Grenada Financial Crimes: Treasury Department Issues Warning
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory warning banks and financial institutions in the US to exercise enhanced scrutiny on transactions originating from, routed through, or involving entities and accounts in Grenada.
Background
Grenada is a commonwealth country in the Caribbean with a domestic financial sector comprising commercial banks, insurance companies, cooperative societies, credit unions, and money remitters. However, its offshore financial sector is more extensive, with 22 offshore banks, 14 licensed trust companies, two company managers, and 4,000 international business companies.
Weaknesses in Grenada’s Financial System
Despite efforts to strengthen its anti-money laundering regime, Grenada’s legal, supervisory, and regulatory systems still suffer from significant weaknesses. These include:
- Lack of ability for financial supervisors to compel institutions to produce customer account information
- Secrecy laws that prevent disclosure of customer account information to law enforcement authorities
- Limited ability to share information with foreign counterparts
- Failure to respond in a timely fashion to US law enforcement requests
FATF Classification
Grenada’s deficiencies led the Financial Action Task Force on Money Laundering (FATF) to identify it as non-cooperative in the fight against money laundering in September 2001. However, Grenada has recently taken steps to address some of these issues, including issuing counter-money laundering regulations and publishing anti-money laundering guidelines.
US Treasury Department Concerns
Despite these efforts, the US Treasury Department remains concerned about the significant opportunities for money laundering and crime that exist in Grenada’s financial system. As a result, banks and financial institutions operating in the US are advised to give enhanced scrutiny to all transactions involving entities and accounts in Grenada.
Guidance for US Financial Institutions
The advisory emphasizes that the issuance of this warning does not mean that US financial institutions should curtail legitimate business with Grenada. Instead, it is intended to alert them to the need for increased vigilance in detecting and reporting suspicious transactions.
Safe Harbor Provision
To clarify the application of the “safe harbor” to transactions described in the advisory, the Treasury Department will consider any report relating to such a transaction to constitute a report of a suspicious transaction relevant to a possible violation of law or regulation.
In summary, US financial institutions are advised to exercise enhanced scrutiny on transactions involving entities and accounts in Grenada due to concerns about money laundering and crime. While legitimate business with Grenada is not discouraged, increased vigilance is necessary to detect and report suspicious transactions.