The drug trade represents the largest single financial link between Miami and the Caribbean. The Miami banking system is the crucial connection between the financier, the seller, the market, and the offshore center and tax havens that launder funds. Despite commercial benefits Miami derives from its Caribbean location and Latin population, the city does not have a monopoly on the flow of capital. Miami encounters strong competition from offshore banking centers in the Caribbean which operate primarily as tax havens. The purpose of offshore banks is to launder money back into the United States. A typical money laundering process involves five steps: money is transferred to a secret haven abroad; lawyers create a shell corporation; funds are deposited in the name of a dummy corporation in a cooperative local bank; money is transferred to a larger international bank; and the corporation borrows money from the international bank. It is pointed out that profits from the drug trade are part of a much larger informal economy in Caribbean countries, many aspects of which are legal. It is also noted that the rise in U.S. drug consumption has occurred simultaneously with the crisis in traditional sectors of Caribbean economies; the drug trade has filled an economic vacuum in these countries. 42 references.