Cash transfer firms stay open using US currency

| 25/08/2015 | 1 Comment

money-transfer-services(CNS): Three of Cayman’s money transfer businesses have entered into new arrangements that will deal with US currency transactions only, which will enable them to continue providing cash remittance services after a number of local banks pulled out of partnerships with them. Increased concerns over the risks of these kind of financial transactions and pressure from the local banks’ financial partners in the US saw Western Union abruptly close all its branches last month when Fidelity announced it was no longer going to provide the necessary services.

Jamaica National Money Transfer, which owns MoneyGram and QuikCash, was also facing an uncertain future when Cayman National pulled out of the partnerships as they reduced their bulk cash handling services. But those three businesses have confirmed that they will continue to provide remittance services for Cayman Islands customers using US dollars only.

JN Money Services Limited (JNMS), which ownes JN Money Transfer, operates two branches and a network of nine agents in the Cayman Islands, covering a significant percentage of remittances from here to Jamaica and the Philippines. MD Leesa Kow said the decision was made to maintain services for Cayman Islands customers, adding, “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.”

Government officials from the financial services ministry and the Cayman Islands Monetary Authority, the local regulator, said that Western Union was in discussions with interested parties to re-establish its operations here as soon as possible. However, CIMA said Fast Funds, another cash transfer business, suspended its services on Monday.

Financial Services Minister Wayne Panton said that money transfer businesses had all been facing some complex difficulties recently in meeting the commercial needs of the banks and their customers while making sure any new arrangements met global standards.

“This required careful consideration of all factors, and both the ministry and CIMA are glad that remittance services will continue to be available for persons in Cayman who rely on them,” Panton added.

CIMA Managing Director Cindy Scotland said the authority had reviewed the new arrangements and that money transfer services would continue to be fully supervised by the authority. “’CIMA’s regulation is vital from a reputational standpoint because our role is to provide the necessary independent oversight of the MSBs’ operations in order to mitigate risks,” she said.

Throughout the process, CIMA had assessed the possible considerations against the local requirements and global standards, as the remittance firms worked to stay in business given the increasing risks surrounding this type of financial service.

“This is essential in order to maintain and uphold the high level of confidence that persons have in Cayman as a well-regulated financial services centre,” Scotland said.

Many foreign nationals living and working in Cayman as well as locals with relatives overseas rely on cash transfer services because the low-cost services do not require senders or receivers to have bank accounts. In 2014 Cayman sent around $180 million overseas through these cash transfer firms, with the bulk of that cash going to Jamaica.

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Category: Finance, Financial Services

Comments (1)

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  1. Anonymous says:

    The snippets from the businesses and CIMA are still quite vague, I guess they have to be. Seems like AML and reporting requirements have become too expensive and onerous. The risk of illegal activities being done or cleaned up via MSBs is high. People will need to find alternative ways to send their money out of the country and this will put a strain on demand for US$. Should come as no surprise though, if you were paying attention to the international trends it was inevitable.

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