Drugs barons’ resourcefulness and investigators’ ineptitude driving tougher AML and CFT compliance

The resourcefulness of drugs barons and the ineptitude of investigators to indict them are the interrelated drivers of increasingly rigorous and costly anti-money laundering (AML) and counter-terrorism financing (CFT) measures according to researchers.

The Caribbean Policy Research Institute (CaPRI) made this assertion and linked increased compliance requirements with de-banking in a document circulated at a forum on correspondent banking held in Jamaica earlier this month.

Correspondent relationships

On the impact of de-banking practices on Caribbean economies, the report says that international banks have been pulling out of correspondent banking relationships in response to increasingly tough AML and CFT measures.

In the Caribbean, where remittances contribute significantly to the economy, relatively low-margin business and high-volume transactions are exposing banks to inadvertent risk of financing terrorism or laundering money, possibly making profit from such activities insufficient to account for the risk, the report argues.

Severing ties

With such a divergence of regulatory approaches across states, nations, provinces and international jurisdictions, the report also argues that it is just much simpler for international banks to sever correspondent banking links.

The Caribbean is particularly vulnerable to the withdrawal of correspondent banking, as remittances to the region total US$10 billion a year. In comparison, tourism contributes over US$4 billion to the region’s economy.

Categories: Trade Based Financial crimes News

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