Asia-Pacific seven on dirty money list


Fifteen countries and territories are on the Financial Action Task Force blacklist over money laundering worries

By Rufi Vigilar in Manila
for CNN

(CNN) -- Indonesia, the Philippines and Myanmar remain on a blacklist of "dirty money" countries compiled by the world's anti-money laundering watchdog.

The trio are among seven Asia-Pacific countries and territories on the list because of what the Paris-based Financial Action Task Force says is a lack of cooperation.

The other four are the tiny Pacific nations of the Cook Islands, the Marshall Islands, Nauru and Niue.

They remain on the list of 15 non-cooperative countries and territories (NCCTs) in an annual report released Friday by the Task Force.

Others are Dominica, Egypt, Guatemala, Nigeria, Russia and St. Vincent and the Grenadines, and two newcomers to the blacklist, Grenada and the Ukraine.

Reforms needed

The task force said anti-money laundering laws in the current NCCTs still suffered legal deficiencies and urged "necessary reforms" to stem the flow of dubious funds.

Only one Asia-Pacific country, Niue, was invited to submit plans on how to implement its anti-money laundering measures. Niue impressed the task force with an October target to abolish offshore banks.

But the task force censured Nauru for its slow progress toward abolishing hundreds of offshore shell banks "that have no physical presence", saying they presented an unacceptable money laundering risk.

Although Nauru amended its 10-month-old anti-money laundering law in December to cover offshore banking activity, the FATF said the country took "no action" toward licensing measures and supervision in this sector.

Four removed

The FATF removed Hungary, Israel, Lebanon, and St Kitts and Nevis from the dirty money blacklist.

The task force had given special focus to the fight against terrorist funding, following the September 11 attacks on New York and Washington.

Indonesia criminalized money laundering through a law enacted in April, but its threshold for reporting suspicious transactions remained high, the FATF report said.

Also, Indonesia's law mandates the reporting of suspicious transactions but does not criminalize unauthorized reporting.

Despite assurances by Philippine officials that the country's Anti-Money Laundering Act mandates the reporting of all suspicious transactions, the FATF said that the law covers only high-threshold accounts and recommended that a "legislative measure" be taken(Full Story).

The task force also cited as a major loophole the Philippine law's secrecy provisions that protect bank deposits made before 17 October 2001.

Myanmar enacted its own anti-money laundering law on June 17, but it still has to undergo review.

The FATF said the Cook Islands still needs to establish a financial intelligence unit to monitor suspicious transactions, and to review its laws on offshore banking activity.

In the Marshall Islands, record-keeping provisions only cover high-threshold accounts, the FATF said. Licensing procedures for non-bank financial institutions also needed to be improved.

Slower growth

Slower economic growth is seen in the NCCTs, because they face sanctions recommended by the task force. These sanctions tend to delay and thus discourage the flow of foreign investment.

Sanctions include stricter requirements in identifying bank clients and in setting up offshore branches of local banks.

In the Philippines, such sanctions have affected even overseas Filipino workers whose remittances contribute to the country's reserves and which propped up the economy during the Asian financial crisis.

The FATF, which is an independent offshoot of the Organization for Economic Co-operation and Development, will again review the progress of each NCCT in its next plenary session from October 9-11.

The task force comprises 29 member countries and governments: Hong Kong SAR (chair of the 13th round), Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.