Financial Institutions Warned: Enhanced Scrutiny Needed for Transactions Involving Antigua and Barbuda

Financial Crimes Enforcement Network (FinCEN) Issues Advisory on Enhanced Scrutiny

In a move aimed at preventing financial crimes, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory urging banks and other financial institutions to exercise heightened caution when dealing with transactions involving Antigua and Barbuda.

Concerns Over Anti-Money Laundering Laws and Oversight

The Caribbean nation, known for its offshore banking sector, has raised concerns among regulators in the US, UK, and elsewhere due to a series of recent developments that have weakened its anti-money laundering laws and oversight. The government’s amendment of the Money Laundering (Prevention) Act in November 1998 significantly relaxed the statute, while changes to the supervision of the offshore financial services sector have raised questions about the independence of the regulatory body.

Collapse of European Union Bank Raises Concerns

The collapse of the European Union Bank in August 1997, which was based in Antigua and Barbuda and had boasted of the nation’s bank secrecy laws as an attractive feature for depositors, further heightened concerns about the country’s financial sector. The government’s actions are seen as a threat to international efforts to combat money laundering and other financial crimes.

Why Enhanced Scrutiny is Necessary

• FinCEN warns that institutions subject to suspicious activity reporting rules should carefully examine transactions involving Antigua and Barbuda, particularly those exceeding $5,000 in value.
• This includes transactions with offshore banks licensed by the country, as well as those involving both commercial banks and offshore institutions.
• The advisory emphasizes that financial institutions must determine whether such transactions may be related to money laundering or other illicit activities, and report any suspicious activity in accordance with applicable law.

What this Means for Financial Institutions

• Reports of suspicious transactions related to Antigua and Barbuda will be considered relevant to possible violations of law or regulation.
• Institutions subject to the Bank Secrecy Act must carefully examine transactions involving the country and report any suspicious activity accordingly.
• Institutions not yet subject to specific suspicious activity reporting rules should consider such transactions in relation to their reporting obligations under other applicable law.

Conclusion

The FinCEN advisory serves as a warning to financial institutions about the heightened risks associated with transactions involving Antigua and Barbuda. By exercising enhanced scrutiny, financial institutions can help prevent financial crimes and ensure compliance with relevant laws and regulations.