*EPF406 06/22/00
Text: Treasury's Summers on Poor Anti-Money Laundering Measures
(Praises report citing failure by 15 jurisdictions) (740)

U.S. Secretary of the Treasury Lawrence Summers praised the new report by the Financial Action Task Force (FATF) that names 15 jurisdictions -- countries and territories around the world -- that are failing to take adequate measures to combat international money laundering.

"The United States, an active participant in the FATF, welcomes this landmark step to limit the capacity of drug dealers, terrorists, organized criminals and corrupt foreign officials to launder their ill-gotten gains through safe havens," said Summers in a June 22 statement.

The FATF, a special agency set up by the Group of Seven (G-7) major industrialized countries in 1989, released the "Report on Non-Cooperative Countries and Territories" on June 22 at a press conference in Paris at the Organization for Economic Cooperation and Development (OECD). The FATF has its Secretariat offices at the OECD.

The 15 jurisdictions named were Russia, Liechtenstein, Israel, Lebanon, the Bahamas, the Cayman Islands, Cook Islands, Dominica, the Marshall Islands, Nauru, Niue, Panama, the Philippines, St. Kitts and Nevis, and Saint Vincent and the Grenadines.

Summers said the FATF report "provides important information that financial institutions in this country and around the world should make use of in conducting their own internal anti-money laundering efforts."

He added that the report underscores the need for the Congress to move forward with anti-money laundering legislation that was approved June 8 by the House of Representatives Banking Committee. The legislation, entitled "The International Counter-Money Laundering Act of 2000," would improve the ability of the United States to use selective counter-measures against money laundering havens.

Summers said the new FATF report works in parallel with actions by two other international groups. First, he cited recent actions by the G-7 sponsored Financial Stability Forum, based at the Bank of International Settlements, to categorize the so-called "offshore" financial centers of more than 40 countries and territories according to the perceived quality of supervision and the degree of regulatory cooperation. Second, he cited the OECD "Report on Progress in Identifying and Eliminating Harmful Tax Practices," which will be released June 26 in Paris at the OECD ministerial meeting. This report will include a list of countries considered to be tax havens engaged in harmful tax practices.

"These measures are crucial steps in the effort to ensure that global mobility of capital remains a strong positive force for economic growth and prosperity worldwide," he said.

Following is the text Summers' statement:

(begin text)

STATEMENT BY TREASURY SECRETARY LAWRENCE H. SUMMERS
REGARDING FATF ANNOUNCEMENT OF NON-COOPERATIVE COUNTRIES
June 22, 2000

Today in Paris, the Financial Action Task Force (FATF) named 15 jurisdictions that have failed to take adequate measures to combat international money laundering. The United States, an active participant in the FATF, welcomes this landmark step to limit the capacity of drug dealers, terrorists, organized criminals and corrupt foreign officials to launder their ill-gotten gains through safe havens.

FATF's Report on Non-Cooperative Countries and Territories provides important information that financial institutions in this country and around the world should make use of in conducting their own internal anti-money laundering efforts. The United States will promptly examine what additional guidance ought to be provided to our own financial institutions.

The Report also underscores the importance of Congress acting on the bi-partisan anti-money laundering legislation introduced by Congressmen Leach and LaFalce. The legislation, which passed overwhelmingly by the House Banking Committee, would substantially enhance the capacity of the United States to employ targeted counter-measures against money laundering havens.

This Report fulfills a commitment made by FATF in February and by the United States in March in our National Money Laundering Strategy to identify countries whose counter-money laundering regimes fail to meet international standards. It is major step in the right direction.

Taken together with recent actions by the Financial Stability Forum - categorizing offshore financial centers according to their perceived quality of supervision and degree of regulatory cooperation -- and the OECD -- cracking down on harmful tax competition -- FATF's action reflects a new international commitment to curb financial abuse around the world. These measures are crucial steps in the effort to ensure that global mobility of capital remains a strong positive force for economic growth and prosperity worldwide.

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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