Urges vigilance on card transactions

American consultant Sven Stumbauer urged local financial institutions to keep constant watch on money entering Jamaica, particularly from 'gringos' in the United States.

Wire transfers are vulnerable to money laundering when safeguards are selectively enforced, he said.

"There is a perception that all money coming from gringos (Caucasians) up North is clean. Nobody would ever ask a US bank whether they have deficiencies, even though they may be under investigation for prosecution," cautioned Stumbauer on Tuesday while addressing the inaugural Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) conference held in Kingston.

Stumbauer said data indicates that 11 per cent of international money transfer transactions contain incomplete client information, particularly from the US, which could contain laundered money.

"If you don't screen for completeness then, willingly or unwillingly, you are violating the OFAC," he advised local institutions, some of which have North American parents.

OFAC is a US-led anti-money laundering programme with global reach operated by the Office of Foreign Assets Control, a department of the US Treasury.

Earlier Stumbauer, a board member of Florida International Bankers Association and who is Caucasian, said institutions should take care in knowing their clients. Vulnerabilities he highlighted included safeguarding the reloading of the popular US debit cards at local remittance service outlets.

Clients can go to these outlets and deposit funds onto these cards, he said.

He stressed that the institutions know the safeguards but implement them selectively.

"I have been here for two days and not once has anyone asked me for ID when using my credit card," he told the audience, which collectively said IDs were required for such transactions.

ID requests are commonplace but at least one bank, National Commercial Bank Jamaica, says they do not safeguard against fraud and has been urging merchants to rely more on the security features on credit cards.

Stumbauer said debit or prepaid cards can potentially offer money launderers the ability to move millions internationally without declaring the transactions, and obviating the need to carry bundles of cash at borders.

"Do you think they (remittance services ) would ask any question about my ID? No 1- it's a white guy walking in, so they assume legitimacy; No 2 - most of the times they do not have controls in place," he said.

"If a white guy with shorts (a tourist) is a money launderer and got himself a nice (prepaid) MasterCard or Visa card issued by a US or European bank, [he can] accumulate funds because most institutions do not have a limit," Stumbauer said, highlighting a possible scenario.

Prepaid cards are one of the fastest growing segments in banking, offering institutions low risk because they are cash-based rather than requiring credit.

The October 8-9 AML-CTF conference was hosted by the Jamaica Bankers Association.

steven.jackson@gmail.com