Banking Sector Fraud in Jamaica Estimated at $700-800 Million Annually

A top official at the Bank of Jamaica (BOJ) revealed that fraudulent activity in the country’s banking system is estimated to be worth between $700 million and $800 million annually. Deputy Governor Dr. Jide Lewis made this disclosure during an anti-money laundering seminar hosted by the Jamaica Institute of Financial Services in partnership with the Jamaica Bankers Association.

Decline in Fraudulent Activity

According to Dr. Lewis, the current fraud estimate reflects a decline from previous years, when the BOJ found that fraudulent activity in the banking system averaged around $1 billion annually over a 46-month period ending in 2021.

Room for Improvement

While Jamaica’s fraud rate is not as high as some other jurisdictions, there is still room for improvement. The official noted that while the country has made progress, it needs to demonstrate further improvement in several areas.

Efforts to Strengthen AML/CFT Regime

Jamaica seeks to get off the Financial Action Task Force (FATF) grey list, which it has been on since January 2020. To achieve this, the country must complete 13 action items aimed at strengthening its anti-money laundering and combating the financing of terrorism (AML/CFT) regime.

Progress Made

Dr. Lewis indicated that Jamaica has made significant progress in addressing some of the FATF’s recommendations, but still needs to demonstrate further improvement in several areas.

UK Privy Council Ruling

The BOJ official also touched on the recent UK Privy Council ruling that found against the Jamaican Bar Association’s bid to invoke client privilege in reporting suspicious financial activity under the Proceeds of Crime Act. Dr. Lewis described the ruling as “fairly significant” but emphasized that there are still other issues that need to be addressed.

BOJ Study Findings

A study by the BOJ, which covered a 46-month period ending in 2021, found that fraud losses averaged $1 billion per annum and accounted for around 0.95 percent of Jamaica’s total output. The majority of reported incidents related to credit and debit card fraud, with estimated losses totaling $3.3 billion or four-fifths of the total fraud.

Importance of AML/CFT Regime

Jamaica’s efforts to strengthen its AML/CFT regime and reduce banking sector fraud are seen as crucial in addressing concerns about money laundering and terrorist financing. The country’s progress will be closely monitored by international authorities, including the FATF, which has set a deadline for Jamaica to complete its action plan.

Conclusion

The revelation of fraudulent activity in Jamaica’s banking system serves as a reminder of the importance of strengthening AML/CFT regulations. With the country working towards getting off the FATF grey list, it is crucial that Jamaica continues to make progress and address remaining issues to ensure a safer and more secure financial system.