KUALA LUMPUR: While the tiny island of Dominica positions itself as the next offshore banking facility, its prime minister stated that it is no place to park ill-gotten gains.

“We are open for business, but at the same time we have rules,” said Roosevelt Skerrit, who was in Malaysia on a three-day visit.

The Caribbean leader said it is imperative for Dominica to shake off the negative connotation associated with offshore banking.

“We are very well regulated to protect the investments of those who entrust their money to us, but at the same time there are standards our investors have to abide by,” he told The Edge Financial Daily.

Skerrit was in Malaysia to oversee the setting up of a high commission here, following the formalising of bilateral relations with Malaysia on Jan 19.

However, Skerrit admitted that it would be no easy task especially as Dominica is up against established offshore financial centres including the islands of Jersey and Guernsey, and Dominica’s closest competitor in the Caribbean, the Cayman Islands — which has been in the news concerning transactions involving the debt-laden government investment fund 1Malaysia Development Bhd.

“We want to avoid this negative attention by putting in place mechanisms that can assure us that the money being placed here is clean and from legitimate sources,” said Skerrit, who became the world’s youngest prime minister at 31 in 2004.

The regulations that are put in place are not meant to obstruct the placement of money in Dominica, said Skerrit.

“But at the same we don’t want to be a place where those with ill-gotten gains park their money.

“We have a responsibility to ourselves and the world, so we cannot be a promoter or facilitator of any illegal activity,” said Skerrit.

Due to this stand, several offshore banks have bailed out of Dominica, citing rules, bank policies, and developed attitudes that are no longer suitable for clients.

Dominica issues an average of one offshore banking licence a year and applicants have up to six months to satisfy requirements of its financial services unit.

“The whole process — before and after — is transparent,” said Skerrit, who himself has been alleged by the opposition to have amassed wealth beyond his means and turned a blind eye to the sale of Dominican passports by government officers.

Despite boasting of strict confidentiality agreements, Dominica signed tax information exchange pacts with several countries, most recently with Poland.

Controls that apply to local banks should also be used on offshore banks in the interest of accountability, said Skerrit.

“When we support offshore banks, we cannot assist them in illegal activities. There will be due diligence and questions asked about origins of the money,” he said.

This article first appeared in The Edge Financial Daily, on March 26, 2015.