The administrative financial intelligence unit responsible for receiving and analysing financial disclosures related to suspected criminal proceeds received 935 suspicious activity reports last year, up from 868 reports in 2017.
The increase would be even larger had it not been for a single case in December 2017 which alone triggered the majority of that month’s 220 reports.
Presenting the Financial Reporting Authority’s annual report in the Legislative Assembly on 5 June, Attorney General Samuel Bulgin said there was no such one-off event in 2018. “If the 2017 SARS numbers were normalised to discount this one-off event, the 2018 SARS filings would represent a 30% increase from 2017,” he said.
A total of 179 different entities reported activities they found suspicious. This does not include the 40 overseas financial intelligence units that shared or requested information from the FRA.
FRA director RJ Berry noted in the annual report that “the reporting period was particularly challenging, given the continued increase in the number of SARs received and the ongoing responsibilities of the 4th round mutual evaluation process” of Cayman anti-money laundering regime.
The mutual evaluation report of the Caribbean Financial Action Task Force heavily criticised the Financial Reporting Authority, stating it did not have the tools to assist investigative authorities in the identification of cases.
CFATF assessors said the FRA had not been able to analyse and disclose the reports in time, nor did it have access to wider relevant information. As a result, FRA disclosures were hardly used to initiate or supplement investigations.
The problems stemmed to a large extent from the authority grappling with a backlog of cases that had built up over years as the number of reported suspicious activities increased. Since the CFATF anti-money laundering assessment, three financial analysts have joined the FRA, which accounted for a larger number of cases analysed and closed last year, the FRA said.
The authority is also in the process of recruiting an additional five staff members and are committed to addressing the shortcomings highlighted by the CFATF, the attorney general said.
During 2018, the FRA performed an initial analysis on 719 suspicious activity reports and closed 602 cases. Of these, 283 were reported to local law enforcement and 206 cases were disclosed to overseas financial intelligence units.
Banks continued to be the largest source of suspicious activity reports accounting for 41% of disclosures, followed by overseas financial intelligence units (14%), money services providers (10%), corporate services providers (7%), trust companies (6%), fund administrators (6%), insurance businesses (3%) and attorneys (2%).
The most common reasons for filing a SAR outside of general suspicious activity (31%), were suspected fraud (26%), corruption (12%), money laundering (9%) and tax evasion (7%).
The suspicious activities analysed by Cayman’s financial intelligence unit last year involved 1,034 legal entities and 1,358 natural persons.
The majority of those were based in the Cayman Islands (494), followed by the United States (200), Russia (113), the UK (90), Canada (71), the British Virgin Islands (61), Argentina (60), Jamaica (51), India (50), Panama (47), Peru and Venezuela (46 each).