Bahamas institute financial services seminar told

By Raymond Kongwa,Guardian Staff Reporter raymond@nasguard.com

Fraudulent letters of instructions have become one of the primary methods being used by perpetrators of fraud, against financial institutions in The Bahamas, participants in a week-long seminar, hosted by the Bahamas Institute of Financial Services (BIFS) heard on Friday.

While speaking on "Bahamian Typology Fraud and Commercial Crime," Director of the Police Financial Intelligence Unit (FIU) Atg Supt Edward Smith told financial practitioners that this type of fraud occurs when letters of instruction purportedly sent by a customer or client of a given financial institution arrive at the institution, with instructions requesting the transfer of a specified amount of funds to a certain bank, often in another jurisdiction.

"The institution then acts upon these instructions and later the institution may receive some additional instructions asking for further transfer of funds, only to discover that the account does not hold that amount of funds. So, they become suspicious and upon further examination discover that the client never gave such instructions" he said.

Atg Supt Smith said such instructions were often sent by fax and acted upon without much investigation. In highlighting an actual case of this fraud typology, Mr. Smith told the BIFS seminar of an individual who sent fraudulent letters of instruction with regards to 5 different accounts. He said the funds, which amounted to $1.7 million dollars, were transferred to another Caribbean jurisdiction. Luckily for the institution, $1 million dollars of the funds were recovered and an individual charged before the courts he reported.

He said there were many financial institutions in The Bahamas that suffered similar fates, but would not report such matters to authorities. Mr Smith added that "fraudsters perpetrate this fraud [successfully] because they realize that financial institutions do not want their names to be dragged in the news media about this kind of activity." He advised industry practitioners to require more than fax and electronic mail instructions in order to curb such fraud.

Mr Smith told the seminar that the "Nigerian E-mail Fraud" was also being frequently used against unsuspecting Bahamians. He said culprits of this fraud often introduced themselves as a manager of a foreign based bank where a customer has died and left millions of dollars.

The next step, he explained was for the fraudsters to request the opening of an account to launder the money. But this money was never more than "ghost money" as it never actually exist the Atg Supt said.

Fraud perpetrated against the estates of deceased persons was listed as another type being executed in The Bahamas. This type of fraud is chosen because deceased persons are unable tell the true story said Mr Smith.

He recalled a much publicized case involving the late Wendall Perceival Munnings, who reportedly died and left $50 million, in mainly real estate holdings. He said shortly after Mr Munnings' death, registered with the Registrar General's Office was certain documentation which indicated that a certain woman was entitled to nine-tenths of his estate.

According to Supt Smith, complaints were lodged by the family of the deceased, resulting in the launch of an investigation. "The end result was that the signature of the deceased and the documentation that was purported to give that individual nine-tenths of his estate was found to be forged."

After years of litigation, a mother, a son and a daughter were convicted in the Supreme Court and made to pay a total $75,000 Supt Smith revealed.

He also lectured the BIFS seminar on a number of other fraud practices, including international business company schemes, real estate fraud, embezzlement, passport fraud and insurance fraud. At the end of his presentation, a question and answer period was held for seminar participants to raise related questions.

The seminar, which ended Friday evening, also heard from a number of other speakers including Minister of Financial Services and Investments Allyson Maynard Gibson, Financial Services Board Executive Director Wendy Warren and Central Bank Governor Julian Francis.