BANKS VERSUS CAMBIOS
There is a power that exists in the community which belongs to the commercial banks, and it is monetary control by anonymity and secrecy; they are much larger than most businesses.
Recently, they decided not to do business with Cambios, almost unilaterally, irrespective of the Cambio”s size, clientele and location. I am not sure that any public service organization is legally able to do this; being in the retail business for many years we were taught that one cannot refuse services to a potential customer (except that client is drunk and disorderly, manifestly dishonest, and otherwise unfit).
The banks collect around .75% as a fee to deposit your one US dollar, which means that for one US dollar you realise 99.25 US cents in value. Looking at it another way, were you to get 100 JMD for a US Dollar, you would realise 99.25 cents; or in 10 USD you realize J$992.25 instead of $1000 Jamaican; almost an $8 Jamaican loss.
But the bank’s buying rate is $5.00 JMD less than the average Cambio rate, so on $100 USD where a Cambio pays 106.00, you get 10,600 dollars from the Cambio, and you receive less than 10,020, JMD losing almost 10,240 Jamaican dollars in that transaction. On US$10,000 which is the supposed allowable limit in the USA, you would lose over JMD $ 100,540.
The banks also charges the same percentage in pounds, euros, or Canadian dollars, and with some banks a little more for these currencies.
As a Cambio, one needs to obtain Jamaican Dollars in cash to pay your customers for the Foreign Exchange they sell to you. You get the cash funds from a bank, and they will charge you $1500 to $3000 for every million you take from them. So they ”get'” you going in and going out of the bank with charges. Sometimes you are told they have no more money, even should you have available funds in your checking account.
Hoarding funds is not allowed by monetary authority. The Banks have many branches, and they pay various rates for their foreign money, which averages the daily buying rate at less than average. They take time to bring this reserve fund to sell. Yet the funds sold are not accounted, except to say it “belonged to a client who wanted it sold”, and only accounted when sold. During the last crises when money was unavailable in the formal system, many of our banks found several millions of US dollars to sell at a good profit.
On the other hand they suggest a Jamaican Cambio trades with criminals, terrorists, drug dealers and so on. They are afraid that having done business with a local Cambio, this will bring suspicion on their own operations for similar reasons. The US Government has fined many banks in amounts of billions of dollars; BOA, Wells Fargo, HSBC, Wachovia, and other players, so therein is based the excuse of not dealing with a Cambio. But there is no overseas sanction on a Jamaican Cambio, and with the volume Cambios have which is relatively small, there is little danger from a money laundering enterprise.
Local Cambios are audited regularly by the Cambio Unit of the Bank of Jamaica, at least twice a year, to ensure that there are no illegal transactions. What the banks want to do is regain by hook or crook the perceived profitable trading of foreign exchange, and to bypass the Cambios who have successfully increased their Market -share in Jamaica from zero to 47%; which the Banks lost to the Cambios in the first place.
This height of selfishness is what prevails throughout the Jamaican Commercial Banking System; and an inclination to overcharge more than any other bank in any country for services.
(628 words) R.K. Sujanani