--- begin forwarded text From: "Blair Anderson" <blair@technologist.com> To: "dcsb@ai.mit.edu" <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 Sender: bounce-dcsb@ai.mit.edu Precedence: bulk Reply-To: "Blair Anderson" <blair@technologist.com> 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 ---------------------------- For help on using this list (especially unsubscribing), send a message to "dcsb-request@ai.mit.edu" with one line of text: "help". --- end forwarded text ----------------- Robert Hettinga (rah@shipwright.com), Philodox e$, 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' The e$ Home Page: http://www.shipwright.com/ Ask me about FC98 in Anguilla!: <http://www.fc98.ai/>