Grenada’s Banking Industry Under Scrutiny: Financial Crimes on the Rise

Warning Issued by US Treasury Department

The United States Department of the Treasury has issued a warning to banks and financial institutions operating in the US to exercise enhanced scrutiny when dealing with transactions involving Grenada. The Caribbean country’s banking industry has been identified as vulnerable to money laundering and other financial crimes.

Overview of Grenada’s Banking Industry

• Domestic Financial Sector: Comprised of five commercial banks, 15 registered insurance companies, and several other entities.
• Counter-Money Laundering Regime: Criticized for its lack of effectiveness due to inadequate access to customer account information and limited cooperation with foreign law enforcement agencies.

History of Non-Cooperation

In September 2001, the Financial Action Task Force on Money Laundering (FATF) identified Grenada as non-cooperative in the fight against money laundering. However, the country has taken some positive steps in recent years to strengthen its anti-money laundering regime, including:

• Issuance of Counter-Money Laundering Regulations
• Introduction of New Penalties for Non-Compliance

Structural Weaknesses and Opportunities for Financial Crimes

Despite these efforts, the structural weaknesses in Grenada’s laws continue to create opportunities for financial crimes, allowing criminals to launder and protect the proceeds of crime with relative ease.

Warning from US Treasury Department

The warning does not mean that US financial institutions should curtail legitimate business with Grenada. Rather, it is a call for increased vigilance and cooperation between financial institutions and law enforcement agencies to prevent and detect financial crimes.

Enhanced Scrutiny Required

Banks and other financial institutions operating in the US are being advised to carefully examine transactions involving Grenada to determine if they require reporting under suspicious transaction rules. Financial institutions subject to the Bank Secrecy Act but not yet subject to specific suspicious transaction reporting rules should also consider these transactions with relation to their reporting obligations.

Protection from Liability

The Treasury Department will consider any reports of suspicious transactions related to Grenada to constitute a report relevant to a possible violation of law or regulation, providing protection from liability for reporting of suspicious transactions.