FATF steps up war against money laundering

FATF steps up war against money laundering

PARIS (Reuters): An international agency fighting money laundering published a blacklist on Thursday of banking centers that have yet to toe the line after sanctions warnings last year, including Russia, Lebanon and the Philippines.

The Financial Action Task Force, set up a decade ago by the Group of Seven (G-7) economic powers, said it was keeping all the 15 "offshore" islands and banking sectors on a warning list first issued last June, but that eight of them still had to do a lot more to get off the register.

Russia, the Philippines, Lebanon and a string of more exotic territories such as Dominica, Niue, Nauru, as well as St Kitts and Nevis and St Vincent and the Grenadines were the laggards in its renewed inventory of "non-cooperative jurisdictions".

While all 15 stay on the list for now, the agency said seven others had made considerable progress on its recommendations for better legal and policing practices and now needed to prove that those changes were fully applied in reality.

It said the Bahamas, Cayman Islands, Cook Islands, Israel, Liechtenstein, the Marshall Islands and Panama were now enacting tougher rules to deter recycling of hot money by crime gangs.

"This is not about naming and shaming for the sake of naming and shaming," Jose Maria Roldan, head of the Paris-based agency, known by its FATF acronym, said. "This is naming and shaming for the sake of reform," he told a news conference.

"Money laundering is an international business, and with criminal links, we need an international solution."

Among those in the laggard grouping, the tiny Pacific Island of Nauru was the only one identified as not even having made contact since its name was made public last year.

Russia, Rolden said, had made high-level political pledges on reform, but now had to start delivering concrete plans.

Sergei Stepashin, chairman of Russia's Audit Chamber, an independent watchdog, said Moscow was trying to brush up its act but could not join the international convention on laundering because its parliament had so far failed to pass the needed laws.

Roldan said the seven who had got closer to international norms in past months still had work to do to.

"It's one thing to pass legislation. Another thing is seeing this reporting of suspicious transactions working," he said by way of example.

Government officials in Dominica were incensed that the tiny eastern Caribbean island of 66,000 people had not been removed from the blacklist.

Finance Minister Ambrose George said the island had enacted and amended banking and money laundering laws to conform with FATF guidelines.

"I would hope we would get a report and they would outline what is extra or more that we have to do...but in my opinion, we have done more than enough," said George.

The Caymans, the world's fifth largest finance center behind New York, London, Tokyo and Hong Kong, said it was glad to see the FATF taking a more encouraging stance.

"Our aim has always been to ensure our efforts to continually strengthen our anti-money-laundering systems reflect both our position as a major international financial center as well as FATF standards," Cayman Islands Financial Secretary George McCarthy said.

Bahamas Central Bank Governor Julian Francis said he hoped Bahamas would soon get off the blacklist, and Israeli Justice Ministry Director General Shlomo Gur said he hoped for similar news by the time a key FATF meeting comes round next June.