US worried about money laundering in VI

A report published last week by the United States government lists the Virgin Islands as a “major money laundering country” for the first time. VI officials, though, say that plenty of work is going on behind the scenes to combat money laundering here.

The 2011 International Narcotics Strategy Report, published March 3 by the US Department of State, designates the territory as a “jurisdiction of primary concern,” a label shared with 62 other jurisdictions including the United Kingdom, Germany, Iraq, Burma, the Cayman Islands and other economies of varying size.

In previous reports, the VI was listed simply as a “jurisdiction of concern.”

The specific reason for the change was not explained, but the report stated that there were no prosecutions or convictions for money laundering in the territory last year.

“The Financial Services Commission should increase its staffing in order to meet the recommended inspection and reporting requirements, especially in light of the new entities covered under the law. The lack of prosecutions for money laundering and a reported decline in number of inspections suggests that the FSC should work closely with law enforcement and other authorities,” the report stated.

By US law, the new designation automatically comes with the effect of labeling the territory as a “major money laundering country.” But the report’s introduction stated, “The focus in considering whether a country or jurisdiction should be included in this category is on the significance of the amount of proceeds laundered, not of the anti-money laundering measures taken.”

The report added that a government “can have comprehensive anti-money laundering laws on its books and conduct aggressive anti-money laundering enforcement efforts but still be classified a ‘Primary Concern’ jurisdiction. In some cases, this classification may simply or largely be a function of the size of the jurisdiction’s economy. In such jurisdictions, quick, continuous and effective anti-money laundering efforts by the government are critical.”

It is not clear what practical effect, if any, the new designation will have on the territory. As of yesterday’s print deadline, government officials had not released an official statement.

 

See today’s edition for full coverage.