Money transfer businesses seek new partners
(CNS Business): Almost three weeks after money transfer service Western Union was forced to close all eight locations in the Cayman Islands, company officials told CNS Business they are working diligently to restore all services as soon as possible. The leader in global payment services would not give details as to whether the company had found a new bank but did reveal that the absence of Western Union would not be permanent.
According to the Cayman Islands Monetary Authority (CIMA), well over 600,000 remittances were sent from the Cayman Islands last year, adding up to be almost $US180 million in funds, with Jamaica receiving the most at around US$110 million.
However, Fidelity Bank leaders made the decision to close their near 20-year franchise in Cayman, as well as the Bahamas and the Turks and Caicos Islands, on 17 July, an unexpected decision that shocked many customers across the island.
Cayman National Bank, which facilitates the three remaining money transfer businesses left on island, has also decided to shed its money transfer clients and sent a letter to JN Money Transfer, MoneyGram and Fast-Funds Money Transfer letting company leaders know they have until the end of this month to find other arrangements.
JN Money Transfer told CNS Business they remain confident that the issue will be resolved and said they are currently in discussion with banks in Cayman.
“Although ‘de-risking’ has resulted in changes in the financial sector, as well as money services businesses, there are plans in place, in the UK, for instance, to develop a safe corridor initiative. This is being done along the UK to Somalia remittance corridor,” general manager Leesa Kow stated. “As an industry, we are continuously exploring ways to ensure that remittances, which account for a vast percentage of the income of developing countries, continues to benefit people who depend on international funds to meet basic needs.”
Financial Services Minister Wayne Panton said he does not feel like this will be the end to all money transfer services on the island. He assured that the government is currently working with these companies to find other arrangements.
There is currently a trend as US correspondent banks around the world deciding to de-risk their business and do less with remittance companies. Concerns over money laundering and terrorism financing have made the all-cash business a problem for regulators and for the banks that act as local agents for the money-transfer services. Western Union found itself in trouble recently in Ireland for not having appropriate policies and procedures to prevent money laundering and detect possible terrorism financing. The company agreed to pay a fine of US$1.9 million two months ago.
Category: Finance, Personal Finance
