Members of Colombia's Cali cocaine cartel thought they had found
a perfect way of transforming their ill-gotten cash into legal
tender: a crooked bank on the Caribbean island of Antigua willing
to accept their deposits. As it turned out, they made a big mistake.
The "bank" was run by Drug Enforcement Administration and
Internal Revenue Service agents. When they sprung their elaborate
trap at the end of 1994, the agents netted more than $50 million in
cash, paintings by Rubens and Picasso, nine tons of cocaine, and 88
Operation Dinero was a signal event: It was the first time
American officials attacked narcotics traffickers by setting up a
phony bank to intercept cash from drug sales before it could be
turned into legal assets. But while it dealt a blow to the Cali
cartel, the operation stemmed only a trickle in a rising tide of
laundered money that criminals worldwide are employing to buy
governments, fund terrorist operations, and corner growing shares
of global economic power.
Acknowledging what many experts regard as a looming threat to
international political and financial order, a group of 26
governments is stepping up the fight against money-laundering.
"Money-laundering is an ever-changing activity," notes Ronald
Noble, a former assistant United States Treasury secretary and
outgoing president of the Financial Action Task Force (FATF), which
met in Washington last week. "The ever-changing nature of
money-laundering is like the ever-changing nature of technology."
Corruption at home
Many independent experts, however, contend that there is little
governments can do to curb money-laundering unless their root out
their own internal corruption first.
"Official corruption is rampant throughout the world. There is
no political will to do something because political leaders are
co-opted by money," says Charles Intriago, the publisher of Money
Laundering Alert, a Florida-based trade journal.
No firm estimates exist on the amount of "hot cash" that is
"washed" every year, although it is estimated to be in the tens of
billions of dollars. The methods of turning illicit cash into legal
assets have grown more sophisticated as the US and other
governments have made harder for criminals to transform their
No longer able to deposit dufflebags of currency in banks in
many countries, crooks are buying commodities for sale abroad,
setting up their own banks and foreign-exchange houses, and
laundering their cash through insurance companies, casinos, and the
purchase of real estate and securities.
"Clearly the reach of anti-money-laundering laws need to be
broadened," says Stanley Morris, director of the Financial Crimes
Enforcement Network, a branch of the US Treasury Department.
In its most far-reaching action, the FATF agreed that
governments should extend anti-money-laundering regulations to
foreign exchange dealers, brokerage firms, and other non-bank
financial institutions. …