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Last Updated: Friday, 20 June, 2003, 15:11 GMT 16:11 UK
New rules widen dirty money fight
Lawyers, auction houses, casinos and jewellery dealers are being drafted into the fight against money laundering and terrorist finance, under new rules issued by dirty money experts.

Meeting in Berlin, members of the Financial Action Task Force (FATF) - a 31-nation group responsible for leading the fight against financial crime - have rewritten their 13-year-old rulebook to expand its remit from traditional financial institutions.

In a comprehensive rejig, the FATF has also called for shell banks, which are often little more than brass plates in tax havens, to be banned.

It also wants institutions to be more careful about knowing who their customers really are - especially when they might be connected to people with dubious political histories.

Other measures include tighter regulation of informal money transfer arrangements such as the South Asian hawala system.

However, some FATF members believe objections from the US and the UK mean the new rules are not as stringent as they might be.

The blacklist has saved at least 10 years of work... It's a bit tough when people who've only been at it a few months start taking over
Law enforcement expert

The group also welcomed two new members, Russia and South Africa, in a move which should improve the reputation of the pair's financial markets and make it easier, and cheaper, for them to do business with the rest of the world.

Meanwhile, FATF revised its "blacklist" of countries with inadequate controls on dirty money.

It removed the Caribbean state of St Vincent and the Grenadines, to leave nine states and territories still labelled as risky.

Long haul

The FATF was founded in 1989 as a way of toughening up the fight against drugs by helping countries follow the money trail back to the traffickers.

The following year, it published the "40 Recommendations" which are the bible for dirty money regulation worldwide.

International estimates suggest that as much as $1.5 trillion - 5% of global GDP - is laundered every year.

But the group's profile shot up following the tragedy of 11 September 2001, after which it added eight new "Special Recommendations" designed to tackle terror funding, which can involve much lower sums and is thus much more difficult to spot.

New rules

This year's revision of the so-called "Forty Plus Eight" extends the task to non-financial institutions, which experts believe are increasingly used by launderers as the rules in the banking business get tighter.

After long negotiations, the "Forty Plus Eight" are also now built into the work of assessing countries' general financial regulation carried out by the International Monetary Fund (IMF) and the World Bank.

As BBC News Online reported in 2002, the negotiations came close to pushing the FATF's work - particularly the blacklist - on to the back burner.

But since then, the groups have come to a better working accommodation, with the FATF continuing to oversee the law enforcement functions which the IMF's members will not allow it to examine.

Experts revise dirty money rules
18 Jun 03  |  Business
Experts tackle terrorist funds
11 Feb 03  |  Business
Backlog in hunt for criminal money
06 Sep 02  |  Business
IMF blocks terror fund blacklist
02 Sep 02  |  Business

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