JamFin inks tech deal for compliance system
APLAN by the Jamaica Association for Microfinancing, or JamFin, to modernise the operations of the microfinance sector and improve market share for its members was put into action last month after it inked a deal with Cayman Islands-based regulatory technology firm, Global Risk and Data Authority, GRADE.
GRADE, which specialises in automated compliance software, has built out a central compliance platform for JamFin who now hopes to sell the software to its 15 members through annual or monthly subscriptions.
The software is built to assist with monitoring activities under the KYC – Know Your Customer, KYCC – Know Your Customers’ Customer, AML – AntiMoney Laundering, and CTF – Counter Terrorism Financing guidelines; as well as anti-tax avoidance and transaction monitoring activities.
The cost of the system was not disclosed.
The software is already in use in Cayman, Canada, and countries in Asia, and should, according to JamFin Chairman Blossom O’Meally-Nelson, improve on the compliance manual introduced by the Jamaica Micro Financing Association Limited, or JaMFA, two years ago as part of the sector’s code of conduct.
“This is an automated compliance system that is linked to all the databases in the world, including the Federal Bureau of Investigation right down to our database which is e-Government ,” O’ Me ally Nelson told the Financial Gleaner.
“Already we are entering in a pilot and we have gotten interest from one member. We are providing the other members with additional information because they want it customised; they don’t want all the bells and whistles. In other words, an organisation may not want to know if FBI has the person (loan applicant) on a list, they might be satisfied with the basic things like the credit history, TRN, etc,” she said.
Ultimately, the central compliance system is aimed at overcoming the derisking policies being pursued by local commercial banks, which has led to them barring some microfinance companies from holding accounts due to AML concerns.
JamFin is also keen on clearing any hurdles that might affect the business relationships between microfinanciers and the banks.
The Development Bank of Jamaica, through its upsized Credit Enhanced Facility, is looking to pump over $45 billion into the economy and is partnering with commercial banks and microfinancing firms in spreading the funds across micro, small and medium enterprises.
Part of the funds will be directly disbursed through the commercial banks and the microfinance companies, but some is expected to pass through the commercial banks and on to microfinance businesses for on lending to business owners.
The microfinancing sector has been dealing with the fallout from derisking policies for three years or more through enhanced compliance measures, the new platform being the latest initiative.
“We will be more than lowering the compliance risk, we’ll be practically eliminating it,” said Kavion Grant, CEO of Thunder Impact Limited, which is the local representative for GRADE.
“Compliance will be operated from a central point for the microfinance community and the software has in it risk metrics that are compliant with DBJ as well as the different institution’s own risk metrics. In other words, it will give them bank-line compliance without the added cost since it will be spread across the sector and we will monitor it,” Grant said.
GRADE’s self-service automated compliance platform is developed to serve financial institutions, correspondent banks and regulators, and can be used within the blockchain and crypto-currency space. The software allows for data sharing of an individual’s or company’s AML activities with over 200 intelligence agencies, along with global agencies such as the International Criminal Police Organization, or Interpol.
“In developing the software we have studied the micro credit bill and what is expected of the micro credit market and we decided to tailor the product accordingly. We’ve also worked with JamFin to develop an industry framework, and we are looking to start the pilot in 2020,” Grant said.
Once on board, JamFin members, which includes firms such as Access Financial Services, Kris An Charles, Niche Financing and Lasco Financial Services, will be able to carry out compliance checks and monitor the loan process in real time, thereby speeding up the loan process for customers and creating greater operational efficiency for micro lenders.