SIX REASONS WHY WE WILL PROBABLY SEE AMERICAN MONEY LAUNDERING INDICTMENTS IN THE ST. KITTS & ST. LUCIA CBI SCANDAL IN 2025

Financial institutions in the United States have a mandate to conduct a Risk-Based Anti-Money Laundering Compliance Program. Their compliance departments are required to assess potential risk, and recommend adjustments accordingly. The filing of a civil RICO complaint in US District Court in Tampa, alleging money laundering and rampant corruption within the operation of the Citizenship by Investment (CBI/CIP) passport sales programs of the Federation of St. Christopher & Nevis, and St. Lucia has caused compliance officers at U.S. banks to take a close look at whether they have issues regarding correspondent accounts of Caribbean banks, whether they must reexamine Country Risk, and whether their loan portfolios or bank customers engaged in international trade transactions could be affected.

While we generally deal strictly in facts in our AML/CFT coverage of developing financial news, today we will be detailing why we believe these recent events support the probability that a number of present and former government officials in those two East Caribbean states, as well as Politically Exposed Persons, more commonly known as PEPs, and others, will eventually be indicted under Federal Law, for violations of the Money Laundering Control Act. The potential impact of such an action on American banks is an issue which compliance officers should consider at this point, so that they can consider what steps are necessary and proper to protect their bank, and when they are best applied.

Therefore, I have listed a number of subjects which have led me to the conclusion that it is more likely than not that we will see money laundering indictments handed down, as early as 2025, against the individuals alleged to be the bad actors in the CBI programs at St. kitts and St. Lucia.

1. THE DESIGNATED CURRENCY FOR INVESTMENT IN ALL THE CBI PROGRAMS IS THE U.S. DOLLAR: The creator of the first CBI program in 1984, the late William V. Herbert, Jr., then the Foreign Minister of St. Kitts ignored the use of the local East Caribbean (EC) Dollar, as well as the Pound Sterling  (£), both of which were far more convenient, as well as more familiar to West Indians. I am acquainted with his reasons, but they are not relevant to this discussion. Anyway, his choice of a currency, which would in due course generally be processed and transit through the New York financial center, and therefore does invoke the extraterritorial jurisdiction of U.S. courts, even for foreign national, "if the conduct occurs in part within the United States," is a significant factor.

2. THE TRANSFERS OF DOLLARS THROUGH THE UNITED STATES WERE THE PROCEEDS OF A "SPECIFIED UNLAWFUL ACTIVITY." The passport sales are alleged to have been made at an unauthorized, and unlawful, discount. It has been asserted in the RICO case that they constituted fraud, and that also that there were illegal bribes & kickback allegedly paid. The payments appear to satisfy the requirements of the law under the Money Laundering Control Act.

3. THE PRIMARY ROLE OF A CHINESE-OWNED AND CONTROLLED CORPORATE ENTITY IN THE PASSPORT SALES OPENS A PANDORA'S BOX OF NATIONAL SECURITY ISSUES: The funds were reportedly transferred through a number of American banks, to Hong Kong, under the custody and control of a Chinese company, allegedly linked to the Peoples' Republic of China. This raises a number of possible National Security issues for the U.S., including but not limited to China's expanding influence in the Caribbean republics, the application of American foreign policy regarding foreign influence, all the way back to the Monroe Doctrine of 1823, and even intelligence community issues. You can assume that the DOJ National Security Division has been consulted in what is obviously an ongoing investigation.

4. CARIBBEAN CBI PROGRAMS HAVE BEEN RIDDLED WITH CORRUPTION SINCE THEIR INCEPTION, AND THE ST. KITTS PROGRAM LEADS THE PACK WITH UNSUITABLE APPLICANTS RECEIVING PASSPORTS, INEFFECTIVE DUE DILIGENCE, AND INCOMPLETE CONSTRUCTION PROJECTS THAT ONLY BENEFITTED DEVELOPERS AND THE SKN GOVERNMENT: The U.S. State Department and American law enforcement agencies have had to watch the St. Kitts program's massive problems and shortcomings from afar, without having the ability to rein them in due, to questions of National Sovereignty, and the interest of America keeping good diplomatic relations with its Caribbean neighbors.

5. SENIOR GOVERNMENT OFFICIALS OVERSEEING CBI PROGRAMS HAVE USED THEM FOR PERSONAL ENRICHMENT, WHEN DEALING WITH CVI VENDORS SEEKING EXCLUSIVE ACCESS: CBI consultancies wishing to be exclusive representatives of a specific national program have been known to pay illegal compensation to secure that business, in violation of the Foreign Corrupt Practices Act (US) and the Bribery Act (UK).    

6. THE ST. KITTS CBI/CIP PROGRAM WAS FLAWED FROM THE INCEPTION: I personally was involved with the creator of the SKN program in the initial phase, and the fact is that it intended to, from the beginning, accept known criminal elements, and approve their applications, being wilfully blind to the unsuitable background of applicants who could pay the fees in cash. 

Compliance officers should review the facts, make their own independent inquiries, and govern themselves accordingly, to discharge their professional responsibilities as risk managers.