French Raise Money Laundering Issue At Okinawa Summit

Ulrika Lomas, Tax-news.com, Brussels

27 July 2000

A mission statement prepared on the first day of the G7 annual summit in Okinawa, which took place last weekend, proposed to take stern action against offshore jurisdictions where "loose" legislation permits money laundering to take place. French President Jacques Chirac declared that ‘the fight against money laundering is not only a great moral cause but an essential element for a return to more peace and stability in the world.'

It is estimated that £395 billion, generated from criminal activities such as arms and drug cartels, is processed through offshore bank systems each year. The participating G7 nations – Britain, Canada, United States, Japan, Germany, France and Italy - are to adopt strict measures to combat money laundering, which include the sanctioning of offending jurisdictions from the global financial system as well as refusing financial aid to poorer territories. At the summit Jacques Chirac stated ‘there are places that must make corrections, either by annulling laws or passing laws to eliminate money laundering … if they don’t do this, naturally we will demand sanctions, up to and including the ending of their operations.'

Ironically, Russia, which become the eighth member of the group at the summit’s second meeting, thus renaming the conference the G8 summit, is one of the 15 territories "named and shamed" by the FATF in its list of offshore financial centres deemed to encourage money laundering.. The list also comprised Israel, the Bahamas, Cayman Islands, Dominica, Lebanon, Marshall Islands, Nauru, Niue, Panama, the Philippines, Liechenstein, St. Kitts and Nevis, and St. Vincent and the Grenadines.

Although France did not single Russia out in its appeal for steps to be taken in the form of sanctions by the G7 countries, the two countries are in disagreement after a French court agreed to Swiss trading firm Noga’s request to seize Russian assets in France valued at around $800 million in compensation for the company’s losses, a step which has caused outrage in Moscow.

It is no surprise that France was at the forefront in urging the G7's stance on sanctions, given French-Russian tensions and a recent French report on Monaco’s questionable acceptance of incoming "dirty money". French Finance Minister Laurent Fabius has made no secret of his determination to clamp down on money laundering and the French finance ministry issued a statement as the G7 met in Okinawa, asking all French financial institutions to step up vigilance, especially the central bank and the heads of the national banking commission. The statment said 'This appeal is part of the steps being taken to protect the international financial system against dirty money.'

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