By David P Beiter

Date:     Sun Dec 24, 1995 12:43 pm  CST
From:     snet l
	  EMS: INTERNET / MCI ID: 376-5414

TO:     * David Beiter / MCI ID: 635-1762
Subject:  Great buys in Colombia - let's go

---------- Forwarded message ----------

   The New York Times, December 24, 1995
   Week In Review, p. 4.

   Money Laundering, New and Improved

      Forget Swiss banks. Buy and sell whisky or TV sets. Or,
      to really hide loot, wait for the arrival of

   By David E. Sanger

   Washington. A tip for last-minute Christmas shoppers: For
   the best price on Johnnie Walker Black Label, do your
   buying in Colombia. It's cheaper there than in Scotland,
   steps from the distillery.

   The reason has nothing to do with Latin American drinking
   habits but everything to do with money laundering. A
   worldwide squeeze on safe havens for dirty cash has forced
   drug traffickers, and many others with an interest in
   moving huge sums of cash around the world without notice,
   into the liquor business. They now take the proceeds of
   drug sales in the United States, buy whisky (or General
   Electric refrigerators, Sony televisions, Microsoft
   software and in one case last year a Picasso) and ship them
   back home, where they are sold quickly at below-market
   prices. The drug cartels lose 20 or 30 percent of their
   earnings, but in a high-margin, high-risk business that's
   not considered a terrible price.

   That is only one of the latest maneuvers as the science of
   money laundering -- the life-blood of any enterprise that
   wants to turn illicit profits into palatial houses and
   fleets of Mercedes -- soars to new heights.

   The days when you could trust a Swiss banker to hold on to
   your millions and keep his mouth shut are long gone: Just
   ask Imelda Marcos or, better yet, Paulina Castanon, the
   sister-in-law of Mexico's former President, Carlos Salinas
   de Gortari. She spent several weeks in a Geneva jail
   recently after showing up to make an $84 million withdrawal
   from an account that Mexican prosecutors say was filled
   with the proceeds of drug deals. The assumption is that it
   was controlled by the Salinas family, but the former
   President, in self-imposed exile, isn't saying much. His
   brother has just been indicted for "inexplicable

   Then there is Roh Tae Woo, the former South Korean
   President, who kept his half-billion or so in "gifts" in
   South Korean banks, which were once famous for their
   "no-name" accounts. It turns out that when the political
   winds change, their memory about depositors improves.

   Such embarrassing incidents are forcing any money launderer
   worth his pocket change to go high-tech, using the wonder
   of home-banking computer programs to zip money across
   borders. Or, in the case of Russia's increasingly savvy
   crime syndicates, they are buying up banks, probably the
   surest way to make certain that tellers treat transactions
   with appropriate discretion. All this has touched off a
   frenzy of activity in Washington, where the Clinton
   Administration is cajoling governments around the world,
   from Turkey to Brazil to Taiwan, that they need to create,
   or greatly tighten, laws governing the movement of cash.
   President Clinton has threatened sanctions against nations
   that encourage money laundering, cutting off their
   electronic access to American financial institutions.

   But it will take more than threats to persuade many
   governments that cracking down on money laundering is in
   their interest. Some, like Japan, fear that the American
   initiative will expose relationships they would like to
   keep out of public view, including the ties between the
   world's largest banks and the yakuza, Japan's very
   organized crime groups. In the four-year-long bust in
   Japanese real estate, many of those banks lent money to
   purchase buildings that the yakuza now control. Not
   surprisingly, the gangsters are tardy about paying the
   monthly mortgage, and the bankers are reluctant to oust
   them. "If we do ever get paid," one Japanese banker said
   recently, "no one will want to ask too many questions about
   where the funds came from."

   And Japan is one of the easy cases, where the Government
   usually cooperates in money-laundering investigations. "The
   list of countries where the line between government and
   organized crime is blurred is expanding at a disturbing
   rate," said Ronald K. Noble, the Assistant Secretary of the
   Treasury for enforcement.

   No one knows how much ill-gotten cash is annually invested
   or exchanged in an effort to conceal its illegal source,
   and many governments in a position to make estimates won't
   touch the whole issue. At a meeting in Paris last month,
   the United States Treasury estimated that the American
   share of international drug proceeds five years ago was
   $100 billion, but cited other estimates three times higher.
   Much of it heads to Mexico and Colombia, and Treasury
   Secretary Robert E. Rubin traveled to Latin America last
   month to win support for a new task force that will toughen
   laws and help investigators follow money transfers across
   borders. "You have to remember that we only made money
   laundering illegal in 1986," said Mr. Noble. "And it takes
   a while to make it clear to other countries that over the
   long term, money laundering hurts them -- it destabilizes
   their governments, it undercuts legitimate businesses."

   Mr. Noble's problem is that money laundering is also quite
   profitable for a number of countries. It brought wealth to
   safe havens like the Cayman Islands, which now has signed
   on to the effort to restrict laundering. The Seychelles are
   aspiring to become money-laundering giants, and all over
   Asia, where cash is king and checks are for chumps,
   laundering is still second nature.

   What American authorities fear the most, however, is the
   rise of "cybercash." Experiments are under way around the
   world to market smart cards containing an electronic chip
   that can be filled or emptied with the equivalent of cash.

   The most elaborate experiment is Mondex, a project of the
   National Westminster and Midland Banks in England, along
   with British Telecom. The cards can be filled with cash
   from bank machines or over the telephone from a bank
   account. Money can move from one card to another, in person
   or again by phone. And the holder of the card, operating in
   splendid anonymity, can use it for large or small
   purchases. Pilot projects are planned in San Francisco,
   Canada and Hong Kong, which is already Asia's greatest
   money-laundering center.

   "The nightmare of it is that there is no registration of
   every transaction, the way there is if you use a Visa or
   Mastercard," said Stanley E. Morris, who heads the
   financial crimes enforcement network, a little-known, $24
   million-a-year operation buried in the Treasury Department
   that, to aid the Federal Reserve, the F.B.I., intelligence
   agencies and the Internal Revenue Service tracks the
   movement of money around the world. "That's the drug
   kingpin of the future: The guy walking around with a chip
   in his pocket worth a few million."

   [Photo captions]

   Do: Buy a Mercedes.
   Don't: Use a Swiss bank.
   Maybe: Bank in the Caymans.
   Do: Buy liquor.


LISBON, (Mar.  26) IPS - Drug trafficking has become so pervasive a
global current that many economies and various politicians depend on the
laundering of dirty money and traffickers actually control some large
international banks, a conference here was told.
   Held between Mar.  23 and yesterday under the theme "Drugs:
Dependence and Interdependence," the conference concluded the drug
problem could not be solved by purely national action.  Such was its
global dimensions, a broad multinational strategy was required.
   Some 160 delegates from 58 drug producing and consumer countries
attended the three-day meeting.  It was organized by the North-South
Center (NSC) of the Council of Europe based here.  The meeting was
supported by the United Nations, the Georges Pompidou Center of the
Council of Europe and the European Observatory of Drugs and Drug
   Attending were representatives of people living in the
drug-cultivating regions, associations of citizens, as well as various
organizations of women, youth, trade unions, religious leaders,
educators, agronomists, anthropologists, human rights advocates,
sociologists, historians, social scientists and members of the legal
   Between $300 and $500 billion of illegal drug money goes into
circulation annually, according to figures revealed by a delegate from
the U.N.  Drug Control Program.  However, some experts said these
statistics were too conservative, the actual figure could actually be as
high as one trillion dollars.
   Delegates agreed trafficking in drugs covered the whole planet, and
had been transformed into merchandise used to service and repay part of
the foreign debt of many countries whose economies were most vulnerable.
   Moreover, some major international banks were now directly or
indirectly controlled by organized crime, they said.
   The protective mechanisms of the financial system through bank
secrecy favored the laundering of money coming from the drug traffic.
Though recognizing the legal difficulties involved, the delegates
defended the idea of introducing stricter controls over current
   Italian delegate Umbert Santino proposed the abolition of bank
secrecy and the installation of systems of control over movements of
capital "to end the financial activities of the drug traffickers.
   He also defended the idea of handling the problem through a global
project covering both the North and the South, "because the wealth of
the former is directly related to the poverty of the latter."
   According to Rogerio Rocco, a member of the Rio de Janeiro State
Council for Drugs, "many governments have no interest in where the money
comes from, the important thing is that it is there.  As the ancient
Romans used to say, 'pecunia non olet' (money doesn't smell)."
   When financial crimes became public "the system mitigates the
penalties because such cases involve private interests which if
interfered with could destabilize a country's whole economy," charged
one Brazilian specialist.
   Another concern of the conference was the growing activity in drugs
in former socialist countries of eastern Europe, which can count on
their chemical and pharmaceutical industries having a sophisticated
technology at their disposal to be used to produce illicit drugs.
   In the former Soviet Union fields of marijuana were proliferating in
Kazakhistan, amapola plantations (the base for manufacturing heroin) in
Tajikistan, Uzbekistan and the Ukraine, the conference was warned.
   The meeting concluded that in the case of the countries of the South
the problem of drugs was related to development.  There was a lack of a
viable alternative crop for cultivators of the basic raw materials used
in the production of illegal drugs.
    Copyright 1996


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