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| Sunday, 27 June 2004 |
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Features |  |
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by Jiffrey J. Lunstead, US Ambassador in Sri Lanka Money laundering appears to be complex, but in reality it is logical, relatively simple, and a powerful means for criminal groups to operate and expand. It is important that money laundering laws cover all financial institutions, not only banks but also bureaus de change, money transmitters, casinos, insurance and securities companies. International standards also encourage new laws to cover moneys paid to solicitors and accountants, who have in the past been used as intermediaries in money laundering schemes. Finally, in most anti-money laundering laws, non-financial businesses, such as automobile dealers and other sellers of high value goods, are required to file reports of suspicious transactions. Another factor to consider in preparing your money laundering law is the physical transportation of cash and negotiable instruments across your borders. We have had such a law in place in the US since 1970. It is not illegal to bring cash in or out of the US but it must be reported. The development of money laundering laws and regulations is an enormous task that will require co-ordination of all affected ministries. Sri lanka is already off to a good start with the work completed by the Central Bank, Ministry of Finance, and the Ministry of Justice in their work with the IMF to develop draft anti-money laundering laws. The Ministry of Foreign Affairs should also be complimented on their work in drafting legislation to combat the financing of terrorism. We encourage your continued efforts in finalising this important legislation. Once new laws are enacted, the government must ensure that adequate resources are given to all regulatory, law enforcement, and prosecution agencies to implement the law. After all, which is worse, to have no law or to have good laws that are not enforced? The United States is proud of its partnership with the Government of Sri Lanka in the fight against terrorism, transnational crimes, and other activities that can subvert the progress that you are making toward a better future for your people. It will be your hard work, tailoring a system of laws and procedures to meet your requirements and your environment, which will make this program succeed. Since September 11, many more of us have become aware of the sordid aspects of money laundering relating to terrorist financing. Like the United States, Sri Lanka has long suffered from acts of terrorism and thus our countries share a common interest in eliminating sources of terrorist financing. Money launderers - not only terrorist, but also organised criminal groups - exploit weaknesses in financial systems. Recognising that, the United States has embarked on a worldwide effort to assist countries to develop effective anti-money laundering regimes. Money laundering is the process where the proceeds of illegal activity are concealed, and the money from this activity is made to appear to have a legal source. Very simply stated, money laundering is making dirty money clean. Some people might say that money laundering is not a big problem in Sri Lanka, since the island has no large drug-trafficking or organised criminal groups. But money laundering facilitates all crime, by giving criminals the ability to enjoy the proceeds of their crimes and also by giving them resources to expand their criminal activities. The first money laundering laws targeted the drug trade. In recent times, however, most international organisations and countries have recognised the need to expand money laundering laws to cover all serious crimes. In the United States, money laundering regulations are focused on preventing criminals from getting their illicit money into the financial system. We have both mandatory reporting of large cash transactions and also Suspicious Activity Reports of financial transactions. Because we have closed US banks to an influx of criminal cash, criminals have had to resort to the physical transportation of cash to neighbouring countries, where they can put it into the financial system. Similarly, if Sri Lanka is perceived as having weak anti-money laundering procedures, criminal funds could find their way into the Sri Lankan financial system. This could inhabit the development of Colombo as a Regional Financial Centre. Money laundering laws and regulations do place additional responsibilities and burdens on banking operations. However, in the American fight against money laundering, it was a small price to pay to ensure the stability of the banking system. All international banks currently operating in Sri Lanka already have these systems in place, and through their recent efforts in holding seminars on money laundering they have worked to mentor local banks in promoting the international anti-money laundering message. Extracts from a lecture given at a seminar on money laundering on June 24, 2004 |
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