The Financial Reporting Authority faced a particularly challenging year in 2019 following a 22% increase in suspicious activity reports, staff resignations and the ongoing demands of the Caribbean Action Task Force anti-money laundering evaluation process, according to its director RJ Berry.
In a report released in March 2019, the CFATF took aim at Cayman’s financial intelligence unit finding that it had not been provided with the necessary tools to assist investigative authorities in the identification of money-laundering cases. The FRA had also not been able to analyse suspicious activity reports sufficiently and quickly, and therefore these reports rarely led to police investigations, the CFATF said.
The Financial Reporting Authority has long argued that it needs more resources to deal with a growing case backlog.
Last year, the number of suspicious activity reports filed by banks and other financial intermediaries increased again, by 22%, to 1,138 from 935 in 2018, the financial intelligence unit reported.
At the same time, the authority faced staffing issues, after the acting administrative manager, a financial analyst and a senior financial analyst resigned in the first half of the year, Berry wrote in the FRA annual report.
The FRA subsequently hired a senior financial analyst, three analysts and a temporary manager but the positions of one senior financial analyst and two financial analysts still need to be filled.
The authority staff also had to spend much time responding to the recommendations of the CFATF report.
As a result, the FRA performed an initial analysis on 515 SARs and closed 333 SARs during the reporting period. This resulted in 156 disclosures to local law enforcement agencies or competent authorities, and 119 disclosures to overseas financial intelligence units.
In addition, the FRA issued 46 requests for information to overseas financial intelligence units, mainly to assist local law enforcement agencies with investigations.
Tabling the annual report in the Legislative Assembly on Thursday, Attorney General Samuel Bulgin said the authority had made significant progress identifying hardware and software solutions to facilitate the electronic submission and storage of suspicious activity reports and provide analytical tools to improve the research and analysis of the unit.
The system is expected to go live in August.
The majority of SARs are filed by banks (301), money transmitters (202), fiduciary service providers (156) and funds (132). Most cases originate in Cayman (492), followed by Jamaica (149), the US (105), the UK (75) and Brazil (73).
Aside from general suspicious activity, most filings involve suspicions of either fraud or corruption.
Major corruption investigations, like Lava Jato (Operation Carwash) in Brazil, have also led to increased monitoring and scrutiny of transactions involving Cayman, the annual report noted.