ORANJESTAD, ARUBA, JUNE 10 -- Island nations of the Caribbean, already embattled by the transshipment of cocaine and other drugs from South America to the United States, are bracing for an anticipated surge in money laundering linked to traffickers.
The downfall of Panamanian strongman Manuel Antonio Noriega in last December's U.S. invasion has ended Panama's role as a center for laundering drug money, Caribbean and U.S. authorities say.
That shift, combined with tougher banking, currency and asset-seizure laws in the United States and other developed countries, is leading drug traffickers to move huge amounts of money to the Caribbean, where some countries lack the laws or resources to stem the tide of tainted cash.
"We could lose the integrity of our financial and political institutions as well as our freedom and our future," said Prime Minister Nelson Oduber of Aruba, an autonomous Dutch island.
Oduber spoke today at the conclusion of a three-day conference on drug money laundering here attended by delegates of 20 Caribbean, Latin American and other countries, including the United States. Although the delegates failed to endorse formally a series of legal and regulatory changes designed to inhibit money laundering, they agreed to recommend that the measures be adopted by their respective governments.
The steps would include an overhaul of bank-secrecy rules that thwart detection of the transfer of drug proceeds; new laws to criminalize money laundering and permit the confiscation of assets and property tied to drug trafficking; and tougher regulations governing bank licensing, record keeping and the reporting of currency transfers.
Until now, there has been little effort to coordinate laws or regulations on the movement of funds through the Caribbean, and drug traffickers have had a relatively easy time shifting large amounts of money through shell companies, banks and other financial institutions in the region. The Bahamas, the Netherlands Antilles and the Cayman Islands have been accused of providing havens for drug money.
U.S. officials say traffickers in the region have established a drug service industry that is not involved in handling drugs. Rather, nominally legitimate enterprises such as import-export firms, sea and air transport companies, travel agencies, jewelry and precious metal exchanges and other businesses that deal with large volumes of cash are used to disguise the movement of drug dollars.
It is expected to be an arduous process to standardize regulations in a region where such basic questions as the definition of property are complicated by competing legal traditions of British common law, Dutch law and the Napoleonic code.
Many Caribbean officials have also said that no amount of legal or regulatory reform will make a difference without an increase in technical assistance or economic aid from the United States. Even setting up a new government office with a handful of trained bureaucrats and a few computers can be daunting in nations with minuscule economies and a paucity of skilled workers, Caribbean officials say.
Some regional leaders have expressed resentment that their nations, caught between the major producers of drugs in Latin America and the consumers in the United States, have been forced to spend heavily to cope with the backlash of narcotics trafficking.
Aruba, for example, with a population of 68,000, recently had to build a $12 million prison to handle a booming population of inmates, most of whom are foreigners involved in drug trafficking.
In the last three weeks, Aruba has seized 400 kilograms (880 pounds) of cocaine, all but 50 kilos of which was bound for the United States, according to Prime Minister Oduber. "Every dollar we spend on this is one dollar less that we have for economic development," he said.
Wilbert J. Knoppel, justice minister of the Netherlands Antilles, said developed countries should offer "Caribbean countries technical assistance" and "the necessary financial assistance as well."
The conferees here agreed to prepare a country-by-country assessment of what resources would be required to combat money laundering.
U.S. officials are noncommittal about the chances of increased financial aid to the Caribbean at a time when policy-makers in Washington are devoting unprecedented amounts of foreign aid to Eastern Europe, Nicaragua and Panama. Instead, they said Caribbean countries could take in more funds by confiscating property and assets tied to drug trafficking.
The Americans stressed the importance of a unified regional effort to impede the flow of drug money. "As long as there are weak links in the chain, we will have a difficult time getting control of the problem," said Peter K. Nunez, assistant treasury secretary for enforcement, who headed the U.S. delegation.