly to a bank overseas for deposit. For three months, from late August until late November 2015, the only option for cash transfers was through JN or one of its related companies like MoneyGram, using U.S. cash.
The unusual situation led to a shortage of U.S. currency in the Cayman Islands, causing banks to restrict giving U.S. cash to only their customers, or charging fees of up to $50 to exchange limited amounts of cash. The police and the Ministry of Financial Services sent out warnings against using underground currency exchanges and counterfeit U.S. notes.
On Nov. 25, 2015, former Financial Services Minister Wayne Panton, joined by representatives from Scotiabank, Western Union and GraceKennedy Remittance Services, gathered to announce an end to the crisis. A deal between the three companies reopened Western Union in the Cayman Islands, based on the model of GraceKennedy’s Western Union operations in Jamaica and several other countries.
Jamaica National was able to once again start accepting Cayman currency along with U.S. dollars before Christmas of that year, according to Compass archives.