NAURU EXPECTED TO BE HIT AGAIN OVER MONEY LAUNDERING

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PARIS, France (November 30, 2001 – Agence France-Presse)---The Financial Action Task Force on Money Laundering (FATF) said here Friday it expected to impose sanctions against the Pacific island of Nauru, accused of laundering funds for the Russian mafia.

It would be the first time since it was created in 1989 that the FATF has taken such a step against a state.

FATF Executive Secretary Patrick Moulette said Nauru had apparently not tightened up anti-laundering legislation as requested by the agency.

"As soon as we are certain, today or at the beginning of next week, we will send a circular to member-countries informing them that the counter-measures envisaged have to be applied," he said.

These measures would include applying surveillance on financial transactions.

The independent FATF, based in Paris under the auspices of the Organization for Economic Cooperation and Development, said on September 7 that it might take measures against Nauru, giving the island until November 30 to amend its anti-laundering law, enacted in August, to cover about 450 offshore banks based in its territory.

The 29-nation FATF said then that otherwise the banks would escape controls and noted that as the law stood, people found guilty of laundering money on the island risked only one year in prison.

The OECD press service said it would not issue a statement on the matter until Monday.

"We have to make absolutely sure that no new legislation has been passed," Moulette explained. "It would surprise me if it had been because I would have been informed. But I must undertake legal verification measures with different sources in member-countries."

The Russian central bank has said that 70 billion dollars (79.6 billion euros) generated by the Russian mafia had been handled by offshore banks in Nauru, an island of 12,000 inhabitants.

Michael Field New Zealand/South Pacific Correspondent Agence France-Presse E-mail: afp.nz@clear.net.nz  Phone: (64 21) 688438 Fax: (64 21) 694035 Website: http://www.afp.com/english/  Website: http://www.michaelfield.org 

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