Panel Names 15 Locales as Abettors of Money Laundering

In an effort to create standards of good conduct for the world economy, an international task force on Thursday issued the first list of countries and territories--ranging from Caribbean islands to Russia and Israel--that it accuses of facilitating money laundering.

“In this globalized world, it is so easy to move money around from one country to another,” said Gil Galvao, a central banker from Portugal who is the panel’s president. “If you lose the ability to trace the money, the fight against money laundering will be impaired.”

The Financial Action Task Force on Money Laundering used 25 criteria to determine which countries engage in “detrimental rules and practices which impede international cooperation in the fight against money laundering.”

Suspect measures and actions include the absence of banking regulations, the existence of anonymous accounts, secrecy provisions that cannot be lifted even for criminal investigations, and the lack of legislation to outlaw the laundering of proceeds from other serious crimes.

The countries and territories singled out by the task force, which is linked to the 29-nation Organization for Economic Cooperation and Development, or OECD, are: the Bahamas, Cayman Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, Nauru, Niue, Panama, the Philippines, Russia, St. Kitts and Nevis, and St. Vincent and the Grenadines.

In findings released here at a news conference Thursday, the 15 areas came in for varying degrees of criticism. The government of the Cook Islands, a South Pacific archipelago and dependent territory of New Zealand, possesses “no relevant information” on the estimated 1,200 international companies registered there, the task force said in its report.

In contrast, though Israel lacks specific laws against money laundering, its parliament is expected to pass legislation by the end of July, the task force found. But even then, the panel said, there will be inadequate provision for cooperation with the financial intelligence units of other governments.

The list is one of the mechanisms being developed by international institutions to foster standards for the increasingly interlocked and fast-moving global economy. Next week, the Paris-based OECD--which functions as a super think tank for most of the world’s wealthiest countries--is scheduled to publish another roster of countries that it has determined act as “fiscal paradises” for people seeking to avoid paying income taxes.

“Tax havens hurt honest taxpayers,” Amy L. Bondurant, U.S. ambassador to the OECD, said Thursday. “They allow others to hide their revenues. They distort capital flows.”

The U.S. Treasury estimates that Americans have $1 trillion in offshore accounts. Those numbers have increased by 1,400% in the last 15 years, the OECD said.

In another bid to devise universal rules of the road for governments and businesses, the U.S. and the other OECD members in 1997 agreed to make it a criminal offense to offer bribes to foreign public officials to obtain contracts. According to Bondurant, 22 countries have enacted that commitment into federal law.

Galvao said some nations, faced with the task force’s investigation of money laundering, hurriedly passed tougher legislation to escape the stigma of being included on what some media accounts termed a “blacklist.”

Future sanctions will depend on decisions by governments and international institutions such as the World Bank and the European Union. Some French politicians, for example, have proposed a ban on all banking transactions with Liechtenstein, a small Alpine principality that a German intelligence investigation last year found has become one of the world’s top money-laundering centers.

Money laundering allows drug traffickers, organized crime and corrupt politicians and businesses to turn ill-gotten gains into respectable assets. In one case, lawyers are seeking to recover about $100 million in looted government funds believed to have been stashed in three Liechtenstein banks by late Nigerian dictator Gen. Sani Abacha. Accounts holding about $650 million linked to Abacha and deposited in Swiss banks have been frozen since October, and additional assets worth $602 million in Luxembourg--presumably salted away by the Nigerian leader, who died in 1998--were frozen this year.

According to the Paris daily Le Monde, the list compiled by Galvao’s task force was the subject of intense negotiations behind the scenes. French lawmakers Thursday were stunned that the roster did not include the principality of Monaco. A French parliamentary report issued the previous day found the Mediterranean ministate, a celebrated tax haven for the wealthy, to be “favorable to money laundering.”

Le Monde said the British government had intervened so that its possessions--the Channel Islands, the Isle of Man, Gibraltar and the British Virgin Islands--were not included. Canada, the newspaper continued, interceded to have dropped from the list some Caribbean countries it represents at the International Monetary Fund: Antigua and Barbuda, Belize and St. Lucia.

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The Laundry List

The lands singled out by the task force and accused of facilitating money laundering are:

The Bahamas, Cayman Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, Nauru, Niue, Panama, the Philippines, Russia, St. Kitts and Nevis, and St. Vincent and the Grenadines.