Keith Mitchell, Grenada's prime minister, is hiring PricewaterhouseCoopers to investigate the $150m fraud and money laundering scandal at the disgraced First International Bank of Grenada, which is now in liquidation. Meanwhile, the Grenada International Financial Services Authority has just closed another 16 banks in the face of pressure from the Financial Action Task Force. Even by East Caribbean standards, Grenada has never had a good reputation for financial regulation. After several years of ignoring loud international complaints about money laundering and sharp practice at the First International Bank of Grenada, the Ministry of Finance only recently took the bank over. Rumour had it that when it began operations in Grenada the bank was licensed solely on the capital asset of a red ruby worth $20m. Errol Thomas, acting executive director of the regulator, told Complinet that this was a myth but the story is worth retelling because although the bank was registered before anti-laundering reform swept the Caribbean "in those days it was possible under the law to license banks like that," Thomas said. The bank generally offered investors returns in the vicinity of 100 per cent, said Thomas. Former chief executive officer Van Brink absconded to Uganda about a year ago with a large proportion of the money, he said. But even though money laundering was suspected the government agencies did not find the bank guilty of it because "it is so expensive to investigate the places where the funds came from." Grenada is on the FATF blacklist of 15 "non-cooperative jurisdictions" and is less likely to benefit from a speedy de-selection than other, more repentant jurisdictions such as the Cayman Islands. Nonetheless, its existence on the hit list of the world's great economic powers has cost it dear. "Including the FIBG, which at its peak employed about 60 people directly, we have just revoked the licences of 17 banks. Before that, there were fewer than 50 on the island. This means that our banking system is suffering. These were basically private banks, operating ostensibly for investment purposes," said Thomas If any prosecutions result the local director of public prosecutions would be in charge of them rather than the regulators. Thomas did, however, put in a good word for the recent reforms: "GIFSA has been substantially strengthened recently. We always could conduct compulsory visits and fine companies, but we now have a bank inspector and some auditors. This was not the case when the FIBG came to Grenada. For a long time, we have been cooperating with the UK's National Criminal Intelligence Service. We concluded an MLAT [Mutual Legal Assistance Treaty] with the US last year and we also belong to a Commonwealth scheme which does the same thing. No new banks are appearing here, though. People are staying away from Grenada."