IN the wake of public outrage over the light sentence handed down to Khadene Thomas, who pled guilty to defrauding customers of a total of $74.5 million, head of Jamaica Bankers Association’s Anti-Fraud Committee Dane Nicholson is advocating for an update to the Larceny Act to impose harsher penalties on those convicted of financial fraud.

Nicholson, who is also head of fraud prevention at NCB, is also challenging the authorities to explore the establishment of a financial court amid the rise in financial crimes in Jamaica in recent years.

“Given the prevalence of this matter and the rise in financial fraud over the past few years perhaps it is prudent now that a financial court be established to treat with matters of this nature. Just like when Jamaica had problems with guns, a gun court was launched; a traffic problem, a traffic court was launched; and a family court for family problems,” he said.

“So now that we have a financial crime problem it might be prudent for us to explore establishing a financial court,” Nicholson continued.

His call comes just a day after it was reported that Thomas, a former NCB Capital Markets employee, was sentenced to 24 months in prison after pleading guilty to fleecing three of the institution’s customers a total of $74.5 million.

In February, Thomas admitted to three counts of larceny as a servant and 31 counts of uttering forged documents.

She was charged with larceny and offences under The Cybercrimes Act in January 2023. Reports are that during a two-year stint as a wealth advisor at NCB Capital Markets, Thomas forged clients’ signatures on a debit instrument, debited their accounts, and then transferred funds to several accounts, including hers.

Earlier this month she was ordered to make full restitution of the amount stolen.

The news of her sentencing sparked intense discussions on social media platforms,
Instagram and X (formerly Twitter), with many describing the judgment as a “slap on the wrist”.

“This sentencing does nothing but encourage people to thief. What is two years?” one reader commented under the news posted by the Jamaica Observer on the Instagram platform.

During an interview with Sunday Finance, Nicholson said the discussions around the judgment on Thomas’s case have opened the door for greater collaboration between the members of Jamaica Bankers Association, the judiciary, and regulators.

He said the ruling proves that there is a clear need for legal reforms, harsher penalties, and the establishment of a specialised financial court in order to restore public trust and deter future financial fraud.

“In my view, and if you look at the sentiments of public opinion in relation to this matter, the sentencing sent a wrong message to onlookers and has served to colour the public perception of the financial sector,” Nicholson said.

“Even though there was the promise of restitution — which the bank has not yet received — and the bank has refunded all of the affected customers, the affected bank’s reputation and image have been tarnished, and the sentence does not serve as a strong deterrent for crimes of this nature,” he added.

In addition to recommending the establishment of a financial court, Nicholson is also pushing for special legal provisions for individuals working in the financial sector who breach their fiduciary responsibilities.

He reasoned that when such a person carries out financial fraud, it not only impacts the financial institution but also harms customers and could deter future investments in Jamaica. Further, Nicholson is calling for mandatory minimum sentences for financial fraud.

“If they are convicted for financial fraud, whether larceny as a servant or forged document, and even if you plead guilty and restitution [is] given to the financial entity, the minimum sentence that they should receive is 10 years because you are placed in a position of trust — and banking is built on integrity and trust.

“Despite the strong controls that financial institutions may put in place, banks will have to put some trust and power in the hands of their staff members, so strong laws are needed to serve as a deterrent,” he said.

Thomas’s sentencing is said to be “light” when compared to former senior manager at National Commercial Bank Andrea Gordon, who was convicted of swindling $34 million from the financial institution and was sentenced to seven and a half years in 2021.

Gordon was ordered to repay close to $120 million.

Nicholson surmises that Thomas’s plea deal in the parish court may have led to a more lenient sentence. He suggests that such cases should be tried in the Supreme Court, as was done in the case of Gordon. Additionally, there is a call to review how plea deals are negotiated, particularly for financial sector employees, to ensure they do not disregard the severity of the crimes committed.

“The police wanted the charges to be laid under The Cybercrimes Act but the prosecution offered no evidence for those charges. Those charges carry a higher penalty so perhaps we need to look at that as well to see how the plea deals are done to ensure justice [is served] — especially [as it relates to] those that are in the financial sector — given the reputational damage fraud matters cause,” Nicholson said.

The call for stricter penalties at the justice system level comes amid efforts by local banks to minimise fraudulent activities. Internally, the banks have implemented various checks, including background checks and police reports, to ensure there are no previous convictions. All financial institutions also have “Know Your Employee” frameworks and methodologies in place to detect such issues, along with internal controls such as the separation of duties and limit controls, ensuring that no one individual can execute transactions alone.

However, Nicholson said the loophole is often created through the relationships employees develop with customers.

“The problem often lies in employees manipulating customers and taking advantage of them,” he said.

To minimise this, local banks have emabarked on public awareness campaigns through which they engage consumers on how to spot and avoid fraud, particularly online fraud. NCB, for example, has been running Fighting Friday Fraud educational notices.

Year-on-year, Nicholson says online frauds are down across the majority of local financial institutions.