Local money service businesses hit hard times
On Thursday, February 13th — this Thursday — look to most money service businesses closing their doors, as the only bank in town that was handling their accounts — Bank of Hawai’i — will be closing these types of accounts down, due to strict federal and global banking regulations and compliance issues.
According to one of the local managers of MoneyGram, Charlie Ho-Ching, they were notified by BoH several months ago of the bank’s decision to no longer deal with money service business accounts, which also include Western Union. These are businesses that deal with money transfers.
He said, since the BoH notification, they had been working with the local ANZ Bank branch to see if they would open a money service account for the company. However, they were recently notified that it would not happen — based on a bank policy not to deal with any money service businesses locally or globally.
Ho-Ching said, “It’s completely out of our hands, it’s a global decision by the banking industry and we have no control over their decision. We did nothing wrong.”
In addition, he said, at the time of BoH’s notification, “Our home office told us they would handle it by shipping in money to be deposited directly into our account. But, we were notified on Monday (Feb. 10) that as of now — they are not going to do it because it is ‘too risky’ and ‘too expensive’… so as of this Thursday — we will have to close our doors, until another bank helps us or regulations are relaxed enough to not be such a headache to the banks.”
Samoa News also spoke to an owner of one of the Western Union branches on island, who says he is currently trying to resolve the issue of no bank account.
Asked if he will be closing his doors on Thursday, like MoneyGram, he said, “Not really, but it is a ‘very bad situation’ — and I won’t be able to service all my clients like I used to — as I will have very limited funds.”
How will you be able to send money off-island?
Ho-Ching says you will still be able to use the banks to transfer money — they are still offering that service. Whether it will be ‘next day’ or ‘instantaneous’ available as in the case of most money service businesses — is unknown.
How will you receive money from off-island? Again, the banks will still be handling that type of transaction, he said.
REMITTANCES THROUGH MONEY TRANSFER OPERATORS
Remittances, money sent off-island or received from off-island as a ‘gift’, are believed to constitute a major part of household cash income for many families in the Pacific island countries, according to an overview report, “Remittances in the Pacific” by John Connell and Richard P.C. Brown, published by the Asian Development Bank in March 2005. In the overview, remittances are said to “ensure a balance of payment surplus in most receiving countries.”
A paper in Samoa, the Samoa Observer, reported in September 2013 that source countries of remittances were namely New Zealand, Australia and the USA, according to the Central Bank of Samoa, which also reported that for the twelve months of fiscal year 2012-2013, total private remittances were $418.9 million (tala).
According to the Bank, the formal channel of receiving remittances continued to be dominated by Money Transfer Operator (MTO’s), with its share rising to 68.2 per cent of total private remittances in June 2013. (MTO’s are Money Service businesses)
“On the contrary, the share of private remittances received through commercial banks decreased to 31.8 per cent in the month under review,” the Central Bank said.
Samoa News notes that Paypal is an alternative method to transfer funds.
THE NEW COMMENTS PROCESS
To make comments, you will need to register. You can register under your real name or use a 'screen' name. This way, people will be able to follow comments and make comments back and forth to each other. If you choose to use a 'screen name' no one will know your true identity. In either case, no email addresses will be available to anyone. It is an automated process. If you have questions, email: email@example.com
You currently are not logged in, please LOGIN to post comments.