A Tale of Two Regions: The Latin American and Caribbean Money‐Laundering Connection
| Pages | 312-316 |
| Published date | 01 February 1999 |
| DOI | https://doi.org/10.1108/eb027197 |
| Date | 01 February 1999 |
| Author | Shazeeda A. Ali |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 2 No. 4
A Tale of Two Regions: The Latin American and
Caribbean Money-Laundering Connection
Shazeeda A. Ali
It is an undisputed fact that in the entangled web spun
by money launderers no individual country or single
region stands alone — each is connected by a trail of
dirty dollars.
In this sordid tale of crime, money and the
unbridled thirst for wealth, two regions that have
become inextricably intertwined are Latin America
and the Caribbean — their union forged by the
accident of geography and their future immortalised
by the ingenuity of the drug industry.
The islands of the Caribbean are located between
North and South America and have always been
used for hopscotching between the north and south.
Historically, this has facilitated important economic
and political ties being made between the Americas
and the Caribbean.
However, there has been a concurrent sinister
exploitation of this route as criminals, particularly
drug traffickers, have come to recognise and utilise
the Caribbean's strategic position.
Since the early 1980s the Caribbean has become the
first link in the drug distribution chain and today it is
considered to be a major transit point in the trans-
portation of cocaine and heroin from the producing
countries in South America to the consuming
countries in North America and Western Europe.
Indeed, it has been estimated that over a third of
the total world supply of cocaine passes through the
Caribbean each year.
In order to expedite this flow of drugs the South
American cartels, particularly those in Colombia,
have had to foster ties with indigenous criminal
groups in the Caribbean, resulting too in a rise of
drug gangs operating in the Caribbean.
The drug trade has produced a staggering level of
illegally obtained wealth in the two regions. While it
is difficult to ascertain the precise amount of money
involved, certainly in the billion dollar range, given
the high cost of narcotics on the world market the
financial power of Caribbean traffickers is, as one
writer says, 'bewildering to the point of manic depres-
sion'. Add to this the money earned by the drug lords
located at either end of the Caribbean and the volume
of illicit wealth generated is truly catatonic.
Consequently, the drug trade has produced a
significant source of the wealth requiring laundering
because money is no use unless it can be spent, and it
can only be spent without attracting law enforce-
ment's attention if its unlawful origin is obscured.
While it has been said that in the field of drug
trafficking the Caribbean is a mere pawn, in the
money-laundering game its role is perceived to be
that of a major player. This is because several of its
attributes, including its proximity to the US and its
developed offshore financial services industry, have
been abused by criminals seeking to cleanse their
illicit wealth.
The US Department of State has declared several
Caribbean countries to be major money-laundering
centres, based on a finding that their financial institu-
tions engage in currency transactions involving
significant amounts of criminal proceeds.
In fact a decade ago the Caribbean became known
as 'the first stop for most Latin American drug dollars
moving through international channels'.
THE RISK FACTORS
The following is a brief examination of some of
the factors which have increased the Caribbean's
vulnerability to money laundering, particularly in
relation to Latin America. First, and as previously
stated, there is the matter of geography. The position
of the Caribbean makes it a virtual maritime and
aerial crossroads between the US and Latin America,
a factor which has exposed it to currency smuggling.
Indeed the Financial Action Task Force has
reported that there is considerable physical move-
ment of currency from North America and Western
Europe into the Caribbean and Central American
areas.
Since much of this wealth represents the profits
of crime it is transported secretly in order to avoid
detection.
This finding has been substantiated by the World
Customs Organisation, which has discovered drug
traffickers reverting to 'old-fashioned' smuggling of
cash in order to repatriate their funds. This reversal
of methodology may be attributed to the increase
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