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U.S. Government Investigating Jamaica Financial Corruption Mess

U.S. Government Investigating Jamaica Financial Corruption Mess

Ambassador Curtis A. Ward

Amb. Curtis A. Ward

(02 February 2023) — When the news first broke about the fraudulent conversion of investors’ portfolios at the Jamaican investment firm Stocks and Securities Limited (SSL), my first thoughts were whether the U.S. financial system was in any way compromised by this criminal act. The possibility of U.S. anti-money laundering laws being violated in this crime raised the specter of investigations by relevant U.S. agencies taking a close look. I expected two agencies in particular to be highly interested – the Federal Bureau of Investigation (FBI) and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

The U.S. financial legislative framework penalizes any use of the U.S. financial system, whether deposit or investment institutions, to hide or otherwise engage in facilitating illicitly gained funds. Any such use of the U.S. financial system is subject to significant scrutiny. It is money laundering . The penalties for money laundering are severe. Not only are the U.S. financial institutions barred from facilitating such illegal schemes, but perpetrators are subject to significant penalties. It applies not only to U.S.-based citizens, including U.S corporations, and residents, but jurisdiction extends to foreign nationals resident abroad. Thus the long arm of U.S. laws are also used to prosecute foreign officials or enablers engaged in breaking U.S. anti-money laundering laws and regulations.

For those unfamiliar with FinCEN’s mission, this bureau within the Treasury Department has as its primary responsibility that of safeguarding the U.S. financial system from illicit use and to combat money laundering. FinCEN’s responsibility extends to protecting U.S. national security “through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.” FinCEN disseminates its products for law enforcement purposes, including by building global cooperation with counterpart organizations in other countries and with international bodies. FinCEN follows the money of criminals in their attempts to cover up their ill-gotten gains. The bureau partners with FIUs (Financial Intelligence Units) of partner countries in the sharing of financial intelligence and prosecution of money laundering.

The announcement by Jamaica’s minister of finance, while appearing as a political statement to divert criticisms of lack of effective oversight of the non-deposit financial sector, effectively closing the gate after ‘the horse has escaped’, would have far greater implications than the minister intended. It would have much broader reach than he contemplated. The most recent report on the finance minister’s expectations was revealed in today’s (February 2, 2023) front-page article in Jamaica’s Daily Observer newspaper, headlinedNo place to hide.” The minister is reported to have said that the involvement of the FBI would extend beyond what was initially expected. He shouldn’t have been surprised. I am not surprised and I have stated precisely this in another forum several days ago.

Anyone familiar with the role and capacity of the FBI and how the agency deals with any possible compromise of U.S. laws would have known from the very outset the FBI’s involvement would not be skimming the surface of the fraud or glossing over any aspect of the crime. The FBI would dig deep into the fraud to ensure the U.S. financial system was not compromised and used for money laundering. The criminals always make the same mistake. American banks are their preferred choice to put their corrupted funds. Thus, the FBI will not be satisfied by merely reviewing a few files. The FBI’s investigators will use their highly sophisticated cyber and forensic capabilities to determine what was done by the fraudsters, who are the fraudsters, what modalities were employed, and the role, if any, of U.S. banks and other financial institutions in facilitating the crime. The FBI’s expected objectives should make some people nervous.

Furthermore, the finance minister and the Jamaican government have reasons to be nervous. A thorough FBI probe will expose any weaknesses in government oversight of the country’s financial system and whether the government was careless in regulating SSL and other financial institutions in Jamaica. It also means that if the ill-gotten gains from the SSL were deposited in Jamaican banks or any deposit-taking institutions such findings could trigger certain penalties against Jamaican banks. These penalties could extend to restrictions on correspondent banking relationships and payable-through account services to Jamaican banks. Those in the private sector who applauded the minister when he announced he had invited the FBI to help with the investigation may rue the day. But, Jamaica will be better off in the long term.

U.S. financial institutions could also be subject to penalties if they failed to exercise due diligence in accepting deposits of illicitly gained funds. They are required to employ thorough “know your customers” (KYC) standards for all depositors, foreign and domestic. The penalties for egregious violations have been extremely high. Civil penalties in the tens of millions of US dollars have been imposed for violations of money laundering laws. In cases where the violations occurred, many extended over long periods of time and involved large sums of money (hundreds of millions of dollars), the fines have also been in the hundreds of millions dollars.

While the SSL fraud is not comparable to some of the most egregious acts penalized by FinCEN and the U.S. justice department in the past, penalties are likely, even if of lesser proportions. The US generally fries the minnows with the sharks. No one is exempted.

The government could mitigate the results which the probe will expose if it acts immediately with resolve to proactively fix the glaring problems in the oversight process. New legislation, a strengthened regulatory framework, and significantly increased new penalties (civil and criminal) for violations are actions the government can take to restore integrity and trust to the process before the investigations are concluded.

Both Government and Opposition parliamentarians must come together to find fixes which all of Jamaica can embrace. Real solutions, not band aid remedies, are required at this time. Any credible solution agreed to by the Prime Minister and the Leader of Opposition will resonate with the U.S. government and its responsible agencies.  By acting proactively, the Jamaican government can assure the US government of its future ability to prevent a recurrence of this debacle. It requires an exercise of political will to get this job done.

©  Curtis A. Ward/The Ward Post

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About the author

Ambassador Curtis A. Ward

Ambassador Curtis A. Ward is a former Ambassador and Deputy Permanent Representative of Jamaica to the United Nations with Special Responsibility for Security Council Affairs (1999-2002) serving on the UN Security Council for two years. He served three years as Expert Adviser to the UN Security Council Counter-Terrorism Committee. He is an Attorney-at-Law and International Consultant with extensive knowledge and experience in national and international legal and policy frameworks for effective implementation of United Nations (UN) and other international anti-terrorism mandates; the legal and administrative requirements to effectively implement and enforce anti-money laundering and countering financing of terrorism (AML/CFT); extensive knowledge of the legal and regulatory requirements for effective implementation and enforcement of United Nations multilateral and U.S.-imposed unilateral sanctions; and the imperatives for Rule of Law and governance. He is a geopolitical and international security analyst, and a human rights, democracy, and anticorruption advocate.

3 Comments

  • Best written piece I have read so far. I would be surprised if the Govt . doesn’t consult with you to assist them in this SSL debacle that is unfolding.

  • Now that the FBI will be probing this debacle, there is no doubt in my mind that the govt. will act with dispatch to lessen the fallout in the financial sector and assure its counterparts in Washington that Jamaica is capable of managing its own affairs.
    What was hidden from the wise and prudent will now be revealed to the babe and suckliing.

    • ” What was hidden from the wise and prudent will now be revealed to the babe and suckling.”

      Do you realise the high and serious levels of money-laundering running, non stop through London, New York, Chicago etc. while we remain on the periphery of global money laundering without either seeing it nor acknowledging it? Are we so simple minded – really?

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