UN RELEASES REPORT ON FINANCIAL HAVENS, BANK SECRECY AND MONEY-LAUNDERING19980608 NEW YORK, 8 June (Office for Drug Control and Crime Prevention) -- Financial havens and bank secrecy are a "tool kit" for money launderers, states a new report commissioned by the United Nations Office for Drug Control and Crime Prevention, which advocates global action to reduce the ability of criminals to hide illegal profits. The 118-page preliminary report, "Financial Havens, Banking Secrecy and Money-Laundering", released at the Drug Summit, says most money-laundering schemes involve the use of financial havens.
Finding, freezing and forfeiting criminally derived incomes and assets have been made more difficult during recent decades by the dollarization of black markets, financial deregulation, the progress of the Euromarket, and the proliferation of financial havens, the report states.
The offshore financial world is a "Bermuda triangle" for the investigation of money-laundering, according to the report. "Money trails disappear, connections are obscured, and investigations encounter so many obstacles that they are often abandoned." The annual turnover from drug trafficking is estimated at $400 billion. However, law enforcement efforts recover only $100 million to $500 million each year.
Advances in technology and communications have made tracing money more difficult. About $2 trillion is moved through wire transfers each day. Citing a "blurring of frontiers between legal and illegal economic activities", the report points out that criminal money is usually held by corporations rather than individuals, and that the most important obstacle to investigations may be corporate secrecy laws. Shell companies are used in virtually all money- laundering schemes because they offer complete anonymity to owners. In many jurisdictions, they are not required to keep books or records.
Anti-money-laundering efforts need to pierce "the combination of rapid and largely anonymous transfers and protective destinations", the report states. "What started as a business to service the needs of a privileged few has become an enormous hole in the international legal and fiscal system." Proposals include tighter regulation of offshore banking and casinos, more efficient exchange of financial information between countries, improved training for financial investigators, increased controls over international business corporations and specially designed trusts, and a possible international convention on all outstanding privacy issues, including electronic information exchange and banking privacy.
Money-laundering is one of the key issues on the agenda of the special session of the General Assembly on the world drug problem being held from 8 to 10 June. In 1997, the Office for Drug Control and Crime Prevention in Vienna launched a Global Programme against Money-Laundering to help coordinate international efforts.
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