G7 Meet In Japan To Discuss Moves On Money Laundering

Lisa Ugur, Tax-news.com, London

11 July 2000

Finance ministers of the G7 nations met this weekend at a one-day summit in Fukuoka, Japan, and agreed to take harsh steps against countries deemed weak in the fight against money laundering, including threats to cut them off from the international banking system as well as International Monetary Fund (IMF) loans.

With money laundering hot news these past weeks, culminating in the Financial Action Task Force (FATF) list of offshore financial centres deemed to facilitate the processing of 'dirty money', the French have been particularly vociferous in waging war against money laundering. At the end of the Japan meeting French Finance Minister Laurent Fabius said 'We've named, we've shamed and we're taking measures to fight it. I think it's a necessary trilogy if we want to rid ourselves gradually of this gangrene.'

The G7 ministers from the US, Japan, Germany, France, Britain, India and Canada, said that they were endorsing the FATF's now infamous "hit list", and promised to crack down on money laundering and other forms of financial crime by issuing warnings to banks in their countries to discourage them from doing business in countries seen as lax on financial crime. The G7 said 'This coordinated, multilateral response to international monetary laundering is a landmark step that reflects a new international commitment to curb financial abuse around the world.'

One possibility against repeat offenders, the G7 said, was to restrict support from financial organisations such as the IMF. US Treasury Secretary Lawrence Summers said 'I would anticipate that in the future the normal situation would be that a country that was on the list that came to the IMF for a program would face very substantial pressure to be taking steps to move off that list.'

Naturally threats to cut off so-called "money laundering havens" from the world banking system, or at least restrict their transactions in some way, would have serious implications for the fifteen countries and territories identified in June by the FATF as 'non-cooperative' in stamping out financial improprieties. The G7 said 'Just as the globalisation of the economy has offered unprecedented opportunities for legitimate business and finance, so has it facilitated the ability of international money launderers to provide the financial underpinnings for terrorists, narcotics traffickers, organised criminals, and corrupt foreign officials.' Given the strong words of the G7, offshore centres can be sure that regulators will be watching them much more closely from now on.

Russia was one of the countries discussed at the meeting, as one of the "named and shamed" on the FATF list. Although Finance Minister Alexei Kudrin was not present when money laundering was discussed at the meeting, he later pledged that new laws were on the way, saying 'we are now working on a new law to be adopted by the end of this year. Such statements, however, are not enough for Fabius - he wants action: 'What counts - in this area even more than in others - is that they are put in practice,' he said.

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