PACIFIC NATIONS MOVE TO STOP RUSSIAN MAFIA FROM STASHING AWAY FUNDS

admin's picture

By Michael Field

AUCKLAND, New Zealand (February 15, 1999 - Agence France-Presse)---Pacific nations are tightening up legislation as a result of charges that Russian mafia money has been stashed away in off-shore banks in four South Pacific countries, diplomatic sources said Monday.

The countries were named as the Cook Islands, Nauru, Samoa and Vanuatu in a report released last Wednesday.

The four, plus Fiji, Niue and Tonga, have also been accused of being involved in growing Internet gambling operations which are believed to be vulnerable to money laundering.

The charges were made in a report published by the Financial Action Task Force (FATF), which is part of the Paris-based Organization for Economic Cooperation and Development.

"The Pacific has been seen as a soft touch by these people, but the jurisdictions have begun to tighten up considerably," one senior official who did not wished to be named said Monday.

However, he and another official said the FATF claim that Russian mafia money was making its way into regional banks was new.

No official reaction was available from the South Pacific Forum Secretariat in Fiji which has been mandated with educating its 14 island states on the dangers of trans-national crime.

In the past, the tax-haven operations, particularly in Nauru and the Cooks, had been named by the U.S. Congress, among others, as key money laundering operations for American drug cartels.

FATF said the offshore financial centers of "non-cooperative countries," such as the Pacific ones named, showed an unwillingness or outright refusal to cooperate in dealing with money laundering.

Referring to a FATF experts meeting last year, the statement said schemes in such countries had the common characteristics of a series of multiple financial transactions, the use of nominees or other middlemen to manage the transactions and an international network of shell companies.

The group noted that within the Asia Pacific region some non-FATF members were beginning to implement comprehensive anti-money laundering schemes, but there was evidence of "significant money laundering activity or serious vulnerabilities to it.

"In the Pacific region, a heavy concentration of financial activity related to Russian organized crime has been observed, specially in Western Samoa, Nauru, Vanuatu and the Cook Islands."

The report said the meeting was told of an increasingly common scheme where "apparently American middlemen" are used to open accounts or charter banks in one of the four countries.

"Given the increased suspicion aroused by visible Russian business activity in these jurisdictions, the laundering scheme thus operates under the cover of non-Russian linked business."

FATF said Internet gambling was generating nearly 1.5 million dollars a month.

It represented a "major new business trend" in Samoa, Niue, Vanuatu, Tonga and Fiji "and another potential vulnerability for money laundering and financial crime in those jurisdictions."

Experts had noted the abuse of offshore financial centers and the "increasing presence of solicitors, accountants and other professionals both to set up business entities and facilitate the administration of accounts used in money laundering."

Asian and Pacific members of FATF will meet in Tokyo next month to hold workshops on the use of underground banking and alternative remittance systems for money laundering purposes.

Diplomatic sources noted here that Pacific states were no longer indifferent to the sources of money entering their systems.

The "Aitutaki Declaration" signed by all 16 Pacific leaders in 1997 said they recognized "that an adverse law enforcement environment could threaten the sovereignty, security and economic integrity" of Pacific countries and could jeopardize their economic and social development.

Michael J Field, Agence France-Presse, Auckland, New Zealand Tel: (64 21) 688-438; Fax: (64 21) 694-035; E-Mail: afp.nz@clear.net.nz WWW: http://www.afp.com/english/

Rate this article: 
No votes yet

Add new comment