Financial Crime World

Grenada: A Hotbed for Financial Crimes, Warns US Treasury Department

The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory urging financial institutions operating in the United States to exercise enhanced scrutiny over transactions involving Grenada. The Caribbean country, known for its offshore banking sector and lack of transparency, poses significant risks for money laundering and other financial crimes.

Grenada’s Financial Sector

According to FinCEN, Grenada’s domestic financial sector is comprised of:

  • 5 commercial banks
  • 15 registered insurance companies
  • Several credit unions and cooperative societies

However, the country’s offshore financial sector is much larger, with:

  • 22 offshore banks
  • 14 licensed trust companies
  • Thousands of international business companies

Legal and Regulatory Systems

Grenada’s legal and regulatory systems have been criticized for lacking sufficient mechanisms to prevent money laundering and other financial crimes. Specifically, FinCEN notes that:

  • Grenadian authorities are unable to compel supervised financial institutions to produce customer account information without a court order
  • Secrecy laws prevent the sharing of customer information with law enforcement agencies

International Cooperation

Grenada has limited ability to share information and cooperate with foreign counterparts in money laundering investigations. Additionally, its failure to respond timely to US law enforcement requests for information suggests a lack of effective procedures for assisting foreign authorities in such investigations.

FATF Warning

The Financial Action Task Force on Money Laundering (FATF), an international organization aimed at combating money laundering, has identified Grenada as non-cooperative in the fight against money laundering. Despite recent efforts by Grenada to strengthen its anti-money laundering regime, FinCEN remains concerned about the country’s systemic weaknesses.

Advisory for US Financial Institutions

As a result, US financial institutions are advised to give enhanced scrutiny to all transactions involving entities or persons with connections to Grenada. This includes:

  • Transactions originating in or routed through Grenada
  • Those involving entities organized or domiciled in Grenada

While the advisory does not recommend curtailing legitimate business with Grenada, it emphasizes the importance of reporting suspicious transactions to FinCEN. US officials are also willing to provide technical assistance to Grenadan authorities as they work to address the deficiencies in their counter-money laundering systems.