Proceeds from illicit activities abroad are being laundered through Barbados, according to the latest International Narcotics Control Strategy Report.
The United States report, dated March 2018, said the information was based on a review done last year.
“Narcotics trafficking, money laundering, and firearms trafficking are major sources of illicit funds in the country. In addition to the use of financial institutions, money is laundered through a variety of businesses and through the purchase of real estate, vehicles, vessels, and jewellery,” said the 215-page report, which pointed out that “bearer shares are not permitted [and] there are no free trade zones and no domestic or offshore casinos”.
Barbados was one of 92 countries examined under the money laundering and financial crimes section of the 2018 report, which included the United States, as well as several Caribbean countries, including the Bahamas, Antigua and Barbuda, Dominica, Cuba, Guyana, Haiti, Jamaica, St Kitts and Nevis, St Lucia, Trinidad and Tobago, St Vincent and the Grenadines and the United States Virgin Island.
The report described Barbados as a regional financial centre with a sizeable international business centre (IBC) presence whose “susceptibility to money laundering is primarily associated with the domestic sale of illegal narcotics and the laundering of foreign criminal proceeds.
“There are reports of proceeds from illicit activities abroad being laundered through domestic financial institutions,” the INCSR 2018 said.
It recalled that authorities here revoked the licences of four international businesses after they were found guilty of money laundering and corruption in other jurisdictions, including the US.
“The Government should continue to take a more aggressive approach to conducting examinations of the financial sector and asserting more control over vetting and licensing of offshore entities,” it recommended.
Minister of International Business Donville Inniss, who had announced last October that his ministry would be revoke the four licences, would not comment on this latest report, which pointed out that the local Financial Intelligence Unit (FIU) was administrative in nature, which “means that it does not have the capacity to do investigative work or resolve legal issues”.
It therefore recommended that “the Government of Barbados should allot more resources to ensure the FIU, law enforcement, supervisory agencies, and prosecutorial authorities are fully staffed and have the capacity to perform their duties”.
However, the country was credited for having enacted legislation to address various issues, even though the report pointed out that the island was not party to the United Nations Convention against Corruption (UNCAC).
“Supervision of [non-profit organizations], charities, DNFBPs [designated non-financial businesses and professions], and money transfer services could be strengthened through increased reporting requirements and oversight. Information sharing among regulatory and enforcement agencies also needs improvement,” the counter narcotics report said, while suggesting that “Barbados should become a party to the UNCAC”.
The report said there were “no clear statistics” available on the international business sector “although promotional material suggests there are over 4,000” IBCs.
According to the report, the Central Bank of Barbados, which is responsible for regulating and supervising commercial and offshore banks, trust companies, merchant banks and finance companies, licensed 13 trusts and merchant banks and nine commercial banks and holding companies.
Under volume one of the report, Drug and Chemical Control, which named four Caribbean countries – Jamaica, the Bahamas, Belize and Haiti – as major illicit drug producing countries, it said Barbadian authorities reported a reduction in maritime seizures during 2017 “though it remains unclear if this suggests a reduced flow of drugs via Barbados or increased sophistication of traffickers in evading detection”.
The report noted that 31 participants from the Barbados Revenue Authority were beneficiaries of a financial investigative techniques course last year.
Up to the time of publication, officials of the Barbados International Business Association were unavailable to comment.
However, the government of Antigua and Barbuda has challenged the findings of the INCSR.
The country’s ambassador in Washington, Sir Ronald Sanders, today dispatched a diplomatic note to the US State Department pointing out that “inaccurate, misleading and wrong information in the INCSR has harmed and continues to harm Antigua and Barbuda, particularly in the financial services sector, including the area of correspondent banking relations”.
In these circumstances, the Antigua diplomat said his government was forced to publicly defend the country from the harmful effects of the “inaccuracies and misinformation” in the INCSR 2018 which identifies Antigua and Barbuda and all other Caribbean Community countries as major money laundering jurisdictions.
“The facts of the matter are that the assets under management in Antigua and Barbuda’s entire financial sector, offshore and onshore, is less than US$5 billion, of which the offshore sector is less than US$2.5 billion. In comparison with other jurisdictions, the financial sector is miniscule, and it is an over exaggeration, bordering on malice, to describe it as ‘a major money laundering jurisdiction,’” Sir Ronald said.
In his detailed response, Sir Ronald took particular issue with the claims made in relation to its Citizenship by Investment Programme (CIP), which the report said made it susceptible to money laundering and other financial crimes.
In this regard, specific mention was made of the February 2017 approval by Antigua and Barbuda of a CIP application for Alexandre Cazes [now deceased], the alleged operator of AlphaBay, the world’s largest dark web marketplace.
However, Sir Ronald pointed out that Cazes was a Canadian citizen with access to the United States through his Canadian passport, that does not require a visa for entry into the United States of America, whereas by using an Antigua and Barbuda passport, he would have required a visa and would have had to be interviewed by US authorities.
“So, possession of Antigua and Barbuda citizenship was of no value to Cazes to enter the United States,” Sir Ronald argued.
He also pointed out that Cazes’ CIP application was shared with appropriate US authorities on December 3, 2016, who had issued a ‘no derogatory information found’ response on Cazes.
Furthermore, he said, police clearance reports from the Royal Canadian Mounted Police and the Special Branch of the Royal Thai Police Force were submitted with the application, as required by law. These indicated that there were no criminal records on Cazes, who, according to the Washington Post, was however arrested by Thai police on July 5, 2017 “at the request of US authorities”.
“On this issue, Antigua and Barbuda maintained its strict vetting procedures and Cazes’ CIP application would not have been considered if the CIP representatives had not been told by the US authorities on 3rd December 2016 that they had no derogatory information concerning him,” Sir Ronald pointed out, while calling on the United States government to provide evidence to substantiate its claims about the CIP.
Sir Ronald also took issue with a bold declaration made in the report that “money laundering, narcotics trafficking, gaming, and firearms trafficking are sources of illicit funds in the country”.
In the absence of supporting evidence, Sir Ronald said such claims were nothing short of “reckless”.
He was equally put off by a suggestion that there was a strong casino presence in Antigua and Barbuda which has “two small casinos with three locations that had a combined turnover in 2016 of US$22 million.
“By comparison with ‘small’ casinos in the United States the mini casinos in Antigua and Barbuda are of no significance whatsoever, either in the size of their operations or the money that passes through them,” he stressed.
He also pointed out that there were only four existing operators of offshore gaming enterprises, who, in addition to being tightly regulated, were not served by any bank, onshore or offshore, in Antigua and Barbuda for the acceptance of wagers or the remittance of winnings.
“Such transactions are done by financial services external to Antigua and Barbuda. The only transactions handled by banks in Antigua and Barbuda relate to settlement of local obligations such as wages and payment of utility bills. Therefore, contrary to the unsubstantiated claim in the INCSR 2018, the chance of any money laundering transactions is extremely remote.”
Sir Ronald also rubbished claims of “two high level officials” involved in corrupt practices, while acknowledging that claims had been made by an employee of the Brazilian firm, Odebrecht, back in 2016, that he paid a bribe to a “consular official from Antigua and an intermediary to a high-level government official in Antigua” to withhold documents from Brazilian authorities who were investigating Odebrecht.
However, he said the official involved was promptly dismissed while the so-called “intermediary to a high-level government official”, made a public statement of his involvement, admitting that he was not an intermediary for any other person and claiming that monies paid to him were for legitimate professional functions.
“The US State Department was informed by diplomatic note that the Antigua and Barbuda Government had been providing documents and information to the Brazilian authorities, six months BEFORE the alleged bribe to stop documents occurred. Indeed, the Brazilian authorities have officially complemented the Government of Antigua and Barbuda for the high level of its cooperation,” Sir Ronald added.