Record number of suspicious activity reports filed in 2015/16

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Cayman Compass is the Cayman Islands' most-trusted news website. We provide you with the latest breaking news from the Cayman Islands, as well as other parts of the Caribbean.

A record number of suspicious activity reports (SARs) of potential money laundering and other financial crimes were made between July 1, 2015 and June 30, 2016 according to the Financial Reporting Authority’s 2015/16 annual report.

The 620 SARs represented a roughly 9 percent increase from 2014/15, and marked the fourth straight year the number of reports filed had increased, the Financial Reporting Authority stated in its annual report, which was tabled last week in the Legislative Assembly.

The number of entities making those reports also increased from 116 in 2014/15 to 140 in 2015/16, with the plurality of reports (266) coming from the banking sector.

Most of the reports involved suspected “suspicious activity” – typically reports on accounts showing activity that is out of line with the account holder’s expected level of income – while other reports suspected fraud, corruption, money laundering and “other” financial crimes.

There were 1,257 suspects identified in the reports, 796 of them being “natural persons” and 461 of them legal entities.

Cayman had the most subjects of SARs, with 71 “natural persons” and 210 legal entities being suspected of wrongdoing. The jurisdiction with the second-most number of subjects was the U.S. (100 natural persons and 19 legal entities), followed by the U.K. (51 natural persons and nine legal entities). The other jurisdictions with more than 30 suspects of suspicious activity reports were Taiwan, Jamaica, Canada, the British Virgin Islands and Brazil.

The Financial Reporting Authority noted that 124 of the cases resulted in information disclosures to the Royal Cayman Islands Police Service, 24 disclosures to the Cayman Islands Monetary Authority, 23 to other law enforcement authorities, and 22 to overseas financial investigation units.

The financial intelligence unit, whose international call sign is CAYFIN, said that the growing volume of SARs is likely due to the territory’s enhanced financial crime-tackling measures.

“The FRA has long held the view that the growing number of SARs is indicative of the vigilance of the reporting entities against money laundering and terrorist financing,” the Financial Reporting Authority stated. “The substantial number of cases in the past three fiscal years appears to have been influenced by due diligence reviews as a result of overseas tax, legal and regulatory updates coming into effect.”

While noting that Cayman has enhanced due diligence measures, the Financial Reporting Authority stated that the volume of reports has put “considerable strain” on its resources. The authority has “around” 12 staff, including one legal adviser, according to its website.

The Financial Reporting Authority has had a growing backlog of uncompleted reports: Due to unfinished cases from previous years, the agency had 809 reports to analyze in 2015/16, which is an increase from the 708 total cases it had in 2014/15 and the 679 total cases in 2013/14.

The Financial Reporting Authority completed 481 of the 809 cases, carrying the remainder into the 2017/18 fiscal year.

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