*EPF209 12/14/2004
Campaign Against Money Laundering Needs Boost, Experts Say
(Urge aggressive enforcement across all jurisdictions) (490)

By Berta Gomez
Washington File Staff Writer

Washington -- Governments joined in the campaign against money laundering should cooperate to a greater degree on prosecuting criminals, fighting tax evasion, collecting data, and providing technical and financial assistance to poor countries lacking the tools to fight financial crimes, say U.S. economists Peter Reuter and Edwin Truman.

In December 14 remarks at the Institute for International Economics (IIE) in Washington, the authors reviewed those and other conclusions drawn during three years of research for their new book, "Chasing Dirty Money: The Fight Against Money Laundering."

Truman and Reuter report that the global regime against money laundering appears to have helped protect the integrity of the U.S. and other core financial systems. They also conclude, however, that the regime has had a limited impact on either the extent of money laundering or on related crimes such as drug trafficking, terrorist financing and embezzlement.

Truman, a former U.S. Treasury Department official and now a senior fellow at the IIE, said that while global money laundering rules have expanded dramatically over the past 15 years, the effectiveness of the campaign remains unclear.

The authors said one problem is the lack of adequate data on transactions that are by their very nature hidden from official view. Indirect data, such as the number of arrests and prosecutions for crimes related to money laundering, suggest that most of these crimes go unpunished, they said.

Reuter, a professor at the University of Maryland, noted that the United States leads the world in enforcement but carries out only about 2,000 money-laundering prosecutions in any given year, leading to fewer than 1,500 convictions. Since most experts agree that hundreds of billions of dollars are laundered every year, Reuter and Truman conclude that the risk of conviction for money laundering is less than 5 percent.

"It's hard to see that the regime has made money laundering any riskier" for criminals, Reuter said.

The authors' recommendations for improving the global regime against money laundering include the establishment of a research agenda devoted to the subject. The agenda would include development of an international database of money laundering cases and a systematic analysis of the suspicious activity reports (SARs) filed by financial institutions.

They also recommend that the United States -- given its central role in global finance -- request a comprehensive World Bank/International Monetary Fund (IMF) review of its compliance with global standards on money laundering and terrorist financing.

To improve global enforcement, the authors recommend that governments work together to ensure that money laundering linked to major crimes can be prosecuted in all jurisdictions. They also urge governments to enact laws making tax evasion in foreign countries a crime that can be prosecuted in the United States as well as in other countries.

"This is a global issue; it can only work if many countries participate," Reuter said.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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