Dirty Money, Tax and Banking: Recent Developments Concerning Mutual Legal Assistance and Money Laundering in the Caribbean Region and the Region's Responses
| Pages | 338-344 |
| Published date | 01 April 2002 |
| Date | 01 April 2002 |
| DOI | https://doi.org/10.1108/eb027316 |
| Author | Fitz‐Roy Drayton |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 5 No. 4
Dirty Money, Tax and Banking: Recent
Developments Concerning Mutual Legal Assistance
and Money Laundering in the Caribbean Region and
the Region's Responses
Fitz-Roy Drayton
The Caribbean has been the focus of a lot of attention
over the last year with respect to money laundering.
This paper will firstly examine the main international
initiatives affecting money laundering in the Carib-
bean countries. In the second part of the paper there
will be a review of the regional efforts that have
been taken by Caribbean countries to address the
problem of money laundering.
INTERNATIONAL INITIATIVES
CONCERNING THE CARIBBEAN BASIN
Not for the first time, the importance of controlling
money laundering in the Caribbean was highlighted
in 1996. A series of meetings was held with the heads
of government in the Caribbean and their counter-
parts in Europe. The principal objectives of the meet-
ings were to discuss security issues that affected the
region. They were held in Barbados and led to a
regional strategy being developed to combat drug
trafficking and money laundering. This has become
known as the 'Barbados Plan of Action'. The
Barbados Plan of Action described the islands of the
Caribbean as follows: '. . . Caribbean countries formed
a
geostrategic
arc of
democracy
which was fundamental to
the maintenance of peace and security in the western hemi-
sphere.'1
This description probably had in mind the fact that
the archipelago of islands in the Caribbean Sea is
situated between the producers of cocaine in South
America and its major consumers in North America
and Europe. As a transhipment route the islands had
become particularly important for the burgeoning
cocaine trade. It was estimated by the United Nations
that 310 metric tonnes of cocaine were transhipped
through the Caribbean in 1999
alone.2
The description would also have taken into
account the growth of offshore financial services
that are increasingly being offered by the countries
of the Caribbean. This industry has grown in signifi-
cance in recent years because of the sheer volume of
the world's assets that are now held by offshore insti-
tutions. 'Nearly sixty jurisdictions, scattered around
the globe, comprise the constantly expanding
off-
shore financial services sector. A recent study found
that by the end of 1997, the share of the cross-
border assets held in the offshore sector ($4.2 trillion)
accounted for more than half of all cross-border assets
held globally.'3
Of all the world's offshore banks a large number
are in the Caribbean Basin. 'Of offshore banks,
42%
are located in the Caribbean and Latin America,
29%
in Europe, 19% in Asia and the Pacific and 10%
in Africa and the Middle East.'4 Other offshore ser-
vices such as International Business Corporations
(IBCs) are also largely concentrated in the Caribbean
region.5 The 'UN Offshore Forum' paper estimated
that of the nearly 2.5 million IBCs registered globally
38%
were registered in the Caribbean and Latin
America, 25% in Europe, 29% in Asia and the Pacific
and 8% in Africa and the Middle East.
The financial services industry in the Caribbean
region has grown rapidly in the last 30 years.6
Latest figures are that the Bahamas has 413 offshore
banks and 100,000 IBCs, the Cayman Islands have
570 banks and 50,951 IBCs, Dominica has six offshore
banks and 6,596 IBCs, Panama 34 offshore banks and
372,667 IBCs, St Kitts and Nevis one offshore bank
and 19,500 IBCs and St Vincent and the Grenadines
28 offshore banks and 11,000 IBCs. The fifth largest
financial centre in the world is now the Cayman
Islands.
A further factor that has drawn Caribbean coun-
tries to the attention of international organisations is
that there have often been ineffective means to deal
with criminals, even if they are caught. The Barbados
Plan of Action refers to this as follows:
'The Meeting acknowledged the inability of
criminal justice systems to deal effectively with
major cases of drug trafficking and money launder-
ing, and recognized the need for such cases to be
Journal of Money Laundering Control
Vol.
5,
No.
4,
2002.
pp.
338-344
© Henry Stewart Publications
ISSN 1368-5201
Page 338
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