Unisys Expert Warns Of Money Laundering On Internet

Lisa Ugur, Tax-news.com, London

29 June 2000

The money laundering debate has stepped up a gear. Firstly, a six-month long (and ongoing) investigation into money laundering has plagued Liechtenstein. Then came the publication of the Financial Action Task Force (FATF) list on offshore jurisdictions deemed to be "uncooperative" on money laundering. In the latest development, a fraud prevention expert has stepped forward to warn that the Internet could be offering fresh opportunities for the laundering of money through e-business.

Rowan Bosworth-Davies, a former London detective, has stated that e-business offers so-called "laundrymen" new cover and easier passage, but it is the tax havens deemed to facilitate money laundering with their banking secrecy and lack of transparency to whom he gives short shrift.

He actually praises the recent efforts of the FATF and OECD to expose tax havens in their blacklists of offshore financial centres considered to be "genial to hot money."

Referring to the OECD's report on 35 territories which the organisation views as harmful tax regimes and the accompanying threat of sanctions a year from now if these havens fail to change their ways, Bosworth-Davies said that the OECD report was inevitable: 'There is too little support given by financial organizations to prevent money laundering. The OECD and FATF see the bigger picture - this is not just about crime. Al Capone was nailed by a taxman.'

Bosworth-Davies is concerned that the taxation side of the money laundering issue is compounded by information technology and the Internet and he has called for the development of software which can locate dirty money passing through the Internet, or more specifically which can monitor banking transactions in order to identify suspicious movements of money. In fact, his devotion to the cause has led him to become special consultant on anti-laundering software to Unisys, the US software group.

Yet just how easy all this will be in practice remains to be seen. When business was personal and bankers met clients, the vetting of depositors offered some measure of security and a starting point for those fighting money laundering and fraud, with only tax havens providing anonymity through banking secrecy.

However, the advent of the Internet has changed all that. The speed and ease of electronic banking and global online trading offer legitimate opportunites for the honest and dishonest alike. Bosworth-Davies said 'In e-business there is a big problem in identifying who the customer is. The Internet brings a greater degree of risk. Financial markets have always offered an easy way to launder money. Buy shares, sell at a loss. Money laundering does not seek to be profitable.'

It's unlikely that Mr Bosworth-Davies has money tucked away offshore. His finger continually points at the tax havens as the real culprit in money laundering. He says 'Criminal money will always follow the tax route. Tax channels offer quasi respectability. Dirty money follows these channels too and nobody has the ability to differentiate. The issue is as much to do with tax.' While he said the British goverment had done all it could to encourage its dependencies to fight money laundering, he admits that little has been achieved so far: 'It would be hard to think of a reason why, after all these years, such territories would be instantly persuaded of the need to change the habits of a lifetime.'

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