The Financial Services Commission (FSC) will be taking steps to assist FSC-regulated institutions to strengthen their mechanisms to detect and prevent fraud.
This was disclosed by Executive Director, Everton McFarlane, against the allegations of fraud at investment firm Stocks and Securities Limited (SSL).
Speaking during a press conference at the EX-IM Bank Business Centre in Kingston on Wednesday (January 18), McFarlane said internal controls within the financial system have worked well, particularly for the securities industry.
Pointing out that over time, they have evolved… with technology, and with the evolution of the dealers’ own businesses, he noted however that invariably, internal controls and security arrangements are breached.
“But in the vast majority of cases, such breaches are detected in a manner so as to limit the scale,” he said.
McFarlane said employee theft “is a risk all businesses face, and it’s a risk that businesses, for the most part… and, in particular, financial institutions, take very seriously”.
He pointed out that the level of fraud uncovered at SSL, which “has never happened before”, was a “despicable act of dishonesty by an employee… and possibly with collaborators, [which] we believe, cannot be taken as symptomatic of the risk for the entire industry”.
Highlighting that the incident gives an opportunity for all stakeholders, including the FSC, to take whatever steps that are necessary to strengthen the ring of fraud protection even more, he encourage security dealers to immediately take steps to reassess the existing controls.
“For example, know your employee policies and procedures, levels of authorisations and firewalls between the front, middle, and back offices, and information technology security protocols, among other areas of the operations,” the Executive Director said.
McFarlane further emphasised that no system of anti-fraud procedures will be fully effective, “without concerted vigilance on the part of customers”.
Consequently, he said the FSC “will also be working with the [securities] industry to improve the knowledge and the opportunities for clients to exercise greater and more effective due diligence”.