Internet may be new money laundering battlefield


Globalization of the finance sector and the rapid expansion of online banking are making it easier for criminals to hide the profits of crime, a regional conference of anti-money laundering officials was told Tuesday.

Opening a three-day meeting of the Asia-Pacific Group on Money Laundering, Malaysia’s central bank governor warned that criminals would use new communications and information technology to try to skirt traditional measures against money laundering, which experts estimate involves about US$1 trillion each year worldwide.

“Rapid developments in the financial system and globalization have made the world increasingly borderless,” Bank Negara chief Zeti Akhtar Aziz told more than 200 government and private sector delegates in a speech to open the meeting.

“As countries implement countermeasures, criminals with their ill-gotten gains and money launderers who disguise the criminal proceeds have developed new and more sophisticated methods for moving money around the globe,” she said.

“Money launderers are swift in probing the financial system for vulnerabilities and using their ingenuity to devise new methods to circumvent the system and adapt their methods to exploit these vulnerabilities.”

The Financial Action Task Force on Money Laundering, an international group formed by the G-7 group of industrialized nations, defines the practice as disguising the illegal proceeds of crime as legitimate funds so as not to jeopardize their source.

In a report in February, the task force identified Internet banking as an area of rising concern, because transactions could be made easily, quickly, and with virtual anonymity.

While Internet banking may have contributed to reducing costs and making the sector more efficient, it has also mad customer identification and monitoring of accounts and transactions by financial institutions more difficult, the report said. These monitoring procedures were fundamental to combating money laundering.

While no specific examples of money laundering using the Internet have been reported, some experts say this is because no adequate means has been developed to detect the practice rather than because it does not occur.

The 19-nation Asia-Pacific Group helps develop anti-money laundering policies for its members which match internationally accepted standards. Its annual meeting is being held Kuala Lumpur until Thursday.

Host nation Malaysia earlier this month passed laws making money laundering a crime and imposing new requirements on financial institutions related to customer identification and reporting of suspicious transactions.

Daim Zainuddin, Malaysia’s Finance Minister, told the meeting that money laundering affects all levels of society, robbing governments of tax revenue and driving out legitimate businesses.

“Money laundering is undoubtedly sinister as it lives off ill-gotten wealth,” he said in a speech. “It gives wicked legitimacy to proceeds acquired through drug trafficking, extortion and arms smuggling.

“Complicated financial transactions of converting and concealing proceeds … provide a gloss to the horrible manner the moneys were amassed. The so-called clean money, in turn, spawns more social and economic woes as traffickers and smugglers expand the underworld, bribing their way, cheating.”