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Financial Crimes on the Rise in Dominica: US Warns Banks to be Vigilant
The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a warning to banks and financial institutions operating in the US to exercise enhanced scrutiny over transactions involving entities or individuals from the Caribbean island nation of Dominica.
Dominica’s Money Laundering Concerns
Dominica, known for its agricultural exports and rapidly expanding offshore financial services sector, has been identified by the Financial Action Task Force on Money Laundering (FATF) as non-cooperative in the fight against money laundering. This is due to serious systemic problems in its counter-money laundering regime, including:
- A lack of effective supervision and regulation
- Laws that do not criminalize money laundering unless linked to narcotics-related offenses
- Offshore banks subject to no effective supervision, allowing for anonymous accounts without restriction
- International Business Companies (IBCs) issuing bearer shares and maintaining strict secrecy over transactional information
FinCEN Advisory
The FinCEN advisory urges banks and other financial institutions operating in the US to give enhanced scrutiny to any transactions originating in or routed through Dominica, or involving entities organized or domiciled, or persons maintaining accounts, in Dominica. The advisory also notes that the Treasury Department will consider any report relating to a transaction described in the Advisory to constitute a report of a suspicious transaction relevant to a possible violation of law or regulation.
US Assistance
The US government is offering technical assistance to Dominican officials as they work to remedy the deficiencies in their counter-money laundering systems. Despite some positive aspects of Dominica’s laws and regulations, including:
- Requirements for financial institutions to retain account opening information and transaction records for seven years
- Enhanced scrutiny and reporting requirements for banks and other financial institutions
The lack of effective supervisory and enforcement mechanisms allows criminals to increase their chances of evading investigation or punishment. The FinCEN advisory aims to raise awareness among US financial institutions about the increased risk of money laundering and other financial crimes associated with Dominica.