New player in offshore banking warns against parking ill-gotten gains

The tiny island nation of Dominica in the Caribbean is positioning itself as another offshore banking facility. However, its prime minister warns that if one is thinking of parking ill-gotten gains in his country, to think again.

“We are open for business but at the same time we have rules,” said Roosevelt Skerrit, who has been prime minister of Dominica since 2004.

Skerrit said it was imperative on Dominica as it transforms from an agriculture-based economy to a services-based one, to shake off the negative connotation that comes with offshore banking.

“We are very well regulated to protect the investments of those who entrust their money with us but at the same time there are standards our investors have to abide by,” he told The Edge Financial Daily.

Skerrit was in Malaysia for a three-day visit to oversee the setting up of a High Commission in Jalan Ampang, following Malaysia and Dominica formalising bilateral relations on January 19.

Skerrit admitted that it would be easier said than done especially when Dominica is a new player against more established offshore financial centres such as the Jersey and Guernsey Islands in the Channel Islands (UK), and Dominica’s closest competitor in the Caribbean, the Cayman Islands – where billions of ringgit from suspicious transactions involving the 1Malaysia Development Berhad (1MDB) are placed.

“These more established players are very crowded and sometimes bring unnecessary attention to themselves.

“We want to avoid this negative attention by putting in place mechanisms that can assure us that the money being placed here is clean and from legitimate sources,” said Skerrit, who was only 31 when he was sworn in as prime minister in 2004, making him the world’s youngest prime minister at the time.

He said while regulations are put in place, one does not want to make it difficult for people to place their money in Dominica.

“But at the same we don’t want to be a place where those with ill-gotten gains park their money.

“If for instance the money is stolen (from the people), would it not be best for the money to be returned to the people?

“We have a responsibility to ourselves and the world so we cannot be a promoter or facilitator of any illegal activity,” added Skerrit, when asked about a 1MDB scenario.

This position has seen several offshore banks bailing out of Dominica, citing rules and “bank policies and developed attitudes that are no longer suitable for clients”.

Dominica issues an average of one offshore banking licence a year where applicants are given up to six months to satisfy requirements from the Financial Services Unit.

He said all offshore banking licences are registered in a Government Gazette for public viewing.

“The whole process before and after is transparent,” said Skerrit, who himself had been on the receiving end of allegations by the opposition in Dominica of amassing wealth beyond his means and turning a blind eye to the sale of Dominican passports by some government officers.

In the meantime, while Dominica promotes itself as a tax haven, Skerrit is adamant that his country will not fall into the category of “tax haven”.

Hence, despite boasting strict confidentiality agreement, Dominica signed tax information exchanges with several countries, the most recent being with Poland.

However, Skerrit said one should not let a few black sheep mar the merits of offshore banking.

“People who are against offshore banks are short-sighted.

“Offshore banks should be regarded as local banks and the controls and protections that apply (to the latter) should also be used in some way (for offshore).

“When we support offshore banks, one cannot assist them in illegal activities. We are not saying we will publish their names in The Edge but there will be due diligence and questions asked about the origins of the money,” he said.

He said in ensuring funds in offshore accounts are from legitimate means, it is important for the international community to work together to protect offshore banking.

“We must make it almost impossible for those (with ill-gotten gains) to keep their money here, especially if it is money that is not theirs or belongs to the state”. – The Edge Financial Daily, March 26, 2015.