The best places for embezzled money

Recent laws have eliminated unregistered shares and the more egregious bank-secrecy policies, but Grenada still is home to thousands of international businesses, Internet casinos and lax regulatory oversight.
Recent laws have eliminated unregistered shares and the more egregious bank-secrecy policies, but Grenada still is home to thousands of international businesses, Internet casinos and lax regulatory oversight.Rachel Simon / Shutterstock
/ Source: Forbes

It was a victory for free trade, island style: the World Trade Organization ruling that the U.S. violated the General Agreement on Trade in Services by banning transactions with Internet gambling sites on the island of Antigua.

Long known as a haven for people and money with questionable pasts, Antigua offers a warm welcome to cyber casinos. For a nonrefundable $10,000 deposit and up to $85,000 in annual fees, anybody who passes regulatory muster can open an Internet gaming business. (Typical requirement: "the applicant is in the Authority's opinion untainted with illegality.")

The sunny Caribbean island is just one of a number of jurisdictions, most of them islands, that provide the necessary infrastructure for businesses that don't exactly thrive on close oversight. Included on the punch list for such a host would be low or nonexistent taxes, easy access to licenses and other official paperwork, and regulators who aren't inclined to ask a lot of questions.

Number one on the list of what we'll call Pirate Destinations: Grenada. Since President Ronald Reagan "liberated" this island from socialism with Operation Fury in 1983, this 133-square-mile island has embraced capitalism with a vengeance, handing out licenses to more than 400 international banks. More than a few have wound up in the cross hairs of law-enforcement officials elsewhere.

"The most corrupt, anything-goes destination is Grenada," says David Marchant, editor of Offshore Alert, a Miami newsletter that tracks international banking and corruption. "You can do anything you want, and if the regulators come to call, it's to seek a bribe."

A spokesman for the Grenada Consulate in New York notes that the country was taken off of the Organization for Economic Co-Operation and Development blacklist several years ago and has reformed its financial laws to provide greater transparency.

Still, the island has frequently been involved in criminal cases in the U.S. and elsewhere. On March 27, for example, the U.S. Justice Department obtained the final two guilty pleas from four people indicted in connection with the First International Bank of Grenada, a Ponzi scheme that sucked in $170 million from investors suckered by offers of 300 percent interest.

Among the principals were the late Gilbert Ziegler, who once claimed to be a citizen of the mythical Dominion of Melchizedeck and tried to set up an African Union Reserve System which, had it gotten off the ground, might have vacuumed up even more cash than First International.

Other locations on Marchant's list of pliant jurisdictions include the Pacific island of Nauru, among the world's smallest nations, which has issued hundreds of international banking licenses over the past few years; Montenegro, home to the casino in the current James Bond flick “Casino Royale,” but also known for lax banking regulations; and the Cayman Islands, a more respectable pirate destination that still offers secrecy and low taxes.

And then there's the grande dame of pirate destinations — Bermuda. It seems unfair to include this British commonwealth on the list, but its laissez-faire approach to taxes and regulation has drawn in much of the world's reinsurance business. That's another industry, like online gambling, that thrives on secrecy and minimal oversight, and seems to find its way to sunny islands where the living is easy and prying eyes are on distant shores.