The GraceKennedy (GK) Group, which has been able to expand its Western Union network especially in Cayman where correspondent banking challenges almost closed down the sector in 2015, has indicated that the international nature of its relationships has enabled survival.

In November 2015, GraceKennedy Money Services (GKMS), a subsidiary and authorised agent of Western Union, announced its expansion into the Cayman Islands, replacing previous Western Union partners who exited the market mid-year under pressure from banking service providers.

Under the 25-year-old partnership, GKMS now represents Western Union in 11 territories across the Caribbean – the others being Jamaica, Trinidad and Tobago, Guyana, St Vincent and the Grenadines, St Kitts and Nevis, Antigua and Barbuda, Anguilla, Montserrat, Turks and Caicos, and the British Virgin Islands.

GK Group CEO Don Wehby told the Jamaica Observer, “The issue of derisking is a complex one with many attendant factors and implications. This is a very real risk for several businesses in the financial industry in Jamaica and across the Caribbean, and as such we are all paying very special attention to it.”

He said that GK as a company has made use of tighter compliance management and has capitalised on international banking business relationships to overcome the threat posed by banks which want to withdraw their services.

“… GraceKennedy has effectively mitigated the impact of this issue in the following ways: One, we have leveraged the strength of our compliance programme and our relationships with our international partners. As a result, we successfully opened bank accounts with a major international financial institution in markets outside of Jamaica, namely Turks and Caicos and Cayman,” Wehby disclosed to the

Business Observer.

Simultaneously, he said, the group has been capitalising on the scale of its FX Trader network to supply customers’ foreign exchange demands through GK’s internal supply.

The group is also continuing to invest in human capital and technology “to ensure that our compliance programme meets or exceeds international standards”, he stated.

Recently, the International Monetary Fund (IMF) took note of the growing threat to regional economies posed by the correspondent banking challenge, promising to be more proactive.

Wehby stated, “We understand that derisking is not just a threat to GraceKennedy, but to the region at large, and as such we are working in conjunction with local stakeholders to engage international regulators on this urgent matter.

“The main arguments we have been putting forward to the international oversight bodies and the correspondent banks for consideration include the need for issuing of clear guidelines governing enhanced due diligence requirements,” the CEO said.

He added, “We strongly believe that companies that meet the guidelines, having demonstrated consistent and robust compliance, should be considered favourably.”

GK has also proposed the consideration of money service business entities (MSBs) by the banking institutions, on an individual, case-by-case basis.

At the national level, the company said it has also called for the development and dissemination of key complementary policies, frameworks and recommendations regarding MSBs by policymakers and key stakeholders.

CEO Wehby said there is also the need for all MSBs to continue investing in the people and the technology to ensure full compliance.

“Looking at the way forward, it will be critical for Caricom to take a unified approach where our various heads of government assume direct leadership of these challenges, and GraceKennedy stands ready to support any further efforts,” he concluded.