Narcotics trafficking and money laundering in the Caribbean

¶ … criminal justice in the Caribbean. Specifically it will discuss narcotics trafficking and money laundering in the Caribbean. The Caribbean may be a vacationer's delight, but areas of the Caribbean are a haven for drug dealers and money laundering, as well. In fact, it is one of the biggest narcotics trafficking areas in the world, much of that traffic is destined for the United States, and much of that ill-gotten drug money is laundered in the Caribbean, effectively making it disappear and keeping its owners' identities secret.

The Caribbean is well-known for its narcotics trafficking, and has been for a long time. The United States and other countries have been working to clean up the area, sometimes with the help of local law enforcement, and sometimes not. However, it is a huge problem because they area is so vast, narcotics are recognized in the culture of at least some of the islands, and it is such a lucrative way to make money that many Caribbean residents are drawn into the narcotics trafficking world. As one writer notes, "Narcotics trafficking, money laundering, and illegal migration are integral components of extensive criminal networks that undermine the democratic stability, economic development and social well being of nations."

That is why so many people worry about the activities going on in the Caribbean, and that it is relatively open and freely allowed in many areas.

Compounding the problem is the financial system of the Caribbean, which involves offshore banks willing to open accounts for anyone with the money to pay for it, who then launder the money and make it possible for drug lords to cover their incomes and continue operating. Two writers note, "[Money laundering] is without question one of the biggest challenges facing law enforcement today.... Organized criminal groups, from drug trafficking rings to more traditional organized crime 'families,' could not operate as successfully as they now do without the means to launder money."

Thus, the two activities feed off each other, and part of the problem is the fact that so many of the area's governments and police forces are willing to look the other way when it comes to drug trafficking and laundering money.

An example of this open acceptance by some is the Jamaican Police Services. Many people believe there are drug syndicates working in the police force. Authors Maingot and Lozano discuss a drug bust in the late 1990s by members of the force that confiscated over $111 million dollars worth of cocaine in an inbound airplane, but in six months' time, nearly all of the cocaine had disappeared from the vault in the narcotics department.

It is not just the police departments that are filled with corruption. Authors Maingot and Lozano continue, "It is not that there have been no studies and warning as to the corrosive consequences of that corruption. The fact is that the political elites had let the corrosive forces of drug corruption operate for too long. They were focused on pursuing the common criminal, not the 'money men'."

It is easy to see how this corruption could occur. The drug lords have enough money to bribe officials and the police, so it is difficult if not impossible to control their activities when they can so easily bribe or threaten any official who does not cooperate with them.

Along with the problem of drug trafficking, money laundering is widespread in the Caribbean as well. What is money laundering? It is the passing of money gained illegally through several different channels to help conceal where the money came from, who it belongs to, and how it was obtained. The Caribbean is home to numerous offshore banks that engage in money laundering, so it has become a haven for drug lords and their residences, as well. They use the islands to grow and ship their products, and the islands' banks to conceal their drug money, placing the Caribbean square in the middle of just about every aspect of drug trafficking.

How Big is the Problem?

The problem throughout the Caribbean is huge. For example, in 2007, U.S. Federal Government agents seized "approximately 396 kilos of cocaine and 123.1 kilos of heroin with an estimated street value of $15,056,400. Six people were arrested in the operation."

This was just one operation with six people, when there are literally thousands of operations like this, both bigger and smaller, operating in the area. It is also one of the citizens' biggest complaints, especially in heavily involved countries like Jamaica, but it is difficult to manage the situation when so much of the government and police forces are corrupt, as well. This corruption is widespread throughout the Caribbean islands, with many other instances of political corruption noted in the Bahamas, St. Kitts, where a prime minister was ousted for corruption, and in Trinidad, where a security minister was assassinated after speaking out against corruption.

In addition, unemployment is a big problem in the region as well, but jobs always seem to be available in drug trafficking. The Commander continues, "The rise in unemployment throughout the region has also heightened prospects for the propagation of the Colombian effect, the luring of many into seeking employment in the drug trade as an alternative source of income."

With the global economy even worse than when the Commander wrote this report, there is certainly even more incentive for many today to enter drug trafficking in the Caribbean, which means more drugs entering the United States and Europe in the end.

Money laundering only adds to the size of the problem in the Caribbean. Just about every country located in the Caribbean offers attractive and lucrative incentives to offshore banks, which is why there are an estimated 4,000 offshore banks located in the islands. Each island has different restrictions and fees for setting up an offshore bank account, but they all offer anonymity and confidentiality for their depositors, making them perfect for large-scale money laundering. Authors Maingot and Lozano continue, "There is usually a $125 fee for 'post incorporation structuring.' All insist on confidentiality and anonymity through numbered accounts, and on being tax free."

Money laundering allows the criminal activity of drug trafficking to go undetected, and so, it threatens not only the island nations, but also the entire world. That is why money-laundering activity is now a part of the overall War on Drugs in America, and has been since 1986, when Congress passed the Anti-Drug Abuse Act, which included a bill specifically on money laundering activities.

Money laundering is often a result of illegal activity, but there is another aspect to the money-laundering scheme in the Caribbean. Many of the country's leading financial institutions "shelter" much of their income in Caribbean bank accounts, thereby reducing their tax burden significantly. The two authors note, "They establish financial subsidies in tax havens. They indulge in tax shelters so complex government auditors can't always understand them. They shift profits to low-tax countries by manipulating prices when doing business with their own overseas branches."

With the economy the way it is, it seems that right now, money laundering through Caribbean banks may be an even bigger problem than the drug wars. No one seems to know if some of America's largest financial institutions and corporations have Caribbean or other foreign accounts, and how much money is being washed through those accounts. It would seem to be prudent for the Administration to begin looking into these practices in the hopes of regulating them, some how. It would make sense to add more income from taxes into the country's budget, and who knows if some of the companies who got bailout funds actually placed at least some of them in foreign accounts?

Why the Caribbean?

Why is the Caribbean the source of so much drug trafficking? As with most businesses, it is because of "location, location, location." The area lies between the major producer of narcotics and the major user. A Lieutenant Commander in the Bahamas Defense Force notes, "Known as the third border of the United States, the tiny islands of the Caribbean lie between the world's leading producer, and the world's leading consumer of cocaine and marijuana South America and the United States, respectively."

In addition, the area lies within some of the major shipping and sea-lanes, and there are a myriad of islands, coastlines, and bays where narcotics traffickers can hide out.

Another aspect of drug trafficking finds the Caribbean highly desirable, too, and those are the growers that grow marijuana for sale. Many of the islands are so isolated they make the perfect location for large marijuana farms, complete with security and nearby transportation via plane or boat. No one really knows how many of these small, isolated islands belonging to various Caribbean nations are involved in the drug trafficking trade, but some estimates put it at hundreds or even thousands, indicating why it is so difficult to manage the drug trade in the area.

The Sources - Jamaica

While all the islands of the Caribbean add to the drug trafficking and money laundering problems in the Caribbean, Jamaica is one of the most well-known contributors to the problem. There is an open drug culture on the island that celebrates the use of marijuana, and no one knows how much of the plant is grown on this island, alone. As one drug enforcement manual notes, "Tiny Jamaica has been known to produce upwards of 300 metric tons in a year."

The author also notes that the country is the major source of marijuana in the United States, as well, along with supplying several other countries, as well.

The problem is so bad in the country that it is the top priority of its citizens, who do not trust the government and have not trusted it in a long time. The two authors state, "In 1991, Jamaican pollster and university professor Carl Stone carried out a major survey of public attitudes towards the police and the court system. The results were extremely discouraging: the public trusted neither the police, the courts, nor the justice system."

The situation is still the same today. Jamaica has one of the highest rates of murder in the world, the drug lords literally run the island because they have more money and firepower than the police could ever hope of having, and they reign over the people through fear and intimidation.

The Sources - Dominica

During the last decade, Dominica has become another major source of drugs in the Caribbean. Another author notes, "Mervin Paul, the Director of Dominica's National Drug Prevention Unit, stated 'there are clear signs of a worsening drug problem' and that Dominica has become a transshipment point between South and North America."

The Dominican government is woefully underfunded and they did not even adopt a plan for attacking the drug problem until 1999. They have no military, and one coast guard ship that is disabled, so drug traffickers pretty much have the run of the country. It is interesting to note that as the problem of drug trafficking has grown in Dominica, so has crack cocaine addiction, which had not previously been a problem in the country.

Dominica is also a major source of money laundering in the area. It was so bad in the last decade that United States Financial Action Task Force (FATF) placed the country on its blacklist of states prone to money laundering. While the nation has passed stricter money-laundering laws as FATF removed it from the blacklist, the country continues under scrutiny. Author Hubbell continues, "Nevertheless, despite these measures, a report by Transparency International noted that Dominica and its Eastern Caribbean neighbors are still at risk. 'Narcotics-related corruption and associated arms trafficking, and money laundering and financial crime constitute a "growing threat" to the small island states of the Caribbean'."

Crimes associated with narcotics drug trafficking, including murder, gun running, and drug addiction are all growing in the country, as well.

The Solution

Is there a solution to the problems of drug trafficking and money laundering in the Caribbean? There have been many attempts by the United States to combat the continuing drug trafficking in the Caribbean. They have formed many coalitions with island nations, and have had some success in seizing large shipments of drugs bound for the U.S. One of the most recent attempts is the Caribbean Corridor Initiative by the Border Patrol. Their Web site notes, "The Caribbean Corridor Initiative is a Drug Enforcement Strike Force that includes agencies such as Customs and Border Protection, U.S. Coast Guard, Drug Enforcement Administration, Federal Bureau of Investigation, Immigration and Customs Enforcement and U.S. Attorney's Office."