Financial Crime World

Financial Fraud Statistics Exposed in Jamaica: Banks Lose Nearly $1 Billion

A recent surge in fraudulent schemes has left Jamaican banking institutions and their customers with losses or potential exposure of nearly $1 billion, according to authorities.

Types of Scams

  • Offline POS Transactions: Sophisticated scams target vulnerabilities in offline point-of-sale (POS) transactions, credit card refunds, and customer personal information.
  • Collusion with Unscrupulous Merchants: Fraudulent offline POS transactions account for a significant chunk of the losses and financial exposure, often involving 99.99 percent collusion with unscrupulous merchants.

How the Scams Work

  • Cloned Bank Cards: Fraudsters exploit the fact that some POS terminals can operate offline during Internet service disruptions or emergency situations, allowing them to process fraudulent transactions without authorization.
  • Processing Transactions: The scheme typically involves using a cloned bank card to process a transaction on a POS device taken offline, usually for millions of dollars.

Credit Card Refund Scheme

  • Monetizing Refunds: Fraudsters can monetize refunds by shopping online or using the cash to fund other illegal activities.
  • Prevention Measures: Financial institutions have implemented measures such as verified and delayed refunds to prevent fraudulent transactions.

Investigation Challenges

  • Unprecedented Rise in Cases: According to the Financial Intelligence Agency (FIA), there has been an unprecedented rise in the number of fraud-related cases being referred for investigation.
  • Staff Shortages: The agency is finding it difficult to recruit and retain staff, including police personnel and financial forensic examiners, which impacts the timeliness of completing investigations.

Arrests and Warnings

  • Arrests Made: The FIA has arrested and charged 16 persons for various criminal offenses under the Proceeds of Crime Act (POCA).
  • Warning to Merchants: Authorities are urging merchants to be vigilant against colluding with fraudsters, as they will ultimately be held liable for the transactions.

Quotes

“We are seeing an unprecedented rise in the number of fraud-related cases being referred for investigation. Our intelligence is pointing to the fact that a lot of the fraud being encountered is enabled, in some way, by persons connected to the financial institutions.” - Keith Darien, principal director of the FIA

Anti-Fraud Efforts

  • Jamaica Bankers Association’s Anti-Fraud Committee: The committee has warned merchants against colluding with fraudsters and urged business operators to follow established policies and procedures for processing specific transactions.