Venezuelan Law Aims to Dent Drug Business Reformers Hope to Change the Country's Image as Hemisphere's Money-Laundering Capital, but Skeptics Say New Regulations Will Not Solve the Big Problem - Political Corruption

By Victoria Colliver, Monitor | The Christian Science Monitor, August 2, 1993 | Go to article overview

Venezuelan Law Aims to Dent Drug Business Reformers Hope to Change the Country's Image as Hemisphere's Money-Laundering Capital, but Skeptics Say New Regulations Will Not Solve the Big Problem - Political Corruption


Victoria Colliver, Monitor, The Christian Science Monitor


LONG stretches of unmonitored frontier, well-established organized crime families, and easy access to Colombia and North America have made Venezuela one of the biggest money-laundering havens in the Western Hemisphere, narcotics and legal experts say. Until last week, it wasn't a crime.

Antidrug forces claimed a major victory Aug. 13 with the passage of reforms that for the first time make money laundering a criminal act in Venezuela.

The amendments outlaw anonymous bank accounts, force politicians to reveal the sources of campaign contributions, establish more rigorous customer identification procedures, and impose stiff penalties of up to 25 years in prison on groups and individuals who help legitimize money earned from drug activity.

While many legal and narcotics experts hope the reforms will finally control the problem, skeptics say the judicial and political elements of society are so corrupt they doubt the new regulations will make a difference. Venezuelan banks have been required to report all transactions exceeding $10,000 since 1990, but this law has been considered ineffective, because the records reportedly go unchecked for suspicious activity. Unnecessary precaution

State Department officials in Washington say money-laundering practices are becoming more sophisticated, but local authorities say the activity is so blatant and prevalent in Venezuela that such methods aren't necessary.

"All the schemes are for naught when it comes to laundering money here," says a United States Embassy official in Caracas. "It's a haven - there are no extraditions, no deportations.... I would call it the nexus in the Western hemisphere."

Authorities say the leading players include major Italian families connected with the Sicilian Mafia, a group of Lebanese families, and allies of Colombian drug cartels. "Nobody could ever destroy the tentacles that are already here," he adds.

At a United Nations meeting earlier this year in Vienna, Venezuela was termed the laundering capital of Latin America and a key cocaine transit point from Colombia to North America and Europe.

The estimates of the amount of money laundered through Venezuela each year varies widely because the activity is so hard to pin down. While the US State Department officially puts the Venezuela number at about $3 billion, US Embassy officials here estimate that $25-30 billion is laundered annually in Venezuela. They say some $120 billion is laundered through the US each year.

The reformed law, which was approved unanimously by Congress, won't become official until it is published and signed, says Najah Kafouni de Rauseo, a lawyer with the National Committee Against the Use of Illicit Drugs. …

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