Pubdate: Mon, 05 Jul 2004
Source: Royal Gazette, The (Bermuda)
Copyright: 2004 The Royal Gazette Ltd.
Contact:  http://www.theroyalgazette.com/
Details: http://www.mapinc.org/media/2103
Author: Matthew Taylor

ANTI-MONEY LAUNDERING EFFORTS TO BE BEEFED UP

Bermuda's Financial Investigation Unit is to be beefed up as it continues 
its fight against money laundering.

Inspector Gary Wilson currently heads a team of five but further posts are 
to be created following recommendations by the Foreign and Commonwealth 
Office-inspired KMPG review and a 2003 review by the International Monetary 
Fund.

Funding is in place this year following Cabinet approval.

"We have an approved business plan," Inspector Wilson said. "A further 
eight posts are being created."

More investigators will be added as well as an accountant, a forensic 
accountant, an analyst and administrative support.

Insp. Wilson said the workload is up because of the improved quality of 
Suspicious Activity Reports (SARs), most of which help unearth crime.

However, the number of reports has fallen due to the closure of the Western 
Union wire office which used to regularly report on suspected drug dealers.

"That was the medium of choice for local drug dealers. Consequently that 
reflected the high level of activity.

"They were making a vast number of reports. When it closed in 2002, the 
numbers fell."

Less than ten of the 275 reports last year were unsubstantiated, although 
some of the reports could be about the same individual, said Mr Wilson.

He said with only five staff the Financial Investigations Unit (FIU) has to 
be selective in what it investigates.

Under section 46 of Proceeds of Crime Act 1997 professionals in the finance 
sector must report suspicious activity to the FIU.

Inspector Wilson said there was a rough split between reports of suspicious 
activities on individuals and entities here and abroad. However, there are 
no reports of money laundering for terrorism in Bermuda =AD mostly it's 
drug trafficking.

He said, since the closure of the Western Union money wiring agency, the 
trend had shifted to human couriers and a few bank drafts to get cash 
abroad to buy assets and more drugs.

Legislation allows seizure and eventual forfeiture of cash and assets if it 
is proved to be linked to criminal activity.

"We have had a few successes where we have intercepted monies going out," 
he said.

"There was one report we received which, in isolation, didn't amount to much.

"But over a period of time many SARs were coming in on the same individual 
from several institutions and we were building the bigger picture to a 
point we could monitor activity on accounts.

"We are empowered to do that under the legislation, there are investigative 
tools =AD court orders.

"We happened to monitor an account and a safe deposit box and we caught the 
individual trying to move some money.

"That individual was using human couriers and we caught the courier as well.

"We intercepted a lot of cash which was forfeited. It was all generated 
initially from a report from a financial institution as they are advised to 
do under the legislation."

Drug dealers shunning financial institutions and taking cash out by courier 
are sometimes brought to light by airport authorities doing searches 
following profiling.

"If the Bermudian authorities don't intercept them the Americans may. If 
they are not declaring the cash the Americans will seize it." Ten thousand 
dollars is the limit into the States.

"If they are searching someone based on the profile, and they see the cash 
and ask certain questions and they don't get satisfactory answers, they do 
checks.

"If they find the person is associated with drug trafficking activity they 
can, under the legislation, seize that cash pending further inquiries."

The largest cash seizure of $60,000 was subsequently forfeited.

Cash used to go into the consolidated fund but now goes to a trust which 
helps support drug awareness and drug rehabilitation. It has more than 
$200,000 in the kitty.

Financial Secretary Donald Scott said Bermuda was not a hot spot for money 
laundering.

"World wide it's a fairly significant problem," he said.

"There are a number of major institutions which have looked at how it can 
be problematic for the international financial system which is globalised 
and interdependent through computerisation.

"The International Monetary Fund has looked at the issue fairly recently 
following observations of the financial stability forum several years ago."

Mr. Scott, who is chairman of the National Anti-Money Laundering Committee, 
which was established along with the Proceeds of Crime Act 1997, said: 
"Concerns were brought to the forum as a result of major frauds that are 
fairly well-known here, BCCI, Baring's, =AD they presented shocks to the 
international financial system.

"These are the concerns that major countries have."

He said the Financial Action Task force investigated the licensing and 
regulation of financial service providers such as banks, stock exchanges, 
collective investment vehicles.

"My sense is Bermuda is not a big target for money launderers because we 
don't have a large international offshore banking sector here.

"We don't know of any significant instances where Bermuda has been the 
centre or focus for a large money laundering operation by an international 
organisation."

=95 What is money laundering?

Money laundering is the process by which criminals or criminal 
organisations seek to disguise the illicit nature of their proceeds by 
introducing them into the legitimate commerce and finance. Left unchecked 
it can cause severe and perhaps irreparable damage to a jurisdiction's 
reputation.
- ---
MAP posted-by: Keith Brilhart