Jamaica’s Banking Institutions Face Multi-Million Dollar Losses Due to Sophisticated Fraud Schemes

Unprecedented Rise in Fraud Cases Threatens Jamaican Economy

Multiple fraudulent schemes uncovered in recent months have left Jamaican banking institutions and their customers with significant losses or potential exposure of nearly $1 billion, authorities confirmed.

Offline POS Transactions: A Lucrative Scheme

Fraudulent offline point-of-sale (POS) transactions account for a significant chunk of the losses and financial exposure. These schemes involve collusion with unscrupulous merchants, who are approached by fraudsters offering to pay them a small percentage for use of their POS terminals to process a fraudulent transaction.

• How it works: The fraudster processes the transaction by entering the 16-digit card number, card verification value number, expiry date, and CVV on the POS terminal. The cash is then transferred out of the customer’s account to multiple accounts of money mules linked to the fraudsters.
• Example case: In one instance, fraudsters were able to siphon off J$52 million and US$322,000 from several accounts at a targeted financial institution.

Credit Card Refund Scheme: Prevalent and Lucrative

The credit card refund scheme exploited weaknesses in the system that allowed a merchant to process refunds to a debit or credit card within days without having an original transaction. The cashback is typically sent directly to a cloned bank card that is in possession of fraudsters.

• How it works: This scheme is “very prevalent and lucrative” for fraudsters, who use it to fleece millions of dollars in goods and services from merchants across several industries.
• Affected businesses: Several merchants have lost significant sums from this scheme, which targets gas stations, supermarkets, hardware, and liquor stores.

Personal Data Breach: More Sinister

The scheme that targets customers’ personal data is more sinister. Fraudsters who mysteriously gained access to sensitive personal data for customers at one financial institution were able to siphon off J$52 million and US$322,000 from several accounts.

• How it works: The fraudsters use the stolen data to process fraudulent transactions.
• Example case: Six such cases were uncovered, and 16 persons have been arrested and charged for various criminal offences under POCA.

FID Head Notes Unprecedented Rise in Fraud Cases

The FID head noted that like other law enforcement entities, the agency is seeing an “unprecedented rise” in the number of fraud-related cases being referred for investigation. The intelligence is pointing to the fact that a lot of the fraud being encountered is enabled, in some way, by persons connected to the financial institutions.

• Impact on investigations: The FID acknowledged that some financial institutions submit high-quality reports of suspicious transactions in keeping with their obligations under POCA.
• Staffing challenges: However, Darien noted that the entity, like other investigative agencies, is finding it difficult to recruit and retain staff, including police personnel and financial forensic examiners, which impacts the timeliness of completing investigations.