Money Service Businesses Tighten AML/CFT Measures Amid Challenges

Microfinance firms, remittance services, and cambios have reported success in upgrading AML/CFT measures despite the apparently significant obstacles facing the sector while adhering to compliance.

The chairman of JamFin Dr. Blossom O’Meally-Nelson criticized the enforcement strategy used so far by the regulators, headed by the Bank of Jamaica (BOJ), that now oversees microcredit enterprises and requires them to register as well as adhere to a number of new functioning and reporting rules. Over 200 microcredit companies are thought to be in operation in Jamaica, but only about 100 are reported to have filed for licenses so far.

“We are all talking about regulation, but nobody is talking about enforcement. The enforcement is woefully inadequate,” O’Meally-Nelson said. She highlighted a big list of obstacles that microfinance institutions must overcome in order to meet BOJ standards and more general AML/CFT regulatory compliances. She claims that because the BOJ sets the threshold for compliance so higher, many microcredit providers choose to operate outside of it.

A representative for the microcredit sector demanded that the National Identification System, or NIDS, be implemented to help the field with background checks. According to Chief Compliance Officer at Lasco Financial Services Denise West, the reputation of the Cambio and remittance sector as being highly dangerous, promoting fraud, and lacking adequately strict AML/CFT compliance requirements is misleading.

“We have set up a relationship with Global Risk and Data Authority, and a number of our members have outsourced their compliance to GRADA. This is really costly. We have done compliance training with them. We have AML and POCA (Proceeds and Crime Act) training coming up,” O’Meally-Nelson stated.

She continued by saying that in addition to employee training, JamFin helps microfinance companies find qualified individuals to serve as company directors. “We are still having a rough time automating their systems. If you don’t automate, you can’t get the reporting. We have eliminated cash transactions. People have to go and lodge their money in a bank,” she continued, stressing that the companies were now being licensed and that, as needed by legislation, their lending practices had to be kept apart from other activities.

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