Countries/Jurisdictions of Primary Concern - Curacao
Curacao is an autonomous country within the Kingdom of the Netherlands that defers to the Kingdom in matters of defense, foreign affairs, final judicial review, human rights, and good governance. A governor appointed by the King represents the Kingdom on the island, and a Minister Plenipotentiary represents Curacao in the Kingdom Council of Ministers in the Netherlands. Curacao is considered a regional financial center and a transshipment point for drugs from South America bound for the United States, the Caribbean, and Europe. Money laundering is primarily related to proceeds from illegal narcotics. Money laundering organizations take advantage of the availability of U.S. dollars, banking secrecy, offshore banking and incorporation systems, two free trade zones (airport and harbor), an expansive shipping container terminal with the largest oil transshipment center in the Caribbean, and resort/casino complexes to place, layer, and launder drug proceeds. Money laundering occurs through real estate purchases and international tax shelters. Laundering activity also occurs through wire transfers and cash transport between Curacao, the Netherlands, and other Dutch Caribbean islands. Bulk cash smuggling is a continuing problem due to Curacao’s close proximity to South America.
Economic activity in the free zones is declining, although local merchants are confident the situation will improve. Curacao’s active “e-zone” provides e-commerce investors a variety of tax saving opportunities and could be vulnerable to illegal activities.
The financial sector consists of company (trust) service providers, administrators, and self-administered investment institutions providing trust services and administrative services. These entities have international companies, mutual funds, and investment funds as their clients. Several international financial services companies relocated their businesses elsewhere because Curacao is fighting its perception of being a tax haven. Curacao continues to sign tax information exchange agreements (TIEAs) and double taxation agreements with other jurisdictions to prevent tax fraud, financing of terrorism, and money laundering. The country periodically implements voluntary tax compliance programs; most recently, a one-year amnesty program took place in 2012-2013.
Curacao’s Technology Exchange, CTEX, opened in 2013. Several casinos and internet gaming companies operate on the island, although the number of internet gaming companies is declining.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of U.S. currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: no
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Onshore and offshore banks, saving banks, money remitters, credit card companies, credit unions, life insurance companies and brokers, trust companies and other service providers, casinos, Customs, lawyers, notaries, accountants, tax advisors, jewelers, car dealers, real estate agents, and administration offices
Number of STRs received and time frame: 7,206: January 1 – November 17, 2014
Number of CTRs received and time frame: 6,629: January 1 – November 17, 2014
STR covered entities: Domestic and international banks, saving banks, money remitters, credit card companies, credit unions, life insurance companies, insurance brokers, company and other service providers, casinos, Customs, lawyers, notaries, accountants, tax advisors, jewelers, car dealers, real estate agents, and administration offices
money laundering criminal Prosecutions/convictions:
Prosecutions: 1 in 2014
Convictions: 0 in 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Curacao is a member of the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body. Its most recent mutual evaluation can be found at: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=349&Itemid=418&lang=en
Enforcement and implementation issues and comments:
The Dutch Kingdom released its 2012 Threat Monitor Organized Crime (NDB), a quadrennial report on the nature and threat of organized crime within the Kingdom. The NDB establishes an integrated framework for tracking organized crime in the Caribbean region, and under the framework, government agencies are working more closely together, including through greater information sharing.
Curacao’s Public Prosecutor’s Office continues to investigate money laundering allegations against a member of the board of the Curacao Lottery Foundation who also is a major lottery operator. The Government of Curacao’s cooperation with the U.S. government led to the freezing of over $30 million of the lottery operator’s assets in the United States. The lottery operator is reputedly a major financer of a political party in Curacao. A former prime minister is also being investigated for alleged money laundering and associated crimes.
Curacao utilizes an “unusual transaction” reporting system. Pursuant to local legislation, the reporting entities file unusual transaction reports (UTRs) to the financial intelligence unit (FIU) and not suspicious transaction reports (STRs), as is the custom in common law legal systems. The FIU analyzes the UTR and determines if it should be classified as a STR. There were 15,754 UTRs filed in 2014, as of November 17. From January 1 - November 17, 2014, there were 4,440 disseminated referrals to law enforcement agencies. On January 1, 2014, an acting chief was appointed to guarantee the continuity and functioning of the FIU.
In 2014, a money laundering operation between Curacao, Aruba, and the FARC in Colombia was intercepted by authorities. According to reports, approximately $2 million was laundered using the illicit cigarette trade. The cigarettes, which were intercepted, were hidden in 750 containers and reportedly originated in Paraguay. The cigarettes were routed to Colombia via a Curacaoan and Aruban brokerage.
The mutual legal assistance treaty between the Kingdom of the Netherlands and the United States applies to Curacao. Additionally, Curacao has a TIEA with the United States.
Curacao is part of the Kingdom of the Netherlands and cannot sign or ratify international conventions in its own right. Rather, the Netherlands may arrange for the ratification of any convention to be extended to Curacao. The 1988 Drug Convention was extended to Curacao in 1999. In 2010, the UN Convention against Transnational Organized Crime was extended to Curacao, and the International Convention for the Suppression of the Financing of Terrorism was extended to the Netherlands Antilles, and as successor, to Curacao. The UN Convention against Corruption has not been extended to Curacao.
Curacao should continue its regulation and supervision of the offshore sector and free trade zones, as well as its pursuit of money laundering investigations and prosecutions. The government should work to fully develop its capacity to investigate and prosecute money laundering and terrorism financing cases. Curacao should enact legislation to effectively tackle money laundering vulnerabilities in the money remittance and currency exchange sector. Curacao also should strengthen cooperation within the Kingdom, particularly among agencies such as the Public Prosecutors Office, Customs, Immigration, Revenue Services, Coast Guard, and the Royal Dutch Marechaussee (military police).