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The Jamaica Association of Micro Financing (JAMFIN) said it sees the de-risking policy being pursued by at least one commercial bank as a threat to bona fide micro finance companies that have been in business for years and have substantial lending portfolios.
Under the de-risking policy, commercial banks across the Caribbean have been closing the accounts of cambios, remittance companies and now micro finance companies, JAMFIN’s chair Blossom O’Meally-Nelson said in a release. It said commercial banks maintain that those are high-risk operations that open them up to substantial fines from regulators should there be any breach of anti-money laundering laws or laws against the financing of terrorism.
Correspondent banks mostly located in the United States act as clearing houses for funds that are in transit and they put pressure on commercial banks to get rid of accounts that they deem risky. “It is difficult to ignore the existence of a sub-theme here in that if these types of money services are crippled it means more business for the very commercial banks that are crying wolf,” O’Meally-Nelson said. The release said there are large numbers of ‘unbankable’ persons who use money services and to deprive them of the facility would serve to drive the informal economy.