Financial Crime World

Jamaica’s Financial Institution Security Measures Under Scrutiny as Fraud Costs Reach $700-800 Million Annually

The Bank of Jamaica (BOJ) has revealed that fraud costs in the banking system have reached a staggering $700-800 million annually, with Deputy Governor Dr. Jide Lewis attributing the figure to a decline from previous years.

A Decline, but Still Room for Improvement

While Jamaica’s situation is not as dire as some other jurisdictions, there is still room for improvement. Speaking at the annual anti-money laundering seminar hosted by the Jamaica Institute of Financial Services and the Jamaica Bankers Association, Lewis emphasized that while the country has made progress, it must continue to strengthen its regulatory framework.

Strengthening Regulatory Framework

The BOJ has been working to strengthen its regulatory framework, particularly in light of the ongoing investigation into alleged fraud at Stocks & Securities Limited. The central bank is also extending its oversight from banks to non-bank financial companies and pension funds.

Compliance with FATF Requirements

To get off the Financial Action Task Force (FATF) grey list, Jamaica must complete 13 action items to comply with the global watchdog’s 40 measures against money laundering and terrorist financing. The FATF will meet with Jamaican officials later this month to assess progress before a final decision is made in the summer.

Progress Needed

Lewis noted that while Jamaica has largely complied with six of the 13 action items, it must demonstrate significant progress on the remaining seven by the summer meeting. He also highlighted the importance of implementing measures to ensure all stakeholders, including lawyers and investigative agencies, are equipped to support efforts against money laundering.

Banking Fraud Study

The BOJ’s study on banking fraud among its eight deposit-taking institutions found that losses averaged $1 billion per annum over a 46-month period ending in 2021. The majority of incidents related to credit and debit card fraud, with total losses approximating 0.95% of Jamaica’s total output.

UK Privy Council Ruling

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.

Key Takeaways

  • Fraud costs in Jamaica’s banking system have reached $700-800 million annually.
  • The BOJ is working to strengthen its regulatory framework and extend oversight to non-bank financial companies and pension funds.
  • Jamaica must complete 13 action items to comply with FATF requirements.
  • Progress is needed on seven remaining action items by the summer meeting.
  • Banking fraud losses averaged $1 billion per annum over a 46-month period ending in 2021.