Is there some reason we tolerate money laundering via tiny island banks?

There are banking standards for all of European (even once secret Swiss) and mainland Americas banks, so what good does it do to let tiny island nations launder money for drug and arms dealers?
Can’t we just park an aircraft carrier in their one harbor, send a diplomat in to reason with them, and if they hesitate, mention Grenada.

There are an awful lot of those tiny island nations in case you haven’t noticed. Do you suggest we just invade them all? They are, you know, sovereign nations as well but I suppose we can just ignore that if it helps us make our pristine nation even more secure. Most of the money that is laundered is done right here at home.

Was there a specific problem you were looking to address?

Perhaps offshore tax shelters still have their uses to govts. that are forced to impose lawful banking standards within their own borders.

Maybe the Swiss would be enjoying their old “don’t ask” policy even now if they’d just expended some covert effort to weed out the Nazi customers. Nothing taints your image and renders the status quo untenable like supporting Nazis.

Where would the architects of Iran-Contra have been, after all, without Swiss bank accounts? Now that the Swiss are more mainstream, who can one turn to for business?

I don’t disagree, Loopy, but I think Shagnasty has the better answer – these are sovreign nations we’re talking about. Typically America is not in the business of invading other countries and demolishing the legal government therein just because we don’t think they’re doing stuff the right way.


Yes, but invasion is not the only way of doing these things. The reason so many Swiss banks have now changed their strict rules (not so much on secrecy, buy they are now a lot stricter about illegal earnings) is that international pressure was applied. A similar situation applies in Monaco- it will not help French citizens launder money or avoid paying taxes, because the whole state exists at the licence of the French govt. It would be easy to, say, impose travel restrictions on the head of anyone who owns a questionable Cayman Islands (or whatever) bank- after all, these guys spend their time jetsetting, not sitting on a sandbar in the Carribean. You could do other, similar things, but the mere threat might well be enough.

On the other hand, I suppose that would take a broad international consensus, and the people who make up governments understand the advantages of having somewhere to stash their earnings (once out of power). Plus of course if any state were to impose banking restrictions the others would rush in to hoover up the extra business falling their way. If there is another, less cynical reason for the lack of international condemnation of these practices, I’d be interested to hear it (fight my ignorance!)

I disagree. One of the things about bank secrecy is that the owners of the accounts are one of the things that’s kept secret. If the FBI knew who had the accounts, they’re halfway there already. That’s why U.S. banks have to report any transaction that sends a certain amount of cash overseas – so if you’re laundering money, the government can get a report with your name on it and, when they do, then start investigating where the money comes from.


Best. Straight line. Ever.

Yep, that was a screen-splatterer…

The OP seems to assume that every tax haven is being allowed to do whatever they please with the blessing of the US government. In fact, there’s plenty of pressure from all over the place for these countries to improve their financial systems. Nobody is ‘tolerating money laundering’, they’re just accepting that gunboat diplomacy isn’t the way to sort it out.

What good is a gunboat if we can’t use it for diplomacy?

Made me snicker out loud.

My answer to the OP is simple; the power structure is dominated by the sort of criminals who use such banks for their own profit and schemes; they don’t want anything to be done about it.

I don’t know what you chaps are talking about. :dubious:


If there’s one thing America is known for, it’s invading and otherwise strongarming countries that don’t do things the way it wants. That’s what we find so amusing. You said :

The words “Iraq” and “regime change” come to mind.

Or, for that matter, “Vietnam”, “Nicaragua”, “Panama”, “Phillipines”, “Cuba”…

Don’t forget that the onus is on the taxpayer as well (see Form TD F 90-22.1).

I just love having to declare to the US Government each and every year that I’m not a terrorist, drug smuggler, money launderer, or worse, and if you miss one, just one small asset, then:

Well, if I’ve learnt anything from reading Frederick Forsyth novels, it’s that apparently Lichtenstein, Belgium, and Andorra have rather… non-cooperative banking laws.

Now, if you’ll excuse me, my Wireless Transceiver unit is beeping, telling me that the DC-3 load of Mercenaries I’ve hired has managed to overthrow the government of a small African country… :smiley:

Heh. You know that after the movie came out, so many people were trying the fake-passport scheme in Day of the Jackal that they had to change the system?

There are actually legitimate reasons to have offshore banks, especially in a ‘globalized’ world. Multiple partners of multiple companies on multiple continents need structures that are easy to setup and operate. And not all countries require their citizens to declare all of their worldwide income like the USA does.

In addition, most offshore banks follow US guidelines on money-laundering and Know Your Client (KYC) laws. In addition, regulations like Sarbannes-Oxley affect any business that has ties to the USA (which are quite a lot).

Also, there are ways in which an offshore bank is legal and beneficial for Americans to use. You just have to report it, like Una says. Lets say a hot-shot programmer consults in many countries around the world. She could have problems opening up bank accounts in every country she does work in, so she needs one place for all money to be sent to, in various currencies. An offshore bank is good like that. Also, the contracts she signs outside of the USA can be claimed as Foreign Earned Income, to which Americans have a credit of around $85,000 (meaning you don’t have to pay taxes on the first $85k you earn). Now if she sets up an offshore company (and legally reports it), she can have all money paid to that company, and then THAT company will pay for her expenses (hotels and travel expenses all over the world, etc) and then pay her the $85k a year (tax free), keeping the rest in the offshore account (also not taxed). And this is all legal if she reports it and doesn’t try to claim too many business expenses (like clothing or books not associated with programming). But there are many many many things one must consider when doing this (like number of days in/out of the USA), so it might not be beneficial in the end. But, for some people it is, and it is legal, and thus offshore banks do serve an honest function.

That is just one of many examples where these island offshore banks are benficial. And like I said, most are legit.


Iran, Chile, Haiti … heck, just about every Latin American country at least once.