BOJ unbowed

In the wake of the court decision favouring Alliance Investment Management Limited, AIML, the Bank of Jamaica, BOJ, is standing by its regulatory actions against affiliates, Alliance Financial Services Limited and Alliance Finance Limited.

On April 4, AIML was cleared of 17 charges levelled under the Proceeds of Crime Act for failing to file threshold transaction reports and disclosing threshold cash transactions.

The central bank also noted that AIML itself is not a licensee of the BOJ.

In the wake of the prosecutorial and regulatory actions taken more than two years ago, AIML’s securities portfolio and Alliance Financial’s ordinary shares were acquired by Sagicor Group Jamaica Limited.

The full statement issued by the central bank on Monday, April 8, is reproduced below.

Bank of Jamaica takes note of the recent court decision in the matter involving Alliance Investment Management Limited, which is not a licensee of the Bank, and public commentary related to the actions taken by the bank in December 2021 to suspend the cambio and remittance operating licences issued to then AIML-affiliated company Alliance Financial Services Limited, AFSL, effective December 3, 2021.

The bank’s actions also included the revocation of the authorisation granted to AFSL to operate in the Bank of Jamaica Fintech Regulatory Sandbox as a payment service provider effective 3 December 2021.

As stated by the bank at the time, the regulatory actions became necessary after the Financial Investigations Division, FID, on December 2, 2021 charged AFSL’s principals and two AFSL-affiliated companies at the time (AIML and Alliance Finance Limited) with several offences under the Bank of Jamaica Act and the Banking Services Act.

Bank of Jamaica is aware that investigations by the FID into the Alliance Group began around 2018. However, it was only after formal charges were laid against the entities and their principals by the FID, following the requisite ruling by the Office of the Director of Public Prosecutions, that BOJ took the regulatory action of the suspension of licences to safeguard the financial system. The formal charging of the entities and their principals raised serious ‘fit and proper’ considerations for their continued operation of financial services under the Bank of Jamaica Act and the Banking Services Act.

Alliance Finance Limited, AFL, subsequently pleaded guilty in the St Andrew Parish Court to several breaches of the Bank of Jamaica Act and the Banking Services Act and was fined. These breaches for which AFL was convicted related to “carrying on the business of lending in foreign currency in breach of the Bank of Jamaica Act” and “accepting deposits without the requisite licence in breach of the Banking Services Act”.

The breaches involved engaging in economic activities which are regulated and which require an extensive application process, extensive due diligence checks and continuous monitoring throughout the life of the licence in the case of the Banking Services Act. The breaches also involved engaging in the business of lending in foreign currency without the requisite authorisation that allows for review, due diligence and monitoring mechanisms being applied to ensure continued order in the foreign exchange market.

These represent breaches of the substantive framework of financial services regulated by Bank of Jamaica. One consequence of such breaches is being rendered unfit to own and operate financial services in the financial system.

Bank of Jamaica is also aware of legal action initiated in the Supreme Court by the FID related to criminal forfeiture regarding the offences for which AFL was convicted in relation to the Bank of Jamaica Act and the Banking Services Act.

Bank of Jamaica maintains that its actions taken in December 2021 to suspend the cambio and remittance operating licence of AFSL and to revoke the authorisation granted to AFSL to operate in the BOJ Fintech Regulatory Sandbox as a payment service provider were necessary, as the allegations at the time threatened the good order in the foreign exchange market and payment systems, as well as the reputation and good standing of the Jamaican financial system internationally.

It is important to note that BOJ’s regulatory actions were the subject of judicial review, and finding in the Bank’s favour, the Court of Appeal noted in its 2022 judgment in the matter of Alliance Financial Services Limited v Bank of Jamaica that “the risk to the financial sector outweighed the economic loss and inconvenience AFSL may suffer as a result of the continuation of the suspension”.

Bank of Jamaica remains committed to fulfilling its mandate to ensure the stability of the Jamaican financial system and the effective and impartial supervision of its licensees.

It is also to be noted that Alliance’s divestment of business was a strategy and activity pursued by the principals of Alliance as their own business decision. Bank of Jamaica had no part in that decision or transaction. On April 1, 2022, BOJ publicly advised that AFSL, under a new ownership structure, applied for a cambio and remittance licence, and having satisfied the bank’s due diligence requirements, was licensed to offer cambio and remittance services at approved locations, effective March 23, 2022.

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