According to a recent newspaper report, the Financial Intelligence Unit of Trinidad and Tobago received 1,831 suspicious transaction / suspicious activity reports worth $27Billion for the period 2019-2020.
Trinidad and Tobago is a major trade and financial centre in the Caribbean region and its proximity to South America provides quite easy access to countries on the mainland. This is evidenced by the constant flow of people and products in recent years, not excluding while the Trinidad and Tobago borders were closed as part of its Government’s measures in addressing the COVID pandemic.
As a result, Trinidad and Tobago has attracted both legal and illegal trade and financial flows. Because of its positioning, Trinidad and Tobago has become a transshipment point for narcotics from South America to North America. There continues to be reported cases of trades and attempted trades of birds, monkeys and other restricted animals, trades in firearms, human smuggling and human trafficking between Trinidad and Tobago and the South Continent.
Despite the prevalence of illegal activity and resultant financial flows, money laundering is not considered to be a major problem by many in Trinidad and Tobago. The illegal funds from these trades, and from the bribery and extortion that are a consequential to the activity, are placed into the financial system and can threaten the stability of the economy.
Having acquired the proceeds of crime, the perpetrators of the crime would seek to benefit from those proceeds without being linked to the predicate criminal offences that generated those proceeds. Oftentimes, the proceeds of crime are generated in cash, and are usually deposited into the banking system. Once deposited, the same funds are often transferred from one account to another or one institution to another.
The ultimate objective of the Money Launderer can be categorized by the following 3 C’s: 1) Conceal the origin and ownership of the funds; 2) Change the form of the money; and 3) Control the movement of the funds to avoid detection
The Money Launderer would seek to achieve this objective usually by moving the money through three stages: 1) Placement – the money is placed into the financial system; 2) Layering – the money is moved around in a series of complex transactions so as to disguise the original source of funds; and 3) Integration – the money is moved back into the business or financial system to appear as legitimate funds or assets
The three stages on money laundering may occur simultaneously or as separate and distinct phases.
Money Launderers tend to seek out areas in which there are stable financial systems and governments but low risk of detection due to weak or ineffective anti-money laundering programs, inadequate or un-enforced legislation, poor regulations and financial sector practices, and ineffective law enforcement.
Financial Institutions and Listed Businesses are required under the legislative framework to have adequate procedures and controls in place so they are not used for criminal and fraudulent purposes. Such controls should include adequate due diligence on new and existing customers, monitoring of transactions, reporting of suspicious activity, training of staff and proper record keeping.