Anguilla is located in the Caribbean Sea, to the east of Puerto Rico. It has a total surface area of 91 square kilometres and a population of approximately 12,132 inhabitants. Its economy depends heavily on tourism, offshore financial services, lobster fishing, and remittances from emigrants.

The island was colonized by English settlers from St. Kitts in 1650, and was administered by Great Britain until the early 19th century when it was incorporated into a single British dependency along with St. Kitts and Nevis. In 1971, two years after a revolt, Anguilla was finally allowed to secede and formally became a separate British dependency in 1980. Anguilla is classified as an Offshore Financial Center (OFC) and is also a British Overseas Territory (BOT). The territory’s legal system is based on the English Common Law System.

The last CFATF Mutual Evaluation of the Commonwealth of Anguilla took place on July 10-14, 2000. Anguilla has been a member of the CFATF since its formal inception in 1996.

The financial services sector of Anguilla comprise of both a Domestic Financial Services Sector and an Offshore Financial Services Sector. The Domestic Sector consists of: 4 domestic commercial banks, 3 co-operative credit unions, 1 finance company, 1 development finance company, 17 insurance companies, 43 trusts, 1 stock brokerage firm and 1 money transmitting organization (Western Union). The small but expanding offshore sector has: 3,500 offshore companies, 1 bank, 6 trust companies, 5 trust service providers, 1 (captive) insurance company and 19 registered agents/company managers. Of the 18 companies in the insurance industry only 2 are locally owned and registered (principally with motor vehicle insurance), while the majority of the business in the insurance sector is conducted by foreign owned insurers. 1,500 of the 3,500 offshore companies are international business corporations (IBCs). Securities/investments and mutual fund business seem to be non-existent. There is currently no Stock Exchange in Anguilla.

The ‘on-shore’ commercial banks offer retail banking services as well as investment opportunities on the international markets. Their total assets as at March 31, 2000 amounted to EC$789.7 million. This commercial banking division is the main component of the financial sector. The largest commercial bank operating in the domestic services is the National Bank of Anguilla Limited. The total assets of this bank alone are EC$242.740 million, whereby 73.1% of its total deposits is held in US dollars. There are only 2 organizations licensed as offshore banks in Anguilla; Hansabank and Trust Company Limited established April 6, 1984 as an offshore bank going beyond usual practice. With total assets of US$2,994,980.00, its modern techniques include the conduct of transactions via the Internet. The identified goal of its owners is to be a platform for new banking products. Company’s operations require that management be more involved in daily activities thereby reducing the segregation of duties and the need for a large staff.

Registered Agents or Company Managers, also referred to as “company service providers� (“CSPs�), are recognized as separate entities engaged in the conduct of ‘company management business’ and are subject to formal requirements as any other institution. This business involves incorporation of companies, acting as registered agents, providing registered offices, preparing and filing statutory documents on behalf of the company or acting as director, manager, officer or nominee shareholder of local and foreign companies. The offshore financial sector is primarily focused on the incorporation and management of companies.

There are three types of corporations in Anguilla: a CO company incorporated under the Companies Ordinance (“CO�), an international business company or IBC which is incorporated under the International Business Companies Ordinance (“IBCO�) and a limited li

 

Since the last CFATF Mutual Evaluation in 1998 there have been some significant changes to the money laundering situation in this country. In 1998 there were 57 offshore banks operating within this jurisdiction. Whilst most of them operated legitimately, it is now apparent that some of them were established to facilitate foreign criminal enterprises or were operated in such a way that criminal enterprises were attracted to them. The prime example of this style of banking operation is Eurofed Bank, which was established to facilitate the proceeds of grand corruption offences perpetrated by the former head of state of the Ukraine (Pavel Lazarenko). The bank was also used by US and Canadian based Ponsi scheme operators.

Between 1998 and 2000, 35 offshore banks were closed either as a result of their involvement in money laundering (such as Eurofed) or because they were unable to comply with the increasingly stringent regulatory regime which is being applied to financial institutions operating within Antigua & Barbuda. Offshore banking services are now being provided by only 21 banks. The prevention of the incursions of criminal elements into the banking system by money launderers or other criminals is the present focus of the country’s AML efforts.

The anti-money laundering authority for Antigua and Barbuda is the Office of National Drug and Money Laundering Control Policy (ONDCP), which is a mixed model FIU that has responsibility for:

• Supervision of financial institutions (in the area of anti money laundering control);
• Receiving suspicious activity reports (sars) from financial institutions and conducting any appropriate preliminary investigation. In most cases the ONDCP will also assume responsibility for any substantive investigation that may be called for, alternatively the matter may be referred to another law enforcement agency or government department;
• Initiating proceedings for freeze orders; forfeiture orders; production orders; search warrants and other investigative procedures;
• Receiving and acting upon MLAT requests from foreign countries relating to anti-money laundering matters;
• Collection and dissemination of drug intelligence;
• Hosting and managing the National Joint Headquarters (NJHQ) – a multi-agency task force designed to collect and disseminate local and regional information relating to narcotic trafficking;
• Advising the government on drug and anti-money laundering policy; and
• Advising the government on drug demand reduction programmes and co-ordinating their implementation.

The investigation of sars and foreign MLAT requests received by the ONDCP in the last few years have revealed the use of financial institutions in the country by promoters of “pyramid schemes� usually located in the U.S.A. or in Canada.

As a result of the extensive amendments to Antigua and Barbuda’s anti-money legislation, financial advisories by the USA and the UK were withdrawn in 2001, while Antigua and Barbuda was not enlisted by the FATF as a Non-Cooperative Country during its year 1999 exercise.

The 2001 amendments in the MPLA are now beginning to operate satisfactorily in the area of conviction-based forfeiture according to the Government of Antigua and Barbuda. However, still Antigua and Barbuda has no real example of convictions in the sphere of money laundering in order to demonstrate this. The amendments in any case added new industry groups to the definition of “financial institutions� contained in the Act. The most notably is the offshore gaming industry. These financial institutions operate quite differently from the banking sector. The amendments in the International Business Corporation Act (IBCA) in August 2000 now require resident agents to ensure the accuracy of the records and registers that are kept at the Registrar’s office. Names of beneficial owners of IBC’s are also need to be known and to be disclosed to authorities upon request. The Registrar’s office is howeve

The Republic of Nicaragua is a Central American country located between Costa Rica and Honduras. The primary industries in Nicaragua are food processing, chemicals, petroleum refining and distribution, machinery and metal products etc. Nicaragua’s legal system is a civil law system, which allows the Supreme Court to review administrative acts. With regard to illicit drugs, Nicaragua is a transhipment point for cocaine destined for the United States of America (USA) and for arms-for-drugs transactions. These facts make Nicaragua vulnerable to money laundering.
The Republic of Nicaragua is located in Central America, between Costa Rica and Honduras, bordering both the Caribbean Sea and the North Pacific Ocean. The Nicaraguan population is approximately of 5 million people for approximately 120,000 sq km.

Nicaragua, a CFATF member since signing the MOU in 1996 had its membership suspended in 2001 due to a lack of participation in the Organization’s affairs. To date, no Mutual Evaluation of Nicaragua has taken place.

With regard to the drug situation, given a coastline of 910km on both sea/ocean, Nicaragua is indeed a transhipment point for cocaine destined to the north-American market and also a transhipment point for arms-for-drugs dealing.

Based on the information on file at the Secretariat, it appears that in 2001 there was a significant trafficking increase in all kinds of drugs: 2.7 tonnes of cocaine, 8kg of heroin, 116,000 marijuana plants, 800Kg of marijuana and 8,000 crack stones were seized. The location of the country, the sparsely populated numerous islands and tiny inlets of the Caribbean littoral provide ideal refuelling/rest stations for drug smugglers moving from Colombia on their way north. Drugs are also moved north along the Pan-American Highway and in go-fast boats along the Pacific coast.

To date, Nicaragua has not been identified as a transformation point but a transhipment and cultivation (marijuana) country. The numerous marijuana eradication efforts of the Police must be noted.

The payment in kind by the drug traffickers for the co-operation of the population multiplies the number of addicts (mainly to crack-cocaine) in the country. This is indeed one of the numerous challenges that the Government has to face in the near future.

With regard to the money-laundering situation, it appears that Nicaragua has a weak and under-regulated banking sector which creates a potential risk for misuse by launderers. In 2000-2001, four of Nicaragua’s eleven banks failed amidst allegations of fraud and mismanagement. Over the last years, the Jurisdiction has enacted some texts which should, when enforced, be able to improve the anti-money laundering framework

St. Kitts & Nevis is a federation of two islands comprising 261 sq km. It is located 225 miles southeast of Puerto Rico in the eastern Caribbean. The population estimate in July 2001 was 45,000 (36,000 St. Kitts, 9,000 Nevis). Basseterre is the capital of St. Kitts and the administrative capital of the federation. The currency is the EC dollar which is tied to the US dollar at a rate of $2.70 EC dollar to $1.00 US dollar. The two islands, although functioning as one state, in fact have a great deal of autonomy within their own respective government.

The political structure is based on British parliamentary democracy. There are separate unicameral legislatures consisting of 14 members for St. Kitts, and 9 members in Nevis. The head of state is the British monarch who is represented in St. Kitts by a Governor General who appoints the Prime Minister from the majority party in the House of Assembly. The Deputy Governor of Nevis, in a similar manner names the Premier of Nevis.

The first CFATF Mutual Evaluation of St. Kitts & Nevis took place in February 1999 and the report was endorsed in October 2000, during the Council of Ministers V held in Aruba.

The federation’s economy has traditionally depended on the growing and processing of sugar cane, but decreasing world prices have hurt the industry. Tourism, export-oriented manufacturing and offshore banking activity have assumed greater importance in the economy. The main forms of taxation include withholding, capital gains and land and house taxes. However, the first two taxes do not apply to trusts, limited partnerships and exempt companies. According to the Eastern Caribbean Central Bank (ECCB), GDP was US $282.6 million in 2000 having increased by 6.33% and 10.05% in 1999 and 2000 respectively.

As of May 2002, the financial sector in St. Kitts consisted of 4 onshore banks, 2 credit unions, 4 domestic insurance companies, 2 money remitters, and 15 company service providers (3 of them were also trust service providers). There were 13 trusts and 450 exempt companies. A regional stock exchange, common to the members of the Organisation of Eastern Caribbean States (OECS) and supervised by a regional regulator, is located in St. Kitts. Licensing fees paid to the island of St. Kitts were US$39,000.

The financial sector in Nevis consisted of 5 onshore banks, 1 offshore bank (a wholly owned subsidiary of a Nevis onshore bank), 4 domestic insurance companies (all branches of St. Kitts insurance companies), 1 money remitter and 65 trust and company service providers. There were 2,700 trusts and approximately 22,000 IBCs. Licensing and application fees paid to the island of Nevis total approximately US$3.5million annually.

The political structure as described above has at times created dynamic situations in terms of the approaches made to the development of the country’s anti-money laundering framework. The legal system is based on the British model and is a combination of codified legislation and case law. The federation is served by the multi-state Eastern Caribbean Supreme Court comprising a High Court of Justice, and a Court of Appeal. The Privy Council in London serves as the final appellant court.

The country has become known for its offshore financial services sector the bulk of which is located in Nevis. As a result of having a vibrant offshore sector, St. Kitts & Nevis’ susceptibility to money laundering has increased. Due to deficiencies identified by the FATF, St. Kitts & Nevis was placed on the Non-Cooperating Countries and Territories (NCCT) list in June 2000. Since then, the government has enacted amendments to its legislation and administrative framework to address the identified deficiencies. As a result of these reforms the federation was removed from the FATF’s list in June 2002.
With regard to the drug traffic situation, the federation is located on the eastern edge of the Caribbean archipelago which

St. Lucia is an English-speaking independent nation, one of the Windward Islands of the Lesser Antilles; it is located between Martinique and St. Vincent, north of Barbados. It is a 610 sq km island with a population estimated at approximately 158,000 in July 2001. The system of government is a parliamentary democracy with the British monarch as the head of state, represented locally by a Governor General. The Head of Government is the Prime Minister. Parliament is a bicameral body consisting of a Senate with 11 appointed members and a House of Assembly with 17 elected members.

The legal system is based on the British model and is a combination of codified legislation and common law. The country is a member of the multi-state Eastern Caribbean Supreme Court comprising a High Court of Justice, and a Court of Appeal. The Privy Council in London serves as the final appellant court.

While the economy has been experiencing consistent growth during the last five years, the banana industry, once the mainstay of the economy has suffered severely from the change in the European Union preference regime and increased competition from Latin American bananas. Economic growth has been possible due to diversification. GDP, which was estimated at US $580 million in 2000, grew by 7.89% and 2.76% in 1999 and 2000 respectively. The main factors in the expansion of GDP were improvements in the construction sector and growth in the tourism industry. The manufacturing sector is the most diverse in the Eastern Caribbean and the government has sought to develop the offshore financial sector. The currency is the EC dollar which is tied to the US dollar at a rate of $2.70 EC dollar to $1.00 US dollar.

In 1997 the St. Lucian Government began developing an offshore financial services sector as a new non-traditional avenue of economic activity to complement its flourishing tourism industry. This international financial services sector now provides a full range of banking, audit, accounting, financial advisory and international taxation advisory services as well as professional directors and officers for corporations and nominee, trustee and corporate secretarial services. At the time of the mutual evaluation in July of 1998 there were 7 licensed banks, 4 non-banks and approximately 2,000 domestic companies registered and incorporated in St. Lucia.

The first mutual evaluation of St Lucia took place on July 14-16, 1998 and the report was endorsed during the Council of Ministers V, held in the British Virgin Islands in October 1999.

St Lucia is a place where marijuana has been cultivated both for local market/consumption and exportation to neighbouring islands. The increase in the amount of marijuana/cannabis seized and eradicated over the last few years confirms the increasing role played by St Lucia on the regional market.

There is no evidence of any manufacturing or processing of narcotics within the island. However, it appears that St Lucia, mainly in the southern part of the island, is a hot spot in the transhipment of all forms of drugs to and from the neighbouring islands to the North American/European markets. All types of transportation means are used to smuggle drugs: planes, airdrops, yachts, fishing boats, go-fast boats…

With regard to cocaine, St Lucia has experienced a rapid increase over the last 4 to 5 years. Colombian, Venezuelan and Jamaican criminals are working very closely with local drug trans-shippers to stockpile drugs waiting for exportation to consumer countries. During the period 1993-1998, a total of 2,824 persons were arrested and charged for drug-related offences. It must be noted that for the first time in 2000, 2 kilograms of heroin were seized in St Lucia, most likely for exportation to North America.

The current body in charge of drug policy in St Lucia is the Substance Abuse Advisory Council Secretariat, a new Director of which was appointed in 2001. There is no National Dru

St Vincent & the Grenadines (SVG), is an independent sovereign state within the Commonwealth consisting of a collection of 32 islands and cays, scattered in the Eastern Caribbean and forming part of the Windward Islands. The population of SVG is 115, 942 persons (July 2001 estimate.). Agriculture, dominated by banana production is the most important sector of the economy of SVG.

The volume of activity in informatics operations grew by more than 30% in 2000 and is projected to expand further in 2001. The Services sector, based mostly on a growing tourist industry, is also important. However, the illegal drugs trade has infiltrated the economy of SVG and made some segments of the population dependent of it. This is sometimes seen as the major cause of the decline in civil society resulting into: drug addiction, reduced worker productivity, violent behaviour, murders related to drug trafficking and a general increase in criminal activity.

St. Vincent & The Grenadines has an offshore financial services sector and as such needs to be vigilant about money laundering. In addition to the various financial services that are offered, there is also an economic citizenship programme. In June 2000, SVG was placed on the FATF list of countries that were non-cooperative in the international fight against money laundering. In response to this listing, SVG has improved its anti-money laundering legislative framework through the passage of new anti-money laundering legislation. This Report will review the various pieces of legislation that comprise that framework, discuss its compliance with the Revised 40 FATF and 19 CFATF Recommendations, the FATF NCCT 25 Point Criteria and the 8 FATF Special Recommendations on Terrorist Financing, deficiencies if any and provide recommendations that would enhance the framework.
SVG is sometimes said to be the largest producer of marihuana used in the region. In the inaccessible northern half of St. Vincent, extensive tracts are under intensive marihuana cultivation. Estimates are that the annual eradication exercises destroy only about 10% of the total crop. Compressed marihuana is sent from St. Vincent to neighbouring islands via private vessels. SVG is also seen as a storage and transhipment point for narcotics, mostly cocaine, transferred from Trinidad and Tobago and South America on go-fast and inter-island cargo boats.

Given the large number of islands, spread over vast water areas, which make up SVG, drug trafficking is relatively easy. Indications are that about 90% of the marihuana grown in SVG, and 95% of the total imported volume of cocaine are consigned to foreign destinations. The methods of transportation also may involve hidden airstrips, private airplanes, fishing and commercial boats, yachts automobiles and trucks, by mail and by individual couriers. Transportation routes are from Colombia and Venezuela to Trinidad, shipped through SVG towards St. Lucia and Martinique with final destination for North America or Europe.

SVG also has a small but growing offshore sector that is perceived to be vulnerable to money laundering because of its weak regulation and secrecy laws. In the near past SVG also had a legislative framework for an economic citizenship program geared towards making government earnings with sales from passports.

In June 2000, the FATF listed SVG as an NCCT. The FATF stated that there were no anti-money laundering regulations in place with respect to offshore financial institutions, and thus no customer identification or record-keeping requirements or procedures. It also concluded that resources devoted to supervision were extremely limited and that there was no system to require reporting of suspicious transactions. The FATF evaluation also concluded that there was insufficient international cooperation of SVG in the fight against money laundering. In July 2000, the US Treasury Department also issued an advisory to US financial institutions, warning them to

Suriname is located on the North-eastern coast of South America. It shares its borders with Guyana to the west, French Guyana to the east and Brazil to the South. Suriname’s surface area is 63,251 square miles with a population of approximately 433,998 (July 2001 estimate). The forested area constitutes about 85% of the national territory and is accessible only by air or via the north-south rivers. Bauxite industry accounts for more than 15% of GDP and 70% of export earnings. The official language is Dutch; most people also speak Sranang Tongo, which is a local English-based Creole. English, Hindi, Javanese and Chinese are also spoken.

Independence from Netherlands was granted in 1975. Five years later the civilian government was replaced by a military regime. The military continued to rule through a succession of nominally civilian administrations until 1987, when international pressure finally brought about a democratic election. In 1989, the military overthrew the civilian government again with a so-called “telephone coup�, but a democratically elected government returned to power in 1991. As at February 2000 there were eleven political groups in the National Assembly, two of which are coalitions of smaller parties, plus a number of independent members. The political climate in Suriname for the last 5 to 10 years has been strongly influenced by the transformation of an undemocratic government to a democratic one, based on the legitimacy of the government authority and the period of political isolation towards a period of strengthening and broadening of international contacts.

Suriname started implementing a Structural Adjustment Program in the early nineties, but after change in government in 1996, the new Government ended this program, claiming that it was unfair to the poorer elements of the society. However, economic growth slowed in 1998, with decline in the mining, construction, and utility sectors. Rampant government expenditures, poor tax collection and reduced foreign aid in 1999 contributed to larger fiscal deficits (11% of GDP).
A new Government elected in 2000 has started a new austerity program. However, the unemployment rates within the formal labour market are still increasing and the economy is not yet giving signs of recuperation. Public corruption, though by no means universal, is also a serious problem in Suriname. Reports of money laundering, drug trafficking and associated criminal activity involving current and former government and military officials continue unabated, if generally unproved through legal processes. The new government however, has put anti-corruption efforts high on its priority list and established an anti-corruption commission.

The drug situation in Suriname is a matter of great concern. Suriname is being used mainly as a trans-shipment point due to its strategic geographical location and its regular direct air connection to the Netherlands. Because of the size of the country and the limited human and material resources, the combating of the drugs trafficking seems to be very difficult. During the year 2000, approximately 75,000 cannabis plants were eradicated in DEA sponsored operations in Suriname. In 1999 these efforts led to the eradication of approximately 200,000 cannabis plants. XTC tablets seizures in 1999 and 2000 were approximately 10,000 and 61,232 respectively. Approximately 15 grams of heroin was seized in 1999 and 35.2 grams in 2000. During 1999 till the third quarter of 2000, a total of 2103 cocaine balls, with a total weight of 17,544.39 grams, were swallowed by 35 “swallowers�. The total amount of cocaine seized over the same period was 354,498.8 grams. In 2001 the Police and Customs seized 2510 kilograms of Cocaine, 5.4. Kilograms of Marihuana, and 211 gram of hashish. 12 hectares of Cannabis plants were also manually eradicated in 2001.

Suriname is not a cultivator of coca leaves and no cocaine manufacturing takes place. Cannabis is grown and used in t

The Turk and Caicos Islands (TCI) are located at the south-eastern extremity of the Bahamas chain of islands. It comprises some 40 islands and cays (8 inhabited) with most of the population shared between Grand Turk (3,900), the administrative centre, and Providenciales (13,900), the business centre. Constitutionally, TCI is an internally self-governing Caribbean Overseas Territory of the United Kingdom (UK) with a government consisting of an Executive and Legislative Council and a Governor appointed by the British Crown. The territory has an estimated population of 20,000. Its economy is based on tourism, fishing and offshore financial services. TCI’s GDP per capita was estimated to be US$ 6,000 in 1998.

Like most of the Caribbean’s island territories, TCI’s favourable location makes it susceptible to be used as transhipment point and temporary storage for drug traffickers. Drug production in the TCI is almost non-existent, except for the production of small quantities of crack cocaine. The major problem is the transhipment of cocaine, which originates in South America and is channelled through TCI to the North American and European markets.

Cocaine and cannabis arrive in the TCI mostly from Jamaica, Haiti, Colombia or Venezuela for domestic consumption and onward distribution to the eastern seaboard of the United States of America (USA). These narcotics arrive by “go fast� boats, fishing boats, airdrops and by Haitian sloop (in this case, often together with illegal human cargo).

The Government of TCI, in collaboration with various international governments and agencies, has implemented several measures to combat the drug problem. In 1996 it approved a National Drug Master Plan, which outlined five types of intervention strategies in the area of drug control. This plan was not efficiently implemented because of weak institutional structure and inadequate funding. The Master Plan was however revised in 2000. Recent efforts by the Government to strengthen its institutional capacity led to the appointment of a new National Drug Advisory Council, and an Executive Director for the Drug Unit of this Council.

The TCI is exposed to money laundering because of a large offshore financial services sector. KPMG comprehensively reviewed TCI’s financial and off shore industry in October 2000 (“KPMG 2000 Report�). The report concluded that although the anti money-laundering regulatory framework of TCI had been recently enhanced considerably, there remain areas where financial regulation “still falls short of good practice and international standards�.

The Government of TCI has initiated the process of implementing the recommendations of this KPMG 2000 report. To this effect, during the course of 2001 TCI presented amendments to its legislation to tackle the issue of bearer shares and other connected matters. These amendments to the Proceeds of Crime Ordinance of 1998, the Criminal Justice (International Co-operation) Ordinance 1998 and the Control of Drugs (Trafficking) Ordinance also sought to expand the money laundering offences, and as proposed by the KPMG 2000 Report, to facilitate further disclosure of (client) information to the Money Laundering Reporting Authority (MLRA) and the Royal Turks and Caicos Islands Police Force (RTCIPF). The government of TCI also established a financial investigations unit within the RTCIPF (the Financial Crimes Unit) and embraced a plan to review the offshore services.

The Bolivarian Republic of Venezuela is the CFATF’s largest Jurisdiction of 882,000 square kilometers and a population of approximately 25 million inhabitants. The country is located in the Northern part of South America bordering the Caribbean Sea and the North Atlantic Ocean, between Colombia, Brazil and Guyana. Venezuela’s first Mutual Evaluation took place in November 1999 and the Report was endorsed during Council VI, which took place in October 2000 in Aruba.
With its critical economic situation illegal drugs is one of the major problems that the Venezuelan Government has to face. The 2,050 km of border with one of the major drug-producing countries of the continent and its 2,200 km of uncontrollable Amazonian border with Brazil creates a clear problem that challenges the Government.

Despite the vigorous efforts made by the Government of Venezuela to eradicate illicit plantations of drugs, Venezuela still is, on a small scale, a producer of opium and cocaine. In 2000, 11 hectares of poppy and 50 kg of poppy seeds were eradicated. (Please provide an update for 2001) In addition, it must be noted that since 1995 there has been a permanent increase of all kind of drugs seized in the country. Almost 15 tonnes of marijuana and approximately the same quantity of cocaine were seized in 2000. The same year, the Law Enforcement bodies seized almost 200 kg of heroin and approximately 300kg of crack-cocaine. Ecstasy and LSD have also been stopped at the International Airport of Caracas in 2000 and important quantities of precursors seized in 3 Venezuelan States during the same year.

Venezuela remains a major transhipment point for the Colombian drugs bound for the North American and European markets, but also that part of these drugs are remaining in the country and are available for the local market. No drug processing or manufacturing laboratories have been discovered in the country.

Venezuela’s proximity to drug-source countries creates conditions conducive to money laundering through commercial banks, exchange houses, gambling sites, fraudulently invoiced foreign trade transactions, smuggling, real estate (in the tourist industry) & securities transactions and trade of precious metal.

In 1993, the Venezuelan Congress enacted the Organic Drug Law on Narcotic and Psychotropic Substances (ODL) in which Article 37 criminalizes money laundering linked only to drug trafficking and eliminated bank secrecy laws. While that Law was not broad enough to cover the most prevalent and sophisticated money-laundering schemes (all serious crimes), it was the first important step in the jurisdiction’s efforts to tackle the scourge. That Law applies to financial and non-financial institutions, including the real-estate brokerage houses, but excluding the money remittance service companies.

Although Venezuela is a major drug money laundering centre, due to its proximity to Colombia as well as to the size and sophistication of is financial markets, it is not considered a tax-haven or as an offshore banking centre. Capital is generally exported to the United States and other tax havens in the form of capital flight. Venezuela’s financial crisis, which erupted in 1994, has diverted government attention and resources away from enforcing controls on money laundering.
In 1999 the financial sector of Venezuela comprised of: 14 all-purpose banks, 26 commercial banks, 4 ‘Special Law’ banks, 12 investment banks, 4 mortgage banks, 17 savings and loans institutions, 6 financial rental agencies, 60 insurance companies, 4 reinsurance companies, 400 insurance brokerages, 22 bureaux de change, 8 money market funds, 1 capitalization company, 26 frontier foreign currency dealers, 2 licensed casinos and 7 authorized bingo halls. Most of the money laundering occurs through exchange houses, commercial banks, casinos, and fraudulently invoiced foreign trade, contraband, and real estate transactions. Laundering transactions usually involve