KINGSTON, Jamaica — The Financial Investigations Division (FID) says it has identified a ‘concerning’ trend, referred to as ‘refund fraud.’ The FID says the trend has surfaced within Jamaica’s financial sector from January to June 2023, with over 120 instances of ‘refund fraud’ uncovered over the six-month period.

According to a release on Thursday, the more than 120 instances of fraud involved a total of 840 transactions (798 processed and 42 attempted), with a monetary value exceeding J$133 million.

The fraudulent activities implicated 140 individuals who targeted 135 overseas merchants. Subsequent investigations revealed that the perpetrators, all Jamaican nationals, are distributed across all parishes.

Notably, Kingston & St Andrew and St Catherine accounted for over half of the refund fraud transactions.

In response to these findings, the FID says it has engaged relevant stakeholders across the financial sector to “disseminate information about this emerging trend and provide effective mitigating strategies.”

“Special attention was directed towards entities obligated to report to the FID, including financial institutions and designated non-financial institutions. The FID has actively supported these institutions in identifying key indicators related to ‘refund fraud’ and has equipped compliance officers within reporting entities with insights into observed techniques and trends targeting overseas merchants,” the release read.

In an effort to “fortify the financial system against the risks associated with ‘refund fraud,’ the FID says it strongly recommends that financial institutions and designated non-financial institutions exercise heightened caution.

“This includes reinforcing monitoring systems and implementing ‘red flag’ mechanisms within their anti-money laundering (AML) frameworks to identify and prevent transactions of this nature,” the FID said.

Keith Darien, principal director of investigations at the FID, remarked, “As countries and their respective financial sectors improve their anti-money laundering (AML) framework, we observe a corresponding evolution in the tactics employed by fraudsters. The emergence of refund fraud exemplifies this evolution.”

Darien continued, “This issue remains an ongoing concern, and substantial efforts are underway to effectively combat it and bring perpetrators to justice. Those results will be disclosed at an appropriate juncture.”