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EDITIONS
Friday, 21 June, 2002, 18:06 GMT 19:06 UK
Four states escape dirty money list
Budapest
Hungary has tightened laws on secret bank accounts
Four countries have been taken off an international black list of places seen as havens for money laundering.

The Financial Action Task Force (FATF), the Paris-based body charged with overseeing the fight against money laundering and terrorist finance, gave Hungary, Israel, Lebanon and St Kitts & Nevis a clean bill of health.

The move comes just days ahead of the G8 summit in Canada, which will again boost the profile of the fight against money laundering and terrorist finance.

Ministers are likely to use the FATF's work - which includes analyses of the way both money launderers and terrorists move their money around - to encourage one another to update their own systems.

The FATF's largely positive report will also help them bolster themselves against suggestions that the fight against terror finance is becalmed.

Black-listed
Cook Islands
Dominica
Egypt
Grenada
Guatemala
Indonesia
Marshall Islands
Burma
Nauru
Nigeria
Niue
The Philippines
Russia
St Vincent & the Grenadines
Ukraine
All four will remain under observation for some time, but it should now be easier for them to access the global financial system.

The list of "non-cooperating countries and territories" is published every year and should alert banks and other financial institutions to places they should take special precautions with.

There are now 15 states and territories on the list.

Getting better

Israel was taken off the list after enacting laws to ensure banks know who benefits from their services, FATF president Clarie Lo said. Israel also plans to create a proper financial regulator.

Hungary was taken off the list because it introduced a law that bans anonymous accounts.

Russia has introduced the laws that FATF requested, but the organisation wants to see how these laws work in practice before taking the country off the list.

Black marks

FATF officials said that in the Ukraine, "in plain English, nothing has been done."

The FATF also recommended that its member countries take measures against Nigeria unless it pushes through legal reforms.

The proposed measures are not spelled out in detail, but they include more surveillance and reporting of transactions between banks in a task force country and clients in Nigeria

Such proposals are not particularly draconian, but they would make business more difficult and time consuming.

Terror hunt stepped up

Separately, FATF members have all backed recommendations developed in the wake of 11 September to help sniff out terrorist funds.

FATF members had either adopted these measures or were making "significant progress".

Also on Friday, Germany - whose chief financial regulator, Jochen Sanio, is to be the FATF's president from 1 July - introduced new legislation to confront money laundering.

The law means any suspicious transactions over 15,000 euros ($14,454) have to be reported, not only by financial professionals but also by casinos, art dealers, lawyers estate agents and others.

Black list failings?

Behind the scenes, critics of the FATF black list point out that money laundering happens almost anywhere with a significant financial services industry.

The list, some say, favours big financial centres such as London and New York, which are often the eventual destination for laundered money.

The "big stick" approach of threatening sanctions and isolation is also thought by critics to be problematic, and could encourage a move to effectively build alternative financial structures - making illegal money even harder to track.

That could trigger a move behind the scenes to offer countries more help to change their practices.

Many of the 15 countries on the list - notably Russia - say they are working as hard as they can to rectify matters.

The expense of training and sustaining sufficiently tough regulators is a heavy burden on developing countries.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Andrew Walker
"Those that depart most from the standards the Task Force wants can face counter measures."
See also:

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