Regulation of Remittances and its Impact on Access to Finance. The AML Framework as a Tool to Increase Access to Finance

Transcription

1 Regulation of Remittances and its Impact on Access to Finance The AML Framework as a Tool to Increase Access to Finance Presenter: Jacinth Hall-Tracey

2 Overview AML Regulations & its Impact on Senders & Receivers Impact of Regulations on Remittance Service Providers (RSPs) How RSPs can provide Access to Finance Accessible Financial Services for Money Transfer Receivers

3 REMITTANCES ARE A LIFELINE FOR MILLIONS OF FAMILIES WITHIN THE CARIBBEAN Remittances to Latin America and the Caribbean represent some: 19% of the world s transfers Upwards of 20% of GDP and Up to $600 USD Per Capita.

4 REMITTANCES ARE A LIFELINE FOR MILLIONS OF FAMILIES WITHIN THE CARIBBEAN Policy makers are increasingly faced with a highly innovative and technologically robust industry which demands appropriately responsive reviews of regulations

5 P O C A AML REGULATIONS In Jamaica, there is a strict Registration and Licensing regime, enforced Customer Due Diligence (CDD) and Monitoring. The Remittance Industry has its own Guidance Notes for Compliance.

6 IMPACT OF REGULATIONS ON SENDERS & RECEIVERS Customers are accustomed to Compliance Customers have state issued IDs. Majority having the Voters ID. Customers are used to submitting personal details Our customers are used to providing use of funds and in the case of outbound - the source of funds

7 AML REGULATIONS AND ITS IMPACT ON SENDERS AND RECEIVERS OF REMITTANCE

8 IMPACT OF REGULATIONS ON REMITTANCE SERVICE PROVIDERS (RSPS) Most operate as Nearbanks We are subject to: FIT & PROPER ASSESSMENT CENTRAL BANK SUPERVISON AML POLICIES & PROCEDURES We must be TAX COMPLIANT Customers are subject to full banking KYC

9 IMPACT OF REGULATIONS ON REMITTANCE SERVICE PROVIDERS (RSPS)

10 IMPACT OF REGULATIONS ON REMITTANCE SERVICE PROVIDERS (RSPS) 1. SEND REPORTS TO BOJ 2. SEND REPORTS TO FID 3. TRAIN STAFF IN AML PROCEDURES 4. CONDUCT AUDITS 5. KEEP CUSTOMER RECORDS

11 IMPACT OF REGULATIONS ON REMITTANCE SERVICE PROVIDERS (RSPS) W E K N O W O U R C U S T O M E R S

12 DO RSPs HAVE THE FRAMEWORK TO PROVIDE ACCESS TO FINANCE? How do we assist our customers to access financial services? How do we amend policy framework to deliver our objective relevant financing & financial products for low income families?

13 DO RSPs HAVE THE FRAMEWORK TO PROVIDE ACCESS TO FINANCE? We MEET regulatory requirements and International standards of AML Our customers TRUST us Most RSPs are set up to collect cash and pay out LARGE INVENTORIES of cash All RSPs employ the use of TECHNOLOGY within their varied networks; their reach geographically is more cost efficient that any other financial institution. We are already pre-disposed to offering FINANCIAL PRODUCTS We COLLECT AND REMIT funds on behalf of varied institutions

14 DO RSPs HAVE THE FRAMEWORK TO PROVIDE ACCESS TO FINANCE? How do we form alliances with institutions that already offer financial products? RSPs can collect designated payments on behalf of BANKS, BUILDING SOCIETIES and CREDIT UNIONS RSPs offer BUSINESS HOURS in locations that would not be feasible to Financial Institutions RSPs can REACH the otherwise UNBANKABLE RSPs carry a WIDER NETWORK than Financial Institutions MOST IMPORTANTLY WE CAN TAKE THE FUNDS AT SOURCE

15 DO RSPs HAVE THE FRAMEWORK TO PROVIDE ACCESS TO FINANCE? How do we amend policy framework to deliver our objective sustainable finance for low income families? Policymakers must respond to financially illiterate Policymakers must acknowledge the RSP as tool/ conduit for Financial Services Licences of RSPs and Cambios can be extended to offer Services that complement banking transactions The Banking Act should be amended to include Banking Agencies

16 ACCESSIBLE FINANCIAL SERVICES FOR MTRs PREFERRED FINANCIAL PRODUCTS PARTNER: A savings and loan product which has allowed many persons to save towards assets, school fees etc. HIRE PURCHASE: Credit facility which allows MTRs to acquire furniture LAY AWAY: and appliances; MTRs are currently facilitated by Courts and Singer. The remittance receipts or statement from RSP are proof of source of cash flow SMALL BUSINESS: JN Small Business Loans has a successful Model. LOANS It is marketed in a way that is relevant to the target market. They understand that they can borrow money to: Put on a dance for profit Buy goods to sell back Buy supplies to do hair dressing etc

17 What are the Key Success Factors that must be considered in creating Financial Products? Lifestyle/ culture 1. Preference for the informal 2. Easy access ( minimal transportation cost) 3. Convenient business hours ACCESSIBLE FINANCIAL SERVICES FOR MTRs

18 What are the Key Success Factors that must be considered in creating Financial Products? Age of population 1. Need savings or financing products that appeal to their lifestyle (farming is not currently appealing). ACCESSIBLE FINANCIAL SERVICES FOR MTRs

19 What are the Key Success Factors that must be considered in creating Financial Products? Financial Literacy 1. Don t speak to them about retirement savings, use instead language they identify with Old age Pension ACCESSIBLE FINANCIAL SERVICES FOR MTRs

20 To reach them we must create products that: Appeal to their entrepreneurial spirit In Financial language they can identify with Loans must be short term Savings must be towards a targeted activity Savings products may resemble a Partner Plan ACCESSIBLE FINANCIAL SERVICES FOR MTRs

21 RSPs HAVE THE BEST FRAMEWORK TO PROVIDE ACCESS TO FINANCE RSP s can facilitate: CREATIVE FINANCIAL PRODUCTS Family Indemnity Plan (change the name) Health Insurance Plans KEY TO OUR HOME School fee Savings plans NHT contribution savings plan Currently NHT excludes those who are not employed formally RSPs CAN TAKE THE MONIES AT SOURCE!

22 IS THERE A GENDER GAP IN TERMS OF EASE OF ACCESS? 75% of MTRs are Women Most head single family homes Average age yrs Predisposed to better household management

23 CONCLUSION AML Regulations have created a strictly regulated Money Transfer Sector AML Regulations increase the number of bankable citizens RSPs have structures that can easily be adapted to form alliances with the Deposit Taking Financial Institutions RSPs by their very nature can encourage MTRs to access Financial Products Policy Makers must acknowledge the culture of the receivers and respond appropriately

24 CONCLUSION LET S START THE CONVERSATIONS