Indonesia added to moneylaundering blacklist

Indonesia added to moneylaundering blacklist

PARIS (Agencies): Industrialized nations added Indonesia to a money laundering blacklist on Friday, thereby putting international financial transactions with that country under a tougher scrutiny.

The blacklist, issued here by the Financial Action Task Force on money laundering, includes governments that don't cooperate with international money-laundering efforts.

The Indonesian government proposed money-laundering legislation to the House of Representatives in Jakarta only early this week.

Indonesia and five other countries, which were entered into the list on Friday--Myanmar, Guatemala, Hungary, Nigeria and Egypt-- will face increased scrutiny from the task force, whose 31 members include the world's major economic powers.

The Financial Action Task Force is an international body created to make it harder for criminals to move profits from illegal activities through the banking system.

The task force said in a report that the U.S., Japan, Germany and other industrialized nations had also decided to tighten controls on financial transactions with Russia, the Philippines and the Pacific island nation of Nauru unless those governments crack down on money laundering.

"Enhanced surveillance and reporting of financial transactions and other relevant actions involving these jurisdictions are now required," the Paris-based task force said in the report.

Among the retaliatory steps that task-force member governments might take against the blacklisted countries: warning multinational corporations away from doing business in those countries; forcing banks to collect detailed information before conducting transactions with citizens or companies in those countries; and making it more difficult for banks based in those countries to operate overseas.

The three governments, listed as the most egregious offenders, immediately defended their records and stressed their opposition to money laundering. Russia has recently ratified a money- laundering agreement, introduced legislation to combat the practice and created a special money-laundering unit in the Ministry of Finance, said Yuri Zubarev, press secretary at the Russian Embassy in Washington.

"There are practical steps being taken," he said. "Whether it's enough or not, we're doing what is possible."

The governments of both the Philippines and Nauru have also proposed money-laundering legislation.

"We are taking aggressive action to curb, if not totally eliminate, money laundering," said Patricia Paez, spokeswoman for the Embassy of the Philippines in Washington.

The task force cited several countries blacklisted last year that remain on the list this year, but have improved their money- laundering enforcement, including Israel and Lebanon. The Bahamas, Cayman Islands, Liechtenstein and Panama were removed from the blacklist entirely.

The decision to penalize Russia and the Philippines, in particular, assuaged some European concerns about whether the Bush administration would endorse a joint approach to money laundering. The administration in recent months has moved to weaken a coordinated campaign against offshore tax havens and has launched an internal review of domestic money-laundering rules.

"We fully support the FATF efforts to fight money laundering," said a Treasury Department spokeswoman, who declined to comment on the specific task-force recommendations. The review of domestic laws comes "in light of the fact that customs seizures haven't increased and convictions haven't increased," she said.

A French official said that Europeans had gone into this week's task-force meetings worried that the U.S. would insist on reviewing the entire money-laundering initiative. "We see productive discussions with the U.S., but there are still a number of fundamental issues to be clarified," with regard to the U.S. approach to both tax havens and money laundering, said Caio Koch-Weser, Germany's deputy finance minister.