JIS News

Story Highlights

  • Legislation being prepared for the regulation of microfinance firms will protect the sector against money laundering.
  • Chief Technical Director in the Ministry of Finance and Planning’s Financial Investigations Division (FID), Robin Sykes, told JIS News that the regulation of the sector will feed into anti-money laundering measures being advanced.
  • The Ministry of Finance and Planning is in the process of preparing a Micro Credit Act to create an authority to regulate microfinancing firms.

Legislation being prepared for the regulation of microfinance firms will protect the sector against money laundering.

Chief Technical Director in the Ministry of Finance and Planning’s Financial Investigations Division (FID), Robin Sykes, told JIS News that the regulation of the sector will feed into anti-money laundering measures being advanced.

He said that once the law is in place and the microfinance firms are licensed, the Government will be able to regulate them under the anti-money laundering regime that exists under the Proceeds of Crime Act.

“In every jurisdiction, you want to ensure that anyone, who operates a financial business, is subject to anti-money laundering obligations,” he pointed out.

He was speaking to JIS News at the quarterly meeting of the Jamaica Association for Micro-Financing (JAMFIN) held on Wednesday (July 22), at the New Kingston offices of the Ministry of Industry, Investment and Commerce. The meeting was to advise the members of the pending regulations.

Noting that this sector is at particular risk for money laundering, Mr. Sykes said, “All the measures that the anti-money laundering law will impose, like customer due diligence, record-keeping and suspicious transaction reporting, will then allow these entities to protect themselves against being abused for money laundering.”

The Ministry of Finance and Planning is in the process of preparing a Micro Credit Act to create an authority to regulate microfinancing firms. The legislation will allow the entities to be licensed, while also providing measures for the protection of consumers.

Although there is not a body that regulates the microfinance market, the Money Lending Act sets the framework for how the sector operates.

Over the years, the Ministry has received complaints regarding the high interest rates being charged by microfinance institutions.

Mr. Sykes said that “because they are not licensed or regulated, there is the prospect of abuse and the sector always comes under quite a bit of criticism because of the (high interest) rates that they charge. So, the law will provide for protection of the consumer as it relates to this sort of lending.”

Mr. Sykes said he understands that the sector is willing and eager to be regulated because this will give the public a greater sense of assurance to do business with micro-finance firms.

“When you are regulated by the Government, it provides some assurance with consumers that certainly if the (entity) does not comply with the law, then the consumers have somewhere to go and complain,” he said.

He said the legitimate lenders in the industry “are happy to have something that levels the playing field as they have invested a lot in their operations and those who are not willing to play by the rules have an unfair advantage over them.”

Skip to content