Finance Watch / Inner City Press

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The plane-bombings of the World Trade Center and U.S. Pentagon on September 11, 2001, have resulted in a
renewed (and needed) campaign to reform anti-money laundering, tax haven and bank secrecy laws. This Report
will be ongoing; the initial Background is below, Sept. 23, 2001.
May 12,2003
The U.S. Federal Reserve's William Ryback, speaking May 6 at a Bankers Association for Finance and Trade
conference in Phoenix, said that the Fed has detected more deficiencies in financial institutions' anti-money-
laundering programs in the past two years. "That's why we hired more specialists to look at money-laundering
controls, and they tend to take a much more harsher view on what is being done in the institutions on a daily basis,"
Mr. Ryback said. He also cited failures to do timely updates of their anti-laundering policies....For or with more
information, contact us.
May 5,2003
From the Kyrgyz news agency Kabar, in Bishkek, May 1st: the National Bank of Kyrgyzstan has adopted a
resolution which specifies new requirements for determining the entities of offshore financial centers and carries a
list of such centers. It says that the document has been adopted in order to ensure the security, reliability and
stability of the republic's banking and payment system, to protect the interests of depositors and other creditors of
commercial banks, to prevent money laundering, to assist in fighting terrorist financing and to ensure that banking
operations are transparent. The resolution says that those banks and their branches, holding companies, financial and
credit institutions, corporate bodies and private individuals that are situated in the countries or their domains that
provide for tax exemptions and/or do not envisage overall public disclosure and/or the handing over of information
to banking supervision bodies, in accordance with the requirements and recommendations of the Bazel Committee
on Banking Supervision, are the entities of offshore centers. The list of offshore financial centers includes Anguilla,
Antigua, Barbuda, Barbados, Gibraltar, Lebanon and so on, 42 countries altogether. The resolution says that certain
amendments and additions may be introduced into the list. The resolution extends to commercial banks, to the
Raschetno Sberegatelnaya Kompaniya open-type joint-stock company a Kyrgyz saving bank, and to financial and
credit institutions. The resolution takes effect in 30 days, after its publication by the National Bank of Kyrgyzstan.
On April 30, the U.S. Federal Reserve required HSBC to sign a commitment to improve its anti-money laundering
safeguards. As reflected below, ICP has been raising these issues since at least November 2002; the Federal Reserve
dodged requiring any application for approval by HSBC to acquire Household International...
April 28,2003
The White House has yet to issue its annual planning document to coordinate the federal government's strategy for
combating money laundering. The administration says the plan, due in February, is late because new Treasury
Secretary John Snow is still reviewing it. Until it is released, agencies involved in the effort lack a list of priorities
that require their attention. (And, as we've reported, the largest banks do too little, and seek confidential treatment
for what little they do.)
April 21,2003
On April 18 in Karachi, officials of the State Bank of Pakistan announced that they've frozen a total of 24 accounts,
containing $ 10.2m in deposits, in the last year and a half. They acknowledge that most targeted groups had already
withdrawn most of their funds from accounts before they were frozen. A State Bank directive, dated March 29,
proclaims that the new policy is part of the "heightened global efforts to prevent the possible use of the banking
sector for money laundering, terrorist financing, transfer of illegal, ill-gotten monies."
April 14,2003
Rose-colored glasses: the Financial Times of April 9 quotes Ellen Zimiles, national financial services industry
leader for KPMG Forensic, that she has detected a "huge uptick in interest from US organizations and foreign
organizations that want to be up to the US standard - from typical banking channels to insurance companies and
brokerage firms." That's a source that's paid to praise the industry. More troublingly, James Sloan, director of the
U.S. Treasury Department's Financial Crimes Enforcement Network is quoted that "The industry has become one of
the most important partners we have." Yeah, the largest banks have been doing a great job -- particularly Citigroup
and HSBC....
April 7,2003
The South African publication Business Day opined last week that "the Southern African Free Trade and
Development Agreement between the US and the Southern African Customs Union (Sacu) appears to be driven by
the commercial interests of US business in search of global markets. Scratch the surface, however, and its true
motivation lies in a pursuit for US national security.... Except for Swaziland, all countries in the region have