Agency assesses $564m of suspicious activity

  • Information received: there were almost 500 suspicious activity report filings to the Financial Intelligence Agency in 2016-17, the second highest number since the agency was formed in 2008 (Graph by Scott Neil)

Financial activity in Bermuda worth a combined total of more than half a billion dollars was flagged up as suspicious during a 12-month period.

The island’s Financial Intelligence Agency received 494 suspicious activity reports between April 2016 and the end of March last year. That was up 12 per cent on the previous reporting period.

Of the 10,363 separate transactions contained in those reports, with a collective value of $564,249,836, some 40 were in excess of a million dollars.

Once the reports had been analysed and reviewed by the FAI to assess whether the suspicious activity was as it appeared, 371 of the reports were ultimately included in 97 disclosures of classified information and intelligence to partner agencies, with 85 being disclosed locally — the majority to the Bermuda Police Service. The other 12 were disclosed to overseas agencies.

While the number of suspicious activity reports increased for a second consecutive year, and was the second highest recorded since the FAI was formed in 2008, the agency said it was pleased.

“This can be attributed to the continued training and presentations provided by the FIA, which has assisted in improved suspicious activity report filings.”

The agency noted: “Due to the training and presentations given to new entities, different sectors started to identify suspicions activity within their businesses and filed SARs accordingly. It was evident from the presentations given that many sectors were hesitant to file as they did not have an understanding of money laundering or the role of the FIA.”

The data is contained in the agency’s 2016-17 annual report, which was tabled in Parliament on Friday. It provides a snapshot of the independent agency’s work to receive, gather, store, analyse and disseminate information relating to suspected proceeds of crime and potential financing of terrorism.

Suspected fraud totalling almost $395 million was referenced in 49 of the reports, affecting eight sectors, namely banks and credit unions, fund administration, insurance companies, investment service providers, and long term insurer services. Meanwhile, suspected corruption to a combined total of $71.5 million was featured in 23 reports.

The most reported suspicious activity is cash exchanges of Bermudian currency to a foreign denomination — usually US dollars.

In the one-year period, suspicious cash exchanges at banks totalled $22.1 million, in 8,322 separate transactions. There was also $419,713 worth of suspicious wire transfers.

Money laundering, and money laundering/cash exchanges made up the largest number of SAR reporting indicators, followed by corruption and fraud. Other indicters included tax offences, insider trading, sanctions and terrorist financing.

SAR filings in the money service business more than doubled to 155, while in the banking sector they fell from 295 to 246.

Separate to the 12 spontaneous disclosures made by the FAI to foreign partners, there were 30 requests for information from foreign financial intelligence units in 16 countries. Nepal and Bangladesh made the most requests at five apiece. The other countries that made multiple requests were the UK, US and France.

With Bermuda’s financial sector regulated, and designated non-financial businesses and professions such as real estate agents, lawyers, accountants and corporate service providers, also regulated or in the process of having anti-money laundering and antiterrorist financing oversight regimes implemented, the island has now put a focus on so-called “high value dealers”. Particular emphasis has been placed on car, boat and motorcycle dealers, jewellers, precious metal and stone dealers, and auctioneers.

Following consultation and legislation, a supervisory framework is in place that gives entities considered high value dealers to organise their operations to obviate the need for them to be registered and subject to supervision by the FIA. The FIA’s supervision is focused on those businesses that wish to be able to accept cash payments of $7,500 or higher in a single or series of transactions.

Sinclair White, director the Financial Intelligence Agency, in an introduction to the annual report referenced preparations for the Caribbean Financial Action Task Force’s upcoming mutual evaluation of Bermuda. He said the agency has been playing a pivotal role as the island prepares for the evaluation. It has participated in a number of National Anti-Money Laundering Committee working groups. Mr White has been providing weekly updates to Cabinet on the agency’s preparedness for the review.