Index of "International Narcotics Control Strategy Reports"
Index of "Treaties and Legal Information" ||
Electronic Research Collections Index ||
FINANCIAL CRIMES AND MONEY LAUNDERING
In 1992, the major trends affecting money laundering policy
were: (1) further sophistication of money laundering
practices; (2) greater investment of drug and other illicit
proceeds into established businesses, both to conceal money
movements and to capitalize on illicit profits; (3) the
internationalization of money laundering networks whose
operations involve an ever larger number of countries and
territories, regardless of their importance as financial
centers or as drug producing or transit countries; and (4)
the intensified involvement of the Sicilian Mafia and other
criminal organizations in Europe, Asia and the Western
Hemisphere who comingle proceeds from many crimes to confound
investigators, and are now acting as brokers for funds
unrelated to their own trafficking activities. These trends
have made it more difficult to differentiate between drug-
related money laundering and other forms of illegal money
Over the last three years, narcotics money laundering has
evolved into an important foreign policy and financial
management priority in small as well as large financial
center countries. Many governments are tightening controls
to counter what they perceive as a threat to the stability
and integrity of their financial systems and, for some, to
their political and social stability. Many have made
wholesale changes to laws and regulations, ratified the 1988
UN Convention, and adopted the recommendations of the
Financial Action Task Force (FATF.) Regionally, many
countries have also complied with the European Community's
policy directive on money laundering and the Organization of
American States' model regulations and other commitments.
As many as 100 governments have adopted or are now
considering provisions which criminalize money laundering,
regulate the flow of currency and monetary instruments,
mandate records of currency and other monetary instrument
transactions, require declarations of beneficial owners of
accounts, and compel disclosure of suspicious transactions.
In many countries, "due diligence" conventions and other
sanctions require banks to accept responsibility for ensuring
that their institutions take necessary steps to prevent
narcotics money laundering. Banking systems in many key
countries have created effective barriers, especially against
cash transactions by money launderers, thanks to the adoption
of these new laws and regulations. Such changes, however,
must be globally enforced to ensure that the kinds of
narcotics-related transactions attributed to BCCI and other
banks do not continue or recur.
At the same time, money laundering is taking place in a
second and even third tier of countries which were not of
major concern three years ago. Traffickers seek out
countries and territories with weak central banks, limited
controls on foreign exchange, and restrictive bank secrecy
practices. Money laundering continues even in leading
financial centers like the US, UK, Germany and Switzerland,
where governments and banks have adopted laws and practices
to prevent it, a reflection of the increasing sophistication
and changing tactics of narcotics and other money launderers.
While a large number of major banking systems are less
vulnerable today to direct cash placements, recently detected
patterns of money flows indicate that many systems remain
vulnerable to placements through offshore branches, non-bank
financial institutions and wire transfers. Rodriguez Gacha
laundered an estimated $130 million, using 82 company and
other accounts in 16 countries, including the US, BVI,
Panama, Colombia, Luxembourg, Hong Kong, UK (London, Channel
Islands, Isle of Man), Switzerland, Austria and Germany.
More recently, the raids conducted by the Colombian National
Police reveal that a single money manager had bank accounts
in 40 countries--only 15 of them members of FATF. Although
the adoption of new laws is gratifying, the test is in the
enforcement of these policies and laws. Adoption and
implementation of law and controls in many countries still
lag behind changing practices of professional money
The developed nations have the technical and enforcement
capability and, in most instances, the political will to
revise strategies to meet new challenges. The 26 FATF
national members, the 12 EC nations, the EFTA countries, and
the 72 states party to the UN Convention are adopting
legislation that will ultimately improve their individual and
collective capabilities. By 1993, every EC nation was
obliged to mandate the reporting of suspicious transactions,
and criminalize money laundering. (Several governments
missed the January 1 target date but legislative changes are
underway throughout the EC.) Between 1992 and 1995, all FATF
members must be evaluated on performance in implementing FATF
recommendations, a certain reckoning that has already
CONCERNS. The following concerns remain paramount:
-- The vulnerability of many financial systems where the
need for capital or capital replenishment could undermine
prudent banking practices and safeguards;
-- The concentration of economic power in the hands of
Colombian and other cocaine traffickers in this Hemisphere
and of criminal organizations in Europe and Asia which could
be translated into political influence;
-- The use of more sophisticated money laundering techniques
to exploit liberal economic regimes in several countries,
while simultaneously avoiding national and international
-- The use of professional money laundering specialists by
drug trafficking organizations;
-- Delayed reaction by many governments to counter the
threats they face from drug money launderers;
-- The increasing use of unevenly regulated, non-bank
financial systems, for the placement of cash.
-- The conspicuous gap between many governments' ability to
investigate and identify accounts and their authority to
freeze, seize and forfeit drug and money laundering proceeds.
-- The need to impose sanctions on individuals and financial
institutions which repeatedly fail to take prudent measures
to prevent money laundering;
-- The need for continuous fine-tuning of bilateral and
multilateral strategies, which define responsibilities and
objectives on a country-by-country basis, and set specific
goals for cooperation with the varying money laundering and
money transit countries.
-- The unchecked flow of funds into second and even third-
tier financial systems, including countries which had not
been of prior concern to anti-money laundering efforts.
-- The continued exploitation of US financial systems, at
levels probably not approached by any other country.
-- The reluctance of governments to expand predicate
offenses for money laundering beyond narcotics.
-- The continued reluctance of some bankers and governments
to adopt anti-money laundering regulations, despite the
obvious weakness of many voluntary control systems and
despite reports from government after government that
adoption of such statutes had not caused declines in deposits
or resulted in threats from traffickers.
-- The role of European banks in money laundering in Latin
America. These banks and West European regulators and
enforcement officials could do more to ensure that money
laundering countermeasures are practiced abroad as well as at
-- Loose incorporation standards and the legality of bearer
shares in countries which otherwise control money laundering.
DIVERSITY. Records seized in Colombia and other
investigations indicate that the Cali and Medellin cartels,
directly or through their money managers, have conducted
financial operations in at least 40 countries, including:
Brazil, Chile, Bolivia, Suriname, Venezuela, Ecuador,
Argentina, Paraguay, Uruguay, Nicaragua, Honduras, Costa
Rica, Mexico, Bahamas, Aruba, Netherlands Antilles, Cayman
Islands, Panama, United States, Canada, United Kingdom,
Austria, Liechtenstein, Italy, Spain, Portugal, Netherlands,
Germany, Finland, Hungary, Luxembourg, Switzerland, Nigeria,
Ghana, Taiwan, South Korea, Japan, Hong Kong and Australia.
Only 15 of these 40 governments are members of FATF, a point
which underscores the determination of FATF (as well as UNDCP
and other organizations) to engage these and other
governments in adopting and implementing FATF and other
counter-measures consistent with the 1988 UN Convention.
THE SICILIAN CONNECTION (and other Mafias). Throughout
Central and Eastern Europe, and indeed many other parts of
the drug world, the term "mafia" is used to describe a
kaleidoscope of organizational structures, including the
Sicilian/Italian Mafia (La Cosa Nostra) which is the dominant
player. The Italian Camorra, 'Ndrangheta, and Nuova Sacra
Corona Unita are also important factors. The newest players
are the "mafiya" in the former Soviet Union, organizations
which are present throughout Central and Eastern Europe whose
members frequently include former officials of the Soviet
KGB. Other players in those areas include former Stasi
agents, Afghanistan war veterans, Islamic fundamentalists
from Uzbekistan and Tajikistan with links to Iran, Chechens
from the Caucasus, the so-called "karate mafia" of martial
arts experts, as well as so-called "regular" criminals. The
activities of the more than 5,000 organized crime sub-groups
operating in the area have prompted Russian President Yeltsin
to declare a "war on crime." Asia continues to be dominated
by ethnic Chinese groups, just as Africa and Latin American
nationals dominate their regions.
National boundaries, however, no longer circumscribe their
activities. Colombian groups are known to have established
connections in Poland and Hungary for more than a year, and
Nigerian couriers have also plied Eastern Europe.
The best-organized and most powerful group is the Sicilian
Mafia which not only traffics in heroin and cocaine but uses
its worldwide network to take advantage of the price
differentials for these drugs in the US and Europe. Barters
are becoming more common. That same network has positioned
the Mafia to become the money broker for many other
organizations. For fees of 20 percent or more, it reportedly
guarantees the safety of its "placements" which include
investments in stocks, bonds, real estate, and a very
diversified list of businesses, many of which become fronts
for laundering money. The difficulty in identifying these
front companies is that many of them have been well-
established for years, and usually have a legitimate activity
which generates funds. The Mafia invests in Spain, France,
Luxembourg, Liechtenstein, the Netherlands, Switzerland as
well as Italy. A favorite target in every country is the
construction industry, controlled directly or compelled to
buy goods and services from businesses controlled by the
FURTHER STEPS. At the policy and regulatory levels,
organizations like the UN, FATF, EC, COE, OECD, CFATF and OAS
help ensure the burden of responsibility for change is
shared. But, there is a need for quick, flexible action by
the maximum number of governments, including the second and
third tier of vulnerable countries. There is a high demand
for training and technical assistance. A comprehensive UNDCP
training program supported by experts from FATF governments
could be invaluable, as would a major program of assistance
underwritten by the EC, or by OAS in our region.
FATF and US officials have had useful discussions with UNDCP
officials about the training needs associated with the effort
to build a global alliance. UNDCP plans to train financial
investigators and draw upon experts from many countries; FATF
has agreed to provide the UN with a list of national experts
who would be appropriate as trainers. UNDCP has just
conducted its first training course in Canada, with an
audience drawn from every part of the globe.
BILATERAL ACTIVITIES. The U.S. Department of the Treasury
has completed cash transaction information exchange
agreements with Colombia, Ecuador, Peru, Panama (as part of
the MLAT), and Venezuela. In addition to formal negotiations
on treaties and agreements, bilateral meetings on a range of
money laundering issues, variously involving State, Justice
and Treasury, were held in 1992 with Australia, the Bahamas
Mutual legal assistance treaties (MLATs) are now in force
with nine countries: Switzerland, Turkey, Italy, the
Netherlands, Canada, Mexico, the Bahamas, Argentina and the
United Kingdom with respect to its dependent territories (the
Cayman Islands, Anguilla, British Virgin Islands, the Turks
and Caicos Islands and Montserrat). MLATs have been approved
by the U.S. Senate with seven other countries (Uruguay,
Jamaica, Spain, Thailand, Belgium, Morocco and Colombia) and
are awaiting ratification by those governments. The Senate
has not taken action on the MLAT with Panama. Similar
treaties with a number of key money laundering jurisdictions
are in various stages of negotiation.
TRAINING AND TECHNICAL ASSISTANCE. The U.S. Treasury
Department, with funding by AID, has established bank
training institutes in Poland, Hungary, Czechoslovakia and
other East European countries. In an offset of this program,
Treasury's Office of Financial Enforcement (OFE) conducted
anti-money laundering seminars in Malaysia, Nigeria,
Venezuela, Ecuador and Bolivia. Other participants in
various of these seminars included US Customs, Justice
(Office of International Affairs) and DEA.
A multi-agency group completed a financial assessment of the
anti-money laundering system in Ecuador in April-May 1992.
Justice's Asset Forfeiture Office sponsored the second U.S. -
Canada asset forfeiture conference in August 1992, and a
similar conference in September for the UK and its dependent
territories and dependencies. Other conferences on asset
forfeiture are planned for the Caribbean. Justice's
International Affairs Office provided training in money
laundering prosecution for French magistrates.
DEA proposes to provide training in asset forfeiture in 1993
through four regional seminars, which are expected to attract
at least 98 foreign officials from 49 countries. The week-
long seminars will be held in Guatemala, Malaysia, Romania
and the Netherlands Antilles.
US Customs held money laundering training programs in 1992
for 217 officials in Brazil, Malaysia, Bahamas and Ecuador,
part of an overall training effort involving 38 countries and
ASSET FORFEITURE. Justice shared $18.7 million in seized
assets with 10 countries in the period July 1990 to February
1993. Recipients include Canada, Switzerland, United
Kingdom, British Virgin Islands, Cayman Islands, Colombia,
Venezuela, Paraguay, Guatemala and Costa Rica. Additional
requests, which require approval of the Secretary of State,
are pending. Still other transfers were made by US Customs,
during the period, including $226,506 in seized assets with
Canada (three awards) and Trinidad and Tobago during 1992.
ENFORCEMENT. Operation GREEN ICE was the first of a series
of coordinated international enforcement actions. Led by
DEA, USG agents targetted a list of top cocaine traffickers
and sought not only to arrest them but to disrupt their money
laundering operations. Culminating in raids last fall, Green
Ice was carried out in Spain, the United Kingdom, Italy,
Canada, the Cayman Islands, Costa Rica and Colombia, with
coordinated actions in Houston, Miami, Ft. Lauderdale,
Chicago, New York, San Diego and Los Angeles.
The raids resulted in seizures of $47.7 million, and the
freezing of 140 bank accounts containing $7.3 million, and
dozens of arrests, including that of Carlos Rodrigo Polania-
Camargo, Director of Special Investigations for the Colombian
Superintendent of Banking.
Operation CABBAGE FARM was a joint investigation by the FBI,
IRS and DEA which targetted a major network in Chicago, Los
Angeles, Miami and Houston which laundered money for
Colombian drug organizations. The investigation detected $36
million in cocaine proceeds the network laundered in the US,
and identified more than 90 bank accounts in the US,
Colombia, Panama, Canada, Spain, Switzerland, the UK and
Venezuela which were used to launder cocaine proceeds.
Operation CHOZA-RICA is a long-term undercover money
laundering operation, begun in 1990, in which undercover
Customs agents, posing to US bankers and Mexican "casa de
cambio" owners as currency facilitators for narcotics and
arms traffickers. The operation seized more than $40 million
in currency and financial instruments. In March 1992,
violators from three different banks and 10 Mexican nationals
associated with the cambio activity were arrested. Following
up, USG agents traced accounts in California and Texas to a
New York bank where $35 million was seized. Also in March, a
25-count indictment for various money laundering, bank fraud
and conspiracy charges was unsealed, resulting in the arrests
of high level officials from Texas banks, as well as owners
and operators of cambios in Monterrey.
FINCEN. The Financial Crimes Enforcement Network (FinCEN)
continues to expand its support to federal, state and local
law enforcement as well as regulatory agencies. Through
international training modules, a financial records analysis
workshop in Lyon, France, which will become a yearly offering
in cooperation with INTERPOL, and extensive participation in
FATF, FinCEN has also extended its support to foreign
government agencies throughout the world.
FinCEN's tactical reports continue to provide analytical
support to some of the most complex and far-reaching
international money laundering investigations. These reports
are based on information collected from commercial and law
enforcement data bases and are used to identify assets for
seizure and forfeiture, as well as to provide leads for
further investigation. FinCEN's Office of Strategic Analysis
has more fully developed its Country Profile and
International Money Laundering Gazeteer report series to
assist in identifying money laundering vulnerabilities in
each of the world's geographic areas. In 1992, it published
new assessments and updates on more than 20 nations. It has
also published a number of reference documents, including a
multilingual glossary (English, French, German, Italian and
Spanish) of financial investigation terms, as well as papers
on various funds transfers systems.
MULTILATERAL ACTIVITIES. The Financial Action Task Force
(FATF), created by the Economic Summit in 1989, now includes
26 financial center governments: US, France, Germany, UK,
Canada, Japan, Belgium, Netherlands, Luxembourg, Sweden,
Denmark, Norway, Finland, Iceland, Ireland, Spain, Portugal,
Greece, Austria, Switzerland, Turkey, Australia, New Zealand,
Hong Kong, Singapore, and two regional organizations, the
Commission of the European Communities, and the Gulf
The FATF Secretariat is housed in the Organization for
Economic Cooperation and Development. FATF consults with
the UN Drug Control Program, Council of Europe, World Bank,
European Bank for Reconstruction and Development,
International Monetary Fund, Interpol, Customs Cooperation
Council, and the Organization of American States.
FATF operates through a six-member steering committee. It
includes the President (Australia), the past President
(Switzerland), the next President (UK), and the chairmen of
three working groups: Legal Issues (Italy), Financial
Cooperation (Netherlands) and Policy/External Relations (US).
The Deputy Secretary of the Treasury heads the US delegation;
the Department of State chairs Working Group III (external
Five FATF Members (US, UK, France, Netherlands and Canada)
cosponsored the Caribbean Financial Action Task Force which
met in Kingston on November 5-6. This Task Force involves
most Caribbean governments including dependent territories as
well as selected Central and South American governments. The
Task Force changed significantly at its meeting in June,
where it was evident that the Caribbean and Latin nations in
attendance had taken political control of the process. In
November, ministerial-level delegates endorsed 59 objectives
(40 FATF recommendations plus 19 recommendations drafted at
the Caribbean Drug Money Laundering Conference in Aruba in
June 1990), and committed to their implementation. They also
adopted a number of resolutions, including one which commits
them to evaluate their progress at one and three year
intervals, and another which named Trinidad and Tobago as the
new chair of CFATF and authorized Trinidad to form a small
secretariat to assist with training and technical assistance
and hosting next year's conference.
Governments participating included: Antigua and Barbuda,
Aruba, Bahamas, Brazil, British Virgin Islands, Canada,
Cayman Islands, Colombia, Dominican Republic, France,
Grenada, Jamaica, Mexico, Netherlands, Netherlands Antilles,
Panama, St. Vincent and the Grenadines, Trinidad and Tobago,
Turks and Caicos, United Kingdom, United States and
FATF also supports the OAS experts group which recently
produced model laws to implement the UN Convention, models
which also incorporate FATF standards.
The Caribbean conference and follow-on training is but one
element of a global plan which FATF endorsed at Sydney in
September to assess worldwide money laundering practices,
trends and typologies. It includes a symposium for
financial, judicial, and regulatory policy makers from East
and South Asia to be held in Singapore April 21-23, 1993.
Governments invited include Pakistan, India, Bangladesh,
Nepal, Sri Lanka, Myanmar, Thailand, Laos, Malaysia,
Indonesia, Brunei, Korea, People's Republic of China, Taiwan
and the Philippines, as well as FATF Members Singapore, Hong
Kong, Japan, New Zealand, Australia, UK and US.
FATF conducted seminars on money laundering countermeasures
featuring presentations by experts from eight nations and
four international organizations in Budapest, February 3-10,
1993 for officials from financial, judicial and enforcement
ministries from Hungry, Poland, Czech Republic, Slovakia,
Albania, Bulgaria and Romania. A second seminar was held in
Warsaw, March 1-4. Additional seminars are planned for
Russia and the NIS republics in the fall; another Eastern
European seminar in 1993 is also possible. National experts
were provided by US, UK, France, Germany, Italy, Netherlands,
Switzerland and Austria. The EC Commission, Council of
Europe, UNDCP and INTERPOL participated.
FATF met with several African policy makers in November in
Paris (Morocco, Nigeria, Kenya, Central Africa Republic, and
Cote d'Ivoire), and plans a region-by-region approach to
Africa. FATF has also agreed to collaborate with the Gulf
Cooperation Council on a meeting May 4-6, 1993, of its six
Arab Member states, and will participate in Council of Europe
conferences for Baltic nations and NIS republics in 1993.
As the 1992-93 round progresses, FATF will also be
considering direct responses to situations in Russia and
other republics of the former Soviet Union. FATF will also
support Australia's initiative with the Pacific Island
nations, some of which are becoming more deeply involved in
In November, FATF (Working Group III) gave the Third
Committee of the United Nations a detailed assessment of
global money laundering and the responses proposed by FATF
and other international groups. A similar presentation was
made at the Conference on International Economic Crime at
Oxford University in September.
OAS Legal Experts Group. During 1991-92, a 13-nation group
of experts prepared model legislation on narcotics-related
money laundering and asset forfeiture for the Inter-American
Drug Abuse Control Commission (CICAD) of the Organization of
American States (OAS). The drafting process was completed in
early 1992 and the model statutes were adopted by CICAD on
March 10, 1992. On May 22, 1992, the OAS unanimously
approved the model legislation and recommended that it be
enacted by the 34 OAS member states.
The model statutes consist of 19 articles which focus on
three areas of regulatory and enforcement activity. The
first three articles provide definitions and set forth a
model statute to criminalize money laundering. The second
group of articles sets forth model statutes for the seizure
and forfeiture of assets. The third set provides a framework
for regulations involving financial institutions and currency
The OAS is now conducting a series of regional conferences to
encourage member governments to adopt the model statutes and
participate in a cooperative effort to combat money
laundering. The first conference was held in Santiago,
Chile, in December, with representatives from Argentina,
Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay.
Additional conferences are planned for 1993 in Panama, Mexico
City and in the Caribbean region.
STATUTORY REPORTING REQUIREMENTS. The accompanying charts
are provided to comply with P.L. 102-583, which established
reporting requirements for FY 1993 and 1994, including a
requirement that the INCSR identify the major money
laundering countries, and provide specific information for
each such country.
There is no uniformly reliable way of estimating the volume
of currency or monetary instruments flowing through a given
financial system, and therefore no mathematical definition of
"major money laundering country." However, there is enough
information about the majority of nations and territories to
identify them as high, medium or low priority.
From such rankings, an inference can be made that a given
nation or territory is a major concern to the USG if it is
considered a high or medium-to-high priority. That inference
guided construction of the following chart designating each
nation or territory as (H), (M) or (L), or (NP) for no
priority. Using this construction, governments shown as (M-
H) or (H) could reasonably be considered as "major money
A country can be considered High priority for different
reasons. The UK, for example, is high priority because its
cooperation is needed, not only to stem money laundering in
Great Britain, but also to ensure uniform application of laws
in its associated and dependent territories, some of which,
like Hong Kong and the Cayman Islands, are high priority
themselves. Panama is a high priority for what it is not
doing or is doing inadequately about the high volume of money
laundering suspected to occur there. These priorities can
change. India was a medium priority last year as a potential
money laundering country on the basis of the flow of money
related to India's role in the SWA heroin trade. Now, with
Colombian and other traffickers laundering money through
India, it has a high priority.
A High priority country is also one in which new or improved
laws more effectively applied would have an impact in the
money laundering world and probably, as in the case of
Switzerland, would prompt movements of money to other
A Medium priority county designation can indicate a country
in transition, where the threat is real but hasn't fully
materialized, or simply a country where a significant but not
market-shaping volume of money laundering is believed to
occur, or one which gives moderate but important assistance
to anti-money laundering enforcement efforts.
A Low priority country is one in which there is only a
moderate amount of money laundering, and where we do not
expect the situation to worsen in the immediate future. By
definition, we would not expend major resources in such a
country. No Priority means that we either are not aware of
any money laundering or it is too insignificant to be a
factor in the international drug money market.
These rankings, like the material in the country summaries,
were developed in a series of meetings involving State,
Justice, Treasury, Federal Reserve, Comptroller of the
Currency, Central Intelligence Agency, Drug Enforcement
Administration, Customs, Federal Bureau of Investigation,
Financial Crimes Enforcement Network, Internal Revenue
Service, Comptroller of the Currency, and the Office of
National Drug Control Policy.
Nations/Territories: Afghanistan (NP), Algeria (NP),
Anguilla (NP), Antigua (L-M), Argentina (M), Armenia (NP),
Aruba (M), Australia (M), Austria (M), Azerbaijan (NP),
Bahamas (M), Bahrain (M), Bangladesh (NP), Barbados (L),
Belarus (NP), Belgium (M), Belize (M), Benin (NP), Bolivia
(M-H), Botswana (NP), Br Virgin Islands (M), Brazil (M-H),
Brunei (NP), Bulgaria (M), Burkina Faso (NP), Burma (M),
Cambodia (L), Cameroon (NP), Canada (H), Cape Verde (NP),
Cayman Islands (H), Chad (NP), Chile (M), China (PRC) (L-M),
Colombia (H), Comoros (NP), Costa Rica (M), Cote d'Ivoire (M-
H), Cuba (NP), Cyprus (M), Czech Republic (L), Denmark (M),
Dominica (NP), Dominican Republic (L), Ecuador (M-H), Egypt
(M), El Salvador (L), Equatorial Guinea (L), Estonia (NP),
Ethiopia (NP), Fiji and Tonga (NP), Finland (L), France (M),
Gambia (NP), Germany (H), Ghana (L), Gibraltar (M), Greece
(M), Grenada (L), Guatemala (M), Guyana (NP), Haiti (L),
Honduras (L), Hong Kong (H), Hungary (M), Iceland (NP), India
(M-H), Indonesia (L), Iran (L), Iraq (L), Ireland (L), Israel
(M), Italy (H), Ivory Coast (M-H), Jamaica (L), Japan (M-H),
Jordan (NP), Kenya (M), Korea (M), Kuwait (M), Kyrghyzstan
(NP), Laos (NP), Latvia (NP), Lebanon (L), Lesotho (NP),
Liberia (NP), Liechtenstein (M-H), Lithuania (NP), Luxembourg
(M-H), Madeira and Azores (M), Malaysia (L-M), Mali (L),
Malta and San Marino (L), Martinique (NP), Mauritania (NP),
Mauritius (NP), Mexico (H), Moldova (NP), Monaco (L),
Montserrat (M), Morocco (M), Mozambique (NP), Nauru (L),
Nepal (M), Netherlands (H), New Zealand (NP), Nicaragua (NP),
Niger (NP), Nigeria (H), Norway (L), Netherlands Antilles (L-
M), Oman (NP), Pakistan (M-H), Panama (H), Papua N Guinea
(NP), Paraguay (M-H), Peru (M), Philippines (M), Poland (M),
Portugal (M), Qatar (NP), Romania (NP), Russia (M), Saudi
Arabia (L), Senegal (L), Seychelles (NP), Sierra Leone (NP),
Singapore (H), Solomon Islands (NP), South Africa (NP), Spain
(H), Sri Lanka (L), St. Kitts (NP), St. Lucia (L-M), St.
Vincent (L), Sudan (NP), Suriname (L), Swaziland (NP), Sweden
(L), Switzerland (H), Syria (M), Taiwan (M), Tajikistan (NP),
Tanzania (NP), Thailand (H), Togo (NP), Trinidad and Tobago
(L), Tunisia (NP), Turkey (M-H), Turkmenistan (NP), Turks and
Caicos (NP), UAE (M-H), Uganda (NP), Ukraine (NP), United
Kingdom (H), Uruguay (M-H), Vanuatu (L), Venezuela (H), Yemen
(NP), Yugoslavia (NP), Western Samoa (NP), Zaire (NP), Zambia
(NP), Zimbabwe (M).
The table below responds to Section 409(a)(7) of the Act. In
each listed country, a significant but unestimated amount of
U.S. and other drug-related currency flows through the
financial system, in an amount or manner of importance to the
U.S. With each listed country, the USG either has agreements
in force which permit needed exchanges of data and other
information or there is sufficient compatibility of laws to
permit such sharing as needed. Each of the governments to
whom the USG has proposed agreements of the kind envisioned
by the Act has negotiated or is negotiating in good faith.
There have been no refusals to cooperate with the USG on
narcotics money laundering cases. The table indicates
whether a government has ratified the 1988 UN Convention
Subsection 7(B)(ii) asks about the existence of legal
assistance agreements between foreign governments. As more
governments prosecute the offense of money laundering,
particularly those cases which are international in
character, the indication is that their needs for cooperation
and evidence from other governments is also increasing.
While only a few governments, notably the US and UK, have
such agreements today, the expectation is that this number
will increase significantly in the years to come.
The table indicates, in response to Subsection (7)(C) and to
the extent that information is available, whether a country
designated in this report as High or Medium-High priority
(i) criminalized narcotics money laundering;
(ii) required banks and other financial institutions to know
and record the identity of customers engaging in significant
transactions, including the recording of large currency
transactions at threshholds appropriate to that country's
(iii) required banks and other financial institutions to
maintain, for an adequate time, records necessary to
reconstruct significant transactions through financial
institutions in order to be able to respond quickly to
information requests from appropriate government authorities
in narcotics-related money laundering cases;
(iv) required or allowed financial institutions to report
(v) established systems for identifying, tracing, freezing,
seizing, and forfeiting narcotics-related assets;
(vi) enacted laws for the sharing of seized narcotics assets
with other governments;
(vii) cooperated, when requested, with appropriate law
enforcement agencies of other governments investigating
financial crimes related to narcotics; and
(viii) addressed the problem of international transportation
of illegal source currency and monetary instruments.
[A Chart titled "Compliance Table -- Major Money Laundering
Countries" appears here in the hard copy.]
CANADA has a drug money laundering problem that may be as
large as US$10 billion, and possibly increasing. Canada is
considered a significant money laundering threat because it
is a transit point for drugs and money destined for the US
from South America, the Middle East and Asia, traffic which
compounds the money laundering problem created by domestic
The domestic drug market generates proceeds in Canadian
dollars but international drug organizations are using Canada
to launder proceeds from their worldwide operations. South
American cocaine cartels launder drug proceeds from U.S.
sales through Canadian financial institutions. A Colombian
kingpin who held an account in a Canadian bank wrote several
checks to various individuals as payment for the purchase of
cocaine base from a Bolivian trafficker. The checks were
ultimately deposited into European bank accounts. A
prominent Middle Eastern heroin trafficking and money
laundering organization is also known to launder drug money
through Canada. Drug profits have been laundered through
import/export businesses, and have been used to purchase real
estate in Canada.
Operation Green Ice used undercover operations, in
cooperation with the Royal Canadian Mounted Police (RCMP), to
trace Colombian cocaine proceeds. The RCMP seized
approximately US$1.6 million.
In general, Canada is meeting the goals and objectives of the
UN Convention, but some deficiencies remain. Canadian law
(1988) permits the freezing and subsequent seizure of assets
related to drug trafficking and makes money laundering a
separate criminal offense. Canadian law (1991) requires bank
and non-bank financial institutions to maintain records on
transactions and make those records available to law
enforcement agencies. A major problem with the Canadian
money laundering program is the failure to enact measures to
address the problem of cross-border currency movements, a
problem which the government has acknowledged but has been
slow to address.
In 1992, the Solicitor General set up special teams in
Montreal, Toronto, and Vancouver, comprised of RCMP officers,
full time prosecutors, administrative staff and local police
officers to investigate and prosecute drug-related money
laundering offenses. The anti-drug profiteering program
resulted in seizures of $C15.2 million ($Cl equals about 80
U.S. cents) in assets in 1991, and in $C13 million in the
first seven months of 1992. The addition of provisions for
administrative seizure of assets would facilitate the work of
Although the money laundering law is four-years old, there
have been few prosecutions. Asset seizures are minimal
compared to the amount of known drug money and money
laundering occurring in Canada. The tracing and seizure of
the proceeds of drug crime in Canada are largely the
responsibility of the Royal Canadian Mounted Police, which is
understaffed, particularly in the sections devoted to asset
seizure/forfeiture. Seizures were approximately C$35 million
in 1989; C$20 million in 1990; and C$21.2 million ($ClO
million in seizures and $C11.2 million in fines) in 1991.
This is considerably more than in years previous to the
enactment of the 1988 Act, but small when compared to the
estimate of C$10 billion in drug monies. The formation this
year of special joint teams may contribute to more seizures
of assets as well as more arrests. The Government continues
to refine a formula to share seized assets among federal,
provincial, municipal, and possibly foreign authorities.
The UNITED STATES' money laundering "problem" has been
variously estimated at $100 to $200 billion annually from the
sales of heroin, cocaine and marijuana. USG enforcement
agencies continue to escalate their efforts, launching such
successful campaigns as Operation Green Ice, Cabbage Patch
and others, involving with increasing frequency multi-agency
teams of investigators, intelligence analysts, prosecutors
and other officials. Yet, despite a continuing pace of
record seizures of both proceeds and products, the US remains
the world's principal money laundering country. This
situation reflects not only the great diversity of the
American financial system, but also the continuing high
levels of demand and payment for illicit drugs. As noted in
the Executive Summary, where USG bilateral and multilateral
programs are discussed in more detail, the US has greatly
intensified its commitment to anti-money laundering measures
which have a high foreign policy as well as enforcement
BELIZE is a dormant but potential money laundering country.
A few businessmen are able to launder drug-related money for
large drug cartels. The potential lies in the absence of
laws and enforced regulations, and the adoption of the 1990
International Business Companies Act (IBC) which was designed
to help Belize's financial sector. While the potential for
money laundering through IBCs exists, there have been no
indications that IBCs are being exploited. Companies under
the IBC act are exempt from local taxation and exchange
control. They offer complete anonymity for owners, who may
be non-Belizeans. Bearer shares may be issued and owned by
one individual who need not reside in Belize. No annual
accounts or financial statements need to be filed, nor is the
IBC required to be audited.
Belize has laws regulating the buying and selling of foreign
currencies and bank-to-bank transfer of these currencies, but
no regulations controlling the actual movement of money in
the country, and money laundering is not a crime. Belize
passed a tough drug-related asset forfeiture law in 1990, but
no assets have been forfeited. There have been seizures of
US currency (the largest was $265,000). The government seems
serious about countering the money laundering threat, and has
COSTA RICA played an important role in Operation Green Ice,
reflecting both its increased significance from a money
laundering perspective and its cooperation with US agencies.
Four Colombian money launderers arrested in Costa Rica face
97 counts of money laundering in addition to cocaine
trafficking charges. Extradition to the US, however, hinges
on a Costa Rican court decision on the constitutionality of
the extradition treaty, which was signed in 1982 and finally
came into effect in 1991. The US requested the extradition
of Colombian money launderer Carlos Figueroa in September
1992, but his case has been tied up on appeals as to the
constitutionality of the extradition treaty.
Costa Rica is a tax haven with strict bank secrecy laws.
Liberalization of the economy may have created money
laundering opportunities through bearer share-controlled
DEA officials emphasize the need for changes in Costa Rica's
asset seizure laws. Cooperation between the United States
and Costa Rica in this area is improving; however, assets of
drug traffickers in Costa Rica may only be seized if they
were directly used in the act of drug trafficking, not just
if they were purchased with drug proceeds. An increasing
number of Colombians are reportedly buying land over its
market value in Costa Rica, purchases allegedly part of a
money laundering operation.
In addition to financial crimes investigation training, there
is a need to strengthen drug conspiracy laws. Drug
trafficking and money laundering conspiracies are presently
very difficult to prove by Costa Rican law. There is also a
need for investigative mechanisms such as permitting the use
of wire-taps which would greatly enhance drug conspiracy
EL SALVADOR's involvement with drug money laundering has not
been estimated, but there are indications that money
laundering through licensed exchange houses is widespread.
These exchange houses process an estimated US$500 million a
year, and conduct large hard currency transactions with
foreign banking institutions.
Money laundering is a criminal offense. The government has
access to bank accounts as well as to tax information, and
can freeze bank accounts suspected of being narcotics
related. All money exchanging operations are required to
report weekly to the central bank's exchange department on
transactions involving US$10,000 or more. There are no
controls on the amount of currency which can be brought into
or out of the country. However, the central bank can require
written information from commercial banks and money exchanges
on international operations carried out by individuals or
GUATEMALA has the potential to become a money laundering
center: tight bank secrecy laws, inaccessibility of foreign
tax returns, and strict corporate confidentiality. The
Guatemalan government and banking community believe that
money laundering is increasing, and noting that the banking
sector has grown faster than the rest of the country's
The GOC enacted a narcotics law in September 1992, providing
for the death penalty, seizures of property used to commit
drug-related crimes, and criminal conspiracy convictions in
drug prosecutions. The US and Guatemala exchanged letters of
agreement in May 1992 on case-specific asset sharing
arrangements in drug cases, and exchanged letters of
agreement again in July 1992 in order to give Guatemala a
portion of drug proceeds seized in joint U.S.- Guatemalan
Guatemalan representatives of Medellin's Rodriguez Orejuela
organization and other traffickers use several Florida banks
to launder drug proceeds.
HONDURAS has made the confiscation of drug-related assets a
crucial weapon against drug trafficking, but shortcomings
exist in other areas of the law. Extradition of Hondurans is
unconstitutional, and bank secrecy is fairly tight, making
the tracing of drug money difficult. Tight bank secrecy laws
would seem to make Honduras a potential money laundering
center. Such activity, however, has not been significant
because of strict controls over foreign currency transactions
and a shortage of international banking affiliations
preventing the wire transfer (and therefore the layering) of
MEXICO is an increasingly important money laundering center,
particularly for cash transactions by "casas de cambio" along
the U.S.border. Mexican laws do not require banks to keep
stringent records on large currency transactions or identify
customers making them. There are no controls on the amount
of money that can be brought into or transferred out of the
country, and no limit on, or reporting of, currency
transactions in exchange houses. The USG has urged Mexico to
make money laundering a criminal rather than a fiscal
violation, but the GOM has not moved in that direction.
The Mexican Treasury Department (Hacienda) normally detects
money laundering schemes when conducting fiscal
investigations on business entities, organizations and
individuals involved in multi-million dollar transactions
with tax haven countries to circumvent Mexican tax laws. In
1992, the US Customs Service and the Internal Revenue Service
worked with them on investigations of corruption and bribery
among Mexican government authorities. One investigation led
to the seizure of $6 million in assets in the US. In 1992,
the GOM seized properties related to narcotics trafficking,
but passed the assets to the Mexican Treasury rather than to
law enforcement agencies. In March 1992, US officials
arrested eight Mexicans and three Texas bankers involved in a
money laundering conspiracy. As a result, $31 million in a
New York bank account and an apartment complex were seized by
US Customs from a major Monterrey drug money launderer.
While Mexican authorities did not participate in the US
investigation, US authorities reported good cooperation by
Mexican officials after the arrests were made.
Similarly, in March 1992, Mexican officials cooperated in the
seizure of 60 real estate properties related to the seizure
by US authorities of 22 tons of cocaine in Los Angeles,
California, in 1989. Mexican and US officials also
cooperated in a bilateral sting operation in 1992 against a
Canadian motorcycle gang's attempts to launder drug money
through the purchase of assets in Mexico.
PANAMA is, second only to the US itself, the primary money
laundering concern in the Western Hemisphere. Panama remains
a principal conduit for financial transactions by Colombian
drug cartels, who continue to rely on Panama for its
established international connections. Although it has begun
taking some of the right steps, there is a clear need for
more effective intervention by the Government of Panama
Several factors make Panama an important regional financial
center: a dollar-based economy; offshore banking; strict
bank secrecy laws; loose standards for incorporation;
corporate ownerships through bearer shares, etc. Long
established as a tax haven, Panama offers the kind of
sophisticated, confidential banking that is essential to the
professionally managed schemes used today by the cartels.
The country is both a transit point for money and the site
for conversion of funds within the financial system and the
Colon Free Trade Zone (CFTZ). While there is no precise
method of measuring volume, there is no doubt among US
enforcement agencies that Panama is a venue of choice. Many
of the money transfers which US agents have traced to Europe,
Asia, the Caribbean and the US have Panama as a common link.
Although it is difficult to estimate degrees of money
laundering, one possible measure is the amount of surplus US
cash returned from Panamanian banks, which increased in 1992.
While some of this surplus may be explained by legal
transactions, in particular cash sales in the CFTZ which
offer a legitimate basis for at least part of the surplus,
the amount of currency being returned in $50 and $100
denominations is alarmingly high (over 50% of the surplus
return in 1992). The US stopped issuing $50 and $100 notes
to Panama in 1986. A large volume of high denomination bills
is usually indicative of money laundering.
Money laundering activities are connected principally to the
industry and the drug proceeds are primarily owned by
external, mostly Colombian, organizations. Money laundering
is believed to occur within the bank and non-bank financial
sectors (credit and loan companies), and through Panamanian
Drug money laundering is a criminal offense, but is difficult
to prove. There have been no successful money laundering
prosecutions in Panama since money laundering was
criminalized in December 1986. Banks must record
transactions of more than $10,000. These reports are subject
to inspection by the National Banking Commission (CBN) to
determine compliance. The reporting process is not supported
by extensive or efficient examinations by bank regulators.
Banks also are required to retain currency transaction forms
for five years, and to identify customers engaging in
significant, large currency transactions. The GOP does not
require currency transaction records from non-bank financial
institutions. There are procedures for identifying, tracing
and freezing narcotics related assets; however, legal means
to forfeit these funds have not yet been perfected. There is
no limit on the amount of currency that can be brought into
or out of Panama, though the Cabinet has shown interest this
year in requiring currency import-export declarations by
persons transporting large amounts of cash into and out of
the country. The government has not adopted "due diligence"
or "negligence" laws, but is considering other new laws.
A running feud between the head of the Panamanian National
Assembly's Drug Commission, Leo Gonzalez, other key members
of the counternarcotics establishment, and Attorney General
Rogelio Cruz overshadowed money laundering and other
counternarcotics investigations during much of 1992. The
feud stemmed in part from Cruz's handling of bank accounts
which had been frozen on grounds they contained drug assets,
and over Cruz' past involvement with a bank associated with
Colombian drug kingpins. While Cruz argues he had authority
(citing US precedents) to release the funds when there was
insufficient evidence of drug transaction origin, the Supreme
Court ruled that such authority to unfreeze such accounts
rested exclusively with the courts. Upon recommendation by
Solicitor General Ballesteros, who is charged with
investigating allegations of wrongdoing by Cruz, the Supreme
Court suspended the attorney general from office. Charges
are pending and may possibly lead to an impeachment trial.
The Drug Secretary was also removed from office.
Numerous documents found at Celeste International, a major
front company laundering money for the Rodriguez Orejuela
organization which was raided by Panamanian police in
cooperation with DEA in July 1992, illustrate the extent of
money laundering in the Colon Free Trade Zone. The CFTZ has
long been believed to be a money laundering mecca for drug
traffickers. The discovery of numerous pre-signed and pre-
stamped blank invoices for fictitious import/export companies
in Colombia suggests that false invoicing is being used as a
method of laundering money. The 1992 seizure of $10 million
dollars secreted in shipping containers also indicates the
use of Panama to ship drug currency in bulk from the US to
Latin America. In one instance, Panamanian Customs officials
seized more than $7 million in cash arriving in a container
from Miami; they charged the man responsible for failing to
report the "merchandise."
There is particular concern that traffickers are investing
drug proceeds in the construction industry in Panama, as they
have in Colombia, Thailand and other countries where
traffickers "invest" their proceeds.
In January, $7.7 million was seized from the account of Hong
Kong Bank (Panama) S.A. because it was believed to have been
used to negotiate millions of dollars of domestic US postal
money orders in a drug money laundering scheme. The case
came out of an investigation by the Postal Inspection Service
into the money laundering activities of Colombian drug
cartels. Hong Kong Bank sent large blocks of money orders
purchased by the cartels to its account at Marine Midland
Bank in New York for collection and ultimate credit to the
original Panamanian accounts. An estimated $180 million in
U.S.Postal money orders, purchased in a structure pattern
typical of money launderers, cleared through Panamanian banks
While Panama has not ratified the 1988 UN convention, GOP
officials contend that many of the convention's provisions
regarding money laundering are reflected in Panamanian law or
in the MLAT which awaits U.S. ratification. The MLAT, for
example, will expedite access to bank documents and other
evidence needed in money laundering investigations. Panama
sent a ministerial level delegation to the CFATF meeting in
November. The GOP is considering incorporating in the new
narcotics law some of the CICAD model regulations.
Legislation is being considered which will improve
possibilities for the seizure and forfeiture of narcotics
related assets and for sharing these assets with other
countries. While Panama cooperated in the blocking of more
than 350 bank accounts in the past three years, none of these
accounts have been forfeited, and a number of these accounts,
including the Rodriguez Gacha funds, were released by Cruz
(most of the Gacha funds, however, remain frozen, according
to officials in Panama). Still, Panama continues to provide
bank documents and information to support US money laundering
investigations, and efforts will be made to pass new
legislation in 1993. The MLAT would permit the sharing of
these assets once forfeited. Assets subject to seizure under
current and proposed legislation include instruments and
proceeds of crime, both tangibles and intangibles (bank
accounts). Legal loopholes allow traffickers to shield
assets. Secrecy laws governing corporation ownership allow
traffickers to set up corporations with anonymous boards of
directors and bearer share ownership through which it is
possible to launder narcotics funds. Neither current law nor
the proposed law allows for civil forfeiture.
Certain provisions of the MLAT and the proposed law have
generated concern among bankers that such regulations may
make Panama a less attractive international banking center.
In addition, business persons from the CFTZ have reacted with
alarm about major narcotics money laundering related arrests
in the Zone, fearing that investigations and a concomitant
unsavory reputation as a drug center may adversely affect
their booming business. Leading CFTZ merchants and banks
have expressed interest, however, in gaining U.S. assistance
for controlling the drug trade there.
The banking community has cooperated with government efforts
to freeze assets and has not taken steps to expand bank
secrecy laws. Freezing the accounts of the Hong Kong Bank in
the postal money order scam and the suspension of Cruz have
sent cautionary signals to the banking sector which may serve
to counter the signals sent by the failure to forfeit seized
accounts and the unfreezing of some accounts linked to
narcotraffickers. The government needs to increase the
pressure by moving to secure forfeiture of any seized
ARGENTINA's sophisticated transportation system,
international seaports and airports, and a growing economy
have made it an attractive location for drug trafficking and
money laundering. To counter money laundering, President
Menem issued a decree creating a Joint Control Commission to
study money laundering methods and to propose measures to
detect and penalize money launderers. Nonetheless, money
laundering has intensified.
Effective January 1, 1993, Argentine citizens may hold U.S.
dollar accounts and write checks in U.S. dollars, which
dominate the Argentine economy. Drug-related and non-drug
money laundering may increase during the second phase of
MERCOSUR, the Southern Cone's common market trade agreement,
which will allow free entry and exit of cargo vehicles from
The "casas de cambio", which are not regulated like banks,
have been convenient vehicles through which to launder drug
proceeds. Since early 1992, the United States Drug
Enforcement Administration has been investigating a money
laundering and drug trafficking organization which operates
throughout the U.S., Europe and Latin America. Numerous
Argentines are associated with this organization which
facilitates their money laundering activities.
BOLIVIA has not criminalized money laundering, nor does it
impose restrictions on the movement of foreign currency in or
out of the country, even though cocaine profits continue to
make up a substantial part of all foreign exchange entering
the country. Banks are supposed to report transactions
involving more than $20,000 to supervisory authorities, and
exchange houses or "casas de cambio" are required to maintain
records of currency transactions.
A new banking law, proposed in August, 1991 but still
unpassed, would bring financial houses under the control of
the Superintendency of Banks. The law would also alter the
rules for financial intermediaries not subject to current
banking law, and would override other laws in regulating all
operations of the financial system.
Bolivia has an asset forfeiture law of sorts. Drug money can
be seized, but only if the money can be tied to the drugs.
Under the Coca and Controlled Substances Law, property seized
as a result of offenses will be auctioned off, pursuant to
execution of judgement. Money seized and proceeds from fines
are to be distributed to various governmental departments,
bureaus, and services. Bolivia has not yet met the goals and
objectives of the UN Convention with respect to money
BRAZIL has not been a major money laundering concern in the
past, but recent investigations by Brazilian agencies suggest
that financial institutions are increasingly used as a link
between Colombian cocaine suppliers and major U.S. and
European cocaine distributors. Brazil has the largest
economy in Latin America and the most sophisticated financial
sector in its region.
Hundreds of millions of dollars are estimated to have passed
between the U.S., Europe and Brazil in the last 4-5 years,
with the movement of such assets centered in Rio de Janeiro
and Sao Paulo. The U.S. connection is for dollars from
street sales; money laundered in Brazil is usually routed to
the Caribbean, Europe and Asia. There are indications that
money has been laundered for the Medellin and Cali cartels,
as well as for traditional Italian organized crime elements.
Narcotics money is usually laundered through money exchanges
and brokerage houses. Drug proceeds are also laundered
through front companies and purchases of gold and real
Foreign currency restrictions have prompted Brazilians to
smuggle massive amounts of cash out of the country. These
restrictions have created a vast, semi-legal parallel market
where "cruzeiros" exchanged for dollars compound the problems
of estimating the magnitude of money laundering. Many
wealthy Brazilians hold accounts overseas, often in the U.S.
or Paraguay, also used to move currency.
Brazil, which maintains good relations with U.S. law
enforcement agencies, permits access to bank records under a
court order; other disclosure is prohibited. Money
laundering is prosecuted as a violation of the tax code, not
as a narcotics violation. However, there is legislation
pending to punish persons, including bankers, who engage in
laundering narcotics assets.
CHILE is attractive to money launderers because of its
booming and stable, open market economy in which it is not an
offense to invest proceeds from criminal activities. The
export development policy of the Aylwin Government has
unwittingly afforded Andean cocaine and heroin producers a
new, less suspect route for smuggling their products, and has
resulted in a growth in money laundering, as drug traffickers
use their proceeds to buy import/export companies, travel
agencies, transportation and other finance-related
Money laundering commonly involves the use of Peruvian bearer
bonds to purchase legitimate goods for export to Peru. Money
exchange houses and money transmitters also facilitate
integration of illicit income back to source countries.
Chilean officials confirm that drug money is being laundered
through the booming construction and fishing industries
throughout Chile. Arica, a coastal town bordering Peru, is
considered a center for large scale drug trafficking and
money laundering. Numerous "casas de cambio" are known to be
laundering drug money from Peru, Colombia and Bolivia. GOC
officials attribute this to the increasing level of cocaine
trafficking since last year.
Strict bank secrecy laws and the lack of enforcement
authority and anti-money laundering laws prevent the Chilean
government from thoroughly investigating drug related
financial crimes. To combat the country's expanding drug
problem, the Chilean government in 1992 developed a
comprehensive counternarcotics legislative package, which the
Congress is expected to approve in 1993. This legislation
includes laws on money laundering (which the bankers strongly
oppose), precursor chemicals, police undercover work,
forfeiture of trafficker assets, and penalties for drug use.
Police will be able to obtain access to any bank account
suspected of laundering drug money. Much of this legislation
breaks new ground. Many of the proposed laws are based on
model legislation from the OAS's Inter-American Drug Abuse
Control Commission (CICAD).
COLOMBIA joins Panama, Mexico and the US as the primary money
laundering concerns in the Western Hemisphere. The major
cocaine traffickers are headquartered there, and the myriad
cocaine money deals that now span the globe either begin in
Colombia are or controlled from Colombia, or both. Like
Panama, Colombia has not ratified the 1988 UN Convention and
is the only Andean country failing to do so. While the
Colombian government has cooperated with the USG in cases
such as Operation Green Ice, Colombia does not yet meet the
goals and objectives of the UN Convention with respect to
Prior to the decree allowing Colombian citizens to hold US
dollar accounts, drug cartels were transferring the majority
of their drug profits from the United States to accounts in
Europe. Now, the drug cartels transfer their profits to
Colombia first before transferring them to Europe. However,
while this "opening" in Colombia initially resulted in such a
massive influx of dollars that cash transactions diminished
in parts of the Caribbean and elsewhere, there have been some
recent shifts in the handling of cash, prompted by a
Colombian tax on the conversion of US dollars into pesos.
Drug profits are physically transported to Colombia by air
and sea. Wire transfers are used to launder drug money to
and from the U.S. and Europe. The cartels import and resell
expensive products, such as automobiles and heavy equipment,
to launder drug profits, and are believed to have bought a
degree of control of the heavy construction industry. Front
companies, precious metals dealers, and legitimate businesses
are used to launder narcotic proceeds throughout the US,
Latin America and Europe.
DEA investigations reveal that Venezuelan banks are being
used heavily by Colombian traffickers to avoid a tariff on US
dollars entering Colombia. US dollars are converted into
Venezuelan bolivares or other non-US currency; once
converted, the proceeds are transferred into Colombia by wire
or physical movement without paying any tariffs. Millions of
dollars in cocaine profits have entered Colombia via
Venezuela. Venezuelan banks have opened branches or bought
banks in Colombia, some of which are believed to be owned or
influenced by the cartels.
DEA's Operation Green Ice, which climaxed last September,
targetted Colombian traffickers in Spain, Costa Rica, United
Kingdom, Canada, Colombia, the Cayman Islands, the US and
Italy, where the Italian Mafia was cooperating with Colombian
traffickers. In all, 634 KGS of cocaine were seized, assets
seized were valued at US $47.7 million, and 164 people were
arrested. Police authorities from each nation involved
cooperated to the full extent with United States authorities
in executing the operation.
While money laundering is not a crime in Colombia, the
Colombian law on unjust enrichment could be used to prosecute
money launderers in certain circumstances. The GOC has taken
some measures to track narcotics revenues. Substantial
inflows of foreign capital enter the Colombian economy under
the stimuli of a liberalized exchange regime, high real
interest rates, and a limited tax amnesty during 1991 and
early 1992. In February, 1991, Colombia required that all
financial institutions maintain cash transaction records
(CTR's) on currency exchange transaction amounts over
$10,000, for a period of five years. The Superintendent of
Exchange Control oversees all exchange houses, and also
requires CTR's; he began investigations in mid-1992 to shut
down institutions suspected of laundering money, remove
street traders, and deal with funds laundered through
contraband trade. Colombia has signed a money laundering
information exchange agreement with the US.
The Colombian banking association recently issued industry-
wide guidelines following many of the OAS/CICAD
recommendations and called on the Government to establish a
centralized data bank, which few institutions to date have
developed. "Banker's negligence" laws do not yet exist, but
recent measures enacted under state of emergency decrees
(primarily targeted to control funds held by guerrilla
groups) assign greater responsibility to institutions for
notifying judicial authorities of suspicious transactions.
These same decrees reiterate that divulgence of financial
information in conjunction with a judicial investigation does
not constitute a violation of bank secrecy laws.
ECUADOR is an important money laundering center because of
its bank secrecy laws and the easy accessibility of its
financial system to Colombian and Peruvian narcotics
traffickers. DEA believes these traffickers have laundered
millions of cocaine-generated dollars through Ecuador, much
of it through the construction industry.
In June 1992, the Ecuadorian National Police raided locations
used by Jorge Reyes-Torres drug trafficking organization
(JRTO), the largest in Ecuador and one of the most powerful
in Latin America. It was well connected to Colombian
traffickers with whom it conducted joint ventures. The raids
revealed JRTO money laundering methods, resulting in the
seizure of approximately $30 million in Switzerland,
Liechtenstein, Montserrat and the US. Additional accounts
have been uncovered and seizure proceedings initiated.
The multi-agency US team which met with Ecuadorian officials
last July reported that the GOE has made some efforts to
implement countermeasures. Money laundering is illegal. The
law, which became effective in 1990, applies to both banking
and non-banking financial institutions. Ecuador has largely
based its new narcotics law on the 1988 UN Convention. The
Superintendency of Banks requires that banks maintain records
on currency transactions over $2,000 but some financial
institutions reportedly do not comply. The regulations do
not require the financial institution to file regular
currency transaction reports. While the Superintendency of
Banks has full access to banking records, it cannot easily
share the information with police or prosecutors because of
bank secrecy laws. The GOE, however is considering amending
the bank secrecy act to permit reporting. The GOE signed a
money laundering information exchange agreement with the USG
in 1992 that provides for the exchange of money laundering
information/intelligence between the two governments.
Negotiations are continuing on an asset sharing agreement.
The GOE does not limit the amount of money which can be
brought into and out of Ecuador. The GOE has not taken
action to address the problem of international transportation
of illegal-source currency and monetary instruments.
In October 1992, the U.S. Treasury Department provided
Ecuadorian bank officials and government officials seminars
on the prevention and detection of money laundering. Ecuador
has requested assistance regarding the prosecution of its
money laundering laws which have not been enforced. The U.S.
Department of Justice has been assisting the Ecuadorian
Justice Department with the prosecution of Reyes-Torres who
is under detention with his accomplices pending trial.
Ecuadorian law provides for seizure by the national police,
the military customs police and/or the armed forces of assets
belonging to persons arrested for narcotics offenses.
Several properties belonging to Jorge Reyes Torres were taken
into custody in 1992 by the police, including residences and
businesses in Quito and a cargo airline. Several bank
accounts in Ecuador were also frozen.
GUYANA is not known to have been used as a site for
laundering drug money.
PARAGUAY, like many South American countries, has laws or
practices which facilitate money laundering, such as bank
secrecy and use of dollar accounts, and there are indications
that money laundering occurs in Asuncion, Ciudad del Este,
and Pedro Juan Caballero. Moreover, Paraguay is a transit
point for drug-generated cash, which moves through banks,
"financieras" and exchange houses. There are no controls on
the amount of currency which may be brought into or out of
the country. The informal or contraband sector of the
Paraguayan economy is particularly well established and has
flourished due to lax financial oversight. The movement of
large sums of money emanating from the contraband trade
complicates efforts to identify narcotics-related money
laundering. Paraguay could become an even more significant
money laundering center if traffickers take advantage of
financial system "modernizing" changes through which Paraguay
hopes to become a regional financial center.
In 1992, the GOP initialled a financial information exchange
agreement with the US, which should be ratified in 1993, and
Parliament is considering CICAD model regulations on money
laundering and asset forfeiture, as part of a reform of the
national narcotics law.
Money laundering is not illegal. While banks and financial
institutions are required to report to the Central Bank all
transactions of more than $10,000, the GOP lacks the
resources to monitor results. There have been no arrests or
prosecutions related to money laundering. DEA notes that
"casas de cambio" in Paraguay are laundering drug money
worldwide. Based on DEA information, the most powerful money
exchange house in Paraguay, Cambios Guarani, was investigated
and found to be laundering drug profits. The Cambios Guarani
and numerous other exchange houses such as Cambios Amonday
and Indumex are handling such large amounts of drug profits,
DEA adds, that the spread of these profits are filling
financial institutions and banks throughout Paraguay. The
Superintendency of Banks lacks sufficient manpower to
regulate these institutions fully.
Ethnic Chinese groups operating in Paraguay are stepping up
their efforts to create new narcotics markets and money
laundering centers in anticipation of Hong Kong's reversion
to Chinese rule in 1997. They are attempting to infiltrate
the banking systems of Latin America, and members of the 14K
group have been tracked to Paraguay. These groups operate
underground banking activities to conceal money and would use
such practices in Paraguay, if they are not already doing so.
PERU is not an important international financial center or
tax haven. Peruvian drug traffickers have traditionally kept
much of their proceeds outside Peru, but US dollars are
entering the banking system amidst indications that Peruvian
drug traffickers, increasingly independent from Colombia's
drug barons, are keeping more money at home. One Peruvian
group is known to have smuggled $10 million from Miami to
Peruvian law protects bank secrecy and permits anonymous
accounts. Investment laws enacted in 1991 to attract foreign
capital also facilitate money laundering. President Fujimori
has boasted that Peru now has the most liberal foreign
investment structure on the continent. The investment law
provides a full remittance of profits, capital and dividends
without prior government approval. There are no restrictions
on currency transfers, and bank accounts may be held in any
currency. Investors need not register their holdings with
the government, and exchange availability is guaranteed.
Most importers and exporters can buy and sell foreign
exchange without Central Bank intervention.
A recent US Customs investigation revealed a "partnership"
between drug traffickers and money changers ("cambistas")
operating between Lima and the Huallaga Valley; these groups
also have close ties to drug lords and guerrillas.
During 1992, the Fujimori government, using special decree
powers, amended the criminal code to make narcotics-related
money laundering a criminal offense, and to provide for
prosecution of persons, including banking officials, who
knowingly participate in or facilitate money laundering. In
1991, Peru signed a bilateral agreement with the US which
requires maintenance of records of cash transactions in
excess of $10,000 and provides for exchange of information on
such transactions by the superintendency of banking and the
US Treasury. The Superintendency of Banking has issued
regulations requiring financial institutions to maintain such
records. No requests for information have been made by the
There is no established system for identifying, tracing,
freezing, seizing and forfeiting narcotics-related assets.
The criminal code, as amended by the 1992 decree on money
laundering, gives the GOP legal authority to seize and
forfeit assets, but regulatory and enforcement capabilities
to actually do so remain weak.
SURINAME's tight restrictions on banks, the unconvertible
local currency and the limited scope of its financial system
make the country an unattractive center for major money
laundering. Although money laundering does occur, the
financial system cannot handle major currency transactions
without attracting attention. Suriname does not provide for
asset seizure nor are there legal provisions which permit
financial investigations of money laundering activities.
Drug money may be part of the parallel currency market.
URUGUAY is an important Southern Cone financial center and
tax haven which offers customers complete bank secrecy,
dollar accounts, no foreign exchange controls, and no taxes
on incomes or deposits. Montevideo, the banking , caters to
flight capital from neighboring countries. The financial
sector is significant to the Uruguayan economy: in 1991,
banks in Montevideo were holding more than $2.5 billion in
foreign currency deposits, and a reported $4.3 billion in
non-resident dollars were on deposit. The economy is open to
foreign investment with few restrictions or controls on
investment or ownership by foreign nationals. There are no
restrictions on the movement of money offshore or bringing
dollars into the country.
Uruguay has no regulations governing its 50 exchange houses,
making these institutions a prime target for money
launderers. Many of the registered exchange houses are held
by anonymous corporations controlled through bearer shares.
However, Central Bank officials do not permit new exchange
houses to be registered if controlled through such shares.
It is hard to determine the degree of money laundering in
Uruguay because traffickers' funds are difficult to separate
from the flows of outward bound capital originating in
Uruguay and among its neighbors. U.S. law enforcement
officials believe that narcotics money is deposited in and
easily transferred through the exchange houses to accounts
worldwide. Securities, gold and foreign exchange from around
the world come to Uruguay, which exports gold, but does not
produce a single gram.
While the GOU can seize laundered drug money from banks or
businesses, the GOU has rarely done so. Businesses proven to
have knowingly laundered drug money could be seized, although
the GOU has never seized a legitimate business for such a
crime. The law allows for criminal forfeiture, but the GOU
has never used the law against convicted narcotics
traffickers. No assets were forfeited or seized in 1992.
Banks and exchange houses routinely delay, but eventually
comply in providing courts with requested information on
accounts and transactions.
In October 1991, the Uruguayan Appeals Court ruled that while
drug trafficking constituted an extraditable offense , money
laundering did not. In September 1991, the United States and
Uruguay signed a mutual legal assistance treaty that
concerned drug trafficking and drug money laundering, but the
agreement still has to be ratified by one house of
Parliament. Recently, the Government of Uruguay completed
final drafts for improved anti-drug measures which include
increasing penalties for smuggling, distributing and
processing drugs. In addition, a separate money laundering
measure would enable the government to seize assets involved
in drug related offenses.
VENEZUELA has become a significant center for money
laundering. US officials believe that upwards of US $3
billion is laundered annually through Venezuela. There are
indications that professional smugglers and money launderers
headquartered in the Caribbean have set up off-site
facilities in Venezuela. On Margarita Island, money
launderers use real estate transactions, gambling and night
club facilities, exchange houses, the increasing gold trade
and the black market. In Bolivar, there is significant
activity involving the local gold and diamond markets.
Money laundering is not a crime, nor are there other anti-
money laundering laws. There are no "banker negligence" or
"due diligence" laws. The Venezuelan constitution prohibits
the confiscation of real estate or other proceeds of criminal
activity but allows the confiscation of cars, boats,
aircraft, etc., used in violations of drug laws.
Protected by bank secrecy laws, narcotics traffickers
frequently use Venezuela as a staging point for money
laundering. Narcodollars are deposited into Venezuelan
financial centers and then transferred to European or
Colombian banks. Venezuelan banks and Venezuelan-owned banks
in Colombia are used heavily by Colombian traffickers since
Colombia imposed a tariff on U.S. dollars. (See report on
Members of the Cali and Medellin cartels are known to hold
real estate and commercial investments in Venezuela. Since
there are limited controls on the movement of money in
Venezuela, importation of contraband plays a large part in
the economy of the North-East region of Maracaibo. Goods
from Panama and Colombia, purchased with narcotic proceeds,
are smuggled into Venezuela and sold for Venezuelan bolivars,
which are then deposited into bank accounts in Maracaibo.
In January 1992, the Venezuelan National Guard dismantled a
drug trafficking organization working with the Cali cartel in
shipping cocaine to the US and Europe. The National Guard
confiscated more than 1500 million bolivars from 12
businesses used as front companies. Also seized were several
farms, luxury cars and a yacht.
The GOV and U.S. have not used a 1990 money laundering
information exchange agreement. Better results come from
informal exchanges of information between Venezuelan
investigative and banking institutions and U.S. agencies.
Because money laundering is not a crime, legal action on
suspected money laundering practices occurs only when the
suspected crime involves drug trafficking. Otherwise there
is no legal basis to investigate and make arrests for money
laundering. The GOV instituted the filing of cash
transaction reports (CTRs) on transactions in amounts over
$10,000 by all financial institutions licensed to deal in
foreign exchange. However, there is no centralized data bank
for CTRs which lessens the usefulness of CTRs for
The GOV may make money laundering a crime by passing a drug
law reform package in early 1993. While some banking
institutions have agreed to work informally with U.S.
agencies on a case-by-case basis, others appear to oppose a
money laundering bill, publicly stating that money laundering
is not a problem in Venezuela. The drug law reform package
reportedly provides for the seizure and forfeiture of drug-
derived assets. Under the 1984 drug law, seizure of assets
is provided for, but forfeiture provisions are nebulous,
effectively resulting in no mechanism for channeling drug-
derived assets to drug law enforcement efforts.
ARUBA has increased its cooperation with U.S. enforcement
agencies but lacks the legislative authority to prosecute
money laundering and seize narcotics proceeds. Aruba is
dependent upon enactment of legislation by the Kingdom of the
Netherlands to implement the 1988 UN Convention. There is
also a significant political threat to the continuation of
the Oduber government, which has been responsible for
improved relations with the U.S. on this matter. The degree
of money laundering in Aruba does not appear to have worsened
significantly over 1991, although the same organizations
continue to operate.
THE BAHAMAS is an important international financial center,
with 300 banking and trust institutions and approximately
50,000 offshore companies registered. It is a tax haven with
bank secrecy laws attracting an influx of international
monies for capital preservation. The new government seems
quite serious in its intentions to prevent narcotics money
laundering, but equally concerned about maintaining
traditional bank secrecy and remaining competitive with other
financial centers, especially those in the Cayman Islands and
During the 1980's, the Bahamas was a haven for cash from drug
transactions entering the financial system, but U.S. and GCOB
officials concur in a belief that cash money laundering has
diminished. The majority of banks now seem to be
administering effectively a know-your-customer policy which
helps deter cash money laundering by non-account holders
and/or transients. However, there is not uniform compliance
with voluntary requirements for recording significant cash
transactions, and requirements for reporting suspicious
transactions are not uniformly applied to all customers or
transactions. The GCOB, which waives its tight bank secrecy
laws to permit investigations, amended its laws in 1992 to
provide for the confiscation of laundered assets, and
upgraded the reporting requirements for corporations.
Money laundering and money transshipments still occur, albeit
on a reduced basis. Most suspected scenarios involve
electronic transactions through international banks and
offshore companies with Bahamian offices which use bearer
shares. While some cash still enters Bahamian banks, U.S.
agents believe that non-cash transfers are carried out
through wire transfers from Bahamian banks to foreign banks,
e.g., in Colombia, Aruba and Europe. There are also
unconfirmed reports of bulk shipments of money by aircraft
departing the U.S., stopping in the Bahamas, then flying to
points in Latin America, particularly Colombia; these monies
are apparently not "landed" in the Bahamas but remain in
Six weeks after taking office in August 1992, the Ingraham
administration held talks on money laundering with U.S.
officials from Treasury, State, and Justice, in which it
assured the USG of its willingness to cooperate and discuss
these issues. The U.S. officials agreed that cash money
laundering seemed to have diminished, but expressed concern
whether the GCOB laws and policies were adequate to prevent
or detect the new and more sophisticated methods used by
professional money managers. The delegation noted that one
possible cause of the decline in cash money laundering in the
Bahamas may have been the new availability of dollar accounts
in Colombian banks. The U.S. delegation also expressed
continued concern about the use of bearer shares to control
shell corporations and the use of monetary certificates made
out to bearers.
Following these discussions, the U.S. delegation recommended
a formal request be made that the GCOB: criminalize money
laundering; standardize and mandate adequate bank record-
keeping; standardize and mandate suspicious transaction
reporting; analyze cash intensiveness to determine the proper
threshhold for recording and reporting transactions; conduct
a cash flow analysis of casino operations; assess the
adequacy of asset forfeiture and seizure laws; and consider
adoption of a due diligence convention for bankers, lawyers
and accountants which would hold them liable for ensuring
proper disclosures of their clients to banks and which would
prosecute them for facilitating money laundering.
After reviewing GCOB laws, the U.S. delegation believes the
GCOB has not criminalized money laundering as fully as some
other governments. They also advised that the laws on asset
forfeiture are weak and do not give the government the full
measure of authority which international advisory
organizations and other jurisdictions believe to be needed.
They further advised the GCOB to improve the fullness and
timeliness of responses to requests for mutual legal
The GCOB requested information from which to initiate
investigations on alleged money laundering schemes and
reiterated its commitment to keep its system free of drug-
The cornerstone of the Bahamas' money laundering control
system is deterrence through a central bank policy of "know
your customer." The GCOB believes that money laundering is a
crime under its Tracing and Forfeiture of Proceeds of Drug
Trafficking Act, but, to date, sanctions remain untested
before the courts due to a lack of investigations completed
which specifically target money laundering. The USG-GCOB
Mutual Legal Assistance Treaty (MLAT) facilitates the
exchange of information on money laundering and the USG has
successfully received information through this mechanism.
The GCOB has no "due diligence" or "bankers' negligence" laws
making individual bankers responsible if their institutions
launder money, and no really accountable auditing of their
institutions. Instead, the GCOB, when faced with
questionable actions on the part of financial institutions,
requests the closure of the institution. One such closure
occurred in 1991.
Under Bahamian law, asset forfeiture can occur following the
conviction of an individual for a drug offense. While the
need to fully adjudicate a case before forfeiture slows the
process, the asset forfeiture statute is adequate. In 1992,
the Royal Bahamas Police Force made administrative changes
that encourage closer coordination of drug investigations and
asset forfeiture investigations. Formerly these two type of
investigations were conducted by separate sections within the
The GCOB is active in international fora on the subject of
drug money laundering. The GCOB has a representative on the
experts' group of the Caribbean Financial Action Task Force
(CFATF) and the deputy Prime Minister attended the CFATF
ministerial conference in Kingston, Jamaica in November.
BARBADOS is not a major financial center. Money laundering
is illegal under the Drug Abuse Prevention and Control Act of
1990. There are strict controls on amounts of money which
can be converted into foreign currency and taken out of the
country. Banks are expected to report large or unusual
transactions voluntarily. Law enforcement agencies cooperate
with U.S. and other countries' attempts to trace and seize
THE CAYMAN ISLANDS is a major money laundering center which
ranks sixth among the world's banking centers, has 23,500
registered corporations and 548 banks which hold assets of
some $400 billion, but only 26,000 inhabitants. All but four
of the 50 most important international banks in the world are
represented here, but, of the 548 banks, only 68 have offices
and staff in Georgetown. The vast majority have
"representative offices" or "brass plate offices," and some
exist only on paper.
The Cayman Islands thrive on the offshore banking industry.
Its inhabitants enjoy one of the highest per capita annual
incomes ($20,000) in the Western Hemisphere. The Islands'
tax-free status, and very tight bank secrecy laws, make the
Caymans an attractive tax haven for many corporations.
Although London appoints the Islands' governors and the
British Foreign and Commonwealth Office controls the Caymans'
foreign policy, the Bank of England (Britain's central bank)
has no direct control over Caymans' financial regulations.
The Caymans Government cooperated closely with DEA on
Operation Green Ice and other investigations. In Green Ice,
Caymanian authorities set up shell companies and undercover
bank accounts; when the targets were arrested and their
assets frozen, DEA seized $400,000 in drug-related currency
in an undercover Caymanian account. In May 1992, the Cayman
Islands signed an agreement allowing U.S. "confiscation
orders" to be "registered and enforced" in the Cayman
Islands. According to reports, a U.S. confiscation order
from a recognized U.S. court will allow local law enforcement
officers and bank inspectors to seize bank accounts, real
estate, cars, homes, and other assets.
DOMINICA is not a major financial center. There is no
indication that money laundering occurs on the island.
THE DOMINICAN REPUBLIC is not a major regional financial
center or significant money laundering center. Foreign
currency exchanges and currency exports are strictly
controlled, limiting the appeal of the commercial banking
system. An estimated $800 million is sent to the Dominican
Republic annually from approximately one million Dominicans
residing in the US, some of which could be drug dollars.
GRENADA is not considered an important financial or money
HAITI serves a greater role as a transshipment point for
narcotics than as a center for money laundering, which is not
a criminal offense. What laundering occurs is primarily done
through money changers operating on the black market rather
than through banks.
JAMAICA is not an important narcotics money laundering
center. The chair and host of the 1992 meetings of the
Caribbean Financial Action Task Force, Jamaica has committed
to enacting money laundering laws.
MONTSERRAT is increasingly used as a money laundering haven.
The most prominent case came to light upon analysis of the
financial documents seized when the Ecuadorian National
Police, working with DEA, raided the Jorge Reyes Torres drug
trafficking/money laundering organization in June 1992.
Because Ecuador prohibits the holding of U.S. dollar accounts
by Ecuadorian banks, Reyes-Torres established an offshore
bank in Montserrat and a branch of this bank in Quito, which
he used to deposit millions of U.S. dollars in drug-related
currency, and evade Ecuador's currency control laws. Reyes
would wire transfer the funds in his bank (Banco de los Andes
Internacional) to other banks around the world.
NETHERLANDS ANTILLES experiences both drug trafficking and
money laundering, primarily associated with St. Maarten and
Aruba (see separate report).
The St. Maarten laundering operations are very extensive.
Included in the many activities are resorts, casinos,
restaurants, airlines, banks, construction businesses, a
transportation company, and a travel agency. These
activities appear to be concentrated in St. Maarten but there
is evidence that parts of the network have spread to other
islands of the Netherlands Antilles, as well as to St. Kitts
and the British Virgin Islands.
ST. LUCIA is not a major financial center, although the
government is interested in attracting offshore facilities.
In 1992, there was some evidence that allegedly fraudulent
banks had sought registration and licensing in St. Lucia; a
special government committee has been set up to investigate
this matter. Legislation is before Parliament requiring that
any offshore company or financial institution first be
licensed with the Ministry of Finance before being registered
in St. Lucia. There are controls on amounts of money which
can be converted into foreign currency and taken out of the
country. The Ministry of Finance investigates unusual
ST. VINCENT is not a major financial center, but there is a
possibility its offshore institutions may be used to transfer
funds gained from narcotics trafficking and other illegal
activities to banks in the U.S. and elsewhere.
TRINIDAD & TOBAGO is not a major financial or money
laundering center. The government, which has assumed the
chair of the CFATF, has criminalized money laundering.
However, more detailed legislation is needed. A number of
local banks have recently agreed to monitor large cash
deposits in an attempt to prevent money laundering.
Beginning last December, banks are required to complete a
source-of-funds form on transactions of more than $6,000, and
may be held liable for facilitating the retention of drug
proceeds. The procedures have not yet been implemented, and
it is unclear how comprehensive or effective they will be.
There are stringent currency controls.
AUSTRIA is neither an important financial center, tax haven
or offshore banking center, nor do U.S. and foreign officials
consider Austria a major money laundering center. However,
its bank secrecy laws create the potential for money
laundering and some money laundering does occur.
GOA officials are closing loopholes to discourage money
laundering. They propose to amend banking laws to comply
with EC regulations in anticipation of EC membership in this
decade. In 1992, the Ministry of Justice proposed
legislation that would make money laundering a specific
crime; however, this bill, which the government approved on
December 1, has not passed Parliament and has drawn serious
opposition. Efforts are also underway to amend the penal
code; both actions are needed to allow ratification of the
1988 UN Convention. There have been no arrests or
prosecutions for money laundering.
Banks must maintain records of large currency transactions,
and report this data regularly to the Austrian central bank.
Bankers are not allowed to report "dubious" monies to the
Justice ministry, but, should the banking bill become law,
banks would be required to report such cases to the
responsible public prosecutor. The Chamber of Commerce
updated the banking industry's code of conduct in February.
The code lowers the ceiling for customer identification and
reporting of transactions to AS 200,000 (about $18,100) and
was broadened to include all currencies, not just U.S.
Debate continues over the future of anonymous bank accounts
for Austrian residents; Austria is the last European country
to allow anonymous accounts which have some potential for
money laundering because they are in effect paid to bearer.
These accounts are very popular with small savers. Both
anonymous accounts and bank secrecy remain politically
sensitive issues; the debate results in slow and careful
implementation of countermeasures.
BELGIUM is an important financial center but not a
significant money laundering haven. Belgian police and DEA,
however, received information that a Colombian Cartel cell
laundered $8-10 million through Belgian exchange houses and
other financial institutions during the past two years.
Belgian law provides for seizure of assets directly linked to
a crime. Bank secrecy laws, however, are still so strong
that the police do not have the tools to actually enforce the
law. The law does not apply to non-financial banking
institutions, such as exchange houses. Authorities have
seized $400,000 and arrested two currency couriers. There
have been no prosecutions for money laundering.
DENMARK is not an important money laundering center. It is
an important financial center, however, and (non-drug) money
transits Denmark in large amounts. Denmark is the largest
foreign exchange dealer among Nordic countries, accounting
for about 45 per cent of turnover.
Denmark is not a transit point for drug money, but is seen by
drug traffickers as one more hiding place where law
enforcement authorities would not normally look -- the money
laundered here has been both local and foreign, and all
within the banking system. Banks are not required to
maintain records of large currency transactions, but all bank
transactions are linked to a central computer, which is
accessible to law enforcement authorities with court
approval. There is no requirement to report suspicious
transactions, nor controls on the amount of money that can be
brought into or out of Denmark.
Because money laundering statutes are not yet in force, there
have been no arrests for money laundering per se. Denmark,
however, has laws making possession of criminal proceeds
illegal. If the police investigate a drug case and the
suspects have money, the money can be seized. There were two
recent, major cases of money laundering by Colombian drug
smugglers in which the pertinent bank accounts were seized
under this law.
FINLAND attracts illicit money because of its bank secrecy
laws, and because money laundering is not a crime. Western
narcotics proceeds and Russian "mafia" funds enter the
banking system. The government is taking steps to
criminalize money laundering and lift bank secrecy.
Parliament is expected to enact a bill in early 1993.
Although Finnish banks do not wish to lose the banking
secrecy provisions in current law, they have not opposed
these changes as they do not wish to be the target of
narcotics money. The new legislation will bring Finland
fully into compliance with the 1988 UN Convention.
FRANCE imposed new requirements for reporting suspicious
transactions on banks and other financial institutions. A
law adopted January 1993 widens the authority of its
centralized financial intelligence service, Tracfin.
Suspicious transactions which must be reported include those
possibly involving drug proceeds. France and Italy are the
only EC members which the EC Commission says were in
compliance with its money laundering policy directive on
January 1, 1993.
France has "agent provocateur" laws which make it extremely
difficult for law enforcement personnel to participate in
undercover operations, but, in late 1991, France passed a law
to allow certain undercover operations, under controlled
conditions, with the concurrence of a magistrate or judge of
instruction. If a judge concurs with a joint US-French
undercover operation, all transactions would be directed
through French counterparts. French officials are receptive
to opening "dollar" accounts to allow wire transfers of funds
as part of an investigation. They are also considering the
use of undercover money laundering operations similar to U.S.
Under French law, money laundering is only a crime if it is
associated with a drug offense. Monetary instruments used in
committing a crime or acquired by a criminal offense, may be
seized, and can be returned to the country whose laws have
been violated by decision of the French judicial authorities.
French law does not allow for civil forfeiture.
GERMANY is increasingly used as a money laundering center for
the Colombian cartels as well as other trafficking
organizations (e.g., the Italian Mafia as well as Turkish and
West African heroin organizations). Germany has taken
several initiatives to curb this activity, including new
legislation, while also seeking cooperation from other
governments. The Bundeskriminalamt (BKA), the German Federal
Police, has identified several suspicious accounts and has
asked the U.S. for assistance in obtaining further background
information on the account holders. However, The U.S.
Justice Department says that none of its several requests to
German authorities to freeze bank accounts containing drug
proceeds has been honored to date.
On September 15, 1992, the Organized Crime Act came into
effect; inter alia, it made money laundering a criminal
offense. The Act calls for fines and imprisonment, not only
for those who conceal property from any felony offense, or
drug violation, or acts by a criminal organization, but also
punishes gross negligence for not recognizing the illegal
source of property in transactions. The Act also provides
for forfeiting assets of persons convicted of such offenses.
A bill introducing reporting requirements for financial
institutions with respect to suspicious transactions, and
demanding identification of depositors and beneficiaries for
larger transactions is still pending in the Bundestag, where
it is strongly opposed by financial institutions.
GIBRALTAR actively encourages the development of its banking
business to establish itself as a leading international
financial center. Its offshore banking and secrecy laws
attract drug money, but the extent of such activity and its
relationship to drug trafficking has not been estimated.
Gibraltar offers tax-free status to offshore financial
institutions that do business only outside the Rock.
Gibraltar also has no exchange controls and no tax treaties,
so people who invest through Gibraltar companies are assured
GREECE continues to be an important financial center and tax
haven. While it is difficult to determine degree, Greek and
U.S. authorities assume that drug money laundering takes
place. In 1992, the Government drafted anti-money laundering
legislation to comply with the UN Convention and EC Policy
Directive. The overall gross of "black" money (derived not
only from drug trafficking but also from illegal arms sales,
smuggling of gold and electronic items, gambling, etc.) is
modestly estimated at more than 300 billion drachmas per year
(approximately $1.8 billion). Money laundering would become
a criminal offense under the proposed legislation drafted by
the Commission on International Criminal Law. In January
1992, DEA conducted a seminar on money laundering for Greek
prosecutors and judges, in connection with ratification of
the UN convention.
A Presidential decree in March 1991 allowed for
"investigation of the origin of private capital in order to
expose money laundering." After arresting two Greek and one
Syrian heroin traffickers in early 1992, police froze a bank
account worth 8 million drachmas (approximately U.S.
$500,000), the only known example of such action taken by
ICELAND, a party to other international conventions, has not
yet ratified the 1988 UN Convention, presumably because
ratification would require major changes in legislation to
prevent money laundering. Though there is no specific
legislation criminalizing money laundering, the extremely
small size of the Icelandic banking system precludes
significant money laundering activity.
IRELAND officials fear that money laundering is becoming more
common, especially in the cases of investment in legitimate
businesses by the Provisional Irish Republican Army (PIRA)
and the purchase of real estate by foreigners. Irish
authorities believe the PIRA is becoming more involved in
racketeering, including narcotics trafficking.
ITALY approved the "Anti-Mafia Law" in August 1992, in the
wake of the murders of Judges Falcone and Borsellino.
Italian police authorities are now using the law's provisions
requiring banks to work with law enforcement to uncover
suspicious accounts. The law also authorized undercover
operations and controlled deliveries in drug-related money
Despite this new legislation, and its compliance with the EC
policy directive, Italy is quickly becoming one of the
leading money laundering centers in Europe, as shown by
Operation Green Ice. Colombian and other South American
cocaine trafficking organizations want to establish money
laundering businesses in Italy where they already have
cocaine importation and distribution networks. Also, funds
generated from the continued rash of kidnappings in Italy are
being used to purchase drugs from South America and sold back
in Italy, thus recycling criminal proceeds. Thus, while
Italy has taken steps to combat money laundering, and is
generally in compliance with the goals and objectives of the
UN Convention, it is clear that it must take additional
measures in order to implement effectively these new policies
The Servizio Centrale Operativo (SCO) assisted Operation
Green Ice by providing the DEA Rome office and the Operation
with a storefront in Italy. As a result of the participation
in Green Ice, SCO has been able to identify approximately 40
Colombian cell members associated with Cosa Nostra, Camorra
and 'Ndrangheta organized crime families. DEA and Italian
officials seized nearly $6 million during Operation Green
Ice, which resulted in 41 arrests and the indictment of an
additional 100 individuals, and other seizures. As a result
of DEA cooperation with the Guardia di Finanza), more than
$55 million was seized in the U.S. and multi-hundred
kilograms of cocaine were seized in Italy and France. The
drug proceeds belonged to the 'Ndranghetta crime family.
The Italian Parliament, in anticipation of the European
Community's Second Banking Directive, passed a series of laws
to limit confidentiality of account holders, but some bank
secrecy persists. Italian authorities have adequate access
to account information and legislation is in place which
establishes reporting mechanisms for suspect transactions.
Further, Italian authorities have created a special unit to
investigate financial crimes.
Italy has a variety of controls on non-bank financial
activity, which could be considered a potential threat area
for money laundering. However, there is concern that bearer
bonds, a common investment for Italians from every economic
group, can be used by the Mafia to shelter funds.
Based on the high tax rate, recent legislation to curb tax
evasion, and Italy's tradition of small businesses, there is
a strong motive for using a "submerged" or black market
economy. Italy has no reporting requirements for cash
purchases, but high-value cash purchases have been prohibited
and consumers must use financial instruments (which can be
traced), a feature of Italy's efforts to channel financial
transactions through its banking system. There is a
significant trade in fine art, jewelry and gold (to a more
limited extent), which provides excellent opportunities for
laundering illicit funds via conversion to assets. The U.S.
Customs Service and Italian authorities have documented
numerous cases where this type of activity has occurred.
U.S. Customs has also documented cases where importers of
gold from Italy have been involved with drug trafficking
organizations. Italian authorities say real estate firms
have been directly involved in laundering illicit funds,
especially for the Sicilian Mafia.
LIECHTENSTEIN strengthened its Banking Commission, and money
laundering and judicial assistance legislation, which took
effect in March, criminalizes money laundering related to
drug offenses. A more comprehensive money laundering bill
which would prohibit the laundering of proceeds from all
criminal activity is under consideration. Pursuant to an
MLAT request by the U.S., Liechtenstein blocked a bank
account in the name of an Ecuadorian endowment in the amount
of $8 million. A total of U.S. $17 million is currently
frozen at the request of U.S. authorities. Although
Liechtenstein is not a party to the UN Convention, these
actions indicate that it is moving toward meeting the
Convention's goals and objectives with respect to money
LUXEMBOURG is a major world financial center, hosting more
than 180 international banks which operate as "universal
banks" with an unrestricted range of activities. Luxembourg
is considered a tax haven due to its strict bank secrecy
laws, absence of exchange controls, lack of withholding tax
on interest and politically stable environment. Bank secrecy
does not apply in criminal cases.
Government officials acknowledge that narcotics money
laundering occurs, but they do not consider Luxembourg more
of a "center" for such activity than other places with highly
developed banking systems. Authorities believe most drug
money laundering is related to cocaine trafficking. Most of
the money laundering cases involved funds introduced into the
world financial system elsewhere (often in the US) and then
channeled through Luxembourg's banking system en route to a
final destination. Even in these cases, however, Luxembourg
law holds bankers personally liable if they fail to establish
the bona fides of the beneficial owners of funds when
received. The Monetary Institute has stepped up its efforts
to police the banks' anti-money laundering performance.
Although there have been no indications that the non-banking
financial sector has been involved, the government is
assessing whether building companies, real estate agencies,
jewelry stores, art galleries, or antique dealers have
engaged in money laundering activities.
Bankers and other financial sector professionals are required
to keep documents on transactions for at least five years,
and to report suspicious transactions to the public
prosecutor. Currency traders, lawyers, notary publics, and
bankers who handle securities are under the same obligation.
Bankers are criminally responsible if their institution
knowingly launders drug money. Client identity must be
verified for transactions exceeding 500,000 francs ($15,500).
There are no controls on money brought into or taken out of
Banking groups have accepted the money laundering law, and
authorities contend there has been no reduction in bank
deposits since the law took effect. However, provisions
holding senior bank officers criminally liable for any money
laundering transaction which occurs in their banks have not
been popular among bankers. No charges have been brought
under the "professional responsibility" provision. However,
the legal requirement for banks "to know the client" has
resulted in careful scrutiny of existing accounts and review
of new clients for possible money laundering connections.
In April 1992, the Luxembourg Court found Jose Jurado-
Rodriguez and Edgar Garcia-Montilla, the alleged chief money
launderer of the Cali Cartel, guilty of money laundering.
The guilty verdicts mark the first time in Europe that drug
money launderers have been successfully prosecuted on
specific drug money laundering statutes. The defendants were
convicted of laundering approximately $36 million throughout
Europe,of which $8 million is frozen in Luxembourg. The
money reportedly belongs to Jose Santacruz Londono, the
reputed head of the Cali Cartel. Other Cali funds linked to
Jurado and Garcia are frozen in France, UK, Finland, Italy,
the Netherlands, Monaco and Hungary. The government is
appealing a Luxembourg court decision which held that the $8
million should be returned to Santacruz-Londono's relatives,
because the funds were not directly related to a drug
offense. The technical point (loophole) on which the Court
ruled has subsequently been overcome by legislation.
Asset forfeiture remains a problem, although forfeiture can
follow conviction of the money launderer as well as the
trafficker. Courts can enforce foreign forfeiture orders
relating to drug offenses, but it is not clear whether the
courts will enforce civil forfeiture orders. GOL and U.S.
officials are exploring the possibility of obtaining a civil
forfeiture order from the U.S. to release $40 million frozen
in four Luxembourg banks which cannot be forfeited because
Medellin cartel leader Rodriguez-Gacha, the beneficial owner,
is dead and cannot be convicted, A civil suit is also being
considered against $10 million belonging to Pablo Escobar.
MALTA AND SAN MARINO are potential money laundering sites.
Given Malta's proximity to Italy and San Marino's location
inside of Italy, they are attractive locations for Italian
organized crime groups to conduct off-shore banking activity.
Malta and San Marino may benefit from the erosion of bank
secrecy in other European countries.
MONACO considers finance a major industry. But, since the
seizure of Medellin cartel records involving Gonzalo
Rodriguez-Gacha, which showed that Monegasque banks had been
used to launder some of its profits, no other evidence of
money laundering has emerged. Nevertheless, Monaco remains a
potential money laundering site because it has no income tax,
low business taxes, and thrives as a tax haven for
individuals who have established residence and for foreign
companies that have set up businesses and offices there.
Theoretically, Monaco's casinos could be exploited by money
launderers but no cases have emerged.
THE NETHERLANDS, one of Europe's oldest and most active
financial centers, is a significant factor in both European
and Caribbean money laundering. Banks are not required to
report suspicious transactions, nor maintain records of large
currency transactions. On August 27, 1992, the Dutch Cabinet
announced it had reached agreement on introducing legislation
compelling banks and other financial institutions (securities
brokers, insurance companies, collective investment schemes,
credit card companies and exchange houses) to report any
unusual transactions. A reporting office for "unusual
financial transactions" will be set up. The cabinet also
agreed to tighten the rules for compulsory identification for
financial transactions in banks, life insurance and stock
brokerages. The measures are in line with EC directives.
During 1992, major banks have been reporting and recording
transactions of dubious nature on a voluntary basis, and
reported suspect transactions worth 350 million Dutch
guilders (approximately $195 million). Most of these
reported transactions involved the laundering of drug money.
The government estimates the volume of money laundering to be
in the range of $600 million to $2 billion per year,
involving more than 100 money laundering organizations
representing every ethnic group in the Netherlands. Money
laundering proceeds are owned by both local organizations and
groups located in other countries. Money laundered is
subject to confiscation.
There has been a rapid growth in the number of exchange
houses which are unregulated by the government and are only
required to be registered with the Chamber of Commerce. In
Amsterdam alone the number has increased from about 10 in
1991 to between 120 and 150 in 1992. Banks will no longer
exchange large amounts of cash for individuals unless they
present proper identification, part of a greater diligence
approach by banks. As a result, coffee shops have begun to
handle large volumes of cash. One coffee shop allegedly
exchanged U.S. $100 million in one year.
The Netherlands is signatory to such instruments as the UN
Convention and the 1990 COE convention; it is examining
domestic legislation and regulation to ensure conformity with
those conventions prior to ratification. Legislation has
been drafted which will make money laundering a separate and
distinct criminal offense; it is currently covered by general
provisions of law dealing with property of criminal origin.
Banks will be required to maintain records of large currency
transactions and report unusual transactions, which major
banks have been doing on a voluntary basis throughout 1992.
On November 20, 1992, the U.S. and The Netherlands signed a
US/Dutch Asset Sharing Agreement. Pending legislation
provides for both civil and criminal forfeiture.
NORWAY treats drug money laundering as a criminal offense.
Banks must report to the Norwegian Central Bank any
international cash transactions over 25,000 kroner ($4,000)
and international monetary transactions which exceed 60,000
kroner ($10,000). Norwegian law on asset seizure in drug
cases is very strong and adequate to ensure fulfillment of
both international and national obligations. Under present
law the government can seize and retain any assets which can
be linked to criminal activity. The Director General of
Prosecution takes an aggressive approach to asset seizures
and the values of assets seized have increased in recent
PORTUGAL now requires its banks to report suspicious
transactions, under a law effective this January, which
brings Portugal's laws into compliance with EC directives.
Banks must maintain records of large currency transactions
($10,000 or more) and report suspicious transactions to law
enforcement authorities. Bank secrecy laws may be waived in
three instances: official corruption; suspected illegal drug
transactions; and when checks are issued against insufficient
funds. The Portuguese escudo is not convertible and is
unattractive to money launderers.
Although Portugal is not a leading financial center or money
laundering threat, there is concern about offshore banking
activity in Madeira and the Azores. These two regions are
autonomous and are not subject to Portuguese law. There are
no bank reporting requirements for the offshore banks (only
aggregate totals are reported to the Central Bank of
Portugal). Seventeen banks have been licensed to operate
offshore banks in Madeira and some 350 companies are
registered at Madeira's offshore center (predicted to rise to
more than 800 by the end of 1992). Portuguese narcotics
investigators suspect that the offshore center is being used
by narcotics traffickers to launder money.
SPAIN is becoming a major money laundering center which
attracts funds from Colombian Cartel and criminal
organizations, who use Spain as a base for European money
laundering operations. To counter this threat, the
Parliament adopted legislation last November which
strengthens its narcotics enforcement efforts concerning
money laundering, seizure and forfeiture of assets, chemical
precursors, and controlled deliveries. For the first time,
drug money laundering is a crime in Spain.
Many of the same conditions which make Spain attractive as
both a financial and drug transit country have been
exacerbated, FinCEN believes, by the EC "open borders"
policy. South American, Nigerian and Middle Eastern
organizations have joined Europeans in routing money through
Spain, with much of the money believed to have been invested
there because of the strength and stability of its economy.
During Operation Green Ice, Spanish National Police (SNP)
assisted in three pick-ups totalling $329,535, and arrested
12 defendants, one of whom is considered to be a major money
broker for the Cali Cartel. The defendant has admitted
laundering more than $4 million during the preceding 18
months. The Spanish broke a major money laundering ring in
Cadiz which may have laundered as much as $75 million through
70 banks, and was handling drug proceeds for Turkish and
other organizations. In October 1992, the SNP arrested 14
individuals and seized foreign and U.S. currency valued at
$1,485,333, including a cashiers check payable to "bearer" in
the amount of U.S. $800,000.
SWEDEN is not a major money laundering center, but Swedish
police are investigating an organization of Bolivians and
Swedes who are bringing large quantities of U.S. dollars into
SWITZERLAND is one of the world's leading financial centers.
Swiss banks have a reputation for financial soundness,
reliability, and for the confidentiality with which they
handle clients' money, which made Switzerland a priority
venue for money launderers. The Government's response has
been strong legislation that virtually ended the historic
numbered Swiss bank account while establishing a code of
conduct for banks to cooperate with authorities.
Switzerland has delayed ratification of the UN Convention
because it lacks a national consensus on the requirement to
punish narcotics users. The Swiss penal code was amended in
1990 to make money laundering a criminal offense. The new
law also makes it a criminal offense for financial
institutions or agents to fail to exercise due diligence in
identifying the beneficial owner of assets entrusted to their
The government plans to present to the Parliament in 1993
legislation which would punish membership in or cooperation
with organized crime, permit easier confiscation of assets
derived from crime, and allow bank employees to denounce
suspicious transactions without fear of violating bank
secrecy. The Swiss Banking Commission issued a "circular
letter," which took effect in early 1992, designed to
implement recommendations of FATF. Swiss banks are already
self-regulated on the issue of customer identification
through the "due diligence convention" of 1987.
Banks must maintain records of currency transactions of
100,000 sfr or more. The Banking Commission, in consultation
with the banks, plans to lower this threshhold to 25,000 sfr.
Banks are not required to report suspicious transactions.
There are no controls on the amount of currency which can be
brought into or out of Switzerland.
Non-banking financial institutions, such as exchange houses,
are not governed by the due diligence convention or regulated
by circular letters from the Banking Commission. They are,
however, subject to the penal code, notably the code's
prohibition on money laundering and its requirement for due
diligence in identifying the beneficial owner of assets.
Despite Swiss voters' rejection of the EEA on December 6,
1992, authorities still want their nation to accept the EC
money laundering directive, which does oblige banks to report
suspicious transactions. Switzerland would have to adjust
its internal regulations in order to conform.
Switzerland is also signatory to the Council of Europe
convention on money laundering and confiscation of criminal
assets. The government plans to ask Parliament for
ratification of the convention in 1992.
US and Swiss authorities have cooperated in many important
cases, including the Noriega case in which the Swiss blocked
accounts and obtained bank records. Swiss authorities have
also blocked accounts of the Medellin cartel and furnished
bank records at U.S. request. The changes already undertaken
or proposed present important new opportunities in U.S.-Swiss
law enforcement cooperation. Bankers consulted with the
government on new legislation but did not object in principle
to the change. While Swiss banks have not complained about a
decline in deposits, there is evidence that money launderers,
aware of the mechanism now in place, have turned elsewhere
(e.g., Germany. Eastern Europe and other locations).
TURKEY has emerged as a major money laundering concern.
Turkish organizations control the bulk of the European heroin
trade, and millions of illicit drug dollars are consequently
secreted out of Europe into Turkey. Payment for shipments of
heroin to Europe is brought into Turkey by trucks and
international buses, or through underground banking channels,
or other methods. Or, funds are deposited into European
banks and wire transferred into international accounts.
Money laundering is not a crime, and Turkish authorities have
no conspiracy law with which to prosecute money launderers
linked to drug trafficking. Foreign exchange may be freely
purchased by nationals, and foreign exchange accounts may be
opened. Transactions are reported only in the aggregate to
the Central Bank.
It is likely that significant amounts of narcotics profits
return to Turkey and are invested in legitimate businesses.
A major money laundering and heroin trafficking operation
based in Istanbul uses legitimate business transactions, such
as travel and tourism agencies, real estate deals, and
currency exchanges. Currency exchange transactions and wire
transfers among bank accounts in Europe, Canada, the US and
Turkey are popular methods of laundering drug money. Without
laws against laundering, it is virtually impossible to track
these inflows or estimate their magnitude.
UNITED KINGDOM banks and other financial institutions share
the vulnerability to money laundering experienced by the
world's major banking centers. Narcotics proceeds are
converted in the UK but also transit the country. The
Channel Islands and the Isle of Man have offshore banking
facilities that are also believed to attract drug funds, and
have adopted money laundering countermeasures.
The UK has four primary acts in force which relate to money
laundering and drug trafficking: 1) the Drug Trafficking
Offenses Act, 1986; 2) the Criminal Justice (Scotland) Act,
1987; 3) The Criminal Justice Act, 1988; and 4) the Criminal
Justice (international cooperation) Act, 1990.
The Drug Trafficking Offenses Act of 1986, as amended,
provides banks and other institutions with a means of
reporting suspicious transactions through voluntary
disclosure to the NCIS and protects them from prosecution for
breaching bank confidentiality. Money laundering controls
also apply to non-banking financial institutions, such as
exchange houses. All proceeds of drug trafficking, following
a criminal conviction, can be seized, including instruments
of crime and tangible property. Additionally, the misuse of
drugs act and the powers of the criminal courts allow for
forfeiture of tangible property as the court sees fit. A
Home Office working group has proposed recommendations for
significant improvements in the act. The directive will make
mandatory the disclosure of suspicious transactions,
identification of account holders, and the exertion of due
diligence in dealing with suspicious transactions.
Proposed legislation and regulations would amend the
confiscation provisions of the Drug Trafficking Offenses Act
of 1986, and strengthen the existing legislation on money
laundering to allow the implementation of the European
Community directive on money laundering. They would also
confirm the powers of HM Customs and Excise to investigate
and prosecute offenses; amplify existing provisions regarding
enforcement of an overseas forfeiture order; and simplify the
process of designating countries under these Acts.
The Criminal Justice (international cooperation) Act of 1990
enhanced money laundering authorities, including the ability
to detain cash up to two years if a narcotics connection is
suspected, with potential for civil forfeiture. Money
laundering is a criminal offense if it is related to drug
trafficking or terrorism.
HMG has reached agreement with the U.S. on a mechanism for
exchanging adequate records in connection with narcotics
investigations and proceedings, and adopted laws and
regulations which ensure the availability of adequate records
of narcotics investigations to appropriate U.S. personnel and
those of other governments.
UK banks are not required to maintain records of large
currency transactions or report the data regularly to a
central authority, and there is no statutory requirement to
report the identity of customers engaging in large currency
transactions. HMG has not adopted "due diligence" or "banker
negligence" laws. However, the law provides financial
institutions a means of reporting suspicious transactions to
the NCIS. HMG continues to address the problem of
international transportation of illegal-source currency and
monetary instruments. There have been 24 prosecutions for
money laundering in 1992 and 42 prosecutions are in process.
Technically, all proceeds of drug trafficking, including
substitute assets when proceeds are not obtainable, can be
seized. Additionally, the misuse of drugs act allows for
forfeiture of tangible property as the magistrate sees fit.
Legitimate businesses used to launder drug money cannot be
seized; however, proceeds including substitute assets
(trafficker proceeds) can. Legal loopholes which allow
traffickers to shield assets are possible because of the lack
of ability to track and trace funds internationally and the
lack of UK civil forfeiture procedures, except in certain
cases. The Treasury Consolidated Fund for domestic seizures
receives proceeds from narcotics asset seizures and
forfeitures. An asset forfeiture fund has been established
for international sharing based on external confiscation
orders and asset sharing gifts. The obstacle or disincentive
to passing such laws on seizure and forfeiture is balancing
the needs of law enforcement against the public liberties of
individuals. Upon conviction for a drug offense and on an
order of the court, i.e., issuance of a confiscation or
default order, HMG has the authority to forfeit seized
HMG authorities appear to be very aggressive in enforcing
existing drug-related asset seizure and forfeiture laws. The
police, HM customs, and the NCIS are responsible for tracing
and seizing assets. Pending legislation should provide them
additional powers. Approximately $12 million of assets were
forfeited and/or seized in the past year.
HMG is engaged extensively in negotiations to harmonize
efforts regarding asset tracing and seizure, multilaterally
through the EC, and bilaterally. It has 12 bilateral
confiscation agreements in force and a further 15 which have
yet to be brought into force. The UK ratified the Council of
Europe convention in September 1992. HMG laws do not permit
sharing of forfeited assets with other countries. However,
pending legislation which would allow the UK to share assets.
In September 1992 India and Great Britain signed an
extradition treaty and an agreement on the confiscation of
terrorists' property and assets. This agreement will prevent
the illegal movement or laundering of money, particularly
through the hawala system which is widely used in the UK.
Recently enacted legislation dictates that financial
institutions in the Channel Islands (which are tax havens)
must now report "suspicious" accounts and/or transactions
that they believe are drug related. Since the enactment,
Jersey and Guernsey authorities have elicited DEA London's
advice on a number of suspicious transactions, which have not
been confirmed as drug related.
The UK assisted in Operation Green Ice by providing an
undercover policeman to pick up trafficker funds in London.
Through the operation, approximately U.S. $1.8 million kg
sample of cocaine was received. During the "takedown" of
Operation Green Ice, the United Kingdom seized 42 additional
kilograms of cocaine, U.S. $5.6 million (in pounds sterling),
one yacht and arrested 4 individuals.
For purposes of this report, Eastern Europe is defined as
including Albania, Bulgaria, Czechoslovakia, Hungary, Poland,
Romania and the remnants of Yugoslavia. We note, however,
that in recent international fora, the Hungarians in
particular refer to themselves as Central Europeans.
While much attention is being focused on money laundering in
Eastern Europe, there may be a practical ceiling for at least
a few years on money laundering as opposed to other types of
financial crime which seem to be flourishing. Political and
economic uncertainty, strict exchange controls, high
inflation, and the dearth of sophisticated financial
institutions make money laundering in Eastern Europe a chancy
Drug money managers tend to avoid unnecessary risk in their
financial decisions, and money laundering in Eastern Europe
remains a chancy proposition, given the region's significant
political and economic uncertainty. Most countries still
have strict exchange controls, inflation is high, and
sophisticated financial institutions are scarce. Ironically,
the money laundering potential increases as governments
modernize their financial sectors, and offer such services as
wire transfers, free exchange of currencies, access to other
financial markets, and the use of instruments like bearer
bonds and letters of credit.
BULGARIA is not a narcotics money laundering center.
However, authorities fear that its antiquated banking laws
and it location on the "Balkan route" for heroin might
attract such funds. Bulgaria's banking sector is beginning
to decentralize but the lack of a convertible currency
prevents it from becoming an important regional financial
center. Bulgarian authorities have stated their readiness to
assist in investigating any money laundering activities and
are drafting new laws on money laundering and asset seizure.
There is no legislative mechanism to regulate control at the
banking level where suspicious transactions would normally be
spotted. There is concern that the Italian Mafia, Colombian
drug cartels and other criminal syndicates may be investing
in Bulgaria, and or be laundering illicit proceeds through
CZECH AND SLOVAK FEDERAL REPUBLIC (CSFR) dissolved into
separate republics on January 3, 1993. Domestic laws of the
former Czechoslovakia were not automatically transferred to
the new republics; rather, each republic must decide what
laws to adopt anew. However, both republics have agreed to
accept international agreements and UN commitments. The
appraisal given here was written prior to that separation and
discusses laws in operation on that date.
Money laundering does not appear to be of great concern in
the CSFR. Central Bank authorities fear possible large scale
investments by foreign organized crime groups, and are trying
to find ways to stem the influx of such money. The CSFR
Penal Code makes it a crime to help, hide or hinder
investigation into the origins of assets derived from
Many newly-founded import-export firms appeared in the CSFR
during 1992. Police are concerned that some of the foreign-
owned firms may be involved in money laundering and/or the
importing and exporting of precursor chemicals. One company
belongs to the brother of a Colombian cocaine kingpin; the
brother, who has been connected to bank accounts in the US,
also set up a forwarding company that attempted to ship 200
kilograms of cocaine from Czechoslovakia to the Netherlands.
The shipment was seized by Czech authorities.
Banking regulations require that financial institutions
record transactions of more than 100,000 Czechoslovak crowns
($3,500). The requirement, however, ends there, since
neither the federal nor republic government have offices to
record or analyze these large transactions to identify
possible instances of money laundering.
The Czechoslovak penal code allows confiscation of assets
derived from criminal activity, but there is no preemptive
element. A court must determine that a felony was committed
before the resulting assets can be confiscated.
HUNGARY, with the most advanced financial system in the
Central/Eastern group, has the most significant money
laundering problem. The financial system has been
infiltrated by Italian and other organized crime groups. An
aspirant to EC membership, Hungary is aware that anti-money
laundering legislation must be adopted in accordance with EC
directives, and, February 1993, hosted an FATF seminar on
money laundering for regulators, bankers, prosecutors,
investigators, and others, who received guidance on FATF and
EC regulations and their implementation. Hungary has issued
new banking regulations which, inter alia, require banks to
report suspicious transactions and maintain adequate records.
But a strong tradition of secrecy prevails, which pending
legislation must address. The FATF seminar concluded with
experts from eight FATF member nations offering formal
guidance to the major ministries on changes needed. The
seminar was attended by officials from Hungary, Poland, the
Czech Republic, Slovakia, Bulgaria, Romania and Albania.
POLAND has issued regulations requiring banks to report
suspicious transactions and maintain customers' identities
and other transaction data for five years. Poland has
drafted additional anti-money laundering legislation. In
March 1993, Poland hosted an FATF seminar, at which 40
experts from six nations offered formal and informal guidance
on the various aspects of money laundering controls.
A Polish banker reported that many banks were being used by
clients from the former Soviet Union and from West Africa to
deposit large amounts of hard currency. In one instance a
West African attempted to deposit nearly U.S. $1 million; the
transaction was refused by the bank.
RUSSIA AND THE NEWLY INDEPENDENT REPUBLICS are emerging as
significant money laundering concerns. All indications are
that Russian organized crime is making substantial inroads
into the Western European drug market. Easy access to Asian
heroin and hashish, worldwide criminal connections, and the
chaotic economic situation leave the door open for organized
crime to engage in international drug trafficking and money
RUSSIA is not considered an important financial center or tax
haven, but its reputation as a narcotics money laundering
center is likely to grow in the coming years, according to
estimates by the Russian government. In 1992, the security
functions of the former KGB were restructured, into the
Ministry of Security (MVD), which is charged with suppressing
drug trafficking, organized crime, and financial crimes. The
MVD strongly supports the enactment of anti-money laundering
legislation. The ministry is drafting laws to deal with this
issue, but because lawmakers have been addressing more
pressing matters, the MVD says it is unclear when such laws
will be enacted.
The MVD reports efforts by organized smuggling groups to set
up ties in Russia to launder drug money. Authorities' lack
of control of joint ventures and other private enterprises in
Russia as it moves toward a market economy hinders the
government's ability to control such activity. The MVD's lack
of money-tracing mechanisms compounds the problem.
The major Russian organized crime groups appear to be
integrating themselves into the global trafficking network.
They have taken advantage of the unstable ruble and the black
market to launder drug money. According to reports, rubles
are sold to South American drug dealers for hard currency at
black-market rates. The drug traffickers then purchase
commodities inside the Commonwealth of Independent States
(CIS), such as gold, oil, or diamonds, which are then sold on
the world market.
Russian lawmakers have taken few effective measures to combat
organized crime and drug trafficking, although legal
regulations have been put into place regarding asset seizure
and money laundering. However, the use of the telephone
intercept was undermined by a recent law. Russia initiated
new banking laws in 1991 which rescinded bank confidentiality
requirements and prohibited cooperative organizations, such
as political organizations and government agencies, from
operating financial institutions. Licenses are required for
foreign currency transactions.
AZERBAIJAN has not experienced significant money laundering,
largely due to the lack of an efficient commercial bank
system. However, money laundering is a reality but remains
virtually undetectable by authorities because the economy
operates largely on a cash basis in both dollars and rubles.
As a commercial banking system develops, enforcement experts
believe Azerbaijan can expect domestic and foreign
traffickers to launder proceeds there.
TURKMENISTAN's poor international transportation connections
and its undeveloped banking system make it a weak candidate
for either drug trafficking or money laundering. The other
NEWLY INDEPENDENT STATES are also not significant from a
money laundering perspective.
MIDDLE EAST: The Persian Gulf
GULF COOPERATION COUNCIL, a member of FATF, has six members -
- Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oman
and Qatar -- which have been working with the GCC on adoption
and implementation of FATF recommendations. An assessment of
their progress will be made during a GCC and FATF sponsored
seminar in May, 1993.
BAHRAIN is a significant Middle East financial center with an
open market economy and a government which seeks to eliminate
all impediments to growth. It is of medium significance in
terms of money laundering.
KUWAIT, a major financial center in the Middle East, is also
a potential money laundering threat. Subsequent to the
Persian Gulf War, the flow of capital bank into Kuwait forced
the banking system to become quickly operational. Due to the
intense redevelopment effort ongoing in Kuwait, rapid
transfers of large sums of money are not uncommon. Upheaval
and voluminous activity in Kuwait's financial sector may be
attractive to drug traffickers and money launderers who are
moving away from the tightening controls of European banks.
OMAN is not a money laundering threat. The Central Bank has
implemented regulations to combat money laundering in
compliance with FATF recommendations. The Central Bank has
also issued a number of directives which require banks to pay
special attention to transactions, and to account holders
from countries that do not adhere to strong anti-money
QATAR is not considered significant from a money laundering
SAUDI ARABIA is contemplating changes in its banking laws to
ensure that money laundering does not occur. Saudi Arabia
has agreed with FATF to conduct a seminar on money laundering
for the Gulf states on May 4-6.
UNITED ARAB EMIRATES (UAE) is a major financial center in the
Middle East. The UAE's open banking system and free currency
exchange make it attractive to international money launderers
and drug traffickers. The UAE has not met the goals and
objectives of the UN Convention with respect to money
laundering. For example, money laundering is not a criminal
offense in the UAE. Banks are not required to report
currency transactions to a central authority, although bank
officials have shown a willingness to inform authorities of
exceptionally significant transactions. Numbered bank
accounts are not permitted; banks are required to verify the
identity of account holders. Since bank secrecy is a custom
in the UAE, the Central Bank can subpoena records only
through a court order. The dirham is freely convertible. No
records are kept of currency exchange transactions. Due to
the high number of foreign guest workers in the UAE, currency
exchange houses are very active. They are licensed by the
Central Bank and subject to periodic inspection. In May
1991, the UAE Cabinet allowed offshore banks to operate as
tax shelters; final regulations were to have been issued in
1992 but were delayed.
The UAE's free port, Dubai, is a major gold market, and a
major center for gold smuggling throughout the Middle East
and Southwest Asia, which often involves drug proceeds
laundered by Indian and Pakistani traffickers. Nationals and
foreigners may purchase and sell gold in any form. Hawala
dealers with ties to the drug trade were involved with BCCI
in the UAE and laundered money through it.
OTHER MIDDLE EASTERN STATES
CYPRUS is used as a conduit within money laundering schemes
or transit point for drug money but is not intended as a
final destination of trafficker funds. Little money is
believed to be laundered in the domestic economy (due in part
to restrictions on foreign ownership of real property and
currency controls). The increased use of Cyprus in money
laundering operations is partially attributed to the
political situation of nearby Lebanon. In response to the
money laundering threat, the Central Bank of Cyprus advised
domestic and offshore banks to implement a "know your
customer" policy and also conducted a special survey of large
cash transactions at sixteen offshore banks.
EGYPT is a limited money laundering threat but liberalization
of monetary control laws and a long-established drug trade
make the country a potential money laundering center. Egypt
is neither a tax haven nor an offshore banking center.
Although numbered accounts are permitted, the Egyptian
Central Bank maintains fairly strict control over the banking
system to prevent abuses which might facilitate money
laundering. Bank secrecy laws stipulate that information on
accounts may be disclosed only with a court order. Egyptian
officials have the authority to seize "unexplained" assets in
criminal cases, whether drug-related or not. These assets
are retained for five years, after which they are returned,
provided the subject has not engaged in further illegal
IRAQ has been rendered an ineffective financial center and an
insignificant money laundering threat by war, economic
sanctions, and international isolation.
ISRAEL is considered a potential money laundering threat,
given the alleged links between Israeli organized crime
figures and drug money launderers. Money laundering is not a
crime in Israel. One money laundering organization which
included Israeli nationals operated out of New York City and
is known to have laundered over $20 million in drug proceeds
between 1991 and 1992.
JORDAN is not a significant money laundering threat. The
Central Bank of Jordan is continuing to ease restrictions on
foreign currency, which may increase the potential for
LEBANON's civil war and political instability have
substantially eroded the financial and banking systems.
Lebanon's extensive drug trade continues to raise concern
about money laundering. Lebanese drug traffickers operate
throughout the U.S. Lebanese drug proceeds are known to have
been invested in real estate in the U.S, including businesses
which are used as fronts. Drug money may also be entering
Lebanon through several African nations with loose banking
regulations. Some Lebanese drug money flows through Europe,
involving Lebanese-owned jewelry stores, gem import/export
businesses and other enterprises which have been identified
as money laundering fronts.
SYRIA is not a money laundering country, due to its strict
foreign exchange controls and policies prohibiting foreigners
from holding Syrian bank accounts. The country, however, has
no specific laws to combat money laundering.
BANGLADESH has a primitive banking industry and is not a
significant money laundering threat. However, the banking
sector has come under increasing scrutiny in recent months.
The Banking Companies Act of 1991 mandated improved oversight
of the banking system, but the Central Bank failed to do so.
Finance Minister Saifur Rahman has criticized bankers for
inefficiency and dishonesty. In April, 1992, the Central
Bank ordered the closure of two investment banks for money
laundering and illegally operating and lending.
Investigations are continuing into other investment
INDIA is increasing in significance from a money laundering
perspective. Raids conducted in August, 1992 against a
Colombian money launderer working for the Cali and Medellin
cocaine cartels revealed that drug money was being deposited
in an account in Punjab. A multilateral effort was recently
initiated to target a well-known Colombian cocaine kingpin
who has used at least one bank account in India to facilitate
the transfer of funds from the U.S. Although there have been
no arrests/prosecutions for money laundering, investigation
of a major stock market scandal in Bombay has developed leads
indicating possible ties to narcotics-related activities.
In general, India is meeting the goals and objectives of the
UN Convention with respect to adopting money laundering
legislation, but enforcement needs improvement. Money
laundering is a crime. Indian banks are required to maintain
records on large currency transactions that are over 20,000
rupees (approximately $800), and to report them to the
Central Bank. However, reliance on manual bookkeeping for
some 60,000 branches and loose accounting practices have
created abundant opportunities for fraud. The Central Bank
created a separate bank supervising board in March 1993 to
address the widespread perception that bank supervision is
weak and ineffective.
The major difficulty law enforcement agencies face in the
successful pursuit of financial investigations is that the
GOI asset seizure law is a criminal statute requiring a
criminal conviction to effect asset forfeiture. The law
contains so many loopholes and requires so many years to
prosecute as a criminal matter that U.S. officials consider
it ineffective. In March, 1992, duties on imports were
reduced, and a variety of currency and foreign exchange
requirements were liberalized. Restrictions on gold and
silver imports were also relaxed. In September 1992, the
Indian Government announced that foreign institutions will be
allowed to invest directly in all stock market instruments,
operate foreign currency accounts, and convert funds to
rupees at market rates.
"Hawalla," the Indian form of an underground banking system
traditional throughout the Middle East and Asia has links to
drug trafficking. With the easing of foreign exchange
controls and the unified exchange rate, Hawalla activity has
apparently slowed. There has been a 40% increase in
remittances by nonresident Indians through banking channels.
Indian Customs reports a recent increase in large currency
importations. Indian law requires declarations for imported
currency exceeding U.S. $10,000. However, records are
maintained by hand and investigations rarely follow. While
the long-term effects of India's liberalization measures
remain to be seen, the Hawala system will continue to be used
by persons involved in such illicit activities as tax
evasion, drug trafficking, money laundering, and arms
smuggling. Invoice manipulation is pervasive and is used
extensively to launder illicit proceeds.
NEPAL is not an important regional financial center but links
may exist between drug traffickers in Nepal and money
launderers in traditional centers like Hong Kong, Singapore,
and Bombay. The GON is committed to maintaining control on
the movement of hard currency in and out of the country;
however, in practice, all hard currencies are available on
the black market in Kathmandu. Banks inform the Rastra
(central bank) of all foreign exchange transactions through a
regular reporting system, but there are no laws or penalties
for money laundering, nor has the government mounted any
investigations. Nepal has yet to apply its asset seizure law
but anticipates doing so as the narcotics enforcement unit
increases the sophistication of its investigations.
PAKISTAN is a significant money laundering concern, primarily
due to its prominence in the production and trafficking of
heroin and hashish. Pakistan does not yet meet the goals and
objectives of the UN Convention. While Pakistan is making
understandable efforts to channel funds from underground
currency movement systems into mainstream banking, its
relaxation of currency controls and other steps, which can be
exploited by drug traffickers, combined with its failure to
update its narcotics control legislation and practices,
heightens the potential for money laundering.
Undercover investigations into Pakistani drug traffickers and
money launderers have revealed the international scope of
their operations. Pakistani heroin networks have laundered
their profits through banks throughout the United States and
Middle Eastern nations.
Strict hard currency laws inhibit the outward flow of cash
but Pakistanis use the worldwide underground networks, known
as "Hundi" in Pakistan, to overcome outgoing currency
exchange restrictions, evade taxes, or move their illicit
proceeds. One official estimates as much as U.S. $2 billion
a year flows through Pakistan's Hundi system, and a
significant part of this money may be derived from drug
trafficking. Gold smuggling is also a means of laundering
money. The Hundi system is a major target of recent foreign
exchange reforms which are designed to bring the money
flowing through the black market and the Hundi system into
the formal economy. The GOP has liberalized foreign currency
restrictions and gold import policies, and launched various
bond schemes. Pakistanis may now negotiate foreign currency
transactions and remit offshore profits made with foreign
exchange outside of Pakistan. In addition, Pakistani banks
offer foreign currency accounts that guarantee complete
secrecy. The GOP is encouraging its banks with offices in
the Middle East to establish money changing operations in
countries with large Pakistani populations, who might
otherwise use the Hundi system. An estimated US$1 billion
has flowed into Pakistan since the foreign exchange controls
In an attempt to attract foreign capital, Prime Minister
Sharif announced in March, 1992, the issuance of interest
bearing bonds, denominated in US dollars. The bonds were
advertised, "No questions asked about Source of Funds." Nor
was the identification of the purchaser required. The GOP
admitted the bond scheme was an effort to make "black" money
"white." Under pressure from the international community,
the GOP withdrew the bond issue five days after the
Money laundering is not a criminal offense, and there have
been no arrests or prosecutions for money laundering. Under
1991 regulations, banks are no longer required to maintain
records of large currency transactions, nor to report the
identity of customers engaging in large cash transactions,
and controls on the amount of currency moving in or out of
Pakistan were removed. Foreign exchange assets in the
Pakistani banking system have increased significantly since
the new foreign exchange regime came into being. According
to some sources, these assets may have grown by as much as
400 percent. GOP officials have recognized the money
laundering potential of these regulations and have begun to
consider ways of remedying this defect, but no plans exist at
present. "Prudential banking regulations" exist, but do not
adequately address the problem. These regulations do not
apply to exchange houses, or to the informal financial
The law provides for forfeiture of drug-related assets but
requires a life sentence before being invoked. An amendment
under review would lower the minimum sentence triggering
forfeiture from life to two years, whether the conviction is
handed down in Pakistani or foreign courts.
The United Arab Emirates (UAE), particularly Dubai, is a
widely-used repository for Pakistani drug proceeds. In
Pakistan, invoice manipulation can benefit drug traffickers,
as it allows them to defraud the government, which offers
export incentives. Hundi transactions and invoice
manipulation have been used to launder money through Dubai.
SRI LANKA is not a significant money laundering country. The
government, however is seeking to attract capital from Hong
Kong and other East Asian countries by offering numbered
foreign currency bank accounts. There are limited controls
on the amount of currency which can be brought into or out of
the country. There are no money laundering laws but a
forthcoming master plan is expected to address money
laundering; however, bank secrecy regulations remain
obstacles to such legislation. Money laundering
investigations, due diligence conventions and asset seizure
are uncharted territories for Sri Lankan law enforcement
SOUTHEAST ASIA AND THE PACIFIC
AUSTRALIA has taken a leading role in international efforts
to encourage governments of financial center countries to
adopt more effective legislation. It currently holds the
Presidency of the Financial Action Task Force, and hosted a
plenary session of FATF which was also attended by
governments from Southeast Asia and the Pacific region.
Australia requires centralized reporting of significant
currency transactions, mandatory reporting of suspicious
transactions, and mandatory reporting of currency imports and
exports. Its data center, AUSTRAC, like the U.S. FinCEN,
assists investigations by tracing accounts and transactions
and provides analysis and intelligence. Australia is the
first country to develop a system of centralized monitoring
and reporting of wire transfers. Like its other reporting
systems, the wire transfer regulations were adopted in
consultation with the banking community, which has been
supportive of Australia's diverse program. Parliament is
evaluating the AUSTRAC system during 1993.
Australia passed federal legislation in November 1992 which
enabled the government to ratify the 1988 UN Convention.
Australia already had in place asset forfeiture laws and
currency transaction reporting legislation. Asset forfeiture
is dependent upon conviction for a narcotics crime.
One of the largest cocaine seizures in Australian history
occurred in September 1992. One hundred and twenty kilograms
of cocaine were confiscated in Sydney. Two fugitives who
were the target of a major money laundering investigation and
several South Americans were arrested. One of the fugitives
was considered by Sydney area enforcement authorities to be a
major cocaine distributor and his associate was known to have
assisted him in laundering U.S. $500,000 out of Australia to
BURMA (MYANMAR) drug traffickers shun the government banking
system, as do gem, gold and other smugglers, relying instead
on the extensive money exchange network known as the ethnic
Chinese underground banking system (CUBS). Significant money
laundering takes place through smuggling of precious gems and
gold into and out of the country from Thailand and India, as
well as drug trafficking. Although money laundering is
widespread (the open-market exchange rate is 20 times the
official one), most profits from Burma's drug trade are held
outside the country.
On January 7, Burma's ruling State Law and Order Restoration
Council promulgated a new drug law which closes several gaps
in the 1974 drug legislation, particularly with regard to
money laundering, asset seizure, financial investigations,
corruption and conspiracy. The new law, which is intended to
comply with the UN Convention, criminalizes various aspects
of money laundering and financing of narcotics activities as
well as "constructive possession." Previous laws did not
deal specifically with money laundering, but Burma could
successfully prosecute money laundering suspects for non-
payment of taxes. There is little or no domestic capacity
for carrying out sophisticated financial investigations, and
the test now is for Burma to enforce the law in the spirit of
Narcotics officials are looking for money to combat their
country's drug problem. Their suggestion however, was to
have other countries who have seized the assets of convicted
drug traffickers channel them back to Burma for their
country's use. Instead, it is believed that an international
asset sharing agreement which would allow the GOB to share in
assets and proceeds from drug investigations in which they
participate would be more appropriate. The GOB has also been
unwilling to acknowledge the existence of a valid extradition
treaty with the United States and this issue hampers DEA's
ability to cooperate in pursuit of narcotics traffickers.
CAMBODIA is not a financial or money laundering center.
CHINA does not have a significant money laundering problem,
but PRC officials realize they need to address the financial
problems which the growing narcotics trafficking situation is
creating. Most drug profits seem to be smuggled out of China
for placement into the financial systems of other East Asian
and Pacific governments. The National Narcotics Control
Commission noted in a June 1992 symposium that among its
accomplishments was the increased cooperation with
international anti-drug agencies and the efficiency in
processing drug-related criminal cases.
Chinese criminal law is aggressively administered and
punishments, including confiscation of property and asset
seizure, are enforced. There are no known legal
technicalities drug traffickers could use to shield assets.
The Chinese criminal code allows the confiscation of part or
all of the property personally owned by a person convicted of
a crime. Laws relating to "crimes of undermining the
socialist economic order" list confiscation of property as
one of the punishments for smuggling. The 1990 drug law
lists confiscation of property as a penalty for trafficking
in drugs. In October 1992, the National Narcotics Control
Commission requested a copy of U.S. laws concerning the use
of forfeited assets to combat drug trafficking. There are
indications that China may implement similar laws.
HONG KONG is a major international financial center used by
drug traffickers to launder proceeds in both the banking and
non-bank systems. The Hong Kong government, however, has
taken aggressive steps to curb drug money laundering. The
territory, a member of FATF, has expressed its intention to
comply with as many of the FATF recommendations as possible
before the territory is evaluated by FATF in April 1994. The
UK ratified the 1988 UN Convention in June, 1991, with
applicability extending to Hong Kong as soon as the territory
has the complying legislation in place. Compliance with the
Convention and FATF Recommendations should result in changes
in HK laws and regulations, e.g., with respect to currency
The 1989 Drug Trafficking (Recovery of Proceeds) Ordinance
empowers the government to trace, freeze and confiscate
proceeds of persons convicted of drug trafficking offenses.
It provides for enforcement of confiscation orders submitted
by designated foreign jurisdictions, including the US. The
basis for U.S. designation is a bilateral executive
agreement, which contemplates sharing of assets. The HK
Court of Appeal has upheld the freezing and forfeiture of
assets based upon U.S. civil forfeiture proceedings.
The HKG, which currently retains all assets seized in Hong
Kong, is considering a U.S. request involving the forfeited
assets of accused drug trafficker Law Kin Man, who was
extradited to the U.S. in late 1992 and faces prosecution in
the Eastern District of New York. Since enactment of the
ordinance, about $40 million in drug-related assets have been
frozen at the request of the U.S. and over $18 million has
been confiscated by Hong Kong authorities pursuant to U.S.
forfeiture orders. A wide variety of assets can be seized,
including bank accounts, cash, jewelry, cars, and real estate
as well as legitimate businesses used as fronts. Hong Kong
created two new financial investigation groups, one police
and the other customs, to enforce the ordinance.
Section 25 of the 1989 Ordinance was intended to criminalize
money laundering. That section defines the offense as
"assisting another to retain the benefit of drug
trafficking." Under the ordinance, the authorities have
arrested people for assisting another to retain the benefit
of drug trafficking (activities which are considered as money
laundering in the US). However, a High Court decision on
August 4, 1992, ruled that this provision was inconsistent
with the presumption of innocence contained in the bill of
rights, passed by the legislature in June 1991, and Section
25 of the 1989 Ordinance was repealed. The HKG, which takes
the position that this decision does not preclude prosecution
of new money laundering cases, has nevertheless suspended
prosecution of new cases until this matter is adjudicated.
It has appealed this decision to the UK Privy Council, which
is scheduled to hear the case on March 26, 1993.
A major consequence of the August 4 ruling has been the
dramatic drop in the number of reports from banks despite
government assurances that the ruling did not affect the
provision which protected them from civil liabilities arising
from making such disclosures. Compared to 245 reports from
January 1 to August 4, 1992, involving $8.8 million, the
number plummeted to less than 20 from August 4 to early
December, 1992. The authorities can still obtain information
but only after obtaining a court order for a search warrant.
Pending the Privy Council ruling, a compromise has been
worked out with the banking association. Under this
arrangement, banks will maintain an internal record of all
suspicious transactions since August 4. If the Privy Council
decision should be favorable to the government, then the
banks will make the reports available on a retroactive basis.
Financial institutions are not required to maintain records
of large currency transactions and there are no currency
controls. The HKG and the bankers believe it is not
desirable to have any requirement to maintain records of
and/or report large currency transactions. However, banks
and deposit-taking companies are required under the 1989
ordinance to report suspicious drug-related financial
transactions. The Association of Banks and Deposit-Taking
Companies Association issued guidelines, modelled closely on
a statement by the Basel Committee, to assist banks to
identify and report such transactions. Hong Kong is also
focusing on ways other parts of the regulated financial
sector - securities and insurance - will similarly report on
A far more difficult problem is how to bring the unregulated
sector including money changers, gold shops, and money
lenders into the reporting network, which conducts much of
the drug financing and money laundering.
JAPAN may be more involved in money laundering than available
records would indicate. Until the Diet passed financial
control laws in October 1991, which became fully effective
one year later, there were virtually no legal tools available
to Japanese narcotic enforcement officers to seize funds
acquired through drug trafficking. Bank secrecy statutes
made it extremely difficult for law enforcement agencies even
to examine drug traffickers' financial institution records.
As a consequence, there have been very few investigations
which can support or deny the belief that a great deal of
money laundering takes place in Japan.
DEA Tokyo believes that a significant amount of money
laundering has been occurring in Japan for years. The
87,000-member organized crime syndicates (boryokudan) are
likely to have taken advantage of the wide-open banking
system. With approximately 40 percent of their illicit
income estimated to be derived from drug trafficking, it is
improbable that they would not exploit the opportunities
which existed before adoption of these controls, and may have
layered their funds to prevent subsequent detection.
U.S. officials believe South American cocaine cartels have
continued establishing a presence in Japan over the past year
as they look to expand their markets into the Far East. DEA
has evidence that Colombian cocaine cartels have been using
Japanese money launderers who operate front companies and
import/export businesses to launder cocaine money.
The 1991 Currency Transaction Reporting laws are not
difficult for money launderers to evade. Banks must report
transactions of more than approximately $240,000 for single
domestic transactions and $34,300 for overseas remittances.
These new laws, while not too restrictive, do help to conform
Japan's laws to the 1988 UN Convention which Japan has
KOREA is not a major money laundering country. There are no
known cases of money laundering, which is not illegal. There
are, however, strict controls on the transit of large sums of
money. Tax evasion is another means of prosecuting a person
for money laundering. Given its bank secrecy laws, the
ability to open bank accounts with third party or fictitious
names, and the amount of methamphetamine produced for export,
Korea would seem to be a relatively easy country through
which to launder drug proceeds. Financial liberalization
measures currently underway will reduce restrictions on the
banking system, allowing banks to sell gold as well as
currency, and make capital investments in the leasing
industry. Foreign exchange services, however, will not be
permitted by most domestic banks. The foreign exchange
control laws are strict and could be used in an anti-money
LAOS is not a place where one would consider laundering money
because large transactions would attract the sort of
attention money laundering is meant to avoid. Laos is not an
important financial center, and is only now establishing a
commercial banking system. There is no non-bank financial
system. Several Thai banks may begin branch banking activity
in 1993. The Lao kip is not convertible and the GOL
restricts its export. There are no specific laws on the
laundering of currency as none have been considered necessary
to date. The GOL does not require records of large currency
transactions. There are also no special efforts to interdict
money launderers. The legal system is also in an early stage
of development. Lao law provides for asset seizure, but none
has been reported.
MALAYSIA is becoming more important as a financial center but
is not currently significant as a money laundering center.
It has an advanced financial infrastructure and active
banking industry. In 1990, Parliament created a tax haven on
Labuan, an island off the coast of the East Malaysian state
of Sabah. Malaysia could become a significant money
laundering center, should the Labuan tax haven become a major
financial center. There are indications that other financial
organizations, especially in Penang, may be laundering funds
from narcotics trafficking.
Malaysia has limited asset seizure and forfeiture laws.
There are no financial reporting requirements, although
legislation is being considered. Because domestic laws have
not been brought into compliance, Malaysia has not yet
ratified the 1988 UN Convention.
Malaysian law provides police investigators with full access
to bank records, notwithstanding bank secrecy laws. It also
specifically permits sharing investigatory material with
foreign law enforcement authorities. The police have pursued
money laundering and asset seizure cases and cooperated
closely with DEA and other foreign enforcement agencies.
Police have seized traffickers' assets worth nearly $2
NEW ZEALAND is not a significant location for money
laundering, which is not a criminal offense. Banks monitor
large currency transactions but the reporting requirements
are such that the information is useless to law enforcement
officers attempting to identify and control transactions by
narcotics traffickers. Money laundering legislation is in
the preliminary drafting stage and enactment is expected to
face considerable resistance by the banking industry. The
GNZ relies on conspiracy laws to control money laundering.
There have been no money laundering prosecutions. On July
1, 1992, the Proceeds of Crime Act authorizing asset seizure
and forfeiture went into effect but it has not been tested in
THE PHILIPPINES is not significant as a money laundering
center. While there have been only a few reports of money
laundering in the Philippines, mostly related to drugs
shipped to Australia, tax evasion is considered a way of
life. Residents conceal their true worth through shell
companies, hold dollar accounts under false names and also
hold foreign bank accounts (usually in Hong Kong). Asset
forfeiture legislation allow assets to be seized only if
found with the drugs or in a conveyance. The Philippines has
strict bank secrecy laws which effectively prevent
criminal/civil investigations of narcotics-related assets.
Local officials have not developed any investigative tools
with which to conduct financial investigations due to the
lack of more effective asset forfeiture or money laundering
SINGAPORE is a major financial center and ranks among the top
five foreign exchange centers in the world. The presence of
dozens of offshore banks, the stability of the economy and
government, bank secrecy and the strength of the Singapore
dollar would appear to make this an attractive target for
money launderers. U.S. authorities suspect that significant
narcotics money laundering has occurred but the Monetary
Authority of Singapore (MAS) disputes the contention.
The recently-passed Drug Trafficking (Confiscation of
Benefits) law criminalizes money laundering and lifts certain
bank secrecy restrictions regarding financial information.
This legislation should establish guidelines for U.S. and
other countries to access bank account information. The U.S.
is keenly interested in negotiating an agreement with
Singapore, in response to its new law.
The legislation, based on the UK and Hong Kong laws, provides
for freezing of assets and ultimate confiscation; enforcement
of foreign forfeiture orders, potentially including civil
forfeiture orders; and seizure of assets attributable to
drug-related criminal conduct occurring in and outside of
Singapore. The law presumes that assets earned or acquired
six years before conviction on a drug trafficking offense
were derived from drug trafficking. Perhaps most significant
from the U.S. perspective, the legislation lifts restrictions
concerning financial information even if the criminal
investigation is initiated outside of Singapore.
The new law enables enforcement agencies to freeze and
confiscate assets obtained as a result of drug trafficking
activities, though authorities will be required to seek a
court order at each stage of their investigation. The GOS
will only be able to obtain the forfeited properties of a
person who has been convicted of a drug offense. The
government's concern is to ensure this law will not infringe
upon the confidentiality of their depositors, investors and
Although Singapore has not yet ratified the 1988 UN
Convention, the legislation authorizes bilateral agreements
or treaties for facilitating mutual assistance in drug cases
and criminalizes the laundering of drug proceeds in
conformity with the Convention. Singapore has shown a
greater willingness to cooperate in multilateral efforts to
combat money laundering. Singapore is a member of FATF and,
in April, will host the FATF/Commonwealth Secretariat seminar
on money laundering for policy makers from Asian and Pacific
TAIWAN is not a major transit point for money in the region,
although funds entering Taiwan can be transferred from the
official banking system to the traditional but unofficial
remittance system and vice versa, and it is believed that
narcotics proceeds from the Asian heroin trade have been
laundered through both systems. Taiwan is neither an
important tax haven nor an offshore banking center.
Taiwan is not a signatory to the 1988 UN Convention, and
therefore has not adopted formal articles of ratification.
However, money laundering is a criminal offense. Banks in
Taiwan are required to maintain records of financial
transactions in excess of one million new Taiwan dollars
(exchange rate as of December 11 is NTD 25.46= $1.00),
though there is no central authority which monitors such NTD
transactions nor any requirement that banks report such
transactions. Taiwan law places a ceiling of five million
U.S. dollars or the equivalent in other foreign currencies,
per entity and per annum, on all outward and inward
remittances of foreign currencies, and banks that deal in
foreign currencies are required to report foreign exchange
transactions to the central bank in excess of $ 500,000.
Banks in Taiwan are required to report suspicious financial
transactions, but there are no official guidelines which
define suspicious transactions.
The Ministry of Justice Investigation Bureau is considering
drawing up legislation which addresses money laundering and
in November 1992 asked DEA for any model legislation relative
to this subject as well as information on methods of
A Memorandum of Understanding (MOU) on judicial assistance
was signed between the American Institute in Taiwan and the
Coordinating Council of North American Affairs in October,
1992, and calls for Taiwan to allow law enforcement officials
to testify and present evidence at U.S. criminal trials.
THAILAND is becoming increasingly important as a money
laundering center, and U.S. officials believe its full
potential is only now being exploited. Thailand serves as a
conduit for funds being transferred to Hong Kong, Singapore,
Taiwan and Malaysia, all of whose currencies are more readily
convertible than the Thai baht. Thai authorities believe
that narcotics-related financial transactions may be a much
larger problem than previously perceived -- a concern
reinforced by recent revelations that certain local
commercial banks were helping suspected drug traffickers to
launder money. Thailand permits numbered bank accounts and
the use of nominees is a common practice. While Thailand
requires declarations to Customs by persons entering the
country with more than $10,000 in their possession, the
regulation is only sporadically enforced and no central
registry is maintained.
Thailand does not have anti-money laundering laws, but the
Parliament passed narcotics conspiracy and asset forfeiture
laws and is in the process of ratifying the MLAT with the US.
Modeled on similar laws successfully enacted in the U.S., UK
and several other countries, the new asset seizure law
stipulates the burden of proof rests with the suspects who
will be required to prove their assets have been acquired
through legal means. All assets can be seized as soon as the
offenders are apprehended and will go to the state for use in
The law also enables law enforcement officials to ask
commercial banks and financial institutions to cooperate in
tracing the assets of suspected and convicted traffickers by
releasing financial records, and requiring individuals who
deposit large sums of cash to report sources of income.
However, financial institutions are not obligated by law to
cooperate and many have chosen not to out of fear of losing
accounts and ensuing legal action by their customers.
Narcotics control officials are reluctant to proceed with any
new anti-money laundering measures after encountering strong
opposition by various groups to the asset forfeiture and
narcotics conspiracy law before its introduction. However, a
senior U.S. Treasury official met with Thai officials in
Bangkok in September 1992, and representatives of the Central
Bank, ONCB and the Permanent Secretary for Finance declared
their readiness to address the money laundering issue and
seek enactment of needed laws.
Thailand has very stringent bank secrecy laws, and
confidentiality is strongly protected. Laotian officials
tried in 1992 to gain access to bank records to trace Laotian
depositors, but the courts rejected the request.
The Thai banking system is undergoing a major change. In
September 1992, the government authorized creation of a
Bangkok International Banking Facility (BIBF) which will
permit foreign and local banks to set up offshore banking
units. The short-term objective is to channel investment
funds to Cambodia, Laos and Vietnam, which are emerging from
long periods of political and economic stagnation. A longer
term objective is to make Bangkok into a regional financial
center. The offshore banks will be allowed to take deposits
and borrow money from abroad in foreign currencies and make
loans in foreign currencies to Thai and overseas borrowers.
The units can also handle overseas trade and foreign exchange
transactions, and guarantee foreign currency loans extended
to overseas borrowers. Until this new law was passed,
Thailand had not allowed new foreign banks into the country
for many years.
VANUATU has been a major offshore financial center for more
than 20 years, but there is no evidence of significant money
laundering. It has strict bank secrecy provisions and no
foreign exchange controls. Offshore investors deal through
more than 100 foreign banks from Thailand, Hong Kong, France
and the UK, as well as from South American countries.
PAPUA NEW GUINEA, WESTERN SAMOA, FIJI, and other Asian and
Pacific countries were reviewed but are not considered
important financial or money laundering centers.
ALGERIA has liberalized measures in force, but the banking
sector is still largely dependent on the state, making the
financial climate not conducive to an influx of foreign
capital. Currency exchange restrictions also act as a
disincentive to capital inflows.
GHANA is not an international money laundering center.
COTE d'IVOIRE (Ivory Coast) is an important financial center
in West Africa and may be a transit and conversion point for
money laundering. Cote d'Ivoire has made money laundering a
criminal offense. Banks are required to maintain records on
large currency transactions and to report the data to the
GOCI. Financial institutions are required to report
"suspicious" transactions. Cote d'Ivoire has asset seizure
laws but the modalities for their application have yet to be
determined. The law covers vehicles, cash, and other
property, and allows the GOCI to freeze bank accounts.
Legitimate businesses used to launder drug money can be
seized after a conviction. There are controls on the amount
of money that enter or leave the country. Individual bankers
are not accountable for the activities of their institutions.
Money laundering controls are not applied to non-banking
institutions. There were no arrests or prosecutions for
money laundering in 1992. Although Cote d'Ivoire is moving
toward fulfilling the UN Convention's goals and objectives on
money laundering, it will not be in full compliance until the
gaps noted above are closed.
KENYA.The money flow associated with narcotics activity in
Kenya involves both commercial banks and wire transfers, and
the hawala system operated by ethnic Indians. Most illicit
money is transferred out of the country through the hawala
system. Much of the money is deposited into banks in the UK.
MAURITIUS is concerned about the potential for money-
laundering in the nascent off-shore banking industry and has
assigned a high priority to obtaining foreign assistance for
monitoring such activities and developing legislation for
preventing abuse of the banking system.
MOROCCO, which expressed interest in working with FATF on
anti-money laundering programs during a meeting in Paris last
November, agreed with the Commission of the European
Communities last May to establish a joint narcotics experts
group in Rabat to examine methods of expanding Morocco's
anti-drug efforts. Both moves, as well as the ratification
of the UN Convention, are part of Morocco's intensified
narcotics program begun in 1992.
The networks that export hashish repatriate profits to
Morocco in the form of contraband goods and electronic
equipment. Profits are also invested in businesses and real
estate in Northern Morocco, or banked. The volume of bank
deposits in cities like Tangiers and Nadour in the North are
reportedly far greater than those which would be commensurate
with the level of economic activity in the region. Like many
nations, Morocco has a forfeiture law but it is limited to
those instruments used in the commission of a crime. Thus if
there are any seizures of assets involved in a drug case it
is usually only seizure of the vehicles used to transport the
drugs and the proceeds go into to the national treasury.
There is no real seizure of asset legislation.
There is no evidence that the financial system of Morocco is
used to launder drug money. Officials are concerned about
European drug proceeds transiting Morocco or being
transshipped through currency exchange houses. There have
been currency exchange violations: in 1990 Moroccans
convicted for exchange violations were using banks in
Switzerland and the Bahamas. There is not total bank
secrecy, for Moroccan law permits designated Moroccan
Government officials access to bank records for investigative
purposes. There now is discussion about establishing
offshore banking in Morocco, which could increase the
potential for money laundering.
NIGERIA is not currently an important regional or
international financial center. Nigerian drug traffickers
use the country's financial system to convert drug proceeds
into naira and to launder these funds for use elsewhere.
Moreover, the influx of drug money following the Nigerian
drug trade gives rise to the possibility that Nigeria could
become a more important money laundering center. Business
fraud and financial swindles are serious problems in Nigeria
and affect perceptions of business practices and financial
There are no laws governing the movement of hard currency
into Nigeria nor the departure of hard currency. Once a bank
account has been established in Nigeria, deposits of any size
can be made with no questions asked. The government can
freeze bank accounts and seize assets, but only subsequent to
a conviction. Even though legal mechanisms are in place to
combat money laundering, no attempt has been made to enforce
Nigerian residents can maintain foreign currency denominated
domiciliary accounts at domestic banks, and need not disclose
the source of funds. A large number of non-bank financial
institutions, including finance houses, mortgage banks and
others, perform many of the functions of banks but are not
subject to the same level of oversight from government
authorities. Nigeria also has a network of licensed foreign
exchange bureaus authorized to trade in foreign currency
notes and traveler's checks. Banks, non-bank financial
institutions, and exchange bureaus are all susceptible to
drug money laundering.
During the summer of 1992 a Nigerian heroin trafficking group
attempted to use banks in Bulgaria to wire U.S. $6.1 million
from Nigeria through Bulgaria to the US. The money never
entered the Bulgarian financial system because the banks were
much slower than in Western Europe to clear the transactions,
and the Nigerian was arrested by Bulgarian authorities.
The national drug law enforcement decree bars willful
attempts to disguise the nature, source, location, ownership,
or control of proceeds from narcotics trafficking, as well as
the international transport of funds derived from or used in
narcotics trafficking. Violation of the decree is a criminal
offense, with stipulated penalties of up to 25 years
imprisonment and heavy fines. However, there have been no
prosecutions under this authority.
There are regulations calling for the reporting of large cash
transactions by banks, but enforcement of this rule, which
was introduced during a currency reform period and was not
directed at money laundering, appears to have lapsed in
recent years. One major constraint on attempts to monitor or
control money laundering is that Nigeria lacks an effective
oversight mechanism for the banking system. While the import
or export of Nigerian currency is prohibited, except in token
amounts, there are no rules on the import or export of
foreign currency. Incoming travelers are supposed to declare
the import of foreign currency in amounts of $ 5,000 or more,
but this requirement is not enforced. There have been no
arrests or prosecutions for money laundering in Nigeria.
There is no legislation in place regarding seizure or
forfeiture of assets of narcotics traffickers, but new
legislation is under consideration.
SENEGAL is not a major money-laundering center.
BURKINA FASO, CHAD, ETHIOPIA, THE GAMBIA, LESOTHO, SOUTH
AFRICA, SUDAN, TOGO, TUNISIA and ZIMBABWE were reviewed, and
are neither important financial nor money laundering centers.
[EDITOR'S NOTE: Charts referenced to in brackets [ ] are
available only in hard copy of report.]
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