Money Laundering in Jamaica: Risks, Challenges, Response

• Author: Dr Shazeeda A. Ali
• Pages: 262-295

9

MONEY LAUNDERING

IN JAMAICA:

Risks, Challenges, Response

Introduction

Apart from terrorism, or other acts of violence, most criminals

have as their ultimate objective the acquisition of wealth. As Tolstoy

observed, ‘the consequences of money are…the breeding and invention

of new and endlessly new wants, which can never be satised….’ It

is this insatiable appetite for wealth that leads criminals to engage in

money laundering; in a quest to preserve their ill-gotten gains.

Money laundering is essentially the process by which illicit wealth is

designed to appear to have a legitimate source, usually through a series

of nancial transactions. It is considered the root of much evil since it

allows criminals to spend their illegal wealth without the underlying

oences being detected. It also provides criminals with the resources

needed to commit further crime, such as buying more drugs or guns, as

well as facilitating the covert nancing of terrorism and the corruption

of ocials.

Much of the nancial crime in Jamaica, particularly money

laundering, relates to the illegal drug and gun trade. Indeed, Jamaica

remains a signicant producer and exporter of marijuana and is a

major transit point for South American cocaine.1 However, there is

evidence of a greater number of cases involving sophisticated forgeries

of nancial instruments, credit card fraud and tax evasion, as well as

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Money Laundering in Jamaica

increasing allegations of lottery scams, identity theft, Internet crime

and copyright breaches.2 Since the proceeds of all these illicit activities

have to be laundered, the focus of this chapter will be on money

laundering, in light of the profound implications of this activity, both

domestically and internationally.

e principal objectives of this chapter are rst; to review some of

the factors that increase the money laundering risk; second, to explore

some of the challenges faced in combating the money laundering

scourge; and nally, to assess the legislative measures that exist in

Jamaica to deal with money laundering.

I. Money Laundering – the Risk Factors

Vulnerability of Jamaica

ere are certain characteristics of the Caribbean in general,

and (apart from 2 below) Jamaica in particular, which increase its

vulnerability to being the recipient of the proceeds of crime.3 Amongst

these factors are the following:

1. geographic location – strategic position of the region facilitates

the physical movement of the prots of the drug trade from the

North American markets to the drug lords in South America;

2. oshore nancial industry – several jurisdictions oer oshore

banks, companies and trusts which are used to distance the

trail between the money and its source or destination;

3. law enforcement constraints – limited resources may be

available to nance the sophisticated technology and specialised

personnel needed to investigate serious nancial crimes;

4. cash-oriented societies – large cash transactions are not by their

nature immediately suspicious since it is not uncommon for

expensive items to be bought with cash;

5. US dollar demand and circulation – wide use and easy

convertibility enables the inux of large amounts of foreign

currency;

6. popularity of remittance services – facilitates the ow of foreign

currency into the region; and

RISKY BUSINESS: Perspectives on Corporate Misconduct

264

7. gaming industry – enables illicit wealth to be disguised as

winnings.

ere is a saying that dirty money follows the path of least resistance.

Consequently, as controls strengthen in some jurisdictions, money

launderers would be inclined to move their funds to other jurisdictions

that are perceived to have a less stringent regulatory regime. It is in this

regard that Jamaica has, in the past, been considered vulnerable to the

inow of criminal wealth.

Vulnerability of Financial Intermediaries4

e methods employed by money launderers are limitless,

constrained only by the imagination of the perpetrator. Experience has

shown, however, that at some point in the cycle most operations will

almost invariably involve the nancial services industry. It is for this

reason that money laundering counter-measures are usually targeted

not only at the criminal who commits the underlying oence, but

also at those in the business of handling other peoples’ money; that is,

nancial intermediaries.

At the same time, as greater controls are imposed in relation to

one type of business, the trend is for criminals to use other businesses

within the nancial industry. Since initial eorts were targeted at

banks and securities businesses, in light of increased regulation of those

conventional services, other nancial intermediaries have become

increasingly attractive to criminals. Indeed, the spotlight was on banks,

because of their traditional dominance in the nancial sector, but time

has proven that banks are just one portal through which dirty money

ows.

In many cases, nancial intermediaries may constitute just one

part of a sophisticated web of complex transactions that has its origins

elsewhere in the nancial services system. Some of these persons may

become implicated unwittingly, others by simply turning a blind eye

to the truth and, of course, there are those cases where they openly

embrace criminals.