Financial Crimes Take a Toll on Trinidad and Tobago’s Economy
By Channing Mavrellis, December 14, 2022
Introduction
Trinidad and Tobago’s economy is facing a growing threat from financial crimes, with fraud schemes and other illicit activities draining millions of dollars from the country’s coffers. A new report by Global Financial Integrity reveals that financial fraud has become a widespread problem in the Caribbean region, involving hundreds of millions if not billions of dollars in illicit proceeds each year.
Types of Fraud Impacting Trinidad and Tobago
The report highlights various types of fraud affecting the region, including:
- Advance Fee Frauds: These include lottery/prize scams, online shopping scams, and romance scams. The report notes that pyramid schemes frequently take advantage of citizens’ comfort and familiarity with “sou-sous”, a legitimate community savings practice.
- Pyramid Schemes: These are business models in which returns are paid to existing investors from funds contributed by new investors, rather than from profit earned.
Channels Used for Moving Fraud Proceeds
The primary channels used to move the proceeds of fraud in Trinidad and Tobago include:
- Cash Smuggling
- Money Service Businesses
- Bank Transfers
- Trade-Based Money Laundering
- Online Money Transfer Platforms
Obstacles to Combating Financial Crime
The report highlights cultural barriers as a major obstacle in the prevention and investigation of fraud. Some citizens may incorrectly perceive governments’ 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.
Recommendations for Improvement
To improve their responses to financial crime, the report provides several recommendations for the public and private sectors:
- Effective Awareness Campaigns: Conduct more effective awareness campaigns to sensitize citizens to risks.
- Verification of Business Registrations: Make it easier for potential investors to verify those individuals and companies registered to conduct business in a jurisdiction.
- Tax Legislation: Explore the use of tax legislation when civil asset forfeiture is not available.
- Consumer Protection Legislation: Evaluate current consumer protection legislation for potential improvements.
- Specialized Courts: Create courts that only address financial crime cases.
The report is part of a larger project by GFI that analyzes financial crimes in Latin America and the Caribbean.