Thu, 27 Apr 2000

Banks lose their value for world's money launderers

By Petra Klingbeil

STRASBOURG (DPA): Drug barons and other crime bosses are shunning banks as the first port of call to launder their criminal gains, turning instead to stockbrokers, real estate agents and auction houses.

Banks have lost their attraction as a depository for illegal money with countries such as Liechtenstein, Lithuania, Andorra, Poland and Rumania considerably tightening controls on accepting large sums of money.

This is highlighted in a report by the Council of Europe's committee on the control of money laundering for the 1998-1999 period which looks at measures being taken to combat money laundering in eight of the council's 41 member countries.

Committee secretary Peter Szonka said: "Whereas the money launderers are using the latest electronic technology to channel the flow of their criminal gains into the legal economy, law enforcement authorities are slow, inefficient and lacking in personnel."

According to Council of Europe estimates, up to US$800 billion of money earned through crime is exchanged or invested in a way which conceals its illegal or improper source. Only a fraction is ever seized by authorities.

The committee's financial controllers point out that although Liechtenstein tightened laws in 1996 relating to money laundering and also established a special police unit to investigate economic crime there has not been a single conviction so far.

The report also criticizes the fact that Liechtenstein does not cooperate internationally in identifying and confiscating illegal money.

Anyone handing over 25,000 Swiss francs or more to a bank in Liechtenstein has to produce proof of identity, but investigators say this is no real bar to concealing illegal gains.

"Anyone who has illegal earnings or drug dollars on an account in Valduz can sleep easily," Szonka said.

It is a similar story in Poland where although money laundering has been a crime for the last five years there have been no convictions for the offense.

This although the committee has established a number of sources for illegal wealth, including drug dealing, car theft, illegal alcohol and cigarette sales, blackmail and fraud.

Money earned through these crimes is often laundered in the country's 3,500 exchange bureau or 34 gambling casinos.

The report says Poland urgently needs to set an example by convicting and jailing money launderers so that law enforcement agencies do not feel powerless to act.

The report paints an especially grim picture of the situation in Rumania where since the collapse of communism in 1989 the trade in drugs, weapons, radioactive material, counterfeit banknotes and stolen cars has increased dramatically.

There has been a law against money laundering since April 1999 but there is confusion over its enforcement, leaving justice authorities with no clear guidelines on what constitutes a prosecution.

In addition the new law will not affect the firmly-based principle in Rumania of bank confidentiality, leaving the Council of Europe's experts unclear as to what changes can be brought about.

"The government in Rumania wants to cooperate with the money laundering committee, but we will have to see what will really happen," said Szonka.