90% increase in suspicious activity reports
Robert James Berry, Director FRA
(CNS): A massive increase in the number of suspicious transactions was recorded by the Cayman Islands Financial Reporting Authority but there has been little explanation for the 90% jump in the number of suspicious activity reports (SARs) between 1 July and 31 December 2017 compared to the same period in 2016. The 6-month interim report by the FRA reveals that 563 SARs were made to the authority over this period, with 220 made in December alone, which officials said was an anomaly. The report states that the increase represents “the continued vigilance of reporting entities against money laundering and terrorist financing”.
However, there was no full explanation anywhere in the report for the exceptional and sudden leap in reporting, which came from a multitude of financial entities, including banks and money transfer agents.
As he presented the report to the Legislative Assembly last month, Attorney General Samuel Bulgin, who has responsibility for the FRA, said nothing about the cause for the increase in the numbers but merely outlined the work of the authority and the preparations for Cayman’s 4th Round Mutual Evaluation by the Caribbean Financial Action Task Force (CFATF).
The FRA receives information relating to suspected money laundering, proceeds of criminal conduct, terrorism and the financing of terrorism. It also receives requests for information from local law enforcement agencies, CIMA and overseas financial intelligence units. It then analysis and investigates the reports, and discloses information where necessary to the relevant authorities.
The report covers just six months because the FRA, like many other statuary authorities and government companies, is aiming to realign its financial reporting periods to the calendar year, matching the switch already made by government.
In the breakdown of statistics, the authority points out that the 563 SARs in this six-month period accounts for almost as many as the authority would normally expect in a full year. In the previous twelve months (2016/17) the authority received a total of 601 SARs.
Total cases by financial year reporting period (source: FRA)
FRA Director Robert James Berry said in this interim report that the SARs came from 120 different reporting entities, including 27 overseas agencies that voluntarily disclosed information to, or requested information from, the FRA.
The report described the significant increase and the record-breaking number of reports it received in December 2017 as a “one-off’ event”. However, the 220 SARs that month is the most ever received in one month, the previous record being 89 in November 2016.
Over the six-month period 185 reports were about suspected tax evasion, 153 were for suspicious financial activity, 102 for fraud, 39 for corruption, and 28 for money laundering — which were the top five reasons for filing reports. Given Cayman’s financial services global connections, 85 different countries were the subjects of the reports, though Cayman and the United States were where most of the reports came from.
Due to the huge increase in the number of reports over this six month period, the FRA is carrying over many of those cases. It closed 42 cases, but at the end of 2017 there were 521 new ones in progress, as well as several cases that have been passed on from year to year.
Of the 42 cases assessed, 20 resulted in a disclosure to the relevant law enforcement or other regulatory agencies, while five did not require further immediate action. Twelve were replies to requests from FIUs and five were requests from local agencies.
Category: Business, Financial Services
Picked up speed since Canover’s early release?
Maybe our financial institutions have just turned a blind eye over the years. With the CFATF inspection they had to be seen to be on board. Let’s see the next twelve month
If you report activity it gives you a degree of protection against any claims that you assisted in money laundering or that you breached the onerous money laundering regulations. It’s smart practise to report anything and everything. The reports themselves just gather dust somewhere.
This is not necessarily an indication of an increase in reportable activity. It could simply reflect an increase in the reporting of activity that historically has not been reported. The new MLRO/DMLRO/AMLCO regs has resulted in an increase in the number of registered entities that historically did not have a reporting officer specifically designated to that entity, but now do. I.e., the activity has probably gone on unnoticed for quite some time, but now that the entity has it’s own designated MLRO, the activity is only now being reported. The increase in SARs could also indicate multiple MLROs reporting the same incident unbeknownst to each other, due to tipping off rules. The system is not flawless.
12:35 Or in plain English – CYA time?
CNS, is it a legal requirement for financial entities in the Cayman Islands to file SARs? Reading this story it almost appears to be a voluntary process.
As I understand it (I’m not a lawyer) in the UK this is covered by three pieces of legislation – POCA, TACT and MLR. Under these laws it is potentially a criminal offence not to file SARs.
CNS: Yes, it is a legal requirement. If you follow the links to the most recent report, there is a section on “Legal Framework” starting page 5.
Many thanks CNS, that probably explains the pick up in reporting. CYA time?
Does the recent crypto-currency / blockchain market have anything to do with this?
Tango!
You know when you’ve been Tangoed!
Another blow hard useless entity created to kill the financial industry by passing information based solely on suspicions which is not based on solid proof nor fact yet we play along because those requesting want easy access to our information, yet they are neither helpful or reciprocal nor transparent in providing their information unless it is convenient to them.
Also interesting to know are some statistics about the amount of money involved in the average case.
We don’t want these people here. Just do your job.
Cayman Islands start-up Block.one raised $4 billion as of Thursday (31 May 2018), eclipsing the world’s biggest initial public offerings this year and more than doubling the next biggest offering of that type.
https://www.cnbc.com/2018/05/31/a-blockchain-start-up-just-raised-4-billion-without-a-live-product.html
Looks legit.
We have given them a clean audit.
Participants in the ICO used cryptocurrency ether instead of U.S. dollars in exchange for the new eos tokens. The fundraising brought in 7.12 million in total ether as of Wednesday night, according to Token Report, a division of blockchain advisory firm New Alchemy. At Thursday’s U.S. dollar exchange rate of $576 per ether, the ICO has brought in the equivalent of $4.1 billion. This amount could change depending on the price of ether once the sale closes.
https://www.cnbc.com/2018/05/31/a-blockchain-start-up-just-raised-4-billion-without-a-live-product.html
We believe that $11,000 is a much fairer value for one ether, therefore the $7.14 million raised means that the company is actually worth $78 billion.
We don’t want anyone confusing us with the Bermuda blockchain scam.
http://www.royalgazette.com/international-business/article/20180711/question-mark-over-arbitrades-gold-backer
Except actual dollars were not actually paid in.
Doesn’t matter, KYC is still (or at least should be) performed on the persons sending in the crypto currency. If it’s not, then this is a huge reg flag.