Moderate jump in suspicious transactions at int’l banks, trust companies

The international banks and trust companies sector in The Bahamas saw a moderate increase in suspicious transactions, though only several led to de-risking and suspicious transaction reporting actions, according to The Central Bank of The Bahamas’ (CBOB) in its analysis of anti-money laundering (AML) data returns submitted by banks, trust companies, credit unions and money transmission businesses.

The report explained that in 2019 one supervised financial institution (SFI) in the international banking sector reported two “positive sanctions hits” relate to entities or people sanctioned by the Office of Foreign Assets Control (OFAC) in the US Treasury Department. In 2020 two SFIs had twelve positive hits.

“The results for 2020 indicate that two SFIs had twelve positive hits, one of which led to de-risking and STR actions,” the report states.

“The other eleven were generated by attempting to transact with sanctioned intermediary or beneficial financial institutions. All these transactions were rejected.”

According to the report, the sector is plagued by false positive alerts, with 112,000 reported by 11 SFIs in 2020. It explained that those alerts are generated by screening tools that stymie the institutions’ systems and compliance functions.

“As advancing technologies are leveraged and models used continually optimized, it is expected that false positive alerts will be minimized,” the report states.

“Although the Bahamian international financial industry should generate very low sanctions hit rates, the Central Bank will continue to work with the industry with regards to sanction compliance expectations and requirements.”

The report adds that this sector reported a 100 percent increase in attempted fraud in 2020 (12 cases) compared to 2019, though actual fraud occurrences (three cases) decreased by 70 percent.

“Home-supervised SFIs reported the majority (64 percent) of the instances of attempted fraud for 2020, whereas the reported amounts were evenly distributed in 2019,” the report states.

“International SFIs reported filing 113 suspicious transaction reports (STRs) in 2020, representing a twelve percent decrease from 2019. No restricted SFIs reported filing STRs in 2019 or 2020. When compared to the 793 unusual transaction reports received internally by MLROs, this represents a 14 percent conversion rate.”

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source https://thenassauguardian.com/moderate-jump-in-suspicious-transactions-at-intl-banks-trust-companies/