At the Anti-Corruption Summit in Washington last Thursday, US Deputy Treasury Secretary Stuart Eizenstat outlined three steps for the international community to take in the global fight against money laundering. Mr Eizenstat also said the US would intensify pressure on the International Monetary Fund (IMF) and the World Bank to take a more active role in combating money laundering when the G8 industrialised nations meet in Prague this week.
As far as Mr Eizenstat's three-point programme is concerned, the first step, he says, will involve expanded work by the Financial Action Task Force (FATF), which will hold its next major meeting in Madrid in October. It will be there that the FATF decides which banking jurisdictions to include in a second group to be investigated on suspicion of facilitating the practice of money laundering. The FATF will also begin a process to strengthen anti-money laundering standards amongst its own 29 members, according to Mr Eizenstat. The FATF blacklist of "money laundering havens", which was published in June and has achieved near-infamy, included a plethora of jurisdictions such as the Bahamas, the Cook Islands, the Cayman Islands, Liechtenstein, Israel, Panama and St Kitts and Nevis.
Mr Eizenstat said in his speech that the "name and shame" initiative has brought about more progress in the past couple of months than other actions taken during the past several years. Clearly cooing over measures enacted since the blacklist was revealed, Mr Eizenstat stated: 'For the first time customer identification will be mandatory in the Caymans as it is in other comparable financial centres; for the first time money laundering is a crime in Israel as it is in other comparable developed countries.'
The second step described by Mr Eizenstat is to press for a stronger role by the IMF, the World Bank, and regional development banks in fighting financial malpractice. Whilst the Deputy Treasury Secretary said the US would not suggest that the two institutions police the financial system, he asked that they should both play "a greater role in fighting abuse and preserving the integrity of the international financial system in areas that are within the scope of their mandates". He said that they would be asked to "institutionalise" the fight against money laundering through technical assistance, surveillance and financial sector assessments. Their loans could be made conditional on countries making "real and measurable progress" in combating money laundering.
The final step, Mr Eizenstat said, was to press the leading industrial countries to restrict international lending and banking transactions with jurisdictions on the FATF list that do not make efforts to close down money-laundering. By the 2001 G7 summit, he said, there should be a clear picture of which countries on the FATF list have decided to "ignore the will of the international community."
Closing his speech, Mr Eizenstat appealed to the US Congress to enact legislation to restrict US institutions from carrying out financial transactions with known money laundering havens. He said a "handful" of US lawmakers are blocking any potential legislation.
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