Fri, Jan 21, 2005 page6

• World plans to get serious about money-laundering

  CRACKDOWN 2005 will be the year governments and financial regulators will be cracking down on the global problem of money-laundering

  • THE OBSERVER
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  Governments are increasing their efforts to reduce the conversion of dirty money into respectable assets. It is estimated that between US$1,000 billion and US$1,500 billion is circulating worldwide as a result of international crime, bribery and terrorism.

  A high proportion has always been in US dollars but the euro is gaining ground, partly because the EU now has a greater population than North America.

  Jos de Wit, a consultant who worked in the Caribbean for ING, the Dutch financial group, says: "Also the euro notes reach higher denominations, meaning less bulk. The average citizen is not aware of money-laundering, while some governments want to turn a blind eye, especially when it adds to the national revenue."

  Nonetheless, a series of counter-measures and conferences are scheduled for this year with the emphasis shifting to the war against terrorism.

  Thus, the EU is about to issue its third directive since 1991 against laundering money, this time focusing on funds used by groups like al-Qaeda in reaction to Sept. 11.

  It follows the introduction of the US Intelligence Reform & Terrorism Prevention Act at the end of last year, which includes the monitoring international transactions.

  Among other measures worldwide, Britain is to coordinate its financial and criminal policing under a Serious Organized Crime Agency based in London.

  All this is in response to 48 recommendations -- such as suppressing bogus charities -- made by the investigative arm of the Organization for Economic Co-operation & Development (OECD) based in Paris.

  Known as the Financial Action Task Force (FATF), it now embraces a network of regional counterparts such as the one formed by South Africa and eight neighboring countries.

  The FATF system has already forced most offshore havens to tighten supervision, but five countries are still listed for lack of controls.

  They are Cook Islands and Nauru in the Pacific Ocean, Indonesia, Myanmar, Nigeria and Philippines.

  Many countries now have a system of reporting suspicious transactions -- from insurance to diamonds and from stockbrokering to real estate.

  Last year's suspicious transactions tally in the UK doubled to 63,000, while Australia's financial monitor, AUSTRAC, counted 11,500 -- an increase of 42 percent.

  Six of the worst 10 countries for misuse of banks are in Latin America, but experts reckon that the biggest area where accounts can be opened without too many questions is the US.

  The US is also wide-open to "phishing," the technique of obtaining a person's assets after tricking them into revealing personal data to a bogus website or call center.

  With nearly 500 attacks a month reported by Citibank alone, 2 million Americans have already been duped into divulging bank accounts or credit card details incurring a total loss of US$1.2 billion so far.

  Canadians are cannier, according to a poll last June by Ipsos-Reid.

  It found that 86 out of 100 would be unlikely to provide personal details without checking.

  Even so, urgent action to make phishing illegal is being demanded by the Canadian Bankers Association's chairman, Raymond Protti, who used to run the country's intelligence service.

  Fraud through impersonation is costing Britain ?1 billion per year, according to a new survey by Robson Rhodes, the UK accounting firm, that found that 16 of the top 100 companies had been victims, with the bigger ones losing 5 percent of turnover.
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