Suspicious finance reports skyrocket

An unusually large number of suspicious activity reports were filed with the Cayman Islands Financial Reporting Authority during the last half of 2017, according to records presented to the Legislative Assembly.

There were 563 reports of suspicious financial activity filed between July 1 and Dec. 31, only slightly less than was reported during the previous 12 months, based on reporting authority records.

Suspicious activity reports, or SARs, can involve anything from an unusual number of deposits in a bank account, to suspected money laundering activity. Typically, the initial reports are made by various financial institutions to the Financial Reporting Authority and involve both corporate and individual transactions.

More than half of the SARs made late last year came from banks with the remainder being from entities like money transmission services, investment companies, insurance services and fiduciary services.

The vast majority of the reports came from financial institutions in either the Cayman Islands or the United States.

During the latter half of 2017, comparatively few reports were made of suspected activities that concern international regulatory agencies, such as money laundering and financing of terrorism.

Suspected tax evasion was the most common reason for entities making SARs with 185 of the 563 reports [33 percent] submitted for that reason.

Simply because a suspicious activity report is made does not indicate a violation or offense has been committed. The Financial Reporting Authority will initially consider all such reports and pass them along to law enforcement or taxing entities as necessary. For many of the reports, no further action is taken because nothing untoward has occurred.

“A large number of reports filed with the Financial Reporting Authority are due to suspicious activity wherein the reporting entity is noticing more than one unusual activity, but could not arrive at a specific suspicion of an offense,” the report states.

Financial Reporting Authority officials noted Cayman did amend its Penal Code last year to add a criminal offense of “intent to defraud the government of general revenue,” but indicated the increase in suspicious activity reports toward the end of 2017 was “not directly correlated” with that change.

Suspected fraud was reported in 102 cases that came before the authority including allegations of bank fraud, securities fraud, debt collection scams and counterfeit check schemes.

The reporting authority received 28 cases of suspected money laundering, 5 percent of the total number reported. Cases of suspect drug trafficking or terrorism-related financing made up about 1 percent of all cases reported during the six month period.

 

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