Amazing Wall Street Journal piece on the Marshall Islands getting cut off from the world banking system.
First Hawaiian bank, owned by a French banking group, is pulling out of its relationship with domestic banking there due to regulatory risk even though there’s no indication of money laundering. This makes cashing paychecks from the US military base problematic.
Western Union has one branch in the capital, which may leave residents taking a trip hundreds of miles by boat or air to receive funds from the rest of the world.
On the Marshall Islands–a chain of volcanic islands in the middle of the Pacific Ocean, population 53,066—the only homegrown bank can’t issue credit cards, doesn’t have any ATMs and sends well-worn dollar bills between its island branches by boat.
..Ebeye’s only venue for international transfers has been a MoneyGram branch tied to the domestic bank. During tax season, there can be a line of 100 people outside, says Ramanty Chong Gum, a 34-year-old high school math teacher on Ebeye. The MoneyGram already restricts the number of transactions for each customer; with First Hawaiian’s exit, that channel will be cut off altogether.
Marshall Islands, Halfway Between Hawaii and Northeastern Australia
The US military base has a Bank of America, but that’s open to military personnel only. Servicemembers will take locals’ debit cards and PINs onto the base and withdraw cash for them, supplementing their incomes by charging a fee for the service.
United Airlines is the only carrier offering flights between the Marshall Islands and the mainland US. They fly four times weekly to Honolulu (United also flies to Micronesia and operates service within the Marshall Islands itself). However residents of Marshall Islands cannot get credit cards from a domestic bank and United no longer accepts cash for buy on board.
Honolulu – Majuro, the capital of the Marshall Islands, is a 4 hour 50 minute flight. United’s four-segment island hopper between Majuro to Guam takes over eight hours.
United’s Island Hopper Arriving in Chuuk, credit: United
Ironically pushing the island out of the banking system pushes everyone to cash, which is worse for money laundering. International institutions are working to “help the Bank of the Marshall Islands get in compliance with” international rules directly. And “the Marshall Islands announced it would launch a cryptocurrency” as a workaround.
(HT: Marginal Revolution)