601 suspicious activity reports filed in 2016/17
Financial Reporting Authority dealing with growing backlog
The 601 reports, known as SARs, filed that year marked the second straight year the Financial Reporting Authority received more than 600 reports, and was just 19 shy of the record 620 SARs filed in 2015/16.
The Financial Reporting Authority attributed the increased number of SARs to more stringent regulations and reporting rules that have come into effect in recent years.
“The substantial number of reports in the past three fiscal years appears to have been influenced by due diligence reviews as a result of overseas tax, legal and regulatory updates coming into effect,” the authority’s report states.
“In 2016/2017, reports appear to have been influenced by overseas corruption investigations involving multinational conglomerates.”
Most of the reports involved suspected “suspicious activity” – typically reports on accounts showing activity that is out of line with the account holder’s expected level of income – while other reports suspected fraud, tax evasion, corruption and money laundering.
Of the 601 SARs, the authority completed the analysis on 206, referring 107 of them to law enforcement authorities, states the report, which was tabled last week in the Legislative Assembly.
The Financial Reporting Authority is dealing with a growing backlog of uncompleted reports. Due to unfinished reports from previous years, the authority had 980 SARs to analyze in 2016/17. The agency completed 398 reports in total, carrying the remainder into the 2017/18 fiscal year.
The authority said 2016/17 was “particularly challenging” due to the resignation of one of its most experienced staff members, Senior Financial Analyst Julian Hurlston.
The plurality of reports (209) the Financial Reporting Authority received came from banks, though the number of banks reporting decreased from 34 in 2015/16 to 25 in 2016/17. Other reports came from overseas financial intelligence units (81), trust companies (76), corporate service providers (56), and money transmitters (41).
The number of reports filed may have slightly decreased in 2016/17, but the number of suspects in the reports increased from 1,257 to 1,538.
The report states that there were 978 “natural persons” and 560 legal entities. Ninety natural persons and 48 legal entities were named in multiple SARs.
Cayman had the most subjects of SARs, with 64 people and 233 legal entities suspected of wrongdoing. The U.S. had the second most suspects (108 people and 13 entities), followed by Ecuador (84 people and 12 entities), Brazil (69 people and eight entities), and the U.K. (50 people and two entities). Canada, the British Virgin Islands, Panama and China were the only other countries with 30 or more subjects.
The nationality of 417 subjects – 237 people and 180 entities – was unknown.
“In some cases, particularly where the service provider has limited information about a counterpart to the transaction, the nationality or domicile of the subject is not known,” the report notes. “This is also the situation in those reports relating to declined business and scams.”