The 2014 International Narcotics Control Strategy Report released this week by the US State Department has listed Belize and the US as major money laundering jurisdictions. At the same time, the US is listing Belize as a major transit country for the illicit drug trade.
Belize may have – at least for the time being – escaped sanctions from the Financial Action Task Force, but this latest report suggests that the country will remain under substantial foreign pressure to align with anti-money laundering measures being propagated on an international scale.
The 2014 International Narcotics Control Strategy Report was published in two volumes: Volume I is Drug and Chemical Control, and Volume II is on Money Laundering and Financial Crimes, both dated March 2014.
Belize is listed as a major money laundering country along with Afghanistan, Antigua and Barbuda, the Bahamas, British Virgin Islands, Canada, Guatemala, Israel, Mexico, Singapore, the United Kingdom, and the United States itself.
“This year’s list of major money laundering countries recognizes this relationship by including all countries and other jurisdictions, whose financial institutions engage in transactions involving significant amounts of proceeds from all serious crime,” the report said.
Belize’s offshore sector is also highlighted: “In an attempt to diversify Belize’s economic activities, the Government of Belize encouraged the growth of offshore financial activities that are vulnerable to money laundering, including offshore banks, insurance companies, trust service providers, mutual fund companies, and international business companies,” the US report said.
The US report also said that, “Belize’s financial institutions were cited for not performing due diligence in screening their customers and prohibiting financial transactions with shell banks,” but noted that Prime Minister Dean Barrow had stated his intentions for the government to be compliant with international AML/CFT recommendations.
Of note is that the Government of Belize this January passed a raft of legislation to put into effect anti-money laundering and terrorism laws, under recommendation by the Caribbean Financial Action Task Force.
The prime minister and other government officials made public statements supportive of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s 2013 designations of Belizeans, and all local banks comply and prohibit business with the designated entities, the report also said.
It added that, “Belizean officials suspect there is money laundering activity in their two free trade zones, known as commercial free zones (CFZ).”
Belize is a transshipment point for marijuana and cocaine, and there are also strong indications that laundered proceeds are increasingly related to organized criminal groups involved in the trafficking of illegal narcotics, psychotropic substances, and chemical precursors, the report said.
In September 2013, US President Barack Obama listed Belize as a major illicit drug producing and/or drug-transit country, along with six other Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.
“United States Government analysts estimate that approximately 90 percent of illegal drugs from South America destined for the United States are smuggled through the seven Central American countries and Mexican corridor. Of this amount, nearly 80 percent stops first in a Central American country before onward shipment to Mexico. For example, multi-ton shipments, seized in Belize, El Salvador, Guatemala, and Honduras, are routed to Mexican drug trafficking organizations for the manufacture of methamphetamine and other synthetic drugs,” the report said.
It said that through the first 10 months of 2013, Belize authorities seized over 115 metric tons of marijuana, over three kg of cocaine, and four kg of crystal methamphetamine.