ST JOHN’S, Antigua -- The government of Antigua and Barbuda said on Thursday that the 2017 US International Narcotics Control Strategy Report (INSCR 2017) misrepresents the situation with regard to its citizenship by investment programme (CIP) and its anti-money laundering and countering financing of terrorism (AML/CTF) regimes.
Contrary to the characterization in the report, Antigua and Barbuda operates a CIP that adheres to the highest international standards and best practices. Similarly, with regard to its AML/CTF regime, Antigua and Barbuda has been found by every competent and authoritative international body to be compliant with their rules. These include the Caribbean Financial Action Task Force (CFATF), the Financial Action Task Force (FATF) and the OECD Global Forum on Tax Information Exchange.
The government said it is, therefore, perplexed over the depiction in the INCSR 2017, particularly as it provides no evidence of its claims and assertions, many of which bear no attribution or source of information.
In this connection, the government of Antigua and Barbuda has invited the US government, through the Department of State, to present the evidence supporting the claims and assertions contained in the report and has undertaken, upon the production of such evidence, to rectify any and all proven claims.
Antigua and Barbuda reiterated its strong and abiding commitment to upholding the highest international standards, and implementing best practices, in relation to its CIP and AML/CTF regimes, which is why it readily subjects itself to peer reviews by the CFATF/FATF and the OECD Global Forum.
Having called upon the US government to proffer the evidence that supports the claims and assertions contained in the INCSR 2017, the government of Antigua and Barbuda has drawn attention to the report’s misleading and incorrect information.
The 2017 INCSR claims that:
Antigua and Barbuda is an offshore center which continues to be vulnerable to money laundering and other financial crimes. Its relatively large financial sector and internet gaming industry add to its susceptibility. Antigua and Barbuda also operates a citizenship by investment program (CIP) that increases its susceptibility to money laundering and other financial crimes. Antigua and Barbuda is a transit point for illegal drugs going to the United States and Europe.
Note should be taken that no evidence is provided or any sources given for these bald assertions.
Further, the reality of the Antigua and Barbuda situation shows the following factual situation:
Compliance with FATF rules
Antigua and Barbuda, has not appeared on the FTAF list of "Non-Cooperative Countries or Territories" since its exit in 2013 from the FATF-AARG enhanced follow up process. Indeed, the FTAF states that Antigua and Barbuda has demonstrated “significant progress” in improving its anti-money laundering/countering the financing of terrorism efforts, and is therefore no longer subject to FATF’s monitoring process under its ongoing global AML/CFT compliance process.
Small Offshore Sector
The INCSR claims that Antigua and Barbuda’s “relatively large financial sector and internet gaming industry” add to its susceptibility. But, by no stretch of the imagination could Antigua and Barbuda’s financial sector and internet gaming industry be considered even “relatively large”. The Global Financial Centres Index (GFCI), widely quoted as a top source for ranking financial centers, has not listed Antigua and Barbuda even amongst the jurisdictions likely to become a significant offshore center as of September 2016. The number of offshore international banks has declined from 16 in 2009 to 11 as at March 2017 – their total assets do not amount to US$2 billion.
Miniscule Internet Gaming Sector
Antigua and Barbuda’s internet gaming industry is by no measure “large” as suggested by the INSCR report. The number of internet gaming companies has been on a steady decline moving from 93 interactive gaming and interactive wagering companies in 2000 to six interactive gaming and interactive wagering companies as at March 2017.
The CFATF’s third Round Mutual Evaluation report on Antigua and Barbuda saw no reason to identify internet gaming as a sector that increased the jurisdiction’s susceptibility to money laundering. In fact, the report, which sets out Antigua and Barbuda’s level of compliance with the FATF 40 + 9 Recommendations, clearly states that:
“The government in seeking to secure this industry has taken a new initiative and has introduced important upgrades to the law regulating internet gaming companies, repealing and replacing the former Internet Gaming and Internet Wagering Regulations. These amendments will serve to strengthen the regulator (“the Commission”) and sustain the jurisdiction on the leading edge in respect of the online gaming industry, and in creating and demonstrating best practices in combating ML and FT.”
Similar action has been taken to upgrade the Act, which governs domestic gambling, making it fully compatible with international requirements to mitigate against the risk of money laundering. Therefore, it is impossible to reconcile this reality, established by competent and authoritative bodies, with the claims of the 2017 INCSR.
Strict Oversight and Regulation of Internet Gaming
The Internet Gaming sector is regulated by the Financial Sector Regulatory Commission (FSRC). The Commission ensures that only a natural or legal person that has met a fit and proper test can play a significant role in, or operate a business or legal arrangement. This oversight applies to all interactive gaming and interactive wagering companies which must first be incorporated under the International Business Corporations Act Cap.222, possess a certificate of incorporation and a certificate of good standing before being granted a licence. All shareholders, directors and key persons are subject to full background due diligence vetting and must meet the fit and proper criteria.
In considering the suitability of the applicant, the FSRC takes into account, for example, the integrity of the applicant, his business reputation, sound current financial position and financial background, his technical expertise in conducting internet gaming or wagering and his commitment to maintaining a physical presence in Antigua and Barbuda. The FSRC must satisfy itself that the applicant is committed to the prevention of money laundering, financing of terrorism and the detection of suspicious transactions, and that it can demonstrate game fairness and transparency.
All activities regarding interactive gaming and interactive wagering fall within the First Schedule of the Money Laundering (Prevention) Act and, therefore, all such activities are subject to the national anti-money laundering and counter financing of terrorism (AML/CFT) legal system.
Unlike some other countries, in ensuring that any perpetrators of financial crimes can be brought to justice, the FSRC takes particular care to identify and assess the natural person behind any beneficial ownership. In 2010, an entire legal framework was created to deactivate bearer shares. Three months after the Corporate Management Trust Services Providers Act 2008 came into effect, all existing bearer shares were cancelled or forfeited unless deposited with a custodian, converted, exchanged or registered, and any new bearer shares are required to be held by a licensed custodian or a recognized custodian. The service providers who are licensed to be custodians are subject to enhanced monitoring.
Corporate Tax applies to Offshore Banks
The INSCR claims that offshore financial institutions are exempt from corporate income tax. This claim is inaccurate. It was widely publicized that, effective July 2016, under the International Banking Act 2016, No. 6 of 2016, all offshore international banks are required to pay corporate income tax.
False claims about Citizenship by Investment Programme
The 2017 INCSR makes the following bald and unsubstantiated claim:
The CIP remains among the most lax (sic) in the world. An individual is eligible for economic citizenship with a $400,000 minimum investment in real estate, a contribution to the National Development Fund of $200,000, or a $1.5 million approved business investment. Applicants must make a source of funds declaration and provide evidence supporting the declaration. The government established a Citizenship by Investment Unit (CIU) to manage the screening and application process. The CIU does not maintain adequate autonomy from politicians to prevent political interference in its decisions.
Ring-fenced from Politicians
It is absolutely untrue that the CIU does not maintain adequate autonomy from politicians to prevent political interference in its decision. In fact, by a decision of the Cabinet, the CIU’s process and decisions regarding applicants are ring-fenced from intervention by politicians.
Cost of Citizenship by Investment
It is incorrect that eligibility for economic citizenship is a $400,000 investment in real estate or a contribution to the National Development Fund of $200,000, or a $1.5 million approved business investment.
In addition to these investments, applicants are also required to pay processing fees and due diligence fees. Processing fess amount to $50,000 per adult. There are also due diligence fees in the amount of $7,500 per application.
Strict Vetting of All Applicants
All applications are filed by licensed agents whose tenure depends on their continuing ability to perform professionally in a manner that reinforces the integrity of Antiguan and Barbudan citizenship and responsibilities to other nations. All applications undergo a rigorous and robust due diligence process as indicated below.
i) Tier 1 – Internal Due Diligence
The CIU’s Compliance Team vets all applications for accuracy and completeness of the information and documents submitted, along with the application for citizenship. When this is done, a review of the applicant(s) and the associated business is conducted through Thompson Reuters World Check, Interpol Most Wanted List, FBI Most Wanted Terrorist and United Nations Al-Qaida Sanctions List.
ii) Tier 2 – External Due Diligence
Tier 2 due diligence services are conducted by independent contracted service providers. Currently the CIU engage the services of BDO consulting, IPSA international, RM-S and Thompson Reuters for this purpose. The choice of a service provider is risk-based and determined by jurisdictional footprint. Thus, an applicant with a significant footprint in Canada will probably have her application assessed by the Canadian based IPSA International. At the end of this engagement, which takes approximately 15-18 business days, the CIU is presented with a full scope investigative report on the applicant and his/her family. This report is integral to the process and helps the Unit to arrive at a final decision.
iii) Tier 3 – Enhanced Due Diligence and Final Decision
The CIU also conducts enhanced due diligence through international border control partners, with whom it has special working relationships. All applicants’ details are subject to checks by international border control partners, and checks by the Joint Regional Communications Centre (JRCC), which collaborates with the Antigua and Barbuda Immigration Department.
The authors of the INCSR should be aware that the JRCC is an arm of IMPACS which brings together the security organs of CARICOM, the United States, the United Kingdom, Canada, and the European Union.
Once all three tiers outlined above are completed, the CIU’s Compliance Team prepares an internal report which summarizes the findings. This report is forwarded to the Unit’s Chief Executive Officer (CEO) for a final decision.
Certain Countries Barred from CIP
It should also be noted that unlike many other jurisdictions, Antigua and Barbuda does not permit applications for citizenship by investment from certain countries, namely: Iraq, Afghanistan, Iran, Somalia, North Korea, Yemen and Sudan.
Far from being the laxest operation “in the world”, the CIP system in Antigua and Barbuda is scrupulous in its vetting procedures and, unlike other countries, retains a high fee structure for applicants.
Other erroneous claims in 2017 INCSR
The INCSR states that:
In 2016, U.S. prosecutors alleged that government officials from Antigua and Barbuda participated in a corruption scandal involving the payout of close to $8 million in bribes by Brazilian construction contractor Odcbrecht (
sic). The corruption allegations involve two high-level officials and two offshore banks in Antigua and Barbuda. Antigua and Barbuda continues to investigate allegations of money laundering.
Note should be taken that while US prosecutors may have made allegations in a US court against an unnamed Antiguan official, the US has not shared with Antiguan authorities the substance and evidence of those statements. Nonetheless, the Office of National Drug Control and Money Laundering Policy (ONDCP), which is an independent statutory body that investigates matters of financial crimes, is keeping this matter under scrutiny.
Further, the ONDCP is conducting investigations in concert with Brazilian authorities into the Odebrecht matter. It has provided full cooperation to the Brazilian investigative authorities resulting in 71 accounts in two banks being restrained and hundreds of documents being provided.
Enforcement and Implementation
The INCSR claims that:
Antigua and Barbuda recorded its first successful confiscation case under the Proceeds of Crime Act in October 2015. The ONDCP first arrested two persons with over 160 kilograms of cocaine aboard a sailing vessel. The court ordered the defendant to pay the amount of $30,000 to the government after learning he had forfeitable assets.
However, the correct version of events is that, on 1st March 2013, a defendant was sentenced to six (6) years imprisonment and fined $1,344,000 or in default two (2) years imprisonment to run consecutively. In a subsequent hearing of an application for confiscation, a confiscation order was made for EC$80,646, which is approximately US$30,000. The latter was found to be the direct benefit the defendant had obtained from his drug trafficking activity. Previously, in 2013, US$4,745 found in the defendant’s possession when he was arrested, was forfeited by a magistrate in cash forfeiture proceedings.
Claim about Lazerenko funds
The INCSR claims that:
ONDCP froze the operations of the European Federal Credit Bank of Antigua (Eurofed), a bank connected to the former prime minister of Ukraine, Pavlo Lazarenko, on the grounds that it had been obtained through acts of corruption committed during his time in power in Ukraine. In 2016, $66.7 million in frozen assets were transferred to the government’s Forfeiture Fund, which the government appropriated, not all of which was included on the official budget.
The seizure of the Lazarenko funds was fully in keeping with the laws of Antigua and Barbuda regarding forfeiture of the proceeds of crime; indeed, it is the same as in the US. While not all of the monies were included in the government’s 2016 Budget, the balance of funds remain in the government’s Forfeiture Fund in the same way that the US retains monies in its Judgement Fund, for utilization when necessary.
The INCSR states:
Antigua and Barbuda has largely achieved technical compliance with international AML standards. The government has prosecuted few cases of money laundering and official corruption and reports of corruption are endemic.
What is remarkable about this statement is that it admits that “Antigua and Barbuda has largely achieved technical compliance with international AML standards”. It also admits that the government has prosecuted cases of money laundering. Yet, on the basis of nothing except “reports” from undisclosed sources, and with no evidence whatsoever, it states “reports of corruption are endemic”. This claim is unsubstantiated and untrue.
The government of Antigua and Barbuda, through its embassy in Washington, has called on the government of the United States, in the interest of fairness and equity, to cause the unsubstantiated and harmful claims made in the 2017 INSCR to be corrected publicly in the same way that the report has been publicized. It would also be mutually beneficial if all future reports are mandated to be consultative with the government, including a review of its final text, in order to eliminate unsupported claims and harmful inaccuracies.