Financial Institutions Warned About Dominica’s Bank Secrecy
US Treasury Issues Advisory on Suspicious Transactions Involving Dominica
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a warning to financial institutions in the United States to be on high alert for suspicious transactions involving Dominica, a small island nation in the Caribbean.
Background
Dominica Identified as Non-Cooperative in Fight Against Money Laundering
Dominica has been identified by the Financial Action Task Force on Money Laundering (FATF) as non-cooperative in the fight against money laundering. The country’s laws and regulations have significant loopholes that make it easy for criminals to launder money and avoid detection.
Key Issues with Dominica’s Counter-Money Laundering Regime
- Lack of Effective Supervision: Offshore banks in Dominica are not subject to effective supervision, making it difficult for authorities to track down illicit funds.
- Bearer Shares: International Business Companies (IBCs) in Dominica can issue bearer shares, which can be used to hide the true ownership of companies and assets.
- Limited Access to Transactional Information: The Attorney General may request access to transactional information maintained by IBCs via court order, but only if the investigation relates to a criminal offense under Dominican law.
FinCEN Advisory
Enhanced Scrutiny Required
FinCEN advises financial institutions to give enhanced scrutiny to any transactions originating in or routed through Dominica, or involving entities organized or domiciled in Dominica. Institutions subject to suspicious transaction reporting rules should carefully examine the available facts relating to such transactions to determine if they require reporting.
Important Note
The issuance of this advisory does not mean that US financial institutions should curtail legitimate business with Dominica. However, it is essential for institutions to be vigilant and report any suspicious transactions to prevent money laundering and other financial crimes.
Technical Assistance Offered
FinCEN has offered to provide technical assistance to Dominican officials as they work to remedy the deficiencies in their counter-money laundering systems.