SARs decline continues

Financial Suspicious Activity Reports fell to 221 cases in 2005/06.

The drop represented a 9.4 per cent decrease from the 244 cases reported in 2004/05, and a 21.6 per cent increase from the 282 cases in 2003/04.

The statistics were listed in the Financial Reporting Authority’s Annual Report, which was tabled in the Legislative Assembly on Monday.

The report does not draw any conclusions as to why the SARs continue to decline.

‘It is difficult for us to determine the reason for the decline in SARs,’ the report stats. ‘It may be due to better risk management/compliance programmes within the jurisdiction, as the Cayman Islands continues to do its part in the fight against global financial crime.’

Of the 221 SARs received, 80 – or 35 per cent – were analysed and deemed to require no further immediate action.

FRA Director Lindsey Cacho said just because there was no further immediate action required on those cases, it did not mean there was no merit to them.

‘It just means they did reach the level of threshold required by law for onward disclosure,’ he said.

The guidelines for onward disclosure are contained in the Proceeds of Criminal Conduct Law.

Under the provisions of the PCCL, Suspicious Activity Reports are required to be made by any person who, through the course of his trade, profession, business or employment, knows or suspects that another person is engaged in money laundering.

Mr. Cacho said the cases that require no further immediate action are kept on file to see if any new information is received on the subject.

As has always been the case, more SARs were made about subjects from the United States, with 85 of the cases made against Americans. Canadians were the subjects of the second most number of SARs with 14, followed by Brazilians with 13. Reports were also filed about 12 Caymanians.

Mr. Cacho surmised why Americans made up the bulk of the subjects of SARs.

‘It probably has to do with our proximity to the United States and that most of our clients are from the US,’ he said.

Banks were the source of the largest number of reports made, with 28 per cent of all the cases, and money laundering was the reason for largest segment of reports, also at 28 per cent.

Besides banks, the sources of Cayman’s SARs include Overseas Financial Intelligence Units (25 per cent); attorneys (10 per cent); company managers/corporate services providers (10 per cent); trust companies (10 per cent); mutual funds administrators (seven per cent); the Cayman Islands Monetary Authority (three per cent); securities brokers (two per cent); realtors (two per cent); professional advisors (two per cent); and insurance managers (one per cent).

The FRA reported that 51 of its cases received in 2005/06 year – which ended 30 June – were still in progress.

Mr. Cacho said most of those cases were still in progress at the time of the report because they were received close to the end of the reporting period, however some required further analysis.

Once information contained in a SAR is analysed, a determination is made whether to disclose the report onward. Depending on the circumstances, that information could be disclosed to local law enforcement agencies, the Cayman Islands Monetary Authority; or overseas financial intelligence units.

The overseas disclosers require the consent of the Attorney General.

The FRA was formed in January 2004 and took over many of the duties of the now-defunct Financial Reporting Unit. The latter came into controversy during the long Euro Bank trial, which spectacularly collapsed in early 2003.

Mr. Cacho said he believes the FRA has lived past the years of negativity and that he hoped people judge the FRA on its own merits. To his reckoning, the community has accepted the FRA and works well with it.