Compliance Risks in Banking Sector in Antigua and Barbuda Pose Significant Threats, Experts Warn
Introduction
A recent report by VinciWorks has highlighted the significant compliance risks faced by banks operating in Antigua and Barbuda. The report identifies corruption, drug trafficking, fraud, human trafficking, and cybercrime as major threats to the financial system.
Estimated Annual Losses Due to Financial Crime
According to the report, an estimated $34 million to $86 million worth of criminal proceeds is laundered annually through the country’s financial system. This highlights the need for robust compliance measures to prevent financial crime and maintain public trust.
Lack of Coordination Between Authorities
Experts say that the country’s focus on drug trafficking has led to a narrow approach to combating money laundering, with the Royal Police Force of Antigua and Barbuda prioritizing cases involving drugs over other forms of financial crime. This lack of coordination between authorities has resulted in low-quality Suspicious Activity Reports (SARs) from financial institutions, hampering efforts to tackle financial crime.
Risks Posed by Professional Services
The report also highlights the risks posed by professional services such as:
- Lawyers
- Accountants
- Real estate agents
- Money services businesses
- Car dealerships
- International banks
These industries are vulnerable due to their lack of regulation and supervision, making them attractive for money laundering.
Used Car Industry: A High-Risk Sector
The used car industry is particularly vulnerable due to its lack of regulation and supervision. Drug traffickers often use this market for money laundering, making it a high-risk sector that requires close monitoring.
Mitigation Strategies
To mitigate these risks, VinciWorks recommends that banks operating in Antigua and Barbuda adopt a risk-based approach to compliance, focusing on:
- Customer due diligence
- Geographic risk assessment
- Ongoing monitoring of transactions
Country-Specific Risks
The report provides a comprehensive guide for businesses operating in Latin America and the Caribbean, outlining key AML challenges, laws, and country-specific risks.
Conclusion
The findings of this report serve as a wake-up call for banks operating in Antigua and Barbuda, emphasizing the need for robust compliance measures to prevent financial crime and maintain public trust. Despite the challenges, experts acknowledge that the country has a strong political will to tackle financial crime, along with technical knowledge and capacity in the finance sector. Recent collaborations with Interpol and the Canadian government have also shown promise in addressing human trafficking.