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An investigation into the measures Financial

Institutions use to CONTROL MONEY


LAUDERING in Santa Cruz, St. ELIZABETH

Name: Shavoy Gayle

Teacher: Mr. cogle

St. Elizabeth technical high school

Jamaica

2017

An investigation into the measures Financial Institutions use to


CONTROL MONEY LAUDERING in Santa Cruz, St. Elizabeth
Table Of Contents
Topic Page
Introduction.....1
Aims and Objectives...2

Data Collection...3

Literature Review...4-5

Presentation of Data....6-8

Analysis of Data..9

Discussion of Findings...10-11

Conclusion..12

Bibliography...13

Appendix14-15
1

Introduction
This research is intended to find out the measures put in place to control money laundering. The

problem statement The measures used by financial institutions to control money laundering in

Santa Cruz St. Elizabeth was created to gain the necessary information. This research is of

importance as money laundering continues to grow within the Caribbean. So the researcher aims

to inform the reader of the proper measures that should be put in place to control money

laundering. Questions were formulated and prepared in the form of a questionnaire then it was

given to members of different financial institutions located in Santa Cruz St. Elizabeth using 30

individuals. Santa Cruz is a small town in the parish of St. Elizabeth, this town houses many

financial institution.
2

Aim and objectives


AIM
Examine the strategies used by the Financial Institutions used to control money laundering
within the Santa Cruz area

Objectives
Discuss the processes involved in money laundering.

State the strategies Financial Institutions use to control of money laundering.

Briefly discuss an organization which monitors money laundering in Jamaica


3

Data collection
The two collection sources used were primary and secondary. Primary source was use to collect

new raw data to be analyzed and published. Secondary source data is already analyzed and

published therefore source was only used to facilitate the research.

The primary source used is a questionnaire it contain 14 questions. A sample of 30

workers was randomly selected from different financial institutions in the bustling town of Santa

Cruz. This was a quantitative research proving very cost effective. However the researcher found

it saved time and data was easily interpreted.

The secondary source used was internet articles; total of (2) articles were used in this

research. Problems faced were found the correct sources to collect data and time spent trying to

find relevant data. The advantage was that it served as a basis for the direction of the

questionnaire.
4

Literature review
According to oxford dictionary.com money laundering is the concealment of illegally obtained
money, obtained, typically by means of transfers involving foreign banks or legitimate
businesses. According to investopedia.com financial institutions is a company engaged in
business in dealing with monetary transactions, such as deposits loans investments and currency
exchange. Money laundering is a growing problem in the Caribbean and can take different
forms. The researcher aim is to find out the strategies used by the Financial Institutions used to
control money laundering within the Santa Cruz area.
According to Ken Tysiac in his article four strategies for money-laundering
deterrence, controls used by banks to prevent and detect money laundering have received a lot of
attention from regulators worldwide in 2013. He also stated in his research that business whose
anti- money laundering control fails are vulnerable to huge fines from regulators in his article he
stated some strategies in financial institutions can prevent money laundering the first one being
know your customer as learning basic information about the customer such as identity,
citizenship, occupation, etc would help to identify what kind of risk the individual pose, another
means of preventing money laundering is by keeping surveillance processes up to date, therefore
the customers account should be constantly updated and cross references should be made
between account should be scanned to ensure terrorist are not present in the system, investigation
and report should also be a key strategy so therefore customer who raises suspicion should be
investigated and report to the relevant authorities to ensure money laundering does not occur, and
lastly the policies must be kept up to date, as the means of money laundering is constantly
changing the policies which control money laundering should also change and to keep up-to-date
the banks has to continuously update these policies.
In the article GUIDELINES FOR: ANTI-MONEY LAUNDERING &
COUNTER-FINANCING OF TERRORISM ISSUED BY THE FINANCIAL SERVICES
COMMISSION (FOR ENTITIES REGULATED UNDER THE INSURANCE, PENSIONS &
SECURITIES ACTS & REGULATIONS) written by the financial service commission state The
experience of regulators in this area has revealed that whatever method is used, there are usually
three fundamental stages of money laundering. Where all stages are achieved, they occur in
sequence but there is often some overlap of the stages. These stages are placement layering and
integration. The article stated that placement is the first stage in the process it is at this point
money is first introduced to the business, in extreme cases money is converted into assets or
financial instruments, this is the stage where the criminal organization is most vulnerable. The
second stage the article mentioned is layering it argued that at this point to it is most difficult to
detect or investigate money, it stated that this process is where the money is separated from its
source by the creation of layers of transaction to seem legitimate and evade an audit trail. The
last process mentioned in the article is integration it states this is when illicit funds is infused
with the economy appearing legitimate, if this process takes place then money laundering can
easily take place once more also it would no longer raise suspicion. The article also mentions
different means of controlling money laundering for financial institutions three of which are
verifying customer identity this is to help check the risk of the individual or to scan the
individual to check if the person reported or investigated, monitoring customer transactions was
also mentioned this is done to track or make note of suspicious activity and reporting suspicious
activity this is to notify relevant authorities of the of the different schemes, these measures will
significantly help to reduce money laundering though out Jamaica. The financial services
5

commission has the responsibility to educate its registrants on their obligations under the law and
provide a guide to meet those obligation. To achieve this they develop guidelines based on the
anti-money laundering and counter financing of terrorism (guidelines). The organization has
been around since august 2 2001 due to the financial service commission act. Its objective is to
position Mauritius as a jurisdiction of the right balance between regulation and business
development.
6

Presentation of data

TYPES OF FINACIAL INSTIUTION

2; 7%
8; 27%
7; 23%

13; 43%

COMERCIAL BANK INSURANCE COMPANY


CREDIT UNION PENSION COMPANY
OTHER

Figure 1.0 diagram showing the amount of people in financial institution in which questionnaires
were distributed

HOW LONG HAS THE BUSINESS BEEN IN OPERATION

7; 23%

13; 43%

8; 27%
2; 7%

5 YEARS 10 YEARS
15 YEAR 25 YEARS AND OVER

Figure 1.1 diagram shows the amount of years the financial institution has been in operation
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INSTITUTION WHICH SUPERVISES MONITORING OF MONEY LAUNDERING

FINACIAL SERVICIES BANK OF JAMAICA CARIBBEAN FINANCIAL


COMISSION ACTION TASK FORCE
19 TIMES MENTIONED 20 TIMES MENTIONED 27 TIMES MENTION
Figure 1.2 Diagram showing the different financial institutions which supervise money
laundering

Question no.8: The three general processes mentioned by all recipients are placement, layering
and integration. The processes were mentioned in the exact order by all recipients.

Most common strategy used

Most common strategy used

Figure 1.3 Diagram showing the most common strategies used amount the different financial
institutions
8

Strategies used to Times mentioned


control money
laundering
Customer 30
verification
Report suspicious 28
activity
Monitor customer 25
transactions
Keep correct/up to
record of customers 25

Other 30

Figure 1.4 Diagram showing the strategies used to control money laundering

Analysis of data
9

Figure 1.0 diagram showing the amount of people in financial institution in which questionnaires
were distributed 43% of the individuals are of insurance companies 27% are commercial bank
workers 23% are credit union workers and seven percent of the respondent work an pension
companies. The responses was further analyzed to show that the amount of years the financial
institution has been in operation of which 43% of the respondents said that they have been in
operation for 5 years, while 23% of them said 25 years and over. 27% of the respondents said 15
years and the remaining 7% said 10 years.

Figure 1.2 shows the diagram showing the different financial institutions which supervise money
laundering, where Financial Services Commission was mentioned 19 times, bank of Jamaica was
mentioned 20 times and Caribbean Financial Action Task Force was mention 27 times. Also the
question What are the three general process/stages in money laundering? was asked and the
respondents said The three general processes mentioned by all recipients are placement,
layering and integration. The processes were mentioned in the exact order by all recipients.

During the analysis Figure 1.3 showing the most common strategies used amount the different
financial institutions was analyzed to show that 8 of the respondents thought that keeping
correct/up to date record is the most common strategy, while 5 of them thought that monitoring
customer transaction was the most common and another 5 of them said that reporting suspicious
activity is the most common. The remaining 12 of the respondents said that verifying customer
identity and there was no response to other. The respondents were also asked What strategies do
you think the institution should use to control money laundering? where customer verification
was mentioned 30 times, report suspicious activities was mentioned 28 times, monitor customer
transactions was mentioned 25 times, keep correct/up to date record of customers was mentioned
25 times and other was mentioned 30 times.

Discussion of findings
10

The researcher aim is to find out the strategies used by the Financial Institutions
used to control money laundering within the Santa Cruz area. According to oxford
dictionary.com money laundering is the concealment of illegally obtained money,
obtained, typically by means of transfers involving foreign banks or legitimate
businesses. According to investopedia.com financial institutions is a company engaged in
business in dealing with monetary transactions, such as deposits loans investments and
currency exchange. Questionnaires were distributed in different institutions throughout
the area.
The three general stage of money laundering are placement layering and
integration was the response to question 8 by the respondent it was also noted that all
respondent answered in the exact order which would mean that all respondent has
knowledge of how the money laundering process takes place. The article GUIDELINES
FOR: ANTI-MONEY LAUNDERING & COUNTER-FINANCING OF TERRORISM
ISSUED BY THE FINANCIAL SERVICES COMMISSION (FOR ENTITIES
REGULATED UNDER THE INSURANCE, PENSIONS & SECURITIES ACTS &
REGULATIONS) written by the financial service commission state also states the stages
are placement, layering and integration. The article stated that placement is the first stage
in the process it is at this point money is first introduced to the business, in extreme cases
money is converted into assets or financial instruments, this is the stage where the
criminal organization is most vulnerable. The second stage the article mentioned is
layering it argued that at this point to it is most difficult to detect or investigate money, it
stated that this process is where the money is separated from its source by the creation of
layers of transaction to seem legitimate and evade an audit trail. The last process
mentioned in the article is integration it states this is when illicit funds is infused with the
economy appearing legitimate, if this process takes place then money laundering can
easily take place once more also it would no longer raise suspicion.
In the article four strategies for money-laundering deterrence Ken Tysiac
gives four strategies which can be used to combat money laundering the first one being
know your customer as learning basic information about the customer such as identity,
citizenship, occupation, etc would help to identify what kind of risk the individual pose,
another means of preventing money laundering is by keeping surveillance processes up to
date, therefore the customers account should be constantly updated and cross references
should be made between account should be scanned to ensure terrorist are not present in
the system, investigation and report should also be a key strategy so therefore customer
who raises suspicion should be investigated and report to the relevant authorities to
ensure money laundering does not occur, and lastly the policies must be kept up to date,
as the means of money laundering is constantly changing the policies which control
money laundering should also change and to keep up-to-date the banks has to
continuously update these policies. The respondents were also asked What strategies do
you think the institution should use to control money laundering? where customer
verification was mentioned 30 times, report suspicious activities was mentioned 28 times,
monitor customer transactions was mentioned 25 times, keep correct/up to date record of
customers was mentioned 25 times and other was mentioned 30 times. This would
therefore mean that not all control methods are used by every financial institution in
Santa Cruz. In the article GUIDELINES FOR: ANTI-MONEY LAUNDERING &
COUNTER-FINANCING OF TERRORISM ISSUED BY THE FINANCIAL
11

SERVICES COMMISSION (FOR ENTITIES REGULATED UNDER THE


INSURANCE, PENSIONS & SECURITIES ACTS & REGULATIONS) written by the
financial service commission state, stated that placement is the first stage in the process it
is at this point money is first introduced to the business, in extreme cases money is
converted into assets or financial instruments, this is the stage where the criminal
organization is most vulnerable. The second stage the article mentioned is layering it
argued that at this point to it is most difficult to detect or investigate money, it stated that
this process is where the money is separated from its source by the creation of layers of
transaction to seem legitimate and evade an audit trail. The last process mentioned in the
article is integration it states this is when illicit funds is infused with the economy
appearing legitimate, if this process takes place then money laundering can easily take
place once more also it would no longer raise suspicion.

In figure 1.2 the diagram shows the different financial institutions


which supervise money laundering, where Financial Services Commission was
mentioned 19 times, bank of Jamaica was mentioned 20 times and Caribbean Financial
Action Task Force was mention 27 times. The financial services commission has the
responsibility to educate its registrants on their obligations under the law and provide a
guide to meet that obligation. To achieve this they develop guidelines based on the anti-
money laundering and counter financing of terrorism (guidelines). The organization has
been around since august 2 2001 due to the financial service commission act. Its
objective is to position Mauritius as a jurisdiction of the right balance between regulation
and business development.

Conclusion
12

The researcher aim is to find out the strategies used by the Financial Institutions used to
control money laundering within the Santa Cruz area. According to oxford dictionary.com money
laundering is the concealment of illegally obtained money, obtained, typically by means of
transfers involving foreign banks or legitimate businesses. According to investopedia.com
financial institutions is a company engaged in business in dealing with monetary transactions,
such as deposits loans investments and currency exchange.
The stages in money laundering are placement layering and integration. An
institution which supervises money laundering along with financial institutions in Santa Cruz is
the financial services commission its objective is to position Mauritius as a jurisdiction of the
right balance between regulation and business development. Some of the strategies use to control
money laundering are Customer identity verification, Reporting suspicious activity, Keep
correct/up to record of customers and Monitor customer transactions etc.

Bibliography
Financial service comission. (2015, Febuary 11). GUIDELINES FOR: Anti Money
laundering&COUNTER-FINANCING OF TERRORISM issued byTHE FINANCIAL SERVICES
COMMISSION(FOR ENTITIES REGULATED UNDER THEINSURANCE, PENSIONS &
SECURITIES ACTS &REGULATIONS). Retrieved april 11, 2017
13

Tysiac, K. (2013, october 30). http://www.cgma.org/magazine/2013/oct/20139002.html .


Retrieved april 11, 2017, from http://www.cgma.org:
http://www.cgma.org/magazine/2013/oct/20139002.html

Appendix
Questionnaire
14

My name is Shavoy Gayle. I am student of STETHS currently in U6. I am constructing a


research a research on the topic An investigation into the measures Financial Institutions use to
CONTROL MONEY LAUDERING in Santa Cruz, St. ELIZABETH. It would be of great
pleasure I you could kindly circle tick or give a short/brief answer for the following questions.
For question number 10 respondents can choose more than one response

1. Gender?
Male [ ] Female [ ]
2. To what group do you belong?
[ ] 18-25 [ ] 26-33 [ ] 34-41 [ ] 42-over
3. Which Financial institution do you belong to?
[ ] Commercial bank [ ] Insurance company [ ] Credit union [ ] Pension company [ ]
OTHER________________.
4. How long has the institution been in operation?
[ ] 5 years [ ] 10 years [ ] 15 years [ ] 20 years [ ] 25 years-over
5. How long have you been working in the organization
[ ] 1-5 years [ ] 6-10 years [ ] 11-15 years [ ] 16-20 years [ ] 21 years-over
6. Have you experience any cases relating to money laundering?
Yes [ ] No [ ]
b. If yes how many times__________

7. State the name of an organization supervises the monitoring of money laundering of you
financial institution?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

8. What are the three general process/stages in money laundering?


______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

9. What are the strategies/measures is most commonly used to control money laundering?

[ ] Verifying customer identity [ ] Monitoring customer transactions [ ] reporting suspicious


activities [ ] Keeping correct/up to date records [ ] other

10. What strategies do you think the institution should use to control money laundering?

[ ] Verifying customer identity [ ] Monitoring customer transactions [ ] reporting suspicious


activities [ ] Keeping correct/up to date records [ ] other

11. State two policies or acts which were created to fight money laundering.
______________________________________________________________________________
15

______________________________________________________________________________
______________________________________________________________________________

12. How does the government help this institution to control money laundering?
______________________________________________________________________________
______________________________________________________________________________

13. Does money laundering affect the customers of this institution as well?

Yes [ ] No [ ]

14. Do you think money laundering can be completely stopped?

Yes [ ] No [ ]