Money Launderers Skirt Law - Using Keyboards Series: Treasure Islands: Second of Two Parts on Offshore Banking

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Follow the money.

That's the credo of any investigator out to uncover fraud and financial crime. But in the wild, high-tech world of offshore international banking, it can be an impossible task.

Within moments, a Russian mobster, say, can electronically send millions of dollars to an international corporation's bank account in Antigua. Minutes later, the money can be redeposited into another account in a different bank, then transferred to yet another corporation, with anonymous owners, who then deposit it in yet another bank. "If you get enough of these offshore corporations and run the money through enough of their bank accounts in these secrecy havens, nobody can find the money," says Washington lawyer Jack Blum, an expert on international money laundering. The marriage of high technology, the global economy, and the secretive offshore banking centers has created a money launderer's dream. Experts estimate that anywhere between $100 billion and $1 trillion dollars of ill-gotten gains are funneled through the international banking system annually. Many of the transactions can be completed with the click of a few computer keys. "The technology and the international criminal activity are way ahead of the governmental response," says Miami lawyer John Mattes. Top US law-enforcement officials admit that the system to deal with the problem is fragmented, at best. This week, experts from the Group of Seven countries and Russia met in Paris to discuss ways to remedy that. They're devising a set of agreements to allow law enforcement to track electronic communications that cross national boundaries. Their goal is to complete it by next year's Summit of the Eight in Birmingham, England. "Figuring out how to enforce fair rules, regardless of where a transaction takes place, is going to be critical for the success of {economic} globalization," says Jonathan Winer, a deputy assistant secretary of State. But even with a coordinated, international attack on the electronics of crime, the money trail can go cold as soon as it reaches the sunny, Caribbean offshore centers with their strict, confidential banking laws. In many of those countries, anyone can open an "international business corporation" and keep his identity private. "To combat money laundering, you need as much transparency in the banking system as you can get," says Jeff Ross of the Justice Department's criminal division. Over the past few years, the international community has pressured the world's 35 offshore centers to tighten their banking regulations, scrutinize their customers, and relax some secrecy laws. …


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