The Government of Antigua and Barbuda has challenged the findings of the United States 2018 International Narcotics Control Strategy Report (INCSR) which has publicly labelled all member-states of the Caribbean Community (CARICOM) as “major money laundering jurisdictions”.
Antigua and Barbuda’s Ambassador in Washington, Sir Ronald Sanders, today dispatched a diplomatic note to the US State Department pointing out that “inaccurate, misleading and wrong information in the INCSR has harmed and continues to harm Antigua and Barbuda, particularly in the financial services sector, including the area of correspondent banking relations”.
“In these circumstances,” Ambassador Sanders said, “the Government of Antigua and Barbuda is forced to defend Antigua and Barbuda publicly from the harmful effects of the inaccuracies and misinformation in the INCSR 2018 by releasing its detailed response”.
Details of the Embassy’s response are as follows:
In its Overview, the INCSR 2018 states that “Antigua and Barbuda has a very small free trade zone and an offshore financial center”. Yet, having admitted that the jurisdiction has a very small free trade zone and offshore financial centre, the Introduction to the entire report identifies Antigua and Barbuda (and all other Caribbean Community (CARICOM) countries) as a “major money laundering jurisdiction”.
The facts of the matter are that the assets under management in Antigua and Barbuda’s entire financial sector, offshore and onshore is less than US$5 billion of which the offshore sector is less than US$2.5 billion. In comparison with other jurisdictions, the financial sector is miniscule, and it is an over exaggeration, bordering on malice, to describe it as “a major money laundering jurisdiction”.
The INCSR also says: “Antigua and Barbuda… operates a Citizenship by Investment Program (CIP) that makes it susceptible to money laundering and other financial crimes”.
The Government of Antigua and Barbuda calls on the Department of State and the Government of the United States to provide the evidence substantiating its statement and undertakes to act on the evidence forthwith. In the absence of such evidence, the Government of Antigua and Barbuda is constrained to assume that the statement in INCSR 2018 is based on gossip and not worthy of further action.
The INCSR boldly states with no supporting evidence of any kind whatsoever that: “Money laundering, narcotics trafficking, gaming, and firearms trafficking are sources of illicit funds in the country. Funds are laundered through the purchase of real estate, vehicles, vessels, and jewelry, as well as through a variety of businesses. Money also has been laundered through wire transfers and the co-mingling of illicit funds through front operations”.
If the State Department of the United States of America is in possession of evidence of this reckless claim, the right, proper and responsible thing to do to is to present it to the law enforcement and regulatory bodies for action to be taken to stop it. It is hardly useful to withhold such evidence of criminal activity (itself a crime) from law enforcement authorities, while including it in a widely distributed document, bearing the imprimatur of the U.S. Government.
Citizenship by Investment
The INCSR also claims that: “The Citizenship by Investment Unit does not maintain adequate autonomy from politicians to prevent political interference in its decisions”. The report does not state how it comes to this conclusion nor does it proffer any evidence to support its claim.
Further, immediately following the sentence cited above and therefore, juxtaposing them for effect, the INCSR states: “In February 2017, Antigua and Barbuda approved a CIP application for Alexandre Cazes (since deceased), the alleged operator of AlphaBay, the world’s largest dark web marketplace”.
Several important matters concerning Alexandre Cazes are omitted by the INCSR 2018, but they are very important. First, Cazes was a Canadian citizen with access to the United States on his Canadian passport that does not require a visa for entry into the United States of America, whereas on an Antigua and Barbuda passport, he would have required a visa and would have had to be interviewed by US authorities. So, possession of Antigua and Barbuda Citizenship was of no value to Cazes to enter the United States. Second, Cazes’ CIP application was shared with appropriate authorities of the United States who on 3rd December 2016, issued a “no derogatory information found” response on Cazes. Furthermore, police clearance reports from the Royal Canadian Mounted Police and the Special Branch, Royal Thai Police Force, submitted with the application (as required by law), indicated that there were no criminal records on Cazes. But, on 5th July 2017, Police in Thailand arrested Cazes “at the request of U.S. authorities” according to the Washington Post.
On this issue, Antigua and Barbuda maintained its strict vetting procedures and Cazes’ CIP application would not have been considered if the CIP representatives had not been told by the US authorities on 3rd December 2016 that they had no derogatory information concerning him.
The INCSR also declares that: “Casinos maintain a strong presence in the country”. Antigua and Barbuda’s Gross Domestic Product is US$1.4 billion. It has two small casinos with three locations that had a combined turnover in 2016 of US$22 million. By comparison with ‘small’ casinos in the United States the mini casinos in Antigua and Barbuda are of no significance whatsoever either in the size of their operations or the money that passes through them. They hardly evidence “a strong presence”. In any event, the enforcement of anti-money laundering legislation in relation to these casinos is carried out by the Office of National Drug Control Policy (ONDCP) in the same manner as financial institutions.
With regard to the offshore gaming enterprises, it is important to take into account that the existing four operators, in addition to being tightly regulated, are NOT served by any bank, onshore or offshore, in Antigua and Barbuda for the acceptance of wagers or the remittance of winnings. Such transactions are done by financial services external to Antigua and Barbuda. The only transactions handled by banks in Antigua and Barbuda relate to settlement of local obligations such as wages and payment of utility bills. Therefore, contrary to the unsubstantiated claim in the INCSR 2018, the chance of any money laundering transactions is extremely remote.
Taxation of International Banks
Quite erroneously and for no explicable reason, the INCSR also states that “the Government has not implemented the legislation” requiring international banks to pay corporate income tax. In reality, the Government has not only implemented the legislation but has collected the due taxes.
Allegations of AML Deficiencies
Incongruously, having stated that “Antigua and Barbuda has largely achieved technical compliance with international AML (anti-money laundering) standards, the INCSR 2018 states: “There are media reports of officials allegedly involved in money laundering and corruption”.
It strikes at the heart of the INSCR’s standing that it would print a statement of such seriousness and credit it to unidentified “media reports” that it has not substantiated. Further, the INCSR ignores all official findings on Antigua and Barbuda’s AML, including reviews by the FATF, the CFATF and the IMF that make no such references.
ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS
In what appears to be a deliberate alteration of the facts, the INCSR 2018 states that corruption allegations involving “two high level officials” were made by U.S. Prosecutors in 2016. No such allegation was made by any U.S. Prosecutors. The record of the case in question which concerned the Brazilian firm, Odebrecht, says an employee of the Brazilian firm, Odebrecht, made the claim. The same employee also claimed that he paid a bribe to a “consular official from Antigua and an intermediary to a high-level government official in Antigua” to withhold documents from Brazilian authorities who were investigating Odebrecht. So, for the INCSR to credit these manufactured statements to “U.S. Prosecutors” is alarming at least.
The State Department has since been informed by Diplomatic Note of the facts of the matter, i.e., the “consular official’ was in fact an “Honorary Consul” appointed by the former Government of Antigua and Barbuda who was promptly dismissed by the present Government, and the so-called “intermediary to a high-level government official”, made a public statement of his involvement, admitting that he was not an intermediary for any other person and claiming that monies paid to him were for legitimate professional functions.
The U.S. State Department was informed by Diplomatic Note that the Antigua and Barbuda Government had been providing documents and information to the Brazilian authorities, six months BEFORE the alleged bribe to stop documents occurred. Indeed, the Brazilian authorities have officially complemented the Government of Antigua and Barbuda for the high level of its cooperation.
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