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by ‘Caribbean Professional’
The Financial Action Task Force (FATF) is an inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. To achieve global implementation of the FATF Recommendations, the FATF relies on a global network of nine FATF-Style Regional Bodies (FSRBs), in addition to its own 39 members. Caribbean countries, including the Cayman Islands, play an important role in supporting the FATF mandate and the implementation of the FATF Recommendations via their membership in the Caribbean Financial Action Task Force, one of the nine FSRBs. Notwithstanding the ongoing efforts of qualified professionals, regulators and the governments in Caribbean countries to comply with global anti-money laundering standards and to strengthen their systems and controls, my observation is that they are still targeted by international organisations and the media as havens for fraud and money laundering and as actors who facilitate fraud and money laundering. Meanwhile, citizens of FATF member countries like Canada, Switzerland, United Kingdom and the United States continue to be named by the US Securities and Exchange Commission (SEC) in high-profile money laundering and fraud cases without receiving the harshness of the treatment meted out by the media or international organisations on Caribbean countries when similar activities are attributed to Caribbean countries. In my opinion, this is happening because of an inherent bias by the media and international organisations.
For example, in April 2022, the SEC filed a complaint in connection with an alleged $194 million securities fraud scheme involving fifteen individuals and one company. To carry out the fraud, German, Canadian and UK citizens allegedly formed companies in Nevada, California and Delaware in the United States and disguised their ownership through a complex network. However, the media did not seem to place emphasis on the fact that many breaches occurred within the United States and the parties that facilitated the fraud were citizens of large onshore jurisdictions, some of who are members of the FATF and other international organsations. Instead, some members of the media only pointed to where one of the alleged fraudsters might be residing, which just happens to be in the Caribbean.
Another example is the October 2021 SEC case involving United Kingdom-based Credit Suisse entities, Credit Suisse International, Credit Suisse Securities (Europe) Limited and Credit Suisse AG, London Branch and various Credit Suisse bankers. According to the SEC, the matter concerned an offering fraud and violations of the internal accounting controls and books and records provisions of the Foreign Corrupt Practices Act by Credit Suisse from 2013 to 2016. In connection with the foregoing, the SEC reported that Credit Suisse bankers received kickbacks totalling at least $50 million.
For the role played by Credit Suisse, the SEC said that Credit Suisse Group AG agreed to pay nearly $475 million to US and UK authorities, including an order to pay $99 million to the SEC for a civil penalty, prejudgment interest and disgorgement.
In the Credit Suisse case, I am not aware of any international scrutiny being placed by the United States on London after the alleged kickbacks and fraud or London being referred to by the global media or international organisations as a “haven” for fraud.
In my humble opinion, the treatment of onshore jurisdictions in these examples (and many others like them) highlight a potential bias that may be exercised by some members of the media from time to time. The outcome of such bias, however, is quite serious for Caribbean countries.
The FATF, for example, could, after a scandal “linked” to the Caribbean, ask FATF member countries to apply “countermeasures” or sanctions to a Caribbean island. Some of these measures may include public statements advising member countries not to do business with the relevant Caribbean island or for such member countries and other countries to perform enhanced due diligence procedures when engaging entities or individuals in the Caribbean island. Ultimately, this makes day-to-day business more difficult and may even result in the relevant Caribbean island losing legitimate strategic partners and income.
There is also another impact on business that is often not discussed. This is, in my view, where regulators in Caribbean Islands engage in “over-regulating” i.e., subjecting businesses to high scrutiny and penalties, even for the smallest breaches or desperately seeking to categorise something as a breach when it may not actually satisfy the criteria for a breach. This aggressive approach and imposition of penalties is what I believe the FATF sees as “effective outcomes” i.e., proof that Caribbean countries are “serious” about fighting fraud, anti-money laundering and other financial crimes.
In contrast, the FATF, other international organisations and the media seemingly turn a blind eye to fraud, money laundering and other activities occurring in big, non-Caribbean countries, as illustrated by the above, real cases. I say “seemingly turning a blind eye” because, after the relevant fines are paid for crimes by bad actors in big, non-Caribbean countries, such countries don’t find themselves getting sanctioned or having countermeasures applied to them or being scathed by the media, at least not to the same extent that small Caribbean nations might.
Caribbean countries need more people like Barbados Prime Minister, Mia Mottley, who seems to be asking international regulators for a level playing field and not disproportionate measures targeted at the Caribbean which have unfair, substantial and negative economic impacts on the Caribbean, its people and business there.