While the anti-cash lobby are busy like performing seals applauding the supposed shift to digital payment means that COVID-19 will usher in, a concern that has gone under the radar is that it must be possible, during the pandemic, for remittances to flow, and quickly, and without massive fee deductions, from members of a community that wish to render financial support to their counterpart community in another part of world.
It is Money Services Businesses (“MSBs”) that do this, and MSBs have been subjected by authorities and banks to their own version of COVID-19: being treated as the financial industry’s number one leper.
Under the heading of de-risking generally and particularly when the MSB handles cash, MSBs have substantially been cut off from domestic and international payment circuits under the headings of AML risk and that MSBs deal with so-called “high-risk countries”. Of course they do. What a surprise!
I have been involved – latterly as chair of the Association of UK Payment Institutions – with briefing both the Financial Conduct Authority and the Payment Systems Regulator about this over recent years, but things have gone from bad to worse.
COVID-19 presents the MSB sector with several challenges in the short term: are the sector’s services essential? Should members close? Should they at least close any branches? Will customers still have money to remit to their counterpart communities abroad? and several more.
But in the weeks to come the real issue, which will inevitably rise in visibility as COVID-19 is mastered here, is the impact of COVID-19 elsewhere, in those countries where public healthcare and so on are not givens, these countries being exactly the ones with the counterpart communities of the ones MSBs serve here.
Once COVID-19 takes hold in those counterpart communities, people there will not be able to travel for treatment, nor will family and friends be able to travel there to lend assistance.
Instead there will be all the greater desire to send money. Any current drop remittances activity will prove misleading, because then the desire would be so great, and the need for support so urgent, that people here will pull out all the stops to send what they can – and if the sender wants to tender cash as the value for the MSB to make the payment, why shouldn’t they?
Right now that money may not be able to get there at all, or could arrive too late to make any difference.
It would be appalling if the stance of banks on supposed AML/CFT risk were to stand in the way of this support being rendered. Nevertheless that stance is widely accepted, is underpinned by a nexus of “authorities”, and is legitimised by the anti-cash lobby, who should, please, at this juncture, take the historic opportunity to shut up.