Akash Sama­roo

Se­nior Re­porter

akash.sama­roo@cnc3.co.tt

The Fi­nan­cial In­tel­li­gence Unit (FIU) is re­port­ing an in­crease in loan fraud by “or­gan­ised crim­i­nal gangs” with the in­volve­ment of bank em­ploy­ees.

In its 15th an­nu­al re­port for 2023-2024, the FIU stat­ed: “In­creased Sus­pi­cious Trans­ac­tion/Ac­tiv­i­ty Re­ports (STRs/SARs) where­in busi­ness cus­tomers (em­ploy­ers) in­di­rect­ly ben­e­fit­ted from loans grant­ed to their ‘em­ploy­ees’. These ‘em­ploy­ees’ utilised fic­ti­tious em­ploy­ment doc­u­men­ta­tion show­ing an in­flat­ed in­come which in­flu­enced the fi­nan­cial in­sti­tu­tion’s lend­ing de­ci­sion.”

In its ad­vi­so­ry to fi­nan­cial in­sti­tu­tions, the FIU al­so high­light­ed “the like­ly in­volve­ment of some em­ploy­ees of the fi­nan­cial in­sti­tu­tion to fa­cil­i­tate these cred­it fa­cil­i­ties.”

The FIU be­lieves this “ma­nip­u­la­tion of the fi­nan­cial sec­tor” is be­ing done by “or­gan­ised crim­i­nal gangs through the use of fic­ti­tious/al­tered job let­ters and/or pay slips to com­mit loan fraud.”

In ex­plain­ing how it all works, the FIU gave a sce­nario in the loan fraud ad­vi­so­ry at­tached to its 2024 re­port. The ap­pli­cant would go to the bank and in­di­cate he is a su­per­vi­sor with a com­pa­ny earn­ing $15,000 month­ly. The ap­pli­cant would then ap­ply for a loan val­ued at $140,000 for per­son­al ex­pens­es.

As part of the ver­i­fi­ca­tion process, the bank would con­tact the ap­pli­cant’s em­ploy­er to cor­rob­o­rate the con­tents of the job let­ter pre­sent­ed which is in­clu­sive of the $15,000 salary. The com­pa­ny’s own­er would then con­firm its con­tents.

This would lead to the ap­pli­cant be­ing grant­ed the $140,000 loan. How­ev­er, soon af­ter the bank would no­tice that $80,000 of the loan pro­ceeds would be trans­ferred to the ap­pli­cant’s em­ploy­er, $30,000 with­drawn via ABM with­drawals, $10,000 trans­ferred to the branch man­ag­er of the bank that grant­ed the loan and $20,000 in point of sale pur­chas­es.

When it was time for the first month­ly loan pay­ment, there would be in­suf­fi­cient funds in the ap­pli­cant’s ac­count.

The FIU said it is “high­ly like­ly that cer­tain em­ploy­ees of the fi­nan­cial in­sti­tu­tions are fa­cil­i­ta­tors of load fraud.” The ap­pli­cants’ fraud­u­lent doc­u­ments con­tain mul­ti­ple fonts and font sizes, the ab­sence of statu­to­ry de­duc­tions on payslips, and sev­er­al loan ap­pli­cants from in­di­vid­u­als with­in a short time frame with con­flict­ing job ti­tles and salary amounts list­ed.

The FIU said the sub­se­quent de­fault of loans by cus­tomers af­ter one or two in­stal­ment pay­ments leads to a loss for the fi­nan­cial in­sti­tu­tions and points to an “ap­par­ent de­gree of col­lu­sion be­tween ju­nior and se­nior em­ploy­ees of the fi­nan­cial in­sti­tu­tions, which fa­cil­i­tat­ed the loan fraud.”

The FIU re­port did not spec­i­fy how much mon­ey has been stolen but said fraud con­tin­ues to be one of the top five sus­pect­ed crim­i­nal con­ducts as it re­lates to sus­pi­cious trans­ac­tion re­port (STR) sub­mis­sions.

“For the pe­ri­od Oc­to­ber 2022 to Sep­tem­ber 2023, the FI­UTT re­ceived 250 STRs on sus­pect­ed fraud with the to­tal mon­e­tary val­ue amount­ing to $4,631,983,132,” it stat­ed.

Sev­er­al ques­tions were sent to the Bankers As­so­ci­a­tion of Trinidad and To­ba­go (BATT) ask­ing how banks have strength­ened their process­es to com­bat this threat. The as­so­ci­a­tion did not im­me­di­ate­ly re­spond.

How­ev­er, the FIU has made some rec­om­men­da­tions, in­clud­ing prop­er ver­i­fi­ca­tion of all loan doc­u­ments, se­nior man­agers play­ing a more ac­tive role in the process­es, set­ting rights and per­mis­sions to ex­e­cute var­i­ous elec­tron­ic tasks, and au­dit­ing loan of­fi­cers’ ac­tiv­i­ties reg­u­lar­ly.

Away from loan frauds, the FIU said it for the re­port­ing pe­ri­od it re­ceived a to­tal of 1,459 sus­pi­cious trans­ac­tion/ac­tiv­i­ty re­ports from the bank­ing in­sti­tu­tions, non-bank fi­nan­cial in­sti­tu­tions, non-reg­u­lat­ed fi­nan­cial in­sti­tu­tions, at­tor­neys-at-law, mo­tor ve­hi­cle sales, pri­vate mem­bers’ clubs and re­al es­tate.

The to­tal mon­e­tary val­ue of the 1,459 STRs/SARs re­ceived in this re­port­ing pe­ri­od amount­ed to $8,962,576,211.87. Com­plet­ed trans­ac­tions amount­ed to $1,672,493,360.97 while at­tempt­ed trans­ac­tions amount­ed to $7,290,052,950.90.

With re­spect to mon­ey laun­der­ing charges, the re­port stat­ed: “The Trinidad and To­ba­go Po­lice Ser­vice and the Crim­i­nal Tax In­ves­ti­ga­tion Unit, In­land Rev­enue Di­vi­sion prof­fered 144 mon­ey laun­der­ing charges against four­teen per­sons dur­ing this re­port­ing pe­ri­od. The cu­mu­la­tive to­tal dol­lar val­ue of Mon­ey Laun­der­ing charges were TT$2,082,371.00 and US$1,628.00.”