Caribbean leaders say G-7 movesagainst Money-Laundering are bullying
The Canadian Press
Caribbean leaders bombards U.S. AttorneyGeneral Janet Reno with grievances, denouncing U.S. efforts tofight money-launderers as a David-versus-Goliath battle to destroytheir burgeoning offshore industry.
"It's the law of the jungle - the big countries using theirpower against little countries," acting attorney generalBernard Wiltshire of Dominica said in a telephone interview.
Wiltshire said Caribbean officials will press the point at a Trinidadconference Monday to discuss money-laundering with officials fromWashington, London and Toronto.
It comes just days after U.S. legislators signalled willingnessto punish banks and countries that make it easy for drug baronsand other international criminals to hide clandestine fortunes.
"This legislation will give the secretary of the treasuryadditional tools to root out international money-laundering havenswhich are used to funnel dirty money...into the legitimate internationalfinancial network," Republican U.S. Representative Jim Leachof Iowa said when the House banking committee overwhelmingly passeda new bill to blacklist offenders and ban their transactions withU.S. banks.
Two weeks ago, the Financial Stability Forum - set up last yearby the G-7 group of richest countries - listed more than a dozenCaribbean jurisdictions as having lax supervision and/or co-operationposing "the greatest potential impact on global financialstability."
The Financial Action Task Force, established by the 29-memberOrganization of Economic Co-operation and Development that includesthe G-7, has threatened to publish a similar list recommendingsanctions against unco-operative countries.
Caribbean countries that have the highest concentration of offshorebanks and companies in the world said they are being unfairlytargetted in what Barbados Premier Owen Arthur called "institutionalimperialism."
Caribbean leaders said offshore banking is one of few profitableroutes left to small island countries in a globalized economy.They accuse the United States of destroying their banana market,forcing the European Union to end preferential trade, slashingaid and causing factories to move to Mexico.
They warn the backlash, if their fragile economies are furthereroded, could fuel drug-smuggling.
"We want to co-operate with them, we want to prevent thegrowth of the drug industry but we cannot do this if they leaveus no means of economic survival and feed temptation," Wiltshiresaid.
Experts note many cash-strapped countries do not have the resourcesto police money transactions, made increasingly rapid and anonymousby new technology. Some fear the push will wipe out the industryin poorer countries whose sole advantage is the secrecy and speedysetup that is under attack.
"It seems to be trying to create a level playing field butin reality it may wind up giving the advantage to the well-established,more mature centres, which are in the First World," likeBritain's Jersey and Guernsey Islands, noted Prof. Anthony Bryanof the University of Miami.
The onslaught prompted Barbados' premier to lash out against "Institutionsin the developed world that have no authority under any treaty,convention, agreement or legal instrument known in internationallaw, (that) are simply attempting to bend the course of developingcountries to their will by the use of crude threats and stigmas."
The forum identified Barbados as the only Caribbean country offeringquality banking supervision and co-operation with internationalinvestigations.
Arthur said it is dangerous to accept financial institutions "candictate to sovereign states."
Like other Caribbean leaders, he charged the majority of dirtymoney is laundered in London and New York City. They pointed tolast year's scandal in which the Bank of New York served as aconduit for $7 billion in Russian money. The International MonetaryFund estimates criminals legitimize nearly $600 billion in illicitprofits every year.
But critics note just about every money-laundering case in developedcountries involves offshore banks, including Bank of New York'soffshore bank in the Cayman Islands.
A British Caribbean territory that holds more than $620 billionin offshore deposits, the the Cayman Islands prides itself onbeing the first Caribbean haven to pass anti-money-launderinglegislation. But its insistence on laws making it illegal to divulgebanking transactions meant it was listed among the least-co-operativecountries by the Stability Forum.