Jack A. Blum
International organized crime and large-scale narcotics trafficking depend on the money laundering and banking services provided by the world of offshore banking and finance. The offshore financial world is made up of countries and political subdivisions that use their sovereign status to protect the wealth of foreign customers from the civil and criminal law of their own countries. These “haven” jurisdictions provide a home for banks, international business corporations, securities brokers, and insurance companies, which are used by the owners of all kinds of offshore assets. All of their transactions are, for the most part, shrouded under a blanket of secrecy.
Offshore financial activity has grown steadily and quietly for the last forty years. Today the banking and investment activity that takes place in offshore jurisdictions is an important part of overall global finance. Based on the booking of deposits and loans, 1 the Cayman Islands are the world’s fifth-largest banking center. The islands are home to 520 banks and more corporations than people. The Netherlands Antilles are the fourth-largest source of foreign investment in the United States. The British Virgin Islands are home to nearly 180,000 corporations.
From their beginnings offshore havens have serviced the money-laundering needs of organized crime, but their real growth came because of the flight of noncriminal money from the political power of the nation-state. The movement of money offshore was facilitated by improvements in communications technology, computer hardware and software, and transportation. The fact is that assets in the offshore havens are a mixture of legal money, fleeing tax and regulation, and the proceeds of criminal activity. This mixture confuses the issue—