THE Bank of Jamaica (BOJ) has signalled that criminals will not be able to use Jam-Dex to carry out their malicious acts.

Speaking at a Jamaica Observer Business Webinar, BOJ deputy governor in charge of Banking and Currency Operations and Financial Markets Infrastructure Divisions, Natalie Haynes, said there will still be strong mechanisms in place to guard against money laundering and terrorism financing.

“Jamaica is a little dot on the map in terms of our risk assessment and in terms of the island being on grey lists and black lists. We have to show the world that we still, even though it’s CBDC which is issued by the central bank, the AML/CFT framework is still in place,” said Haynes.

According to the BOJ, Jamaica’s anti-money laundering (AML)/counter financing of terrorism (CFT) policy is to provide a framework to assist the central bank with ensuring that its services and facilities are not used in the commission of, or to further the commission of money laundering or financing of terrorist activities or financing of the proliferation of weapons of mass destruction.

To this end, the BOJ has indicated that the framework which currently exists for the use of cash in the island will also be used for Jam-Dex. With that said, Haynes noted that only regulated financial entities and their agents will be allowed to hold and distribute Jam-Dex.

“When you go outside of the financial system in terms of financial entities for persons to be issuing money then you’re going to have a problem in terms of how you manage your monetary policy; so we go through regulated financial institutions because of the AML/CFT concerns,” she continued.

The BOJ has indicated that Jam-Dex is not cryptocurrency. The BOJ explained that cryptocurrency is privately issued and not backed by or regulated by a central authority such as a central bank. Whereas, CBDC is issued by a central bank and regulated by the central bank.

Haynes stressed that while Jam-Dex is expected to bring unbanked Jamaicans into the formal financial system, the institutions will be allowed to do their own risk assessment. This involves keeping a close watch on transactions which could be flagged for money laundering.

In the meantime, the BOJ has said there will be no cross border Jam-Dex transaction at this time. Division chief of the Financial Markets Infrastructure Division at the BOJ, Dr Novelette Panton, explained that so far Jam-Dex has only been tested for domestic use.

With regards to where Jam-Dex can be used, the BOJ has highlighted that countries and territories using CBDCs issue them using different models, usually including cross border, wholesale, retail, and hybrid (a cross between the wholesale and the retail).

BOJ will be using the hybrid model for issuing CBDC.

This means that the central bank will not only issue to commercial banks, but also to other deposit-taking institutions — building societies, merchant banks and authorised payment service providers, all licensed or authorised by BOJ. These entities will distribute Jam-Dex to the retail market.