The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

COVID-19 did not slow down questionable activities within the Bahamian financial services industry, it has been revealed, with suspicious transaction reports increasing by 26 percent in 2020.

The Financial Intelligence Unit’s (FIU) annual report for that pandemic-ravaged year, tabled in the House of Assembly last week, disclosed that 663 suspicious transaction reports (STRs) were submitted to it during those 12 months as opposed to just 525 in 2019.

The FIU, which analyses these reports to determine if they merit further investigation by law enforcement or regulatory authorities, credited the increase - which has seen annual STR volumes more than double in five years compared to the 306 submitted in 2016 - “to the increased effort by all partners” to combat money laundering, fraud and other financial crimes.

With 86 percent of 2020’s STR volumes submitted by banks, the FIU acknowledged: “There was also a substantial increase in submissions from one particular financial institution in reporting cases related to a trend peculiar to them, and that no doubt affected the numbers.”

“The figures show that the COVID-19 pandemic did not have a noticeable impact on the number of STRs that were filed by the banks.” However, the number of STRs filed by Bahamian casinos saw a “significant decline” of almost two-thirds, dropping from 48 in 2019 to just 18 in 2020, because the facilities at the likes of Atlantis and Baha Mar were shut by COVID for much of 2020.

As with previous years, the most likely factor to trigger an STR report from a financial institution to the FIU were transactions inconsistent with the account’s usage as stated by customers during the Know Your Customer (KYC) due diligence process that saw them accepted as clients. This accounted for 254 of the 663 total STR reports.

“In 38 percent of the transactions, the financial institution reported that the activity was not in keeping with the information supplied by the subject in their Know Your Customer (KYC) documentation,” the FIU’s 2020 annual report added.

“The other major reason was that the transaction involved cash, which was again inconsistent with what was expected with the account. There were 141 (21 percent) of these transactions.”

Some 63 percent, or 389 of the 615 subjects of STR reports, were Bahamian. Suspected fraud accounted for 325, or almost half, of all STR reports while tax matters, drugs and corruption all featured prominently among the reasons that sparked their submission to the FIU.

Of the 663 STRs received in 2020, just 46 were deemed to have been “closed” by year-end. Of the 102 and 72 requests received from other Bahamian regulators and foreign FIUs, respectively, in 2020, some 47 and 18 were also brought to a close in 2020.

However, the FIU also resolved a total of 297 outstanding matters from previous years in 2020. These included 227 STRs, some 41 requests from other Bahamian financial services regulators, and 29 submissions by overseas FIUs. Together with the 111 cases from 2020 that were resolved in the same year, the Bahamian FIU said it had brought more than 100 to a successful conclusion.

“Despite the reduced working hours for the first half of 2020, the FIU was able to close a total of 408 matters inclusive of matters submitted in 2020 and those submitted in previous years,” the FIU annual report said.

“Focused efforts were placed on reducing the number of backlogged matters (matters received in 2018 and before), which was one of the areas that the Caribbean Financial Action Task Force (CFATF) highlighted in the 2017 Mutual Evaluation Review” of The Bahamas and helped to place this nation on the parent FATF’s enhanced monitoring list.