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More flaws apparent in US State Department report
Published on September 1, 2017 Email To Friend    Print Version


By Caribbean News Now contributor

WASHINGTON, USA -- More flaws have become apparent in the 2017 International Narcotics Control Strategy Report (INCSR) published in March by the Department of State, Bureau for International Narcotics and Law Enforcement Affairs.

The veracity of the report has already been attacked by Antigua and Barbuda, Barbados and St Kitts and Nevis for its numerous false and/or unsubstantiated claims.

Questions are now being asked on both sides of the Atlantic as to why countries such as Canada and the United Kingdom, which have just as effective if not better supervision of financial institutions than the US in place, are, along with every single Caribbean jurisdiction, listed as “Major Money Laundering Countries” contrary to the statutory definition of such under US law.

The INSCR Volume II acknowledges on page 7 under the heading “Legislative Basis and Methodology for the INCSR” that a major money laundering country is defined by statute as one “whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking” (FAA § 481(e)(7)).

However, for the purposes of the report, the State Department has adopted expanded criteria for its assessment of major money laundering countries, namely, all countries and other jurisdictions whose financial institutions and/or non-financial businesses and professions or other value transfer systems engage in transactions involving significant amounts of drug-related proceeds.

Nevertheless, the list of such countries enumerated in the report: “Major Money Laundering Countries in 2016” uses the statutory term without any relevant qualification, thereby asserting, apparently falsely, that the countries listed fall within the precise definition set out in US law.

When asked for its reaction or comments as to what appears to be the unilateral and arbitrary adoption of extra-statutory criteria by the Bureau for International Narcotics and Law Enforcement Affairs for the purposes of defining other counties as major money laundering jurisdictions contrary to US law, a State Department spokesperson responded with a masterpiece of obfuscation:

“The criteria for choosing countries for inclusion in the INCSR Volume II did change between 2016 and the 2017 edition released in March. In previous reports the INCSR approached money laundering as the proceeds from all serious crime.

“However, the law is clear in its focus on narcotics-related money laundering, not ‘all serious crimes’… With this in mind, the Department of State changed the methodology used in compiling the INCSR Volume II report. A primary source for determining which countries would be identified for inclusion in the INCSR Vol II is now the list of countries included in INCSR Volume I, which focuses on the narcotics trade.”

However, the latest assertion that the countries identified for inclusion in the INCSR Volume II is now the list of countries included in Volume I, which focuses on the narcotics trade, itself appears to be flawed given that Volume II clearly states that the “following countries/jurisdictions have been identified this year” [2017] and then goes on to publish the expanded list, which as noted includes Canada and the United Kingdom.

In an earlier rejection of the claim in the INSCR that money laundering is one of the major sources of illicit funds in Antigua and Barbuda, the country’s ambassador to the US, Sir Ronald Sanders, noted that all domestic banks operating in Antigua are tightly regulated by the Eastern Caribbean Central Bank (ECCB).

Canada’s largest bank, the Royal Bank of Canada (RBC), which operates a branch in Antigua agreed with Sanders.

“Royal Bank is well aware of the 2017 report by the US Department of State and the subsequent comments from Ambassador Sanders about the banking environment of Antigua and Barbuda. As Sir Ronald’s statement indicated, all domestic banks operating in Antigua, including RBC, are ‘tightly regulated’ by the Eastern Caribbean Central Bank (ECCB).

“With operations in 17 countries in the Caribbean, including the branch in Antigua, RBC complies with the highest AML standards set by our Canadian regulator, The Office of the Superintendent of Financial Institutions, and those established by our Caribbean regulators, including the ECCB, and the Office of the National Drug and Money Laundering Control Policy. Certain other key stakeholders, such as our US-based correspondent banking partners, also have high expectations of our AML Compliance Programs, which we strive to meet.

“We therefore take a firm stand against money laundering and terrorist financing and ensure that all our clients understand their obligation to provide accurate and complete information when opening an RBC account. We also take very seriously our responsibility to identify and report any unusual or suspicious activity to local authorities.

“RBC is an internationally recognized leader in providing secure, credible and legal financial services, with a long standing history of compliant operations in the Caribbean. We will continue to work closely with all our regulators and stakeholders to ensure that our money laundering risk is appropriately mitigated,” said Nicole Duke-Westfield, senior manager – media relations, RBC Financial (Caribbean).

Marcelo Gomez-Wiuckstern, director, international banking communications, at Scotiabank, which also operates branches in the Caribbean, concurred: “To align with heightened global regulatory requirements in the industry, Scotiabank deploys rigorous due diligence practices and fully complies with AML regulations in countries where we operate.”

Meanwhile, yet another US government agency has contradicted the State Department’s claim that it sought and received assistance from a number of other agencies in compiling the INCSR, including the Department of Homeland Security.

In this latest instance, in response to a Freedom of Information Act (FOIA) request for copies of all records relating to any information sought by and/or provided to the Department of State by the Department of Homeland Security in connection with the report relating to Antigua and Barbuda contained in the (INSCR 2017) and any requests for such information, Immigration and Customs Enforcement (ICE) said it has conducted a search of the ICE Office of Public Affairs (OPA) for responsive records and “no records responsive to your request were found”.

Related articles:
Antigua-Barbuda rejects US narcotics control report
Antigua-Barbuda ambassador questions accuracy of US State Department report
Barbados joins list of countries challenging veracity of US State Dept report
St Kitts-Nevis joins regional rejection of US State Department report

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