Dominica Grapples with Financial Crimes: A Growing Concern in the Caribbean

Introduction

The Caribbean region has witnessed an alarming surge in financial crimes, including fraud schemes, over recent years. These crimes have far-reaching consequences, involving hundreds of millions if not billions of dollars in illicit proceeds each year, impacting economic security and generating associated violence.

A New Report Reveals the Extent of Financial Crime

A new report by Global Financial Integrity examines the prevalence and dynamics of financial crime in the Caribbean. The report focuses on various frauds and scams that affect the region, primarily advance fee frauds and pyramid/Ponzi schemes. It analyzes the actors and facilitators involved, the methods used by perpetrators to contact victims, and the channels utilized to move illicit proceeds.

Key Findings

• Advance Fee Frauds: Lottery/prize scams, online shopping scams, and romance scams are among the most common types of financial crimes in the Caribbean.
• Pyramid Schemes: These schemes often take advantage of citizens’ comfort with “sou-sous”, a legitimate community savings practice.
• Contact Methods: The method of contact between victim and fraudster depends on the type of fraud, scheme sophistication, and type of victims involved.
• Proceeds Channels: Primary channels used to move proceeds include cash smuggling, money service businesses, bank transfers, trade-based money laundering, and online money transfer platforms.

Challenges in Addressing Financial Crimes

Caribbean countries have laws in place to address financial crimes, but many face challenges when translating these laws into effective enforcement actions. Prevention and investigation of fraud also face cultural barriers, with some citizens perceiving government efforts as attempts to prevent them from making money.

Economic Impact

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

Recommendations

For the Public Sector:

• Take additional steps to assess and improve awareness campaigns.
• Make it easy for potential investors to verify registered individuals and companies.
• Explore using tax legislation when civil asset forfeiture is not available.

For the Private Sector:

• Assess and mitigate risk in a nuanced, evidence-based manner, avoiding “de-risking”.
• Evaluate consumer protection legislation for potential improvements.

Conclusion

The report highlights the need for Caribbean countries to address financial crimes effectively. Governments and the private sector must work together to prevent fraud, investigate cases, and prosecute perpetrators. By doing so, we can protect economic security and reduce associated violence in the region.