THE local cambio service industry may be treading uncertain waters following the closure of 14 cambios in 2014. That is roughly three times the amount of operations that ceased in the previous year, according to the Bank of Jamaica (BOJ).

Vice-president of risk management and strategy at Stocks and Secuities Limited, Aldrick Guthrie informed the Jamaica Observer that a number of operators may have decided to close operations based on the significant focus being placed on the Anti-Money Laundering (AML) policies and procedures by the regulator.

What’s more, he stated the commercial banks’ decision to close the accounts of cambio operators last year based on adherence to increasing AML pressures from international banking institutions, has placed a strain on operators to efficiently manage working capital and over time has resulted in many players leaving the industry.

“Most of the banks are not willing to take on new cambio accounts and it means that you have to keep your cash on the floor and that’s risky and costly,” Guthrie told the Caribbean Business Report.

“Because the cambios are now forced to keep working capital on the floor this makes them more susceptible to losing all of their resources in the event of a robbery. We are basically like cash cows for thieves,” he added.

During 2014, 14 licences were terminated by the BOJ, two of which were revoked by the institution while the remaining 12 were voluntarily surrendered by operators according to the 2014 BOJ annual report. In 2013, the bank reported only five closures along with issuing of new locations licences which fell from 10 to five last year.

“Consequently, the number of companies which offered cambio services declined to 66 compared to 73 at the end of 2013. The total number of cambio locations at end-2014 was 159 compared to 168 at end-2013,” the bank stated.

Last January, chief executive officer of Access Financial Services Limited Marcus James told the Jamaica Observer that the company had voluntarily surrendered its Cambio Operating Licence as the service was accounting for less than one per cent of revenue. He stated that the decision was made to redeploy the resources into its main business line based on the risk presented from the operation.

“It’s just a decision to stick to our core,” said James. “We had come out of the Western Union business some time ago, so this is just completing our exit of that business.”

In the 2014 annual report of Lasco Financial Services Limited, executive chairman Lascelles Chin expressed that its cambio division showed a relative decrease in market purchases of US$2,865.63 million in 2014 compared to US$2,914.79 million a year earlier.

Chin stated that despite the industry’s contribution to smooth operations of the foreign exchange market, cambios experienced significant threats to their operations from the

NCB’s announcement and subsequent action to pull the accounts of some cambio businesses.

“Few cambios have succumbed, but given the resilience and resourcefulness of the business operators and the support of the Cambio Association of Jamaica and its members, the industry as at this point, has not experienced any significant fallout,” he stated.

“We faced many challenges and opportunities as a company in 2013/14. The banking industry took certain decisions which affected cambios for which there have been a few closures; however, the majority of us continue to do business; notwithstanding we are watchful of the developments.”