Financial Crime World

Title: FinCEN Warns US Banks of Money Laundering Risks in Dominica’s Offshore Financial Sector

FinCEN Issues Advisory on Money Laundering Risks in Dominica

The Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury issued a new advisory on Thursday, warning American banks and financial institutions about heightened money laundering risks connected to Dominica’s offshore financial sector.

Key Issues with Dominica’s Offshore Financial Sector

  1. Limited regulations: Money laundering is not considered a crime unless it is connected to narcotics-related offenses in Dominica.
  2. Lack of supervision: Offshore banks in Dominica face no effective supervision, allowing the issuance of anonymous accounts and no obligation to report suspicious transactions.
  3. Secrecy and non-cooperation: Dominican International Business Companies (IBCs) can issue bearer shares, shielding transactional information with strict secrecy laws. Information access is limited to the Attorney General with a court order.

Other Concerns Raised by FinCEN

  • Designation as non-cooperative: Dominica has been designated as non-cooperative in the global effort against money laundering by the Financial Action Task Force on Money Laundering (FATF).
  • Absence of effective oversight: The commitment to financial secrecy and the absence of effective Dominican oversight mechanisms to prevent and detect money laundering increases the likelihood of transactions with Dominican entities and accounts being utilized for illicit purposes.

Recommendations for US Banks and Financial Institutions

  1. Enhanced scrutiny: US banks and financial institutions must exercise enhanced scrutiny towards any transaction originating from or relating to Dominica.
  2. SARs requirements: Institutions subject to the Suspicious Activity Reports (SARs) requirements under the Bank Secrecy Act should carefully examine transactions meeting the threshold for potential reported violations.
  3. Non-compliant institutions: Non-compliant institutions should consider such transactions in the context of their other reporting obligations.

Assistance from US Government

The US government stands ready to provide assistance to Dominica as they address the aforementioned deficiencies. For more information on FinCEN and its advisories, visit their website at www.fincen.gov or contact their Office of Communications.

Please note that this advisory does not mean US financial institutions should limit legitimate business activities with Dominica.