Officials are reporting an increase in fraudulent activity during the height of the COVID-19 pandemic as individuals sought to trick individuals and businesses to get money or a job.
And General Counsel at the Financial Services Commission (FSC) Cyralene Benskin-Murray is urging residents to be more patient with financial institutions which ask them for certain information and for institutions to be more flexible in how they carry out their due diligence.
The issues came under the microscope on Wednesday during an online panel discussion at the 11th annual Domestic Financial Institutions conference held under the theme Customer Due Diligence, Reporting Obligations and Monitoring.
Benskin-Murray explained that in addition to various local and international obligations, it was necessary for institutions to ask for “numerous documents” and in some instances original or certified copies “because there is so much fraud”.
“In this COVID-19 time, fraud has gone to exponential levels. Now because of the integrated internet uses there are so many people trying to scam persons in Barbados from another region,” she said.
Benskin-Murray said people were “intercepting” some emails and other forms of communications of individuals utilising information picked up from social media platforms.
“I have one instance where someone sent an instruction – similar email, similar language that this individual would normally use – to a financial institution asking the financial institution to pay it to a US account. Because this was not a pattern the person was accustomed to in the bank and they know the documentation they have on this individual they were able to say ‘something is not right here’. This did not need a suspicious transaction report but I use it to highlight that fraud is very prevalent,” she explained.
Director of the Financial Intelligence Unit (FIU) Kirk Taitt also pointed to an increase in fraudulent activity in Barbados over the past few months, saying that the fraud was being committed both by individuals locally, regionally and internationally.
Pointing to several kinds of fraud including forged documentation, email phishing, online romance scams and business email compromise, Taitt said during the height of the pandemic a lot of “soft” fraud emerged “at a level that we have not seen before”.
Recalling that the national risk assessment conducted at the end of last year showed that fraud was identified as a high threat to businesses in Barbados, he said some trends were seen over the past several months.
“We have seen fraud emerging as a serious issue. With the lock-down we saw even more, because as companies introduced the digital portals to submit documents on, we saw a lot of documentations that were fictitious be it job letters or pay slips.
“Once the lock-down was lifted and persons began to do business again we saw an even more exponential increase in fraudulent documents again . . . Persons weren’t working and were not receiving income and they wanted funds and so felt that was the best way to obtain financing, through fraudulent means,” he explained.
Taitt said: “We also have reports coming in to us during the period, based on e-mail phishing – a random person sending you an email wanting to extract funds from you by telling you a sad story … or you have won a prize for example – [and] believe it or not, some persons have responded and paid money.”
He also reported that the FIU had a case where a hacker assumed a client’s identity and instructed a company to send funds to an account overseas.
He said at the regional and international levels individuals were seeking to offer residents counterfeit goods, including essential items such as personal protective equipment.
During her presentation, Benskin-Murray urged financial institutions to engage their customers more by explaining to them the reasons for the information they often seek.
However, she urged the financial institutions to “ask only for what you need”, and base it on the risk profile of the customer, instead of requiring all customers to submit the same list of documents.
Adding that sometimes customers feel “harassed”, she said regulators were aware of their frustration when financial institutions ask them for documents to do due diligence.
“Customers, I am asking you to bear with the financial institutions because the laws are always changing and sometimes they have a whole backlog of customers that they never got to because they do it risk-based and they deal with the high-risk customers first,” she said.
“We do not require you to know the same thing from all customers. We allow for a facility called simplified due diligence, which means you may not have to ask for the numerous copies of documents that you would normally ask for if you are doing enhanced due diligence. What we don’t want to encourage is one brush for everyone because all customers are not equal,” she explained. ([email protected])