Financial Crime World

Caribbean Region Sees Uptick in Financial Crimes: Report Highlights Trends and Challenges

Introduction

A new report by Global Financial Integrity (GFI) has revealed a significant increase in financial crimes across the Caribbean, including fraud schemes that have resulted in hundreds of millions, if not billions, of dollars in illicit proceeds each year.

The Report’s Findings

The report, titled “Financial Fraud in the Caribbean,” examines the prevalence and dynamics of financial crime in the region. It analyzes the actors and facilitators involved, the methods used by perpetrators, and the channels utilized to move the associated proceeds. The study also assesses current policy and law enforcement responses.

Key Observations

The report highlights several key observations:

  • Types of Fraud: The most common types of fraud in the Caribbean include advance fee frauds, online shopping scams, romance scams, pyramid schemes, and Ponzi schemes.
  • Pyramid Schemes: Pyramid schemes often take advantage of citizens’ comfort with “sou-sou,” a legitimate community savings practice.
  • Methods of Contact: The method of contact between victims and fraudsters varies depending on the type of fraud, sophistication of the scheme, and type of victim involved.
  • Channels for Moving Proceeds: The primary channels used to move fraudulent proceeds include cash smuggling, money service businesses, bank transfers, trade-based money laundering, and online money transfer platforms.

Challenges

The report also highlights challenges faced by Caribbean countries in translating laws into effective enforcement actions, as well as cultural barriers that hinder the prevention and investigation of fraud. For example:

  • Cultural Barriers: Some citizens may incorrectly perceive government efforts to combat fraud as an attempt to prevent them from making money, while others may be hesitant to report fraud victimization due to cultural stigma.

Jamaica’s Experience

In Jamaica alone, experts assessed the annual value of fraud proceeds at up to US$800 million.

Recommendations

The report provides several recommendations for the public and private sectors:

  • Awareness Campaigns: Conducting awareness campaigns that are more effective in sensitizing citizens to risks.
  • Consumer Protection Legislation: Improving consumer protection legislation.
  • Courts Dedicated to Financial Crime Cases: Creating courts that only address financial crime cases.
  • Tax Legislation Use in Civil Asset Forfeiture Cases: Encouraging tax legislation use in civil asset forfeiture cases.
  • Evaluating Policy Responses: Evaluating current policy responses to financial crime.

Conclusion

The report is part of a larger project by GFI that analyzes financial crimes in Latin America and the Caribbean. The findings highlight the need for increased awareness, effective enforcement actions, and cultural sensitivity to combat financial crimes in the region.