No more safe havens for corrupters

Ajit Joy , Jakarta | Mon, 04/28/2008 11:42 AM | Opinion It is bad news for big criminals and corrupters that the number of safe havens to hide their ill-gotten wealth is diminishing. Safe havens are now turning unsafe. In spite of the fantastic growth in technology and services, whereby money can be sent instantly to various jurisdictions and invested through shell companies in remote locations, monitoring of such activities is becoming more and more rigorous. A few years back there was little monitoring of financial transactions within countries. Cooperation between countries in tracing and forfeiting stolen assets was also rare. New dispensations like the United Nations Convention against Corruption, which 114 states have already ratified, call for strict measures to prevent corruption as well as to punish the corrupters and seize and repatriate stolen assets. Money laundering involving ill-gotten wealth is becoming increasingly risky with the proactiveness of regional groupings like the Asia/Pacific Group on Money Laundering (APG) and international bodies like the Financial Action Task Force (FATF) that promote policies to counter money laundering and terrorist financing. Now every financial transaction above a certain amount is reported by the banks to their national Financial Intelligence Units (FIUs). The setting up of FIUs has become mandatory under the UN Convention against Corruption. Banks have to know their customers and report all suspicious transactions. Monitoring of politically exposed persons is more rigorous than others. In Indonesia, the PPATK (Pusat Pelaporan Dan Analisis Transaksi Keuangan) is the Financial Intelligence Unit that is being supplied with the necessary information by all banks in the country. They in turn analyze the data and further notify the Attorney General's Office and the National Police of money laundering. Countries are now also collecting a lot of information through law enforcement cooperation with each other as well as through Interpol. FIUs of different countries have their own cooperation through professional groupings. For instance the Egmont Group, of which Indonesia is a member, is an informal network of FIUs of more than 100 countries that interact and share information. Just to give you a flavor of the kind of setup some of the offshore financial centers have; tiny Jersey, an island between England and France with a population of 70,000, has 77 banks. Cayman Islands with a population of just 40,000 has, hold your breath, 575 banks (IMF, 2000). Historic safe havens like Switzerland are now seriously monitoring wealth being deposited in their country. In the past few years they have returned close to US$1.6 billion to countries that had lost those assets through corruption. Due diligence has become the norm with most Swiss banks, which now employ compliance officers whose job it is to verify the credentials of account holders from around the world and report immediately to the government in case of suspicion. This is also the case with other small countries like Guernsey, Jersey, Isle of Man, Liechtenstein, Singapore, Cayman Island, etc., all of which are well-known offshore financial centers. There is now international pressure on established safe havens to be more transparent in their functioning. Bank secrecy and privacy behind which all kinds of illegal wealth was being laundered are

now being increasingly challenged. The fact that some of this money is also being used by terrorist groups to fund their nefarious activities has contributed to the stricter monitoring of those accounts. An interesting episode took place recently when Germany through its secret service purchased clandestinely personal data of depositors from a Liechtenstein bank. This exposed a large number of German citizens who had stashed away large sums to escape taxation in Germany. The data also revealed several accounts from Great Britain. This startling find has raised further the debate of improving accountability and transparency in European tax havens. Recently the United Nations Office on Drugs and Crime and the World Bank launched a Stolen Assets Recovery initiative (StAR) to help nations recover assets stolen by their nationals and deposited abroad. For stolen assets to be returned through a criminal prosecution, countries have to go through a process of mutual legal assistance (MLA), asking for help from the receiving country. This is a complicated and time-consuming process with a lot of legality associated with differences in jurisdiction and legal systems. The more jurisdictions through which the money has passed, the more difficult its tracing becomes. But now countries are cooperating much more promptly to MLA requests and assisting requesting countries to freeze, trace and return stolen assets. A case in point is that of the former Nigerian dictator Gen. Sani Abacha, whose stolen assets worth millions of dollars were returned back to Nigeria by different countries. The Nigerian government had used a combination of MLA requests under the criminal process, civil action litigation in the receiving countries as well as mediation with the Abacha family. Indonesia is one of the pilot countries under the StAR initiative. The government of Indonesia has shown determination to recover assets that have been siphoned out of the country in the past, assets belonging to the people of the country and which must rightfully come back to them. But this is not going to be either easy or quick. It will require a highly professional team of investigators and prosecutors to work with patience and determination backed by solid political support. It took the Philippines 18 years to recover a portion of the money deposited abroad by former president Marcos. Various strategies will have to be employed by the government in getting back those assets. When criminal action due to a lack of sufficient evidence may not be successful, it has to turn to civil action in foreign countries. In yet other cases it must mediate to bring back its assets. Use of strong diplomatic pressure would also be required. The clever criminal assisted by his lawyers and accountants will still find ways to escape. But with the new order, it seems almost certain that he will not have the pleasure of sound sleep even for a single night. The writer is a crime prevention expert at the United Nations Office on Drugs and Crime, Jakarta. The views expressed here are the author's own. He can be reached at ajit.joy@unodc.org.

Nowadays, the number of safe havens to hide the corruptors ill-gotten wealth is decrease, it means a bad news for them. Bacause Safe havens are now turning unsafe. In spite of the growth in technology and services, whereby money can be sent instantly invested through shell companies in some locations, monitoring of such activities is becoming more and more important A few years back there was little monitoring of financial transactions within countries. Cooperation between countries in tracing and forfeiting stolen assets was also rare. But now every financial transaction above a certain amount is reported by the banks to their national Financial Intelligence Units (FIUs). In Indonesia, Financial Intelligence Units (FIUs) is usually called PPATK (Pusat Pelaporan Dan Analisis Transaksi Keuangan). PPATK (Pusat Pelaporan Dan Analisis Transaksi Keuangan) is being supplied with the important information by all banks in the country. Countries are now also collecting a lot of information through law enforcement cooperation with each other as well as through Interpol. Every FIUs in different country have their own cooperation and share information with another country. Historic safe havens like Switzerland are now seriously monitoring wealth being deposited in their country. In the past few years they have returned close to US$1.6 billion to countries that had lost those assets through corruption. There is now international pressure on established safe havens to be more transparent in their functioning. Bank secrecy and privacy behind which all kinds of illegal wealth was being laundered are now being increasingly challenged. Recently the United Nations Office on Drugs and Crime and the World Bank launched a Stolen Assets Recovery initiative (StAR) to help nations recover assets stolen by their nationals and deposited abroad. For stolen assets to be returned through a criminal prosecution, countries have to go through a process of mutual legal assistance (MLA), asking for help from the receiving country.

Indonesia is one of the pilot countries under the StAR initiative. The government of Indonesia has shown determination to recover assets that have been siphoned out of the country in the past, assets belonging to the people of the country and which must rightfully come back to them. But this is not going to be either easy or quick. It will require a highly professional team of investigators to work with patience backed by solid political support. And many strategy will employed by the government country to get back the asset that lost by corruptors. With that new law, it very hard for corruptor and big criminals to do the criminals thing.

Hapsari Dhamayanti XI IPS-2