WILLEMSTAD – Criminal investigations and risk assessments have uncovered underground banking and informal cross-border financial arrangements involving individual Chinese actors in parts of the Dutch Caribbean, exposing weaknesses in the Kingdom's ability to track illicit financial flows, according to a new report.
The researchers emphasize that underground banking is not unique to Chinese communities and that the evidence does not establish involvement by the Chinese government.
Underground banking allows money or value to move between countries without necessarily producing a corresponding international transaction through the conventional banking system.
For example, money can be given to an intermediary on one island while another member of the network pays the recipient in another country. The participants later settle the balances through cash, trade or other transactions.
Such systems make financial flows more difficult for banks and authorities to detect.
Risk assessments in Aruba and the Caribbean Netherlands have previously raised concerns about possible informal transfers involving Chinese communities.
In Aruba, criminal proceedings have established underground transfers between Aruba and China. One case involved customers providing U.S. dollars in Aruba while corresponding amounts were paid in Chinese currency to recipients in China.
The defendant received commissions and was convicted of operating an unlicensed money-transfer business, habitual money laundering and failure to conduct customer due diligence.
The report also discusses deficiencies in financial investigative capacity elsewhere in the Kingdom.
Researchers argue that individual investigations may reveal only fragments of larger networks because money, companies, property and facilitators can operate across multiple jurisdictions.
They recommend periodically producing a Kingdom-wide assessment of illicit cross-border financial flows, combining intelligence from Financial Intelligence Units, police, prosecutors and other agencies.
Authorities should also examine what happens after money moves through informal systems, particularly when those funds are subsequently used to purchase real estate or other assets.
However, the researchers caution that informal financial activity is not automatically criminal and recommend a risk-based approach rather than treating entire communities or informal payment systems as inherently suspicious.