All Cash Plus' Accounts With NCB Closed!

Well, well, well, Cash Plus Ltd.(Cash Plus), an Alternative Investment Scheme, here in Jamaica, lost their class action suit against National Commercial Bank (NCB), one of the leading banks here in Jamaica, today.

Cash Plus filed the suit last week Friday to bar NCB from closing the twenty-six (26) accounts that it had with the bank.

On December 17, 2007, NCB was granted the right by the Jamaican Courts to shut down seventeen (17) of the twenty-six (26) accounts that Cash Plus had with the Bank.

Today they won the right to shut down the remaining nine (9) accounts.

According to NCB, Cash Plus, under the "know your customer policy" of international financial institutions and "know your customer" clause in the Bank of Jamaica Act , was asked by NCB, to produce audited financial statements (Profit & Loss Statements, Balance Sheet and Cash Flow Statements.)

(According to article, "Know your customer", Wikipedia.org, "know your customer" policies have become increasingly important, globally, to prevent identity theft fraud, money laundering and terrorist financing.)

Up until December 2007, Cash Plus was unable to do so. According to Dave Garcia, NCB's General Counsel,  the last audited financials received from Cash Plus were on March 31, 2006...NCB had questions regarding these financials that still have not been addressed.

NCB earlier claimed that Cash Plus' inability to produce the audited financials, put NCB at increased financial risk and increased the probability that the bank would be in breach of the "know your customer" clause in the Bank of Jamaica Act.

(By the way, I checked online...there is no such clause in the Banking Act or Bank of Jamaica Act, two Acts which set out the legal and regulatory framework for Jamaican Commercial banks.)

NCB today reported that a manager's cheque equal to the  monies in the remaining Cash Plus accounts, was made out to Cash Plus.

One wonders why, however, after a 5-year relationship with Cash Plus, that this policy is finally being enacted.

(Quite a few Jamaicans depended on the 10% monthly interest paid out by Cash Plus, to send their children to school, pay their rent/mortgage and buy their houses.

Cash Plus and other Alternative Investment Schemes gained popularity over the past five (5) years, due to the extraordinarily high interests paid to clients, monthly. This is versus the annual compounded interest of 10% given by Jamaican Commercial Banks.)

It has been said that the Jamaican Commercial Banks are losing money due to the withdrawal of funds by clients who are opting, instead, to invest in the higher-returning Alternative Investment Schemes.

A week following the December 17 Court ruling, Cash Plus asked its clients to to put their monthly withdrawals on hold for three (3) months until March 2008, when they would be given shares equal to the amount they have invested in the Scheme.

Many Cash Plus clients have refused to enact a run on the institution (withdraw their monies), saying that the closing of Cash Plus' accounts, was an attempt by NCB (and other Commercial Banks) to prevent ordinary Jamaicans from making a living and from thriving.

Cash Plus will be appealing the decision handed down by the Courts, today.

Well, we await the outcome of this appeal and the ensuing decision by Cash Plus clients...

Will they be demanding their money back or will they "hang" (stay the course) with Cash Plus?

Will keep you posted!

Please see our post, "Are Investment Schemes Really Credible Investment Alternatives to Banks?", for a background to Alternative Investment Schemes, here in Jamaica.

Gillian

Sources Include:

1) Article, "Cash Plus, NCB, return to court December 17, 2007", Jamaica Observer- News Section, December 8, 2007

2) Nationwide 11:00 a.m. News , Nationwide Radio, February 1, 2008

3) Article, "Cash Plus lawsuit against NCB hearing", Go-Jamaica: Power 106 News Online, February 1, 2008

4) Power 106 News at 5:00p.m., February 1, 2008.

5) Nationwide Radio's Cover Story at 5:30, February 1,2008