States stay on money laundering list

Scrutiny of terror funding is still being tightened

Nineteen countries and territories are to continue suffering under the stigma of being listed as havens for money laundering.

The Financial Action Task Force (FATF), the 29-member body which runs the blacklist, said none of the 19 had made enough progress in enhancing their regulatory structures or information sharing to be delisted.

Blacklisted

Cook Islands

Dominica

Egypt

Grenada

Guatemala

Hungary

Indonesia

Israel

Lebanon

Marshall Islands

Myanmar

Nauru

Nigeria

Niue

The Philippines

Russia

St Kitts & Nevis

St Vincent & the Grenadines

Ukraine

At the same time, the FATF said its work to strengthen measures to block terrorist finances was proceeding according to plan.

By June, it said, the eight recommendations it made after the 11 September attacks should be in place across its membership.

And it invited non-members to join the process, promising that members would offer technical assistance to get their financial regulatory structures up to scratch.

Even countries with strong deterrents already in place against money laundering could have trouble tracking terrorist funds, the FATF believes.

Normal money laundering is about financial gain, and - of course - involves money sourced from illicit activities.

But money destined to support terrorism often has entirely legitimate origins - and the lack of an acquisitive motivation means that there is rarely any overt change in financial behaviour on the part of the recipient.

Hopes deferred

The blacklist ruling dashes the hopes of the Philippines, which is threatened with sanctions if it does not get its house in order.

Nauru, a tiny island in the Pacific accused of being a conduit for billions in Russian mafia money, already has all its transactions with member states heavily scrutinised - the first time in the FATF's 12-year history that counter-measures have actually been applied.

Speaking after the FATF's plenary session in Hong Kong, its president, Clarie Lo, said that a number of the 19 non-cooperating countries and territories (NCCTs) were making progress.

Hungary and St Kitts were both invited to come up with plans of how promises to improve their oversight systems will work in practice, in time for the next FATF session in June.

Hungary's system of anonymous bank accounts is being dismantled, a key requirement for delisting.

Even so, no-one had yet done enough to be removed from the list, Ms Lo explained.

In the Philippines case a senator had come to Hong Kong specifically to lobby for removal.

"The FATF noted that the Philippines had enacted the anti-terrorist act in September 2001," Ms Lo said.

"However, there are still some deficiencies that need to be remedied before we can consider any form of delisting.