Europe Struggling to Stop Money Laundering

Europe Struggling to Stop Money Laundering


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New Europe more than a year ago broke the news about the clandestine operations of Hawala method to channel funds across the world. Now experts at a money laundering conference confirmed the findings. One unnamed banker who spoke during a question-and-answer session said new banking regulations have merely “pushed” money launderers into new financial schemes. For example, the banker said, many criminals washing money from illegal prostitution, drugs and other endeavours have turned to the alternative “Hawala” money system – cash trading without banks – which he said is spreading from its traditional home in South Asia and the Middle East to Latin America and Europe. “This lateral system of (money) transfer is getting bigger,” the banker said. He also said banks, auditors and government regulators who search for money launderers by pouring over the world’s daily money transactions “pick up very little in proportion to what’s happening.”


It is a fact that the European countries are struggling to plug loopholes that allow criminals – including terrorist groups – to transfer huge amounts of “dirty” money through their countries and around the world. “It’s probably a battle we’ll never win,” Michael Adlem, a former British investigator now working for an auditing firm in Poland, told about 100 financial experts at the Prague conference. “But we’ve got to make (money laundering) more difficult.” International scrutiny of terrorism financing accelerated after last year’s September 11 attacks against the United States. As a result, money laundering has become a target for stronger legislation, beefed-up law enforcement and regulatory oversight as well as provoking tighter accounting procedures for banks, insurances companies and securities brokers. A conference participant from Brussels, European Parliament Vice President Gerhard Schmid proposed yet another EU directive. He said the next legal step should include: Establishing a new definition of money laundering to include any legally acquired money that’s used to finance crime; Requiring bank account registers in all EU states to help authorities trace money transactions; Expanding the law to include foreign subsidiaries of EU-based financial institutions; Restricting access to “shell banks” and financial institutions in countries without money laundering laws, enacting tougher controls on offshore banks and requiring registration of Hawala and other so- called “underground” financial systems. Yet criminals may be a step ahead and Schmid agreed, “Of course the devil is in the detail.” (705)

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