Money laundering group scours Philippines


Delegates from countries such as the United Kingdom are in Hong Kong, trying to help fight money laundering

By Alex Frew McMillan
CNN Hong Kong

HONG KONG, China -- A task force is examining the progress of the Philippines in fighting money laundering, since the country passed a law intended to combat the crime.

Task-force observers are "seeing if the Philippines law has been having an effect," Helen Fisher told CNN. "A law is not the same as progress."

The Philippines faced sanctions from some of the world's most powerful countries for failing to help fight money laundering.

It is on a 19-nation blacklist of countries that a task force says are not cooperating in an effort to curb the crime.

The Financial Action Task Force on Money Laundering has drawn around 300 delegates to Hong Kong. They are focusing on terrorism-related funding but also looking to stem laundering of money from drugs and other crimes.

The task force is made up of 29 countries, including the United States and the United Kingdom, as well as the European Union and the Gulf Co-operation Council. Representatives started a closed-door meeting on Wednesday.

Sanctions were put off


The task force claims terrorists in the Philippines and elsewhere raise cash illegally, then "clean" it through tax havens

As it started, Fisher, spokeswoman for the Organization for Economic Cooperation and Development (OECD), told CNN that the task force is weighing progress in the Philippines.

The Paris-based OECD houses the task force's administrative operations. But the task force is technically an independent body.

It had prepared sanctions against the Philippines, as well as Russia and Nauru. But faced with that threat, lawmakers in the Philippines passed a law against money laundering last September.

So on December 18, the task force said it had decided not to act "for the time being."

But it sent a letter to President Gloria Macapagal Arroyo's administration, citing "important deficiencies" in the Philippines law that it claims need addressing.

Failure to do so could still result in sanctions, the task force warned.

Russia's sanctions were withdrawn because it enacted "significant legislation" over the summer. But both it and the Philippines are still on the blacklist.

Nauru penalized


Tsang, here talking to reporters outside the event, says hundreds of billions of dollars are laundered every year

The Pacific island nation of Nauru is so far the only country that has received sanctions from the group.

On December 5, Nauru was formally sanctioned by the task force. The countries taking part in the task force promised to take countermeasures against Nauru.

Banks around the world were warned to pay special attention when doing business with companies and people from Nauru. They are asked to keep records in writing on any deals, and make those records available to law-enforcement agencies.

Fisher said the task force was forced to slap sanctions on the island country because it had done "absolutely nothing" to combat money laundering.

The group had demanded that Nauru change its laws. "This decision is the result of the Nauru government's failure to enact by 30 November 2001, appropriate legislative amendments to its Anti-Money Laundering Act," the task force stated.

Nauru passed a money-laundering bill in August. But the task force feels it isn't enough.

Hong Kong hosting event

Clarie Lo, Hong Kong's narcotics commissioner, opened the task-force meeting on Wednesday. She is current president of the task force, which is being hosted by Hong Kong for the first time.

Hong Kong Chief Secretary for Administration Donald Tsang also welcomed the delegates and charged them to combat money laundering. He said hundreds of billions of dollars are laundered around the world every year.

But the 19 blacklist countries can't participate, and lobbyists from the Philippines have been barred from the event.

In Asia, the most significant economies that have landed on the blacklist are the Philippines and neighboring Indonesia.

But the blacklist also includes Myanmar (otherwise known as Burma), and Pacific island nations like the Marshall Islands, Nuie and the Cook Islands, as well as Nauru.

Around the world, economic powers like Russia, Nigeria and Israel have also fallen afoul of the task force. The group also cites several Caribbean island tax havens as failing to cooperate on fighting money laundering.

According to the task force, terrorists use many of the same techniques as organized crime to launder money. Locally raised cash is placed in banks where the terrorists operate, then shipped to a tax haven before being sent to several European banks.

The money can then be sent back to a country like the Philippines looking legitimate.

It says terrorists raise money through a variety of illegal ways, including selling drugs, kidnapping people, robbery, fraud and smuggling, and occasionally in legal businesses.