'Easy' money laundering in US

Hundreds of billions are laundered each year

An investigation by the United States Congress has concluded that it is not difficult for foreigners to use US banks for money laundering.

It is relatively easy for foreign individuals or entities to hide their identities while forming shell corporations that can be used for the purpose of laundering money

Congress report

The report, by the General Accounting Office (GAO) - the investigative arm of Congress - found questionable transactions involving more than $1bn at Citibank and Commercial Bank of San Francisco.

It said the transfers, which originated in Russia and Eastern Europe, had been carried out in violation of security requirements.

Citibank has admitted there was a lapse and says the accounts in question have since been closed.

The report says that between 1991 and the beginning of this year, more than $1.4bn in wire transactions found its way into 236 accounts opened at Citibank and Commercial Bank of San Francisco.

Legal loophole

The accounts had been opened by two companies registered in Delaware state: Euro-American, and International Business Creations.

The report noted that Delaware law does not require corporations registered in the state to disclose details such as their area of activity or their main participants.

"It is relatively easy for foreign individuals or entities to hide their identities while forming shell corporations that can be used for the purpose of laundering money," the GAO report said.

It said Citibank and Commercial Bank of San Francisco had "violated the principles" of industry policies which oblige banks to monitor accounts for suspicious transactions or customers.

Money laundering - shifting criminally-obtained money in such a way as to make it look like the proceeds of legal business - is estimated to involve some $600bn per year - 5% of the world's gross domestic product.

An investigation last year found that Russian criminals had laundered some $7bn through accounts at the Bank of New York.