BBC explains in simple terms how money laundering is actually done

This post describes money laundering which incidentally the US embassy says is a problem in Barbados. The Government of Barbados has passed laws prohibiting this abuse. This 2008 US embassy report will be discussed in a later post, but first we will try to define money laundering.
We start with an An A-Z of money laundering, BBC, 2002, which explains in simple language how it is done. Offshore finance in Pacific and Caribbean islands is mentioned. The business practices of the money launderers appear to be similar to that of some other companies in Barbados.
(Image above from Open Stock Photography)

 

—————————

An A-Z of money laundering

Here is a quote from the BBC article in which the Caribbean is mentioned:

First comes placement, getting the money into the global financial system and away from where it was made in the first place.
Then comes layering: pushing the money through multiple transactions, using a number of countries and a handful of shell companies - also known as “brass plate” companies, bought off the shelf and with nominee directors standing in front of whoever really benefits.
Finally comes the integration: getting the money back to a place and form in which you, the original crook, can spend it.
Offshore finance is useful here. Any number of Caribbean and Pacific islands have very stringent privacy laws, sometimes preventing not only foreign investigators but even local ones from knowing who really controls a company or a bank account.


I have made notes referring specifically to phrases in the above description:

  • Barbados is usually away from where the money “was made in the first place“.
  • My family has searched extensively in the Barbados Registry (CAIPO), and has come across several “shell companies“, or companies with little documentation set up for the purpose of one major transaction. The directors appear to be “nominee directors“.
  • Barbados has “stringent privacy laws“. Try finding the identity of the rich individuals and corporations who actually own these “shell companies“!


Please not that I am not suggesting that any particular company in Barbados might be involved in money laundering. I am merely stating that in some instances, similarities exist between the modus operandi of some Barbadian companies and that of the money launderers.

Have you had any experiences with mysterious “shell companies”?


Next: What the US and Barbadian Governments are Doing to Combat Money Laundering