US Banks Warned of Money Laundering Risks in Antigua and Barbuda

A Warning from the US Treasury Department

The US Treasury Department has issued a warning to banks and financial institutions to exercise enhanced scrutiny over transactions linked to Antigua and Barbuda, citing concerns over the island nation’s weakened anti-money laundering laws.

Weakened Anti-Money Laundering Laws in Antigua and Barbuda

• Recent changes made by the government of Antigua and Barbuda have undermined supervision of offshore banks.
• The amendments to the Money Laundering (Prevention) Act have strengthened bank secrecy, limiting the scope of investigations and infringing on international cooperation.

A History of Concerns

US regulators have been concerned about the operation of Antigua and Barbuda’s offshore financial sector for some time. However, recent changes made in November 1998 have further eroded its effectiveness.

The Role of the International Financial Sector Authority (IFSA)

• The government has vested authority in a new International Financial Sector Authority (IFSA), whose board includes representatives from the offshore banks it is supposed to regulate.
• This move violates the Basle Principles, widely accepted international standards for bank supervision.

US Efforts to Combat Money Laundering

US Treasury officials believe that these changes will undermine efforts to crack down on money laundering through offshore accounts. “We believe that recent actions taken by Antigua and Barbuda will undermine US efforts to combat international money laundering,” said Under Secretary for Enforcement James E. Johnson.

A Warning to US Banks and Financial Institutions

• The Treasury advisory is available online.
• US banks and financial institutions are urged to take note of the warning and adjust their procedures accordingly to mitigate the risks associated with money laundering in Antigua and Barbuda.