Financial Crime World

Financial Fraud in Jamaica Worsening, Reaches $700-800 Million Annually: BOJ Official

Bank of Jamaica Reveals Staggering Annual Losses to Financial Fraud

According to Dr. Jide Lewis, deputy governor of the Bank of Jamaica, financial fraud in the country’s banking system is costing a staggering $700-800 million annually. This figure represents a downward trend compared to the previous years’ average of $1 billion per annum.

Downward Trend in Financial Fraud

Lewis made this disclosure at an anti-money laundering seminar hosted by the Jamaica Institute of Financial Services and the Jamaica Bankers Association. He noted that while Jamaica’s financial fraud situation is not as severe as some other jurisdictions, it still requires improvement.

Factors Contributing to Decline in Fraudulent Activity

The BOJ official attributed the decline in fraudulent activity to efforts aimed at strengthening regulatory oversight, including:

  • Extension of its reach from banks to non-bank financial companies and pension funds
  • Investigation into the alleged fraud case involving boutique securities firm Stocks & Securities Limited

Jamaica’s Efforts to Improve Anti-Money Laundering Defenses

Jamaica is working to get off a list of flagged nations with weak links in their money-laundering defences. The country has been tasked with completing 13 action items outlined by the Financial Action Task Force (FATF). The global watchdog has committed over 200 jurisdictions to strive towards ridding the world of havens for money laundering and terrorist financing.

Upcoming FATF Review

The FATF will meet with Jamaica later this month, followed by a showdown in the summer to determine whether the island is removed from the grey list. Lewis emphasized that the country needs to demonstrate significant progress on its action items before being considered compliant.

Ruling Against Jamaican Bar Association

In related news, the UK Privy Council has handed down a ruling against the Jamaican Bar Association, rejecting its bid to invoke client privilege in reporting suspicious financial activity under the Proceeds of Crime Act (POCA). This means lawyers who fail to report such transactions will face sanctions.

Findings of BOJ’s Study on Banking Fraud

The BOJ’s study on banking fraud among Jamaica’s eight deposit-taking institutions revealed that:

  • Fraud losses averaged $1 billion per annum between January 2018 and October 2021
  • Major frauds originated from internal staff, internet banking, loans, wire transfers, and other sources
  • Most incidents related to credit and debit card fraud
  • Cumulatively over the 46-month period, fraud totalled $3.9 billion, with reports of over 37,253 incidents

Emphasis on Continued Vigilance

The findings emphasized the need for continued vigilance in combating financial fraud. Lewis noted that most incidents related to credit and debit card fraud, highlighting the importance of ongoing efforts to prevent and detect such fraudulent activities.