Ipol-report suspects large-scale money-laundering in St. Maarten

POSTED: 01/12/12 4:09 PM

Casinos under suspicion

St. Maarten / By Hilbert Haar – There is reason to suspect that money laundering occurs on a large scale in St. Maarten. This has a negative effect on the cost of living and it is a breeding ground for criminality. This is one of the conclusions Ipol, a department of the Dutch national police services draws in the chapter about money laundering of their report Criminaliteitsbeeldanalyse Sint Maarten –an investigation into organized and community criminality. The report comes four years after the scientific research and documentation Center of the Ministry of Justice published an equally devastating report about o. between 2008 and 2010 every year organized crime in St. Maarten.

Casinos are suspected hubs for money-laundering. This one went under last year.

The money laundering industry is fueled by the humongous flow of money into the island – in cash and bank transactions 0.6 billion guilders ($0.33 billion) of the money that came onto the island was considered unusual; in 2008 the value of suspect transactions was 28 million guilders ($15.5 million), and in 2009 23 million ($12.8 million).

“Currently the law enforcement agencies in St. Maarten are insufficiently equipped to control the influx of illegal money,” the authors write. “The Coast Guard and the Customs do not have enough staff to control the ports, the bays and the airport on money that arrives on a daily basis on yachts and private jets. Investigation services have insufficient capacity and expertise to start up slid criminal financial investigations.”

Criminals that regularly make large cash investments in real estate cause price hikes in the real estate sector and also a more expensive living environment. That lowers the prosperity-level and this could create a breeding ground for criminality because people are unable to support themselves, the report notes. Bona fide realtors will also feel the pain, because their sector will be dominated by money laundering and not by market mechanism.

“This could bring even more criminality towards St. Maarten, the report states, for instance because more criminals or their accomplices settle down in neighborhoods where they have bought real estate or because buying real estate creates other opportunities for money laundering, for instances by establishing pubs or restaurants in their buildings.”

Money-laundering also affects the integrity of professionals like attorneys, notaries, tax experts and civil servants, the report states. “That puts pressure on the confidence in the functioning of people in public functions or who represent public entities. In the end this could have serious consequences for the confidence citizens have in the constitutional state.”

On the upside, the report notes, the large amounts of money that flow into St. Maarten and the millions criminals make from their activities could also be a good occasion to invest in combating money-laundering. In 2008 and 2009 51 million guilders ($28.3 million) was labeled as suspect. Capturing only part of this money could help the government with investments in fighting crime.

“Another reason to invest in combating money-laundering is that criminals only stop when their profits are taken from them. Because this does not happen right now and criminals seem to be aware of this, St. Maarten remains an attractive country for conducting criminal activities.”

The report recommends focusing on banks and customs because in these sectors the largest amounts of laundered money are to be found. Banks represent two third of unusual financial transactions, and customs one third. Interestingly, reports by the customs department between 2007 and 2010 were between 0.7 and 1.1 million guilders ($390,000 to $610,000) while these numbers are between five and eight times lower in Curacao.

Another sector that came in the crosshairs of the researchers who wrote the report is the casino industry. Casinos have the possibility to “change large amounts of currency, obscure so-called profits with checks by issuing player-profit statements, keep money in deposit or transfer it to bank accounts. They are also able to move cash between casino-branches in different countries, giving clients the possibility to remain anonymous.”

The report notes something this newspaper has hammered on in the past: the lack of a Gaming Control Board. “Due to the lack of a supervisory board for games of chance and the very limited accountants and tax controls on casinos it is unknown if and in which manner the branch – conscious or unconscious – facilitates money-laundering.”

In a footnote, the report states that on the political level talks about establishing a Gaming Control Board have been going on for years. “For unclear reasons this board has not been established yet. It ought to supervise casinos that are obliges through the law on games of chance to stick to certain guidelines. It also ought to advise the government about granting, amending and withdrawing casino licenses.”

The report notes that casinos hardly ever report unusual transactions to the reporting center MOT. “An investigation into suspect transactions via casinos has never taken place.”

The report’s authors, Sally Mesa and About Stuffers, see casinos as a major hub in the money-laundering industry. “Because there is no supervision over casinos whatsoever, it is conceivable that wealthy clients use the casinos to move or launder large amounts of money, that could tempt some casinos to ignore the rules in part or completely, whereby an offered reward or the fear to lose wealthy clients may convince them to cooperate with money-laundering.”

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