Jamaica’s Central Bank Warns of $700m-800m Annual Banking Fraud Losses
The Bank of Jamaica (BOJ) has revealed that fraudulent activities in the banking system have resulted in losses of approximately $700 million to $800 million annually, a significant decline from the $1 billion average annual loss recorded during a 46-month period ending in 2021.
Fraud Losses Averaging $10 Million Per Month Per Institution
According to Dr. Jide Lewis, Deputy Governor of the BOJ, fraud losses averaged $10 million per month per institution. The revelation was made during an anti-money laundering seminar hosted by the Jamaica Institute of Financial Services and the Jamaica Bankers Association.
Improvement Needed in Combating Money Laundering and Terrorist Financing
Lewis emphasized that while Jamaica is not doing badly relative to other jurisdictions, it still requires improvement in its efforts to combat money laundering and terrorist financing. To get off the grey list, Jamaica needs to complete 13 action items to fully comply with the 40 measures outlined by the Financial Action Task Force (FATF).
FATF Assessment Later This Month
The FATF will meet with Jamaica later this month to assess the country’s progress on completing these action items. Lewis noted that Jamaica is largely compliant with six of the 13 action items and must demonstrate significant progress on the remaining seven.
Regulatory Expansion Beyond Banks
The BOJ has also been expanding its regulatory reach beyond banks to include non-bank financial companies and pension funds, following an investigation into a suspected fraud case involving Stocks & Securities Limited.
UK Privy Council Ruling Against Jamaican Bar Association’s Bid
In related news, the UK Privy Council has ruled against the Jamaican Bar Association’s bid to invoke client privilege in reporting suspicious financial activity under the Proceeds of Crime Act (POCA). The ruling means that lawyers who fail to report such transactions will face sanctions.
BOJ Study on Banking Fraud
The BOJ conducted a study on banking fraud among its eight deposit-taking institutions between January 2018 and October 2021, which found that cumulative losses over the 46-month period totalled $3.9 billion, with reports of over 37,253 incidents of fraud.
Key Statistics:
- Annual banking fraud losses: $700 million to $800 million
- Average monthly fraud loss per institution: $10 million
- Cumulative losses between January 2018 and October 2021: $3.9 billion
- Number of reported fraud incidents: over 37,253