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From: "Blair Anderson"
To: "dcsb@ai.mit.edu"
Date: Sun, 09 Nov 97 01:53:59 +1300
Priority: Normal
MIME-Version: 1.0
Subject: E-Peso's for tractors - McCaffrey on banking
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Reply-To: "Blair Anderson"
06:24 p.m Nov 05, 1997 Eastern
U.S. drug czar appeals to banks to track laundering
By Anthony Boadle
WASHINGTON (Reuters) - Bankers, watch those ``smurf''
accounts.
That was the message drug enforcement authorities gave
the American Bankers Association and the American Bar
Association at their annual money laundering conference
Wednesday.
Any innocent-looking person could be depositing a drug
baron's cash parceled into amounts smaller that the
$10,000 reporting threshhold to avoid suspicion, so get
to know your customer, they warned.
Traffickers hire individuals or ``smurfs'' who open
small accounts at U.S. banks in their own or fictitious
names.
Once in the system, drug money becomes very hard to
trace, White House drug policy director Gen. Barry
McCaffrey said.
Americans spend $49 billion a year on illegal drugs and
much of that cash has to go through banks and
corporations to get back to the Colombian cartels that
ship cocaine and heroin to the the United States, he
said.
McCaffrey said drug traffickers were becoming
increasingly sophisticated in laundering their proceeds,
resorting to high tech communication encryption and
``cybercash'' transactions over the Internet.
``We are not going to find dumb guys stumbling into bank
branches in New York City with cardboard boxes full of
$20 bills that test positive for cocaine,'' he said.
``We are losing contact with the enemy,'' the general
said. ''The government cannot follow laundering by
itself. You are going to have to help.''
McCaffrey said the drug trade was moving into new areas
such as the securities industry to launder its profits.
Treasury Department Undersecretary for Enforcement,
Raymond Kelly, said Colombian cartels were using a black
market peso brokering system to send home their profits.
Cartels sell their dollars at a discount to Colombian
businessmen who need to buy goods in the United States.
The dollars go to pay the U.S. manufacturer or exporter.
The pesos never leave Colombia and end up in the drug
baron's account.
A hooded Colombian woman testified in Congress last
month that she had laundered money through large U.S.
banks and corporations unwittingly used by black market
peso brokers.
She cited the case of drug dollars going to pay for a
tractor for a Colombian farmer.
Keely, a former New York City police commissioner,
warned that money laudering was corroding financial
institutions.
``It is the source and the product of a burgeoning
global parallel trading system that serves the emerging
criminal holding companies,'' he told the bankers and
lawyers.
Kelly said the Clinton administration has worked to
lessen the burden of the Suspicious Activity Reports
that banks are obliged to file under the Banking Secrecy
Act.
The banking industry complained it had to file 12
million such reports in 1996, a time consuming and
costly activity.
New regulations exempts banks from reporting on certain
customers, such as corporations listed on stock markets
and their subsidiaries.
But a new set of rules exempting additional businesses
has caused an uproar among bankers because they would
have to track the daily currency operations of these
businesses for one year and project their annual
currency needs.
Copyright 1997 Reuters Limited. All rights reserved.
Blair Anderson (Blair@technologist.com)
International Consultant in Electronic Commerce,
Encryption and Electronic Rights Management
"Techno Junk and Grey Matter" (HTTP://WWW.NOW.CO.NZ [moving servers,
currently inactive])
50 Wainoni Road, Christchurch, New Zealand
phone 64 3 3894065
fax 64 3 3894065
Member Digital Commerce Society of Boston
---------------------------- Caught in the Net for 25 years
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