In the last decade, Puerto Rico’s banking institutions have become more proactive in detecting and reporting suspicious possible money laundering activity.
As a result, more than 48,000 Suspicious Activity Reports have been filed with local and federal authorities, positioning the island among the top U.S. jurisdictions that are complying with rules in place to combat this type of illicit activity, Puerto Rico Bankers Association Executive Director Arturo Carrión said Thursday.
Local banking institutions have strengthened key areas such as recruitment of human resources specialized in these types of financial investigations and have also invested millions in security systems to promote early detection of these schemes or attempts to carry out money laundering or other related crimes, he said.
“During the past nine years, and after the events of September 11, 2001, commercial banks on the island have evolved significantly,” he said. “They have tempered their programs to detect and prevent money laundering in accordance with the federal requirements, and as the needs of the industry to prevent this illegal activity have changed.”
Banks, he said, have structured continuing education mechanisms to train directors, officers and employees to know how to prevent such crimes at the early stages. They have also established close ties with regulatory agencies to report any suspicious activity. Puerto Rico ranks 27th among the U.S. jurisdictions blowing the whistle on shady banking.
By definition, Money laundering aims to conceal some sort of illegal activity that generates large amounts of money, for example: drug trafficking, tax evasion, public corruption, mortgage fraud, among others. Such activity ultimately seeks, through different means, to hide the source of illegal gains, so that money can be used in the formal economy without detection of their true origin.
People carrying out this type of scheme will try to physically place the illegally obtained money into the financial system through banks or the legal economy. After it is separated from its illegal origin, the money is put through a series of financial transactions, which may make it difficult to trace its origin.
By achieving this, the capital is moved into the formal economy through apparently legitimate transactions, such as buying cars, properties, and companies, among other goods.
Financial institutions have key parameter called the “common warning signs of unusual or suspicious activities” to identify potential money laundering schemes, Carrión said.
“These include modifications of transactions to avoid showing identification or providing personal information, cash transactions at different levels, and purchasing multiple monetary instruments in amounts just below the minimum allowed by law, among other mechanisms,” he said. “Those of us who work in banking have a personal commitment of attacking money laundering. That’s why we’ve designed prevention programs, internal controls and procedures that comply with local and federal laws.”
Part of that strategy calls for working in tandem with regulators and law enforcement agents to track down and catch criminal activity. In the last 10 years, such collaboration has resulted in close to 60 local arrests, the seizure of hundreds of thousands of dollars, firearms and equipment used to commit a variety of crimes, he said.
“Furthermore, at least six criminal organizations were identified and dismantled as a result of joint efforts,” he said, noting that one of the biggest challenges the banking industry faces looking ahead will be dealing with technological advances in new payment methods or financial transactions.