The US-based Global Financial Integrity (GFI) says the Caribbean has seen an uptick in financial crimes -including fraud schemes- in recent years.
In its latest report titled ‘Financial Fraud in the Caribbean’ released on Wednesday, the Washington-based think tank said financial fraud has a widespread footprint across the region, involving potentially billions of dollars in illicit proceeds each year which impacts the economic security of countries and the region as a whole, and generates a “certain level of associated violence”.
The GFI report examined the prevalence and dynamics of financial crime, analysed the actors and facilitators involved, the methods of contact used by perpetrators, and the channels utilised to move the associated proceeds. It also assessed current policy and law enforcement responses.
To assess these contexts, the report provided case studies of five countries namely Antigua and Barbuda, Barbados, Belize, Jamaica, and Trinidad and Tobago.
“Fraud, like other crimes, is a continuously evolving phenomenon that reacts to local, regional, and international developments,” said GFI’s president and chief executive officer, Tom Cardamone.
“The public and private sectors, as well as the region’s citizens, must be alert and responsive to the dynamics of long-standing and nascent fraud schemes,” he added.
According to the report, the most common fraud types in the Caribbean include advance fee frauds, specifically lottery/prize scams, online shopping scams, and romance scams, as well as pyramid and Ponzi schemes.
It said pyramid schemes in the region frequently take advantage of citizens’ comfort and familiarity with “sou-sous” or “partner”, a legitimate, informal community savings practice.
“The method of contact between victim and fraudster is oftentimes dependent on the type of fraud being committed, the sophistication of the schemes and the type of victims involved. For example, lottery scams are largely phone-based while romance scams are perpetrated online and through social media,” Cardamone said.
According to the GFI, the primary channels used to move the proceeds of fraud are cash smuggling, money service businesses, bank transfers, trade-based money laundering, and online money transfer platforms, according to interviews with subject matter experts.
“Caribbean countries have laws in place to cover the types of fraud discussed in this report, however many countries face challenges when translating these laws into effective enforcement actions. The prevention and investigation of fraud in the region face cultural barriers,” the GFI president said.
“Some citizens may incorrectly perceive government’s efforts to combat fraud as an attempt to prevent them from making money. Others may be hesitant to report fraud victimisation due to cultural stigma,” the report said, noting that “in Jamaica alone, experts assessed the annual value of fraud proceeds at up to US$800 million.”