Capital Briefs: Caribbean Nation Bows To U.S. on Laundering

The government of Antigua and Barbuda is tightening supervision of offshore banks in the hope that the United States will retract a recent money laundering warning.

Antigua agreed to replace three members of a new six-member agency responsible for regulating the country's 50 offshore banks. The United States had objected to the three because they were affiliated with some of the banks they would be regulating.

The tiny Caribbean nation is also drafting legislation that would reverse the recent weakening of its bank secrecy and money laundering laws.

Both moves are in response to an advisory sent to U.S. financial institutions this month. The Treasury's Department's Financial Crimes Enforcement Network advised banks to scrutinize any transaction "routed into or out of Antigua and Barbuda, or involving entities organized or domiciled, or nonresident persons maintaining accounts, in Antigua and Barbuda."

Lionel Hurst, Antigua's ambassador to this country and one of the three replacement regulators, said U.S. officials had informally agreed to retract the advisory if Antigua made these statutory and personnel changes. The officials also suggested language for the legislation.

Mr. Hurst called the pressure from the United States "inappropriate" but said Antigua would grudgingly abide it.

"We just hope that the United States lifts the advisory so that our name is not further sullied," he said in an interview.