Jamaican law makers are piloting through Parliament legislation to limit cash transactions. Under the amended Proceeds of Crime Act, it will be illegal for a person to pay or receive cash in excess of J$1 million in a transaction for the purchase of goods or services, or for the reduction of any indebtedness, accounts payable, or other financial obligation. That’s near par for the course when it comes to measures to thwart money laundering, and many countries have similar restrictions and they revolve around the US$10,000 equivalent mark. It will also be illegal to artificially separate a single activity or course of activity into a set of transactions, so that each transaction involves a payment and receipt of cash of less than J$1 million, if the activity or course of activity involves payment and receipt of cash that exceeds J$1 million. Persons convicted of either offence face up to 10 years’ imprisonment if convicted in the circuit court, and may also be fined. If convicted in a resident magistrate’s court, the fine is up to J$3 million and/or three years’ imprisonment. Banks and other financial institutions will be allowed to collect cash above J$1 million.
I understand the logic in trying to deal with money laundering. Jamaica’s need to comply with the money laundering and combating of the financing of terrorism framework advocated by the Caribbean Financial Action Task Force (CFATF), of which Jamaica is a member and which requires compliance with international standards. But in Jamaica it’s going to lead to a raft of problems, mainly for merchants (many of whom work on small margins and try to curb banking costs). Many parliamentarians were quick to point out that it will be banks who will get the biggest benefit from this measure. Banks charge fees for almost every transaction customers make, and for many it’s a real burden, and customers (once the kings) have to bow to the blows that fees impose.
In Jamaica, cash is king. I’ve learned this quickly. I used to be able to walk around with about US$100 in my wallet and it would still be there from the start of the month till the end. I was smart, I thought, in setting up most bill payments electronically, and using credit (or sometimes debit) cards for most transactions. Fast forward to Jamaica, since June. If I go to a bank ATM, I am limited to withdrawals of J$15,000 (about US$150); I can get more if I actually go to a bank branch. That can be gone in a day. Many places will allow transactions with debit cards, so if I fill my car with petrol, at J$130 a litre (about J$7800), I don’t have to dip into my cash and can pay with that card. Likewise, for supermarkets and many stores. However, many transactions are with street vendors, and there’s no way that anything but cash can be used.
However, it’s the case that some large companies do NOT take debit or credit cards and must have cash or checks. That may not seem so hard, except not all current accounts have checking facilities associated with them. I had to get some medicine for my father, recently, and was sent by the hospital to a pharmaceutical company. The bill was more than could be paid with an ATM cash withdrawal, and they would not take credit cards. So, I had to drive around to find a bank, line up, take out a bundle of cash, then head back to the company and try to complete my transactions. Now, admitted, my needs were far from J$1million, but the point is that without the facility to make large cash payments you’re often stuck in this country.
Some politicians pointed out that the system has not kept up with inflation, and that bail bonds, for instance can only be settled in cash, and could easily run above J$1million. I hope that anyone convicted under the Act will be able to pay the fine in a form other than cash.
People understand that the financial system in Jamaica is biased towards cash and that makes some business people into sitting ducks for criminals. So, while the limits may be a problem, the larger issue is that non-cash transactions are not as easy as they need to be in order to reduce the dependence on cash.
Jamaica: Political Economy 