By: Staff Writer
December 16, 2022
Trafficking in illicit drugs is still the top generator of criminal proceeds in the Caribbean says a Washington DC think tank and goes hand and hand with corruption in the region.
The new Global Financial Integrity report, Financial Fraud in the Caribbean, examines the prevalence and dynamics of this financial crime.
This report analysed illicit economies that generate illicit proceeds, including drug trafficking, mineral trafficking, corruption, and trafficking in persons (TIP) and smuggling of migrants (SOM).
The report said: “In the case of mineral trafficking, the report identifies the abundance of minerals in the LAC region and makes the case that there are financial crime risks that go well beyond illicit gold. There are risks related to gemstones like jade, emeralds and diamonds, as well as to precious metals such as silver and newly discovered minerals including lithium.”
The report noted overall that issues like poverty, conflict and weak governance structures play a significant part in financial fraud in the Caribbean.
The report particularly noted, “Drug trafficking is one of the largest generators of criminal proceeds, and in conjunction with corruption and ML, presents arguably the greatest challenge to the LAC region. In addition, drug trafficking often gives way to other transnational organized crime —TIP, illegal mining, illegal logging, etc.—in the region. One expert who has been working on the issue for more than 30 years remarked that narcotics have become a massive obstacle for the whole region; those countries that in the past didn’t believe they had a problem are now dealing with it on a large scale.”
When it comes to drug production and trafficking in LAC, while no jurisdiction is untouched, each region has its own dynamics. Mexico is both a major producer country as well as the gateway to the U.S. Central America and the Caribbean are key transit regions, bridging the gap between South America and Mexico.
The report noted: “There are three main “tracks” that bridge the gap between South America and the largest consumer market, the U.S.: two tracks via the Caribbean and one via Central America. The Eastern Caribbean track roughly spans an arc from the islands of Anguilla through Trinidad and Tobago to Aruba, and, while smaller in volume compared to the other tracks, is still a popular transit point for moving narcotics to Europe. Traffickers “island hop” until they reach a European jurisdiction, i.e. a French or Dutch territory such as Martinique or Aruba, and then move to the European continent.
“The Central Caribbean track runs through Jamaica, Haiti and the Dominican Republic. This track has always been busy, however according to experts the significant level of instability in Haiti in recent years has seen more cocaine flood the Dominican Republic before moving towards the U.S., often via Puerto Rico. Besides the “typical” exchange of cash for drugs, there is a guns-for-drug trade between Jamaica and Haiti, with used firearms from Haiti being exchanged for drugs, mainly cannabis, from Jamaica; one expert also remarked on the growth of a similar trade between Jamaica and Central America.
“In the 1980s and 1990s, cocaine was frequently moved by go-fast boats from Colombia to various Caribbean islands before moving onward to the U.S. With the growing role of Mexican DTOs in the supply chain, coupled with a very strong law enforcement response led by the U.S., the route was moved towards Central America and the Pacific. However, more than one expert remarked on the “resurgence” of the Caribbean route and the use of go-fast boats.”
The fishing sector as well as fishing vessels are another common method for smuggling drugs. Major Mexican drug cartels including the Sinaloa Cartel and CJNG, are reportedly working with local gangs in southern Mexican states, who, posing as fishing cooperatives, retrieve large shipments of cocaine from Colombia and Ecuador that have been left far out at sea, primarily in the Pacific Ocean but also in the Caribbean.
The types of financial crime are the commonplace money laundering and trade based money laundering, in addition to terrorism financing and plain old corruption. “In the case of ML, LAC countries face a variety of vulnerabilities including incipient AML laws, challenges with international cooperation such as mutual legal assistance treaties (MLATs), insufficient financial intelligence and access to technology, as well as limited understanding of risks within international trade,” the report said.
In order to combat proceeds from drug trafficking through these channels, there must be support for countries in the drafting and/or implementation of asset seizure legislation, promote the application of money laundering charges in conjunction with drug trafficking charges, and support capacity building for judges and prosecutors. Improve the exchange of intelligence/information sharing between domestic agencies and between countries, as well as keep an eye on the growth of synthetic drugs, both in terms of increased trafficking as well as the rise of domestic consumption in LAC countries.