St. John's, Antigua, March 10, 2000—Below is a section of the 1999 International Narcotics Control Strategy Report (INCSR) which deals with Antigua and Barbuda.

The annual report which has been critical in past years, has completely changed its tone due to the tighter regulation of the offshore banking industry and soon to be implimented legislative revisions in offshore gaming.

Our country is moving from being viewed by some in the international community as a loosely regulated jurisdiction, to an investment environment of the highest international regulatory standard. This is being accomplished while preserving our offshore banking and gaming industries which are coming under tighter regulation to ensure the highest level of money laundering prevention. In the case of offshore gaming the focus is not only on money laudering prevention but the highest level of player protection and player access to recourse. The upcoming changes in the offshore gaming legislation coupled with recent addition of industry ledgend, William Hill, to the 112 offshore will serve to further enhance the jurisdiction's reputation as a formidable offshore center.

It is predicted that the new measures in offshore gaming will result in a reduction in the number of licensees in the jurisdiction as raising the entry requirements and tightening regulation will cause any questionable operators to relocate to less stringently regulated environments.

1999 International Narcotics Control Strategy Report (INCSR)

Antigua and Barbuda (Primary). Until early 1997, Antigua and Barbuda had an active and virtually unregulated offshore financial service industry, which, combined with stringent bank secrecy, made the country an attractive site for money launderers. The country took steps in 1997 and 1998 to address problems and assert control by passing sound antimony laundering legislation. However, in October 1998, individuals suspected of involvement in money laundering and other illicit economic activities used their considerable financial influence to weaken Antigua's anti-money laundering legislation. Certain amendments to the Money Laundering (Prevention) Act and the 1982 International Business Corporations (IBC) Act distorted the regulatory regime and undermined the ability of law enforcement to investigate and prosecute financial crimes. These developments resulted in the issuance of a financial advisory by the U.S. Treasury Department in April 1999. Shortly thereafter the United Kingdom issued a similar advisory, and France publicly expressed its concerns. The U.S. Advisory, which advised financial institutions to give "enhanced scrutiny to all financial transactions routed into or out of Antigua and Barbuda," was issued because changes in Antigua and Barbuda's money laundering laws threatened to "create a 'haven' whose existence will undermine international efforts of the United States and other nations to counter money laundering and other criminal activity, a concern of which the United States has repeatedly made the Government of Antigua and Barbuda aware".

Since the issuance of the advisories, the Government of Antigua and Barbuda (GOAB) has rescinded most of the objectionable legislation and enacted most of the new legislation which, if effectively implemented, would bring the GOAB into compliance with international norms governing offshore financial services. Additionally, the GOAB is taking other steps to clean up its financial services sector. As a result of an intensive two year review of the licensed offshore banks, the GOAB revoked the licenses of approximately two-thirds of the offshore banks for failing to provide an approved financial audit and to meet the increased capitalization requirements, and, more importantly, for participating in illegal activities such as fraud and money laundering. Numerous criminal investigations in the United States have revealed that several of the offshore banks, most of which have been closed, engaged in financial transactions with funds of questionable origin. Currently there are about 18 offshore banks operating in Antigua and Barbuda, down from about 47 in 1998.

During 1999, the GOAB also increased its bilateral and multilateral cooperation on various law enforcement initiatives. In July 1999, the GOAB became the first country in the eastern Caribbean to bring the new Extradition Treaty and MLAT with the United States into force. Despite difficulties and delays in 1998, the GOAB has provided substantive assistance to U.S. law enforcement and prosecutors investigating and prosecuting fraud and money laundering cases involving the Antiguan-licensed Caribbean American Bank and European Union Bank. A request for the extradition of William Cooper, a director of Caribbean American Bank and owner of Antiguan American International Bank, is currently pending. The GOAB also worked closely with Canadian authorities in the investigation and successful prosecution of a major money laundering case, receiving over $400,000 in shared forfeited assets. Additionally, the GOAB has instituted its own case against former Ukrainian Prime Minister Lazarenko for money laundering. Lazarenko allegedly used an Antiguan offshore bank to conceal monies stolen from the Ukrainian government.

The GOAB created and staffed the Supervisory Authority mandated by the Money Laundering (Prevention) Act and issued regulations to implement the mandated suspicious financial transaction reporting system. In accordance with these new regulations, the Supervisory Authority has received a number of reports of suspicious activity. However, Internet gambling is largely unregulated in Antigua, although the GOAB has indicated it is developing regulations to control this burgeoning industry.

During the past year, the GOAB has amended its Money Laundering (Prevention) Act and IBC Act to correct deficiencies and bring them into compliance with international standards. GOAB cooperation in investigative and forfeiture matters has also improved. The new laws, combined with an increase in resources allocated to regulation of the international financial services sector and a demonstrated willingness to investigate and prosecute suspect individuals and transactions, suggest that the GOAB is now committed to creating a regulatory and anti-money laundering regime which meets international standards. In the future, GOAB must focus its efforts on fully implementing the Money Laundering (Prevention) Act, ensuring compliance with the new regulations of the IBC Act, and enhancing international cooperation on law enforcement matters.
 

Gyneth McAllister
Director of Offshore Gaming