Covid-19 causes drop in suspicious financial reports | Local company
THE COVID-19 pandemic has led to a reduction in suspicious financial transactions due to a drop in reporting from registered companies, according to the T&T Financial Intelligence Unit (FIUTT) 2021 report, which was tabled in Parliament last Friday .
There was an 88% drop in the value of suspicious transactions, from $27 billion in 2020 to $3.1 billion in 2021.
Here are some of the highlights from the FIUTT 2021 report:
1. For the reporting period, there were $3.177 billion in suspicious financial transactions: 1,449 completed transactions worth $2.086 billion and 189 attempted transactions worth $1.091 billion, or 1 638 transactions in total.
2. Even with 1,638 suspicious transaction reports (STRs) and suspicious activity reports (SARs), it was 11% lower than in 2020.
3. Of the 1,638 DOS/SARs received, 16% or 262 reports were primarily associated with the demonetization of $100 cotton bills. Of these, 24 reports were submitted by the Central Bank under Section 52 of the Proceeds of Crime Act.
4. The banking sector submitted the highest number of STR/SARs with 82%, followed by money or value transfer services with 7%.
5. FIUTT recorded a 43% decrease in DOS/SAR from listed companies, a 38% decrease in submissions from Money Transfer Services and a 33% decrease in submissions from Cooperative Societies.
6. The most common reasons for entities to send STR/SARs to FIUTT were suspicions of tax evasion—534 reports; money laundering – 477 reports; suspicious financial activity — 290 reports; fraud — 231 reports; and exchange control violations, 40 reports. These accounted for 96% of the number of reported cases and 98% of the total monetary value of all DOS/SARS.
7. The report notes that more than 100 people at T&T were victims of romance scam/fraud, costing them approximately $2.3 million.
8. It generated 92 intelligence reports – 52 to the Commissioner of Police, 30 to the Chairman of the Board of Inland Revenue, four to other relevant local authorities and six to foreign authorities.
9. He received 156 requests from law enforcement and intelligence agencies regarding 432 suspects.
10. FIUTT assisted TTPS with three suspects being charged with 15 money laundering charges worth $31,130,254.
11. 147 non-profit associations came under the supervision of the FIUTT.
FIUTT Acting Director Nigel Stoddard observed that FIUTT “faces many unique challenges that have altered the normal operations of FIUTT” as a result of the pandemic.
“Covid-19 has led to an increase in compliance with fraud and counterfeiting schemes. This category of crime indicates the growing prevalence of online scams and the Ponzi/pyramid scheme phenomenon. During the reporting period, FIUTT’s analysis showed the persistent intent of criminal networks to defraud unsuspecting people through the various social media platforms.
“Methods include online romance scams, online marketplace scams and others. The use of fictitious profiles on social networks is the main tool used by offenders. The scammers develop a “romantic” relationship online with the victims, and before long the scammers are tricking the victims into sending them their hard-earned funds. The scammers promised to visit them, giving reasons to “get engaged” and get married, among other things.
“In some cases, scammers offer goods and services for sale and fail to deliver the item(s) after part of full payment. These trends were noted to be prevalent as of December 2018. However, the global pandemic facilitated an increase in social media buzz and online activity, as well as opportunities for exploitation by perpetrators,” the report states.
Here is how the alleged criminal conduct has monetary value:
• Tax evasion — There were 534 STR/SARs of tax evasion, with a total value of $1,017,996,716. Of this amount, $1,013,247,159 represented completed transactions, while $4,749,557 represented attempted transactions. This is a 93% increase from the 2020 baseline. In 2020, there were 539 STR/SARs of tax evasion, with a total value of $528,832,225. Of this amount, $485,117,078 represented completed transactions, while $43,715,147 represented attempted transactions.
• Money Laundering — There were 477 STR/SARs of money laundering with a value of $810,308,878. Of this amount, $791,474,029 represented completed transactions, while $18,834,849 represented attempted transactions. For comparison, in 2020 there were 530 money laundering SARs worth $246,746,128, and in 2019 there were 286 money laundering reports worth $246,746,128. of $329,352,874.
• There were 290 suspicious activity reports with a value of $106,296,300—$101,765,863 for completed transactions while $4,530,437 represented attempted transactions. In 2020, there were 401 suspicious activity reports worth $33,547,460 – $26,153,143 for completed transactions, while $7,394,326 represented attempted transactions.
• The value of fraud has increased dramatically. There were 231 fraud cases worth $1,128,942,422 – $71,618,105 reflected completed transactions, while $1,057,324,317 represented attempted transactions. In 2020, there were 205 fraud cases worth $26,170,852,891 – $139,605,680 reflected completed transactions, while $26,031,247,211 represented attempted transactions. In 2109, there were 193 fraud and counterfeit reports worth $685,722,794.
• There were 26 STR/SARs on drug trafficking worth $4,048,633. In 2020, there were 92 STR/SARs worth $4,673,932; and in 2019, there were 71 reports amounting to $3,292,941.
• There were 40 exchange control violation reports worth $44,980,800 — $41,215,508 for completed transactions, while $3,765,292 were for attempted transactions. In 2020, there were 16 exchange control violation reports worth $10,801,381.
• For Terrorist Financing — There were eight reports worth $1,535,755. By comparison, there were 12 reports valued at $3,045,522 in 2020; 97 reports in 2019 for the sum of $1,497,364; and 167 in 2018.
• Corruption (including misconduct in the public service) — 18 reports worth $59,729,152 — $59,631 in completed deals and $98,045 in attempted deals. In 2020, 12 reports were valued at $10,774,334.
• Human Trafficking — there were five reports worth $2,987,755 to $1,987,755 of completed transactions and $1 million of attempted transactions. In 2020, there were 11 DOS worth $2,717,956. Of this amount, $2,661,475 represented completed transactions, while $56,481 represented attempted transactions.
• There were four murder-related STR/SARs. The total value of the completed transaction was $495,367.
• Two STR/SARs participated in an organized crime group (OCG) worth $120,800 — $20,800 in completed deals and $100,000 in attempted deals. In 2020, there were nine reports worth $689,196 that represented completed transactions.
• There were two reports of sexual exploitation worth $18,955, which was a complete transaction. Last year there was one.
• There was a suspicious transaction under the title of insider trading, valued at $252,188.
Who are these people?
The FIU said 1,569 reports were submitted through its electronic filing system, FIUConnect; and 69 by manual submission.
For this reporting period, 506 entities registered with FIUTT.
Among the discoveries are:
1. FIUTT received 137 STR/SAR per month.
2. The number of blocked transactions was 189, compared to 314 in 2020.
3. Self-employed/entrepreneurs were the most represented occupation/profession, accounting for 18% or 301 people who submitted STRs/SARs. Next come skilled workers – technicians, engineers, educators – at 7% or 101 people.
4. Law enforcement officers accounted for 5% or 67 people, an increase of 49% from 2020.
5. Administrators/managers represented 5% or 67 people.
6. Professionals, lawyers, accountants, architects represented 4% or 64 people, an increase of 53% compared to 2020.
7. Politically Exposed Persons (PEPs) were featured five times. In 2020, they were presented six times; and in 2019 there were 11 PEPs worth $1,367,285. In 2018, FIUTT recorded eight suspicious transactions of ten PEPs, worth $9,606,963.