Kenneth Rijock

Kenneth Rijock

Sunday, March 30, 2014

WILL MONEY LAUNDERERS FLOCK TO CUBA'S NEW FOREIGN DIRECT INVESTMENT PROGRAM ?

National Assembly of Cuba
The National Assembly of Cuba, in an effort to bring a much-needed $2bn into the country's treasury, has approved a new foreign investment law, with significant changes from the existing legislation. Could this new law attract the wrong type of "investor" perhaps ?

The new foreign direct investment law provides:

(1) Taxation of profits has been cut by half, to only fifteen (15) per cent.

(2) Personal income tax, and labor tax, has been abolished for investors who qualify under the new program, which is still being created.

(3) All foreign nationals are eligible, including Cuban exiles, provided they they have not been vocal opponents of the regime, generally referred to by the Cuban Government as the "Miami Mafia," though existing sanctions may pose a problem.

One wonders, since Cuba is, frankly, desperate for cash, whether effective due diligence will really be conducted upon those foreign companies that choose to jump into the fray. Money launderers for Latin American narcotics traffickers know that the information will definitely not be shared with American law enforcement agencies, as Cuba is isolated from such contact by the existing 50-year embargo, and sanctions. Therefore, you can expect that enterprising money launderers, who are holding narco-cash, will certainly attempt to, using shell companies and clean front men, place some of their clients' criminal proceeds into Cuba, inside the so-called Bamboo Curtain, far from American prying eyes.

The beauty of laundering the proceeds of crime inside Cuba, is that one need only wait, until a democratic government is eventually, installed in Cuba, and American investors flock to the island. At that time, not only will a handsome profit be had, the criminal origins of the investment capital will never surface.

There is a definite risk for American investors who will purchase foreign-owned businesses in a future democratic Cuba; if the sellers are later indicted, in the United States, they may choose to disclose the criminal origins of the Cuban businesses that they have sold, and US seizure and forfeiture could be the end result, depriving the US investor of the business that it had recently purchased. 

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