28 April 2004
Money Laundering Targeted as Menace to Latin America, Caribbean
Report says multilateral support helps fight illegal practice
By Eric Green
Washington File Staff Writer
Washington -- Money laundering, described as the processing of criminal proceeds to disguise their illegal origin, is having a corrosive effect on the economies of Latin America and the Caribbean, according to the Inter-American Development Bank (IDB).
The IDB said money-laundering transactions in the region are estimated at between 2.5 and 6.3 percent of the gross domestic product (GDP). Worldwide, money laundering is a $1.5 trillion to $2 trillion business per year, accounting for between 2 and 5 percent of global GDP, the IDB said in a new study to be released later in 2004.
The negative effects of money laundering include undermining the private sector and jeopardizing the "integrity of financial markets as well as countries' reputations," the IDB said. In addition, the IDB noted that money laundering causes the loss of tax revenue and "distorts" economies.
The IDB said Latin America is regarded as "perhaps the most active emerging region with money laundering through both bank and non-bank channels." In order to fight money laundering, the IDB said, financial systems need to be strengthened in terms of prevention and enforcement through multilateral cooperation.
One way this is being done is through compliance with recommendations made by the Financial Action Task Force on Money Laundering (FATF), an intergovernmental body based in Paris whose purpose is to develop and promote policies at the national and international level to combat money laundering. Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Paraguay, Peru and Uruguay are complying with most key FATF recommendations, the IDB said. The United States is one of 33 countries belonging to the FATF.
The IDB said multilateral organizations have begun work on strengthening financial supervision, training, and technical assistance in order to better prevent and monitor money laundering. These programs seek to create legal sanctions against money laundering and improve enforcement capabilities, said the IDB. The IDB is working with the Organization of American States to fight money laundering.
For its part, the U.S. government said in its "National Money Laundering Strategy" report for 2003 that combating money laundering and terrorist financing is an "ongoing campaign" that forms a critical part of U.S. national security. In the foreword to that report, U.S. Treasury Secretary John Snow and U.S. Attorney General John Ashcroft warned that the techniques criminals and terrorists use to exploit the financial system continue to "evolve."
In response to the threat, the two officials said the United States is resolved to "remain vigilant and proactive" in its efforts "to disrupt and dismantle organized criminal and terrorist activities" that threaten the U.S. financial system.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
This page printed from: http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2004&m=April&x=20040428164024AEneerG0.6921045&t=livefeeds/wf-latest.html
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