NEWS AMERICAS, WASHINGTON, D.C. DEC. 14, 2022: The Caribbean has seen an uptick in financial crimes, including fraud schemes, in recent years, a D.C. Think Tank says.

The new Global Financial Integrity report, ‘Financial Fraud in the Caribbean,’ says the most common fraud types in the Caribbean include advance fee frauds, specifically lottery/prize scams, online shopping scams, and romance scams, as well pyramid and Ponzi schemes.

Pyramid schemes in the region frequently take advantage of citizens’ comfort and familiarity with “sou-sous,” a legitimate, informal community savings practice, the report said.

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, the report said.

This includes lottery scams which are largely phone-based and romance scams that are perpetrated online and through social media.

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, GFI said.

In Jamaica alone, experts assessed the annual value of fraud proceeds at up to US$800 million.

Given the prevalence of investment fraud schemes, Caribbean governments should make it easy for potential investors to verify those individuals and companies registered to conduct business in a jurisdiction,” the report said.

GFI also said prosecutors working on fraud cases should explore using tax legislation when civil asset forfeiture is not available, and policymakers should evaluate current consumer protection legislation for potential improvements.

The report’s authors also said countries in the region should create courts that only address financial crime cases and that the private sector should take steps to assess and mitigate risk in a nuanced, evidence-based manner, avoiding “de-risking.”

“Fraud, like other crimes, is a continuously evolving phenomenon that reacts to local, regional, and international developments,” GFI’s President and CEO Tom Cardamone said. “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.”

Sam Bankman-Fried, founder of FTX, center right, is escorted out of the Magistrate’s Court in Nassau, Bahamas, on Tuesday, Dec. 13, 2022. Bankman-Fried was denied bail by a judge, leaving the disgraced co-founder of crypto giant FTX behind bars. Photographer: George Robinson/Bloomberg via Getty Images

The report draws on interviews with subject matter experts from law enforcement, financial intelligence units (FIUs), financial services commissions (FSCs), multilateral organizations, the private sector, and the media. Utilizing the interviews as well as background research, the report i) considers the effectiveness of the region’s response to fraud, specifically exploring the success of the national and/or regional efforts, ii) scrutinizes the source of those weaknesses as well as iii) evaluates performance in four key areas: prevention, detection, investigation and prosecution.

The report comes as the US Securities and Exchange Commission charged Samuel Bankman-Fried Tuesday with orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX), the crypto trading platform of which he was the CEO and co-founder. Investigations as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

Bankman-Fried was marched out of court in the Bahamas Tuesday after a judge denied him bail and remanded him to the medical unit of HMP Fox Hill, where he’ll be jailed until Feb. 8, 2023.

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