WORMSCAN: LAUNDRY$

Columbian money laundering.

NOTES: I made a few corrections to spellings and grammar.

Something else to note. I am no longer editing out the address of David P Beiter. It is an address of a place that doesn’t exist. As if his identity weren’t shrouded in mystery already.

LAUNDRY$
By David P Beiter
[REPRINTED WITH PERMISSION]

Date: Sun Dec 24, 1995 12:43 pm CST
From: snet l
EMS: INTERNET / MCI ID: 376-5414
MBX: snet-l@world.std.com

TO: * David Beiter / MCI ID: 635-1762
Subject: Great buys in Colombia — let's go

---------- Forwarded message ----------
The New York Times, December 24, 1995
Week In Review, p. 4.

Money Laundering, New and Improved

Forget Swiss banks. Buy and sell whisky or TV sets. Or, to really hide loot, wait for the arrival of 'cybercash.'

By David E. Sanger

Washington. A tip for last-minute Christmas shoppers: For the best price on Johnnie Walker Black Label, do your buying in Colombia. It's cheaper there than in Scotland, steps from the distillery.

The reason has nothing to do with Latin American drinking habits but everything to do with money laundering. A worldwide squeeze on safe havens for dirty cash has forced drug traffickers, and many others with an interest in moving huge sums of cash around the world without notice, into the liquor business. They now take the proceeds of drug sales in the United States, buy whisky (or General Electric refrigerators, Sony televisions, Microsoft software and in one case last year a Picasso) and ship them back home, where they are sold quickly at below-market prices. The drug cartels lose 20 or 30 percent of their earnings, but in a high-margin, high-risk business that's not considered a terrible price.

That is only one of the latest maneuvers as the science of money laundering — the life-blood of any enterprise that wants to turn illicit profits into palatial houses and fleets of Mercedes — soars to new heights.

The days when you could trust a Swiss banker to hold on to your millions and keep his mouth shut are long gone: Just ask Imelda Marcos or, better yet, Paulina Castanon, the sister-in-law of Mexico's former President, Carlos Salinas de Gortari. She spent several weeks in a Geneva jail recently after showing up to make an $84 million withdrawal from an account that Mexican prosecutors say was filled with the proceeds of drug deals. The assumption is that it was controlled by the Salinas family, but the former President, in self-imposed exile, isn't saying much. His brother has just been indicted for "inexplicable enrichment."

Then there is Roh Tae Woo, the former South Korean President, who kept his half-billion or so in "gifts" in South Korean banks, which were once famous for their "no-name" accounts. It turns out that when the political winds change, their memory about depositors improves.

Such embarrassing incidents are forcing any money launderer worth his pocket change to go high-tech, using the wonder of home-banking computer programs to zip money across borders. Or, in the case of Russia's increasingly savvy crime syndicates, they are buying up banks, probably the surest way to make certain that tellers treat transactions with appropriate discretion. All this has touched off a frenzy of activity in Washington, where the Clinton Administration is cajoling governments around the world, from Turkey to Brazil to Taiwan, that they need to create, or greatly tighten, laws governing the movement of cash. President Clinton has threatened sanctions against nations that encourage money laundering, cutting off their electronic access to American financial institutions.

But it will take more than threats to persuade many governments that cracking down on money laundering is in their interest. Some, like Japan, fear that the American initiative will expose relationships they would like to keep out of public view, including the ties between the world's largest banks and the yakuza, Japan's very organized crime groups. In the four-year-long bust in Japanese real estate, many of those banks lent money to purchase buildings that the yakuza now control. Not surprisingly, the gangsters are tardy about paying the monthly mortgage, and the bankers are reluctant to oust them. "If we do ever get paid," one Japanese banker said recently, "no one will want to ask too many questions about where the funds came from."

And Japan is one of the easy cases, where the Government usually cooperates in money-laundering investigations. "The list of countries where the line between government and organized crime is blurred is expanding at a disturbing rate," said Ronald K. Noble, the Assistant Secretary of the Treasury for enforcement.

No one knows how much ill-gotten cash is annually invested or exchanged in an effort to conceal its illegal source, and many governments in a position to make estimates won't touch the whole issue. At a meeting in Paris last month, the United States Treasury estimated that the American share of international drug proceeds five years ago was $100 billion, but cited other estimates three times higher. Much of it heads to Mexico and Colombia, and Treasury Secretary Robert E. Rubin traveled to Latin America last month to win support for a new task force that will toughen laws and help investigators follow money transfers across borders. "You have to remember that we only made money laundering illegal in 1986," said Mr. Noble. "And it takes a while to make it clear to other countries that over the long term, money laundering hurts them — it destabilizes their governments, it undercuts legitimate businesses."

Mr. Noble's problem is that money laundering is also quite profitable for a number of countries. It brought wealth to safe havens like the Cayman Islands, which now has signed on to the effort to restrict laundering. The Seychelles are aspiring to become money-laundering giants, and all over Asia, where cash is king and checks are for chumps, laundering is still second nature.

What American authorities fear the most, however, is the rise of "cybercash." Experiments are under way around the world to market smart cards containing an electronic chip that can be filled or emptied with the equivalent of cash.

The most elaborate experiment is Mondex, a project of the National Westminster and Midland Banks in England, along with British Telecom. The cards can be filled with cash from bank machines or over the telephone from a bank account. Money can move from one card to another, in person or again by phone. And the holder of the card, operating in splendid anonymity, can use it for large or small purchases. Pilot projects are planned in San Francisco, Canada and Hong Kong, which is already Asia's greatest money-laundering center.

"The nightmare of it is that there is no registration of every transaction, the way there is if you use a Visa or Mastercard," said Stanley E. Morris, who heads the financial crimes enforcement network, a little-known, $24 million-a-year operation buried in the Treasury Department that, to aid the Federal Reserve, the F.B.I., intelligence agencies and the Internal Revenue Service tracks the movement of money around the world. "That's the drug kingpin of the future: The guy walking around with a chip in his pocket worth a few million."

[Photo captions]

Do: Buy a Mercedes.
Don't: Use a Swiss bank.
Maybe: Bank in the Caymans.
Do: Buy liquor.

[End]

LISBON, (Mar. 26) IPS — Drug trafficking has become so pervasive a global current that many economies and various politicians depend on the laundering of dirty money and traffickers actually control some large international banks, a conference here was told. Held between Mar. 23 and yesterday under the theme "Drugs: Dependence and Interdependence," the conference concluded the drug problem could not be solved by purely national action. Such was its global dimensions, a broad multinational strategy was required. Some 160 delegates from 58 drug producing and consumer countries attended the three-day meeting. It was organized by the North-South Center (NSC) of the Council of Europe based here. The meeting was supported by the United Nations, the Georges Pompidou Center of the Council of Europe and the European Observatory of Drugs and Drug Addiction.

Attending were representatives of people living in the drug-cultivating regions, associations of citizens, as well as various organizations of women, youth, trade unions, religious leaders, educators, agronomists, anthropologists, human rights advocates, sociologists, historians, social scientists and members of the legal profession.

Between $300 and $500 billion of illegal drug money goes into circulation annually, according to figures revealed by a delegate from the U.N. Drug Control Program. However, some experts said these statistics were too conservative, the actual figure could actually be as high as one trillion dollars.

Delegates agreed trafficking in drugs covered the whole planet, and had been transformed into merchandise used to service and repay part of the foreign debt of many countries whose economies were most vulnerable. Moreover, some major international banks were now directly or indirectly controlled by organized crime, they said.

The protective mechanisms of the financial system through bank secrecy favored the laundering of money coming from the drug traffic. Though recognizing the legal difficulties involved, the delegates defended the idea of introducing stricter controls over current accounts.

Italian delegate Umbert Santino proposed the abolition of bank secrecy and the installation of systems of control over movements of capital "to end the financial activities of the drug traffickers." He also defended the idea of handling the problem through a global project covering both the North and the South, "because the wealth of the former is directly related to the poverty of the latter."

According to Rogerio Rocco, a member of the Rio de Janeiro State Council for Drugs, "many governments have no interest in where the money comes from, the important thing is that it is there. As the ancient Romans used to say, 'pecunia non olet' (money doesn't smell)." When financial crimes became public "the system mitigates the penalties because such cases involve private interests which if interfered with could destabilize a country's whole economy," charged one Brazilian specialist.

Another concern of the conference was the growing activity in drugs in former socialist countries of eastern Europe, which can count on their chemical and pharmaceutical industries having a sophisticated technology at their disposal to be used to produce illicit drugs.

In the former Soviet Union fields of marijuana were proliferating in Kazakhistan, amapola plantations (the base for manufacturing heroin) in Tajikistan, Uzbekistan and the Ukraine, the conference was warned.

The meeting concluded that in the case of the countries of the South the problem of drugs was related to development. There was a lack of a viable alternative crop for cultivators of the basic raw materials used in the production of illegal drugs.

Copyright 1996