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Date Released: 11 March 1999

A NEW attack on money laundering launched in Vienna on 5 March proposes "a league of internationally approved offshore centres with acceptable standards of control over their use by the financial industry" (FT 5.3.99).

The Financial Times says that the league would, in effect, be a "white list". However, the United Nations Global Programme Against Money Laundering, which has launched the scheme - the Offshore Initiative - is wary of using the term because of political sensitivities. Governments responsible for centres which fail to reach the standards of the league within five years would come under international pressure to close them.

The FT says the approach is a "carrot" one, as opposed to the "stick" approach of the Organisation for Economic Co-operation and Development (OECD), which wants to blacklist suspect centres.

The Isle of Man, the Cayman Islands, Gibraltar and Malta, which have all brought in substantial anti-money laundering measures, have reportedly started talks with the Global Programme about becoming authorised centres.

The UN believes that offering an opportunity for inclusion in a "white list" is thought more likely to attract worldwide political support than straightforward exclusion, or blacklisting of suspect centres.

It is thought that this latter approach might be seen by many developing countries as discrimination by rich nations, led by the Group of Seven and the OECD's 22 other countries.

The paper points out that with the globalisation of the financial industry enabled by computer and communications technology, offshore centres are "a quick way of creating well-paid jobs in developing countries". There are now 18 in the Caribbean and Central America, 16 in Europe, 11 in the Asia-Pacific region, three in the Gulf and eastern Mediterranean and three in or off Africa.

Many claim to be regulated by governments which have passed supervisory legislation, says the FT, but "there is usually a shortage of technically qualified people to enforce the law".

A UN report last year said that many of the banks were little more than "closets with computers", even though they had full access to the global financial system.

Training would be a feature of the Offshore Initiative, which the UN hopes will be endorsed at an international conference next year.

"One important aspect of the initiative", says the FT, "is that it does not challenge the role of offshore centres as low tax zones which ease international capital flows".

"UN officials believe that tax havens will survive because of this role, so it will be better to work with them to separate the money laundering issue from arguments about taxation and harmonisation. The aim would be to reach consensus on criminal use of the centres."


Anthony Fisher

Finance Centre Development Director
Department of Trade & Industry
Government of Gibraltar
Suite 771, Europort

Tel No:  + 350 50011
Fax No:  + 350 47677
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