Jamaica’s inclusion on the grey list of the Financial Action Task Force (FATF) is causing international merchants to block online transactions involving cards issued in Jamaica or deny service to potential clients altogether.

The FATF is an intergovernmental organisation aimed at combating money laundering and terrorism financing. Jamaica was added to the grey list in February 2020 which the FATF defines as the country committing to “resolve swiftly the identified strategic deficiencies within agreed time frames and is subject to increased monitoring”. As a result, Jamaica and 22 other countries are currently under increased monitoring by the FATF. Barbados, Haiti and the Cayman Islands are the other territories in the region on the list.

Since Jamaica has been included on the list, various international merchants such as Lenovo, Binance, Clarks, H & M and Walmart have blocked Jamaicans from transacting business with their Jamaican issued debit or credit cards. The issue has been compounded by fraudsters in Jamaica defrauding certain multinational businesses. As a result, even entities like PayPal have begun to limit payments to local accounts in Jamaica. This has meant that some people have had to request help from others overseas or set up a bank account in the United States of America to carry out their business. Some businesses have had to find alternative routes such as setting up a USA subsidiary in order to circumvent the hurdles posed by inclusion on the list.

In recent times, many local banks have been blocking wires to some foreign brokers and other entities which are near cash/cash like in nature. As a result, some people have had to do a full anti-money laundering (AML) sweep including the need to provide sources of funds, demonstration of relationship with that broker, images of assets held and what kind of instruments will be purchased which is not limited to forex (foreign exchange), commodities, cryptocurrencies, blockchain technology and contract for differences (CFDs). Though the client might be using their own funds, some banks have blocked all crypto or near cash like transactions which means that the verification by Visa or Mastercard aren’t being processed.

When asked about the limitation of JMMB Bank not allowing near cash transactions on its Visa debit card, general manager of JMMB Group’s digital services Gifford Rankine explained that this was due to the need to limit fraud.

“JMMB Bank does not currently allow clients to do some near cash transactions using their JMMB Bank Visa debit card, in order to protect clients from potential fraud attacks. The bank is looking to bolster its Visa card security and fraud-monitoring capabilities in early 2022, to include more alerts and other capabilities. Thereafter, clients will be able to engage in additional near cash/quasi-cash transactions, using their JMMB Bank Visa debit card, with the added confidence and security measures in place to reduce the likelihood of fraudulent transactions,” said Rankine.

At an investor briefing last year, the JMMB Group had revealed that it was looking to set up an alternative payments division to expand its remittance and banking services. This is currently awaiting approval from the Bank of Jamaica (BOJ).

While pointing out the current limitations being faced by individuals to conduct business, Rankine pointed out that this could be an opportunity for regional collaboration especially as more USA banks evaluate the correspondent banking risks in the region relative to the potential income which can be earned.

“Although Jamaica is not the only Caribbean country affected by these restrictions, this presents an opportunity for greater collaboration by stakeholders to continue to lobby international partners to accept these internationally backed payment methods, and to help to change this perception through continued high standards of financial transparency and compliance and overall crime-fighting methods,” said Rankine.

The Government of Jamaica has been moving expeditiously over the last two years to resolve the deficiencies in a bid to get Jamaica off the grey list. This has included things such as bringing the credit unions under the BOJ and regulating the microfinance sector. The International Corporate and Trust Services Providers (Change of Name and Amendment) Act, 2021 was debated in Parliament last October as one of the means to improve the structure around business activities by trust service providers.

Though there have been some high strides, Finance Minister Dr Nigel Clarke lamented that Jamaica is unlikely to leave the grey list anytime soon. This has been compounded by the limited injunction issued by the Court of Appeal to prevent the general legal council from being designated as the competent authority from monitoring AML compliance by attorneys. The Jamaica Bar Association instituted legal action against the government in what it described as an unconstitutional measure. The local authorities have already stated their intent to bring real estate developers and used car dealers under the AML framework.

Despite the impact this is having on the ability to conduct business for many persons, Rankine noted that this also presents an opportunity for local businesses to step up and provide the services to persons who have encountered these issues.

“With reduced options for businesses and individuals to shop overseas, we believe it potentially opens up greater possibilities for the local industry to fill this gap, thereby supporting the growth of the local sector and economic recovery, in the long run. Additionally, individuals can seek to explore viable alternatives to using their debit or credit cards for shopping online, such as: buying from merchants who ship directly to Jamaica; utilising sites, such as Amazon, which typically accepts locally issued cards, and may offer similar, or the same, products via this medium,” Rankine closed.