Manx Customs Department Assisted In International Money Laundering Swoop

by Jason Gorringe, Tax-News.com, London

10 December 2002

The Isle of Man's Customs and Excise Department played a large part in cracking down on an international drug trafficking and money laundering cartel, according to a report in the Washington Times on Sunday.

The newspaper revealed that the two year undercover operation, dubbed 'Operation Capstone', required the cooperation of regulatory authorities and law enforcement agencies in the United States, Columbia, Panama, the Isle of Man and many other jurisdictions, and has netted some $30 million in cash, life insurance policies and bonds, as well as nine arrests in Columbia.

The US Customs Department, which led the investigation revealed that a group of Columbian drug traffickers were using the international life insurance industry in the US, the Isle of Man, and several other locations to launder their proceeds, establishing numerous policies, pumping them full of cash and then liquidating the accounts. Although the early cashing-in of the policies resulted in substantial penalties, the resulting assets would then appear to be legitimate investment income.

Speaking to the Washington Times with regard to the probe, which is ongoing, US Customs Commissioner, Robert C. Bonner observed that:

'This investigation reveals that there are no limits to which drug traffickers and their money laundering accomplices will go to hide and clean their illegal drug profits,' adding that: 'The life insurance industry must be ever-vigilant in preventing the use of its industry to launder the profits of criminal syndicates.'

According to the investigating authorities, the cartels primarily targeted small independent insurance brokers with little training in international anti-money laundering procedures.

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