Basil Jarrett | Are we really in the midst of a fraud epidemic?

THE SEEMINGLY non-stop allegations, discoveries and investigations of fraud and other financial crimes in recent weeks prompted this newspaper two weeks ago to lead with the headline ‘Fraud Spike’, asserting that almost 1,000 persons have been arrested for various schemes over the last five years.

Nearly 3000 complaints of fraud involving over $6 billion have been reported to the police since 2017, the report noted, as the flurry of multi-million dollar fraud cases shows no sign of abating. All of a sudden, scams, fraud and other illicit financial activity are no longer the sole domain of ‘choppers’ and lottery scam artists, as the well-to-do have started to get in on the increasingly lucrative act. Or have they? Is this phenomenon really new or is it that we are only just discovering that the seedy underbelly of Jamaica’s well-to-do is just as reprehensible as that of the have-nots who live on the other side of the tracks?

UNCOVERING THE TRUTH

Are we really in the midst of a fraud epidemic, or are we just uncovering what has always been our reality? Or, could it be that our various financial institutions and law enforcement entities have simply gotten better at detecting, investigating and policing fraud? Or, perhaps our citizens and institutions collectively have become less tolerant of fraud, more emboldened to report incidents, and more confident that something will actually be done? To my mind, all three are true.

According to the Bank of Jamaica (BOJ) in its recent Financial Stability Report 2022, the incidents of attempted and actual fraud jumped two thirds from 15,000 to over 25,000 last year, the highest level since 2017. Quite interestingly, the report showed that women are more often the victims of bank fraud than men. And, while it did not capture the gender of the fraudsters, there is a strong suspicion that our ladies seem to be the main perpetrators, at least based on recent trends.

FRAUD TRENDS

Another interesting revelation coming out of the report is that while actual incidents and attempts at fraud have been on the rise, actual losses from fraud have been on the decline. The BOJ report states that local banks detected about $715 million in fraud losses in 2021, $800 million in 2020, $1.3 billion in 2019, and $1.2 billion in 2018. The five-year average from 2018 to 2022 dipped to $900 million, down from $1 billion a year earlier. This suggests that my second theory – that we are getting better at detecting, discovering and ultimately preventing fraud – is also possibly true. Banks, for instance, have seen a decline in annual bank fraud-related losses, attributed mainly to improved fraud detection and fraud combatting measures such as the introduction of chip encryption in ATM and credit cards.

On my third theory, that persons have become less tolerant and more emboldened to blow the whistle on fraud, money laundering and other financial crimes, we only need to look at the recent successes of our fraud-reporting and tip-collecting entities and mechanisms, including MOCA’s own dedicated Anti-Corruption and Organised Crime tip line, 888-MOCA-TIP. While MOCA’s tip line has yielded some meaty information to law enforcement agents since its inception last December, I can’t say with any statistical reliability that this reflects a significant shift in our cultural, moral or collective attitudes towards whistleblowing and tipsters.

A GLOBAL CHALLENGE

Perhaps, therefore, the best answer to the question of what is responsible for this current fraud epidemic is that all three factors are playing a role in this phenomenon that has seemingly taken over our news cycle and national attention.

To be fair, Jamaica does not have a monopoly on burgeoning fraud. Globally, cyber and other types of sophisticated fraud are also on the rise, as are the incentives to commit them. Coming out of COVID, a whole new generation of online users, about 780 million to be exact, have created a target-rich environment for cyber fraudsters to exploit, costing the global economy an estimated $7 trillion in 2022. These eye-watering numbers are expected to rise to $10.5 trillion by 2025, if steps aren’t taken to improve our cybersecurity hygiene.

FRAUD AS THE SYMPTOM

Despite these shared global challenges, however, one thing I will say with some confidence is that fraud is the symptom of a greater national affliction that Jamaica seems to be grappling with; that is, a national lack of integrity amid falling moral and ethical standards. In other words, fraud is the symptom, not the root cause. The real disease is a lack of integrity and falling moral values, as poor people aren’t the only ones opting to lie, cheat and steal. And, as the family unit and other institutions that we have traditionally relied on to instil moral values continue to falter, we now have to look to our formal regulatory bodies to fill that gap, given Jamaicans’ propensity to not always do the right thing.

The Financial Services Commission (FSC) seems to agree with me as it has clearly stated that policing criminal activity by its members isn’t its only mandate. The entity has a keen interest, too, in ensuring that persons who are deemed fit and proper to carry out financial transactions in Jamaica are also honest, ethical, trustworthy and of sound moral fibre. In other words, the FSC insists that its members be of strong, ethical repute, and backs this up by punishing non-compliance with revocation of their fit and proper stipulations if a member is deemed to be dishonest or deceitful.

Until we start to address these fundamental issues of integrity, honesty and moral soundness formally, I am afraid that we will continue to lose ground in the battle to preserve a just and upright society. Schools, churches, the family and our other community structures must begin to make real and deliberate efforts to educate and inculcate a culture of honesty and integrity among our people, especially our youngsters. Yes, being a poor nation does make it harder to enforce and instil these values, but it isn’t automatic that poverty makes us more corrupt. Just look at the high rollers and high-flying society persons who’ve made the headlines in recent weeks.

As my Gleaner stablemate, Garth Rattray, noted some time ago in this newspaper, “Fraud is a symptom of an ailing society and, here in Jamaica, there is a persistent and pervasive lack of discipline, honesty, checks and balance, and accountability.”

Garth is right. If we do not address these issues systematically, as opposed to paying lip service to them, 2023 may well be the Year of the Jamaican Fraudster.

Major Basil Jarrett is a communications strategist and CEO of Artemis Consulting, a communications consulting firm specialising in crisis communications and reputation management. Send feedback to columns@gleanerjm.com