Thursday, July 20, 2023



 The Virgin Islands Visa Waiver Act of 2022, which allows foreign nationals from the island republics of the Caribbean immediate, visa-free access to the USVI, may have been enacted to facilitate trade and tourism, but there are definitely unintended consequences of importance regarding money laundering in the United States. Obviously, the Department of the Treasury was not consulted when this bill was presented to the US Congress. Here's why.

Most of the jurisdictions in the East Caribbean remain offshore financial centers, a nice term for tax havens where money laundering and transnational financial crime still flourishes. Since their domestic economies depend, to a large extent, upon their "offshore" business, anti-money laundering and countering the financing of terrorism enforcement is a joke, meaning that it essentially does not exist in those countries. Dodgy individuals who would otherwise fail to qualify for a visa can now freely enter the USVI through a simple visa-waiver procedure, to conduct whatever illegal business they wish, with impunity. 

The US Virgin Islands is an American possession, it is United States territory. Therefore, all flight between the Continental United States (CONUS) and the USVI are considered domestic flights. Consider for a moment what this means for money launderers; they are therefore free to move cash or  "monetary instruments" directly to St. Thomas, via scheduled airline flights, in any amount, without fear of violating the $10,000 Customs reporting requirement, because it's technically NOT an international flight.

I can tell you from a decade of experience on that side of the law that money launderers have used the loopholes presented by intermediary jurisdictions successfully for decades, in this manner. The Caribbean banker/lawyer/money launderer entered the US Virgin Islands under the visa-waiver program, is met by an American cash courier arriving from the mainland, makes the exchange, and returns quietly to his tax haven home. The American courier never violates US Customs laws, and you can be certain that the Caribbean laundryman's exit from St. Thomas, among the throng of fellow West Indians returning home, is not scrutinized, especially if he has bought a suitcase of consumer goods. I have played that game myself in other places; it works.

Perhaps American Federal law enforcement agencies might want to consider assigning a task force to profile the arriving Caribbean "visitors" because they may find out that some not the tourists that they appear to be. It's just another application of the Law of Unintended Consequences.


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