The Tribune

By RICARDO WELLS

Tribune Staff Reporter

rwells@tribunemedia.net

LOCAL banks lost hundreds of thousands of dollars as a result of fraud cases last year, according to Financial Services Minister Hope Strachan who suggested the “stringent” identification practice now imposed by local banks will in time hinder the “alarming trend”.

The Sea Breeze MP said international policing agencies like the Organisation for Economic Co-operation and Development (OECD), the Organisation of Eastern Caribbean States (OECS), the Financial Action Task Force on Money Laundering (FATF), and the Caribbean Financial Action Task Force (CFATF) required that every financial institution implement the know your customer policy (KYC).

Her comments came during her contribution in the House of Assembly on an amendment to the Banks and Trust Companies Act.

Statistics presented by Mrs Strachan revealed a $350,000 loss by banks from November 1, 2013 to October 31, 2014 due to fraud cases. Figures collected reflected $202,070 in debit card fraud, $85,574 in credit card fraud and about $54,000 in cheque fraud.

The debit and credit card losses were a result of the Walmart and Target data breaches that occurred in the US between late 2013 and early 2014.

Mrs Strachan explained that despite some complaints that the KYC policy is “overkill by banks,” the policy is working to protect people’s finances.

“The stringent identification policy is applied across the board,” added Mrs Strachan. “The innocent are subjected to the same standards as the guilty. This goes beyond the name, address and phone number. It has become an obligation to know your client intimately. Due to the increasing instances of fraud in the sector, banks were forced to take as many measures as possible to prevent and to mitigate losses from fraudulent transaction.”

The minister expressed her concern that fraud cases were becoming more prevalent. Last month, police took a 38-year-old Bulgarian man into custody who was suspected of having stolen thousands from several bank accounts.

“On executing a search warrant on the premises where the man lived, police found an assortment of fraudulent credit cards, laptop computers, a card reader and over $75,000 in cash,” Mrs Strachan said.

The accused has since been arraigned before a magistrate and pleaded guilty.

She added: “It is hoped that this behaviour is seriously punished as we cannot afford to be seen as a jurisdiction where a criminal advantage can be easily obtained with no real accountability.

“In 2014 an estimated £450 million was lost in the United Kingdom and for the entire 32 member state European Union fraud losses on credit cards totalled 1.33 billion euros. The consequences for us are that cost of doing business with banks has increased significantly over the last several years.

“Banks and financial institutions have increased customer verification procedures. The very onerous and cumbersome practice of verification of identity by multiple means has caused consternation among ordinary working class people who simply want to negotiate their salary cheques or make relatively small deposits to their accounts or pay their loans and mortgages.”

The amended bill was tabled in the House of Assembly for the first time yesterday. Mrs Strachan said the aim of the new legislation is to expand the regulatory powers of the Central Bank of the Bahamas in an effort to improve banking capabilities in the country.