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~ Compliance Contents~
Source: G7 Statement 18 June 1999
21. "We welcome and support the work of the Financial Action Task Force on Money Laundering (FATF) to identify jurisdictions which fail to cooperate effectively in the international fight against money laundering and thus facilitate the laundering of proceeds from corruption and organized crime. (1) The FATF should take concrete steps to bring offshore financial centers and underregulated and noncooperating jurisdictions into compliance with the 40 recommendations against money laundering and to protect the international financial community from the adverse impact of those that do not comply. ***(2) We call upon our Ministers of Finance, in coordination with other Ministers, in particular with Ministers of Justice and the Interior, to coordinate the development and implementation of complementary positions regarding offshore financial centers and the FATF's work on non-cooperative jurisdictions in the various fora where these issues are being addressed."
• The Finance Ministers and Central Bank Governors, the Foreign Ministers and the Ministers of Justice and the Interior have respectively published reports in the aftermath of the Koln Summit that have addressed transnational organized crime (e.g. money laundering, corruption, fraud, etc.). However, with the exception of recognizing that these Ministers take part in the development and implementation of FATF mandates, coordinated positions specifically among these Ministers have not been explicitly developed as of yet.
MINISTERIAL DEVELOPMENTS POST-1999 KOLN SUMMIT
• The 25 September 1999 meeting of the G7 Finance Ministers and Central Bank Governors does indicate a commitment to "ensure that our experts on such matters will coordinate and actively seek to contribute to ongoing efforts to address these problems through mutually reinforcing initiatives within the FATF and the OECD."
• More importantly, the 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors urges the FATF to complete its identification of non-cooperative jurisdictions expeditiously "and, in this context, we will coordinate our work with other ministries when appropriate." The 16 April 2000 meeting of the G7 Finance Ministers and Central Bank Governors conceded that they were looking forward to the FATF's report on non-cooperative countries and territories due in June 2000.
• The 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors indicates that a report on the progress of coordination with relevant multilateral fora to combat money laundering and corruption will be made at the upcoming Summit meeting.
• The Financial Stability Forum's Working Group on Offshore Financial Centers presented a Report to the 16 April 2000 meeting of the G7 Finance Ministers and Central Bank Governors. This Report was subsequently endorsed by the meeting and generally reinforces the work of the FATF on the identification of priority jurisdictions and the more intense focus on improvements in transparency and international cooperation.
• At the G8 Foreign Ministers' Meeting in Berlin, 16-17 December 1999, it was stated that the G8 could strengthen the ability of the international community to prevent conflicts by focusing on the UN; regional organizations and fora; non-governmental organizations, the private sector; the efforts of states at risk with an approach that would include work to address specific issues which include: organized crime, trafficking of persons and drugs in fueling conflict and tackling the illicit trade in certain high value commodities.
• The October 1999 G8 Justice and Interior Ministerial in Moscow states, We warmly welcome the work of our colleagues, the Finance Ministers, through a variety of fora, and the work of the FATF, in combating money laundering...We have considered a range of additional measures which we can take at the G-8 level to complement this work, and, in particular, to further enhance our cooperation with other countries...We agreed to bring into closer alignment our legislation covering the laundering of the proceeds of serious crimes and to render the fullest mutual legal assistance in the investigation and prosecution of serious crime, as well as in confiscating proceeds of crime.
FATF DEVELOPMENTS POST-1999 KOLN SUMMIT
• Indirect evidence of at least concerted Ministerial positions with respect to offshore financial centres and non-cooperative jurisdictions comes through the recognition that these Ministers take part in the work of the FATF. Of particular importance is the publication on 14 February 2000 of a Report on Non-Cooperative Countries and Territories. This Report outlines 25 criteria for identifying non-cooperative countries and territories (e.g. loopholes in financial regulations, impediments set by other regulatory requirements, obstacles to international cooperation and inadequate resources for preventing, detecting and repressing money laundering activities).
The Report also indicates that four regional review groups have been established to carry out this identification process (Americas; Asia/Pacific; Europe; and Africa and the Middle East).
• According to an FATF official, the FATF Annual Report that will be available after their June 20-23 meeting is expected to publish a "black list" of non-cooperative countries and territories and may possibly outline case-specific proposals for action. As the Report suggests, the identification process will likely be categorical and therefore the responses will vary (e.g. Proposals for action include dialogue and or advice and technical assistance via collaborative or unilateral efforts. Other multilateral fora, such as the G7, the OECD, the Basle Committee, the International Organization of Securities Commission (IOSCO) and International Financial Institutions, were also cited for their important role to induce compliance whether in the form of public statements or other appropriate action). In the event of continuing failure to comply, the application of Recommendation 21 has been proposed. This would include conditioning, restricting or even prohibiting financial transactions between members' financial institutions and those identified as non-cooperative. The Report also states that such sanctions should be extended to prohibiting access to information technology facilities as well.
• On 22 June 2000, the FATF published its Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures. Within this Report, 15 of 29 jurisdictions assessed have been identified as non-cooperative (with serious systemic problems) -- the other jurisdictions were identified as only partially cooperative (but becoming more cooperative).
|Bahamas||Antigua and Barbuda|
|Dominica||British Virgin Islands|
|Lebanon||Gibraltar, Guernsey, the Isle of Man and Jersey|
|St. Kitts and Nevis|
|St. Vincent and Grenadines|
• As a result of the dialogue undertaken by FATF regional review groups and these territories, the Report points out that many of these jurisdictions have indicated that they would shortly submit anti-money laundering bills to their legislative bodies and would conclude international arrangements to exchange information on money laundering cases among competent authorities.
• Pending the adoption and implementation of the appropriate legislation and/or measures, the FATF has recommended that, in accordance with Recommendation 21,
Financial institutions should give special attention to business relations and transactions with persons, including companies and financial institutions, from the "non-cooperative countries and territories"...and doing so take into account issues raised [regarding the identified systemic problems].
• The FATF also stated its commitment to remain fully engaged with these identified jurisdictions.
• What this means then is that the commitment to develop coordinated positions on offshore financial centres and non-cooperative jurisdictions that would complement the FATF's work is still in progress -- and will likely occur at the pre-Okinawa Ministerial meetings. Or, at the very least, an indication, on the part of the Ministerials, of working towards a coordinated response, given the short time frame between the FATF Annual Report 20-23 June 2000 and the G7/8 Ministerials (e.g. G8 Foreign Ministers to meet 12-13 July 2000; G7 Finance Ministers to meet 8 July 2000).
ADDITIONAL COMMITMENTS MADE AT THE KOLN SUMMIT
(Note: These additional commitments are included because they form part of the G7/8's overall strategy in combating transnational organized crime and clearly compliment the above commitment -- which was selected based on the ambition/significance methodology).
Source: G8 Communiqué Koln 20 June 1999
45. (1) "We will sustain the momentum of international efforts to combat transnational organized crime and the threat it represents to political, financial and social stability . We commend the work of the Senior Experts Group on Transnational Organized Crime and on Terrorism and (2) urge them to continue their work, in particular for an early conclusion of the negotiations of UN conventions and protocols on organized crime. (3) We also call for more rapid progress of negotiations on the UN Convention on the Financing of Terrorism. We ask the two expert groups to report back to us next year. (4) We reaffirm our commitment to tackle the drug issue, in particular through active implementation of the conclusions of the 1998 UN General Assembly Special Session on the World Drug Program. We welcome the upcoming Ministerial Meeting on Crime to be held this fall."
• The October 1999 G8 Justice and Interior Ministerial in Moscow reaffirmed support for the UN Convention Against Transnational Organized Crime (TOC) and its protocols.
• The Lyon Group has also been influential in the negotiation of the draft on the protocol on trafficking in human beings. According to the October 1999 G8 Justice and Interior Ministerial in Moscow, the Lyon Group has pledged to intensify its efforts to develop and facilitate national, multilateral and international principles, agreements, strategies ad actions to prevent and counter the smuggling of and trafficking in human beings. The guiding principles which will form the basis for future efforts and which all countries should embrace include: there must be no safe havens for those who organize, aid or abet, profit from, or participate in the smuggling of or trafficking in human beings; must reduce the root causes of this phenomenon; all States should enact legislation to criminalize these activities; and, that prevention is also important as is the development of common international standards. To solidify these expectations, this Ministerial produced an Action Plan which entails 16 points on 'International Law, Measures and Procedures' and 14 points on 'Domestic Laws, measures and Procedures.'
• The 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors indicated that,
International financial institutions have been urged to encourage countries, in the context of financial sector reform programs, to adopt anti- money laundering policies and measures.
And, All firms and institutions participating in financial markets have been asked to implement robust systems for alerting them promptly and effectively to financial flows that may involve the laundering of proceeds of crime.
• According to an FATF official, the FATF has played an important part in articulating Article 4 (re: money laundering) of the UN Convention Against TOC. Of particular concern is that there are currently two options under review and the FATF is trying to persuade UN members to adopt the option that will call upon all states to adhere to the FATF's 40 Recommendations.
• The latest Special Session on the framework of the UN Convention Against TOC
convened in April 2000. According to a General Assembly press release (GA/9690) the UN Convention Against TOC will, as initially anticipated, be signed at the high-level conference in Palermo during the Millennium Session later on this year.
Source: G7 Statement 18 June 1999
22. "We welcome the establishment of the OECD's Forum on harmful tax competition and the actual start of implementing the guidelines and recommendations adopted by the OECD with respect to the harmful effects of unfair tax practices. We strongly endorse the current work program of the Forum, in particular efforts to identify tax havens. We also support the Forum's intention to engage in a dialogue with jurisdictions identified through this process. We urge that this work be given a high priority. We also note the ongoing work to implement the code of conduct within the European Union."
• The OECD Forum on Harmful Tax Competition met in November 1999 to undertake an initial technical evaluation of identified tax haven jurisdictions -- based on the criteria set out in the OECD's 1998 Report on Harmful Tax Competition. The preliminary findings were subsequently presented to the OECD's Fiscal Affairs Committee in January 2000. Currently, private dialogue is underway with these identified jurisdictions and any list of tax havens is expected to be submitted to the OECD Ministerial meeting in June 2000. This list will include recommendations for co-ordinated counteracting measures by the Forum -- which are expected to be implemented against the identified jurisdictions which continue to resist cooperation on combating harmful tax competition. Publication of this list is expected after the June 2000 Ministerial.
• As Frances M. Horner notes, Head of the Tax Competition Unit, Fiscal Affairs, OECD,
"The OECD fight against tax poaching is not an isolated one -- it is supported and facilitated by efforts underway by other groupings of countries acting towards the same goal. The G-7 Heads of State have specifically endorsed the OECD work and called for an intensification of dialogue between OECD and jurisdictions that are found to be tax havens. Also, the European Union has adopted a Code of Conduct, binding on its members, that seeks to eliminate harmful tax practices."
• According to the 16 April 2000 meeting of the G7 Finance Ministers and Central Bank Governors, the OECD's Fiscal Affairs Committee came through with its report on access to bank information for tax purposes. Subsequently, the meeting called upon all states to use the report as a starting point and to work rapidly towards a position where they can permit access to and exchange of bank information for all tax administration purposes.
Source: G7 Statement 18 June 1999
23. We welcome the progress made by the OECD's Fiscal Committee and the FATF to explore further the links between tax evasion and avoidance and money laundering, and in particular to ensure the effective flow of information to tax authorities without undermining the effectiveness of anti-money laundering systems. We encourage each group to continue working on their respective responsibilities."
• According to an FATF official, the OECD and the FATF hold formal and informal meetings with respect to the link between tax evasion and avoidance and money laundering. However, there is no collective documentation.
• According to the 25 September 1999 meeting of the G7 Finance Ministers and Central Bank Governors, the FATF now requires its members to report suspicious transactions regardless of whether they are thought to involve tax matters (re: Interpretive Note on "fiscal excuse").
Source: G7 Statement 18 June 1999
24. "We urge the OECD to continue to address the barriers limiting effective exchange of information between tax authorities, in particular those which arise from excessive bank secrecy rules."
• On 12 April 2000, all OECD Members pledged to fight tax evasion -- to improve access to bank information and to outlaw anonymous accounts. This commitment calls for greater cooperation on cross-border revenues. As Gabriel Makhlouf, head of the OECD Fiscal Affairs Committee stated,
"Bank secrecy towards governmental authorities, including tax authorities, may enable taxpayers to hide illegal activities and to escape the taxes established by their parliaments."
This pledge further coincides with the 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors expectation that the OECD's Committee on Fiscal Affairs bring its work on bank secrecy to a rapid conclusion.
Source: G8 Communiqué Koln 20 June 1999
44. "We welcome the growing recognition by the international community of the damaging effects of all forms of corruption and the coming into force of the OECD Anti-Bribery Convention in February 1999. We hope that more countries will ratify the Convention. We applaud the results and planned follow-up of the international conference on anti-corruption efforts, attended by over 80 countries including all G8 partners, and the OECD conference on anti-corruption efforts, both held in the United States in February 1999. In the context of the UN Crime Convention, we urge that acts of corruption involving public officials be made a criminal offence."
• Negotiations on a UN Convention on acts of corruption involving public officials is expected to begin in the near future (i.e. that the preparation will take place next year).
• The 25 September 1999 meeting of the G7 Finance Ministers and Central Bank Governors indicates a commitment to work toward the full ratification and implementation of the OECD Anti-Bribery Convention and for a complete elimination of tax deductibility for bribes. This expectation was reaffirmed at the 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors.
(It should be noted that while France and Italy are in the process of enacting legislation that would allow them to ratify the OECD Anti-Bribery Convention, this has yet to happen).
• At the 25 September 1999 meeting of the G7 Finance Ministers and Central Bank Governors, the International Monetary Fund (IMF) and the World Bank (WB) have been called upon to perform an authoritative review of their procedures and controls and the recipients of IMF and WB credit to identify ways to strengthen safeguards on the use of their funds. The reviews should also identify ways to strengthen governance and anti-corruption measures.
• This expectation was further reaffirmed at the 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors.
• The IMF's role was reiterated at the 16 April 2000 meeting of the G7 Finance Ministers and Central Bank Governors.
• This expectation was also addressed by the Interim Committee of the Board of Governors of the IMF in their 26 September 1999 Communiqué -- re: the implications of corruption and money laundering raise important issues for the credibility and effectiveness of IMF programs, and thus called on the IMF to undergo an authoritative review of its procedures and controls to identify ways to strengthen safeguards on the use of its funds.
• At the October 1999 G8 Justice and Interior Ministerial in Moscow, Ministers pledged to take the appropriate steps to ensure that bank secrecy provisions and other laws governing access to financial information (including information collected and held by financial institutions for tax purposes), to allow for appropriate mutual legal assistance in support of criminal investigations, prosecutions, and, if permissible under national legislation, related civil proceedings.
Source: Stability Pact for South Eastern Europe Foreign Ministers 10 June 1999
10. "To that end we pledge to cooperate towards..."
• combating organized crime, corruption and terrorism and all criminal and illegal activity.
• The Stability Pact (SP), initiated by the European Union and strongly supported by the U.S., was formally endorsed in Sarajevo on July 30, 1999.
• At a meeting in Sarajevo 15-16 February 2000, the members of the SP adopted a U.S.-inspired regional anti-corruption initiative and accompanying action plan designed to combat corruption on all levels in the region, to ensure transparency and ensure the active participation of civil society. The SP members have also committed themselves to ratifying and implementing all existing international anti-corruption instruments.
• The SP members have also agreed to control and destroy illicit stocks of small arms and light weapons.
• At a March 2000 SP Regional Conference, a Quick-Start Package of Measures was funded to support regional efforts in demining, arms control verification and fighting organized crime.
• As of March 2000, a Center for information sharing on organized crime and cross-border crime has become operational in Bucharest.
COMPLIANCE WITH SUMMIT COMMITMENTS ON TERRORISM
Source: G8 Communiqué Koln 20 June 1999
45. "We will sustain the momentum of international efforts to combat transnational organized crime and the threat it represents to political, financial and social stability. We commend the work of the Senior Experts Group on Transnational Organized Crime and on Terrorism and urge them to continue their work, in particular for an early conclusion of the negotiations of UN conventions and protocols on organized crime. We also call for more rapid progress of negotiations on the UN Convention on the Financing of Terrorism. We ask the two expert groups to report back to us next year. We reaffirm our commitment to tackle the drug issue, in particular through active implementation of the conclusions of the 1998 UN General Assembly Special Session on the World Drug Program. We welcome the upcoming Ministerial Meeting on Crime to be held this fall."
• The UN Convention for the Suppression of the Financing of Terrorism was adopted by the United Nations General Assembly on 9 December 1999 without a vote (149 in favour, none against, 2 abstentions).
• This Convention grew out of the G8's initiative to combat terrorist financing and was drafted and introduced by France. It will enter into force when it has been ratified by 22 States.
• The UN Convention for the Suppression of the Financing of Terrorism was opened for signature on 10 January 2000 at the United Nations in New York. By the end of the day, the Convention had been signed by seven countries: Finland, France, Malta, Netherlands, Sri Lanka, the United Kingdom and the United States.
On 10 February 2000, Canada signed the Convention.
• It is also significant to note the far-reaching expectations of this new Convention which in essence coincide with G7/8 efforts to combat terrorism in all of its forms and manifestations. For example, this Convention has established the offence of financing as an independent crime and therefore an actual act of terrorism need not be committed; entails provisions on liability of legal entities and financial institutions, including banks and also deals with bank secrecy; it provides for a number of actions that could be taken regarding the use, forfeiture or seizing of the funds in question and using those funds for the compensation of victims; and, excludes the possibility of using political motives as any kind of defence.
• At the Fourth Session of the Ad Hoc Committee on Terrorism which began on 14 February 2000, the question of convening a high-level UN conference to formulate an international response to all forms of terrorism was considered, and a draft convention for the suppression of acts of nuclear terrorism, originally proposed by the Russian Federation, was considered as well.
• The G8 Justice and Interior Ministerial issued a 'Statement Against Terrorism By The Participants in the G-8 Moscow Ministerial Conference' in October 1999. This Statement reaffirmed the collective assertion that ALL forms of terrorism are unjustifiable and criminal regardless of motivation; reiterated a collective commitment that all States shared the responsibilities of ensuring that there is no safe haven for terrorists and that all States should prevent and suppress the preparation for and funding of terrorist acts. The Ministerial also maintained that the G8 Justice and Interior Ministers have actively participated in the negotiations to draft a UN Convention for the Suppression of Terrorist Financing; welcomed the progress achieved in drafting the UN Convention for the Suppression of Nuclear Terrorism; and, urged that all States become party to all universal counterterrorism conventions. The Lyon Group has played a significant role in these efforts as well.
SUMMIT MEMBER INFORMATION WHICH CONTRIBUTED TO MEASURING COMPLIANCE WITH SUMMIT COMMITMENTS
• According to an Overview of the Justice Department's Recent Activities and Departmental Achievements (August 1999), Canada is playing a leadership role in the development of a new firearms protocol against illicit firearms trafficking -- which will be part of the upcoming UN Convention Against TOC.
• According to a Department of Foreign Affairs and International Trade (DFAIT) 1999 press release, DFAIT, CIDA Health Canada, Citizenship and Immigration Canada, Human Resources Canada, Status of Women Canada and Environment Canada have collectively and actively participated to provide a framework for the protocols on trafficking in migrants and trafficking in women and children.
• At the UN's Crime Congress on 17 April 2000, Justice Minister Anne McLellan indicated Canada's desire to see the early completion of the UN Convention Against TOC and its protocols and that Canada attaches special importance to mutual legal assistance and the extradition provisions. McLellan also expressed Canada's support for including corruption as a predicate offence in the context of proceeds of crime.
McLellan also indicated Canada's interest in convening a UN anti-corruption convention and a UN convention on high-tech crime.
• Phillippe Kirsch, of Canada, chaired the working group that drafted the legislation on the UN Convention for the Suppression of the Financing of Terrorism. The Justice Department provided advice to the Canadian delegation that played a leading role in developing this UN Convention.
• The 19 October 1999 Press Release SC/6741 - Security Council Unequivocally Condemns Terrorism as 'Criminal and Unjustifiable' indicates that Canada, represented by Robert Fowler, supported the adoption of the convention to prevent the financing of terrorist acts and the early adoption of the convention against acts of nuclear terrorism.
• According to the Minister's Message of the Canadian Department of Foreign Affairs and International Trade, the planned spending on International Security and Cooperation for 1999-2000 is $435.6 million and for 2000-2001 is $423.9 million. Within this budget is the Canadian contribution toward measures that combat terrorism, transnational crime and drug trafficking.
• According to the Minister's Message of the Canadian Department of Foreign Affairs and International Trade, regarding Strategies and Key Activities, it is noted that Canada intends to: promote multilateral anti-drug activities by providing stable and assured funding to the United Nations Drug Control Program (UNDCP) and CICAD, following up on the 1998 UN Special Session on Drugs; reporting to the International Narcotic Control Board (INCB); ensure that there is coherence in domestic and international efforts to combat TOC through Canada's candidacy for the UN Commission on Crime Prevention and Criminal Justice in 1999; negotiation of a UN Convention Against TOC to be completed in the year 2000; and the G8 Expert's Group on Organized Crime (Lyon Group) and its sub-groups (on firearms trafficking, illegal migration, high-tech crime, corruption and financial crime); contribute to multilateral efforts to curb trafficking in firearms; tackle criminal corruption; curb trafficking in humans, including the development of a UN protocol; address the threat of Eastern Europe, including Russian organized crime; contribute to international efforts against terrorism through the negotiation of new UN conventions; draft a proposed Multilateral Treaty on Terrorism Funding; promote G8, UN, OAS and other action plans on counterterrorism; conduct bilateral efforts on counterterrorism, including assessing the threat posed by terrorism to the orderly succession of traditional regimes; negotiate new Mutual Legal Assistance Treaties; and modernize and expand Canada's extradition treaty system following its new extradition legislation.
• Antonia Costa, Minister of Justice of Portugal and speaking on behalf of the EU at the UN's Crime Congress, indicated that organized crime has been receiving significant attention from the EU and in a recent meeting members reaffirmed their commitment to combat TOC. In addition, Costa stated, To cater to the different competencies which operate within the Union, mandates have been conferred on the European Commission to negotiate in respect of the three protocols. The Commission and member States are acting jointly to ensure the success of the negotiations. The Union attaches particular importance to the provisions in the text which address the issues of combating transnational crime, including the criminalization of conspiracy and criminal association, money laundering, corruption and protection of victims.
• Costa also indicated that the EU was prepared to play a full role in the follow-up to ensure that the commitments made are being effectively implemented.
• The European Union's own efforts to combat organized crime (e.g. via 'The Prevention and Control of Organized Crime: A European Strategy for the Beginning of the New Millennium') continues to gain momentum and the ambitious joint initiatives are all expected to be ratified by no later than 2004.
• According to the EU's 'The Prevention and Control of Organized Crime: A European Strategy for the Beginning of the New Millennium', the Union has made its voice heard at the UN on the draft Convention on TOC.
• France proposed the UN Convention for the Suppression of the Financing of Terrorism in 1998 and was one of the first countries to sign this Convention on 10 January 2000.
• France has also played an active role in the drafting of and negotiations on the UN Convention Against TOC and its protocols.
• At the UN's Crime Congress on 15 April 2000, Guiseppe Ayala declared that Italy was committed to ensuring that the UN Convention Against TOC be concluded by the end of this year at the Millennium Session in Palermo.
• Of particular importance to Italy is the provisions concerning extradition, mutual legal assistance and cooperation in the field of witness protection. To this end, Italy is committed to assisting in the establishment of effective cooperative schemes that would be applicable on a larger scale.
• Ayala also expressed Italy's concern about corruption and hoped that the draft of a UN anti-corruption convention would begin by the end of this year.
• At the 54th Session of the General Assembly, Japanese representative Kunio Umeda stated that the Japan government is committed to the accelerated time table for the negotiations on the UN Convention Against TOC and its protocols.
• In order to expedite the accelerated negotiations, the Japanese government made a voluntary contribution to be utilized to meet the expenses related to the convening of the meeting of the Ad Hoc Committee. Japan has also organized meetings to address the technical questions concerning this Convention.
• In accordance with Japan's commitment to combating transnational organized crime, Japan has also actively participated in the Lyon Group and has tried to encourage regional cooperation (e.g. at the Asia-Pacific Law Enforcement Conference Against TOC, 20 nations committed themselves to signing the UN Convention Against TOC and its protocols immediately).
• Hiroshi Kawamura, on behalf of Japan, indicated at the UN's Crime Congress that Japan has participated actively in the deliberations on the draft leading to the UN Convention for the Suppression of the Financing of Terrorism.
• Kawamura also expressed Japan's disappointment with the fact that a UN convention against nuclear terrorism had not yet been completed. To this end, Kawamura declared Japan's willingness to promote this convention's completion as soon as possible.
• Hansjorg Geiger, State Secretary, spoke at the UN's Crime Congress and indicated Germany's active participation in drafting international instruments against TOC.
• Hansjorg Geiger also pointed out that just because instruments have been developed outside of the UN, e.g. the FATF's 40 Recommendations, it does not mean that these instruments should be considered any less important.
• At the UN's Crime Congress on 17 April 2000, V.I. Kozlov, indicated some of Russia's efforts to illustrate a commitment to fighting TOC: the development of new money laundering legislation; support for the money laundering articles of the UN Convention Against TOC; signed a TOC-related Convention with the EU; is participating in the international efforts against corruption; supports the UN Convention Against TOC's protocols; and, has set up a special unit to combat computerized crime.
• Russia has also been largely responsible for the proposal of a UN convention against nuclear terrorism. While Russia has yet to sign the latest convention against terrorism -- UN Convention for the Suppression of the Financing of Terrorism -- Russia has indicated the intention of doing so.
• While Prime Minister Vladimir Putin pledged at the G8 Ministerial Meeting in Moscow October 1999 that Russia will take part in the fight against TOC, one might argue that the events which have transpired since Koln 1999 speak otherwise. (re: Russia laundering money through the Bank of New York, speculation that IMF funds were not reaching the intended targets -- although the IMF states that there is no evidence of this). Nevertheless, Putin stated that Russian legislators and Cabinet experts were in the process of drafting a law on money laundering to replace an earlier bill rejected by (former) President Boris Yeltsin.
• In response, the 25 September 1999 meeting of the G7 Finance Ministers and Central Bank Governors stated that, In our discussions with our Russian colleagues, we emphasized the critical need for intensified efforts to combat corruption in Russia and money laundering and the importance of adequate safeguards to ensure that funds provided by the international financial institutions are used for their intended purposes.
This expectation was reaffirmed at the 22 January 2000 and 16 April 2000 meetings of the G7 Finance Ministers and Central Bank Governors.
• Further comments at the 22 January 2000 meeting of the G7 Finance Ministers and Central Bank Governors included, We welcomed the commitment of the Russian authorities to strengthen its capacity to combat money laundering, to resubmit to the Duma for passage, at the earliest possible opportunity, a strong anti-money laundering law in conformity with international standards and to cooperate fully with cross-border money laundering investigations.
This expectation was reaffirmed at the 16 April 2000 meeting of the G7 Finance Ministers and Central Bank Governors.
• Future IMF lending to Russia will also be held at the IMF. This decision comes in the aftermath of learning that the Russian Federation was hiding from the IMF its use of an offshore subsidiary to handle some of its foreign reserve.
• The Secretary of the U.S. Treasury, Lawrence H. Summers stated at the 16 April 2000 IMF and Fiscal Committee meeting that Russia must intensify the fight against corruption and organized crime; the 25 September 1999 and 22 January 2000 meetings of the G7 Finance Ministers and Central Bank Governors have stated that,
• Charles Clarke, Minister of State, spoke at the UN's Crime Congress and indicated that the U.K attaches great importance to the completion of the UN Convention Against TOC and its three protocols.
• Charles Clarke also indicated that the U.K. has been active in the FATF on negotiations regarding non-cooperative jurisdictions and in the negotiation of a cyber-crime convention in the Council of Europe -- consistent with the G8 Justice and Interiors Ministerial's 10 point action plan on high-tech crime.
• The U.K. was also one of the first countries to sign the UN Convention for the Suppression of the Financing of Terrorism on 10 January 2000.
(As the country with the most serious organized crime and money laundering problems, it should be expected that the U.S. will endeavor to take the lead in combating these phenomena).
• The 19 October 1999 Press Release SC/6741 - Security Council Unequivocally Condemns Terrorism as 'Criminal and Unjustifiable' indicates that the United States, represented by Richard C. Holbrooke, would continue to pursue, arrest and prosecute those responsible for terrorist crimes. The U.S. was also one of the first countries to sign the UN Convention for the Suppression of the Financing of Terrorism on 10 January 2000.
• Examples of the U.S.'s commitment to the fight against terrorism in 1999 include: a bilateral counterterrorist working group with India; a G8 agreement that Iran's support for terrorist groups threatens the Middle East peace process and which explored ways to exert influence on the Iranian government to end sponsorship of these groups; expanded counterterrorist discussions with Russia and Palestine; took part in the creation of CICTE, the Organization of American State's Commission on Counterterrorism; hosted important multilateral conferences with the Middle East, Central Asia and Asia; was the impetus behind the UN Security Council's Resolution 1267 which imposed a similar set of sanctions against Taliban; and continued its program to train foreign law enforcement officials in such areas as airport security, bomb detection, Maritime security, VIP protection, rescue and crisis management.
• Since President Clinton's announcement in May 1998 of the first U.S. International Crime Control Strategy, developed by the Bureau for International Narcotics and Law Enforcement Affairs (INL) and other concerned law enforcement agencies, the U.S. has been actively engaged in carrying out a coordinated, effective, long-term attack in international crime.
e.g. INL's global training and technical assistance programs address criminal activities including money laundering and related financial frauds, illegal trafficking in persons, vehicle and aircraft theft, small arms trafficking, tax fraud, public corruption, and intellectual property rights.
e.g. Department of State's Bureau of Diplomatic Security, U.S. Customs, the Immigration and Naturalization Service the Coast Guard, the Federal Bureau of Investigation, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco and Firearms, the International Criminal Investigative Training Assistance Program, are working with law enforcement officials and others through education, personal exchanges, investigative cooperation and technical assistance activities to combat the activities of TOC groups.
e.g. Department of Treasury's Internal Revenue Service, U.S. Customs Service, U.S. Secret Service, the Federal Law Enforcement Training Center, the FBI, Department of Justice, Board of Governors of the Federal Reserve, and the Financial Crimes Enforcement Network are providing mutual assistance to federal agencies in Central Europe and the Newly Independent States through development of a regional training program keying in on financial investigative techniques, industry oversight measures, and criminal analysis methods based on U.S. and host country requirements especially in the areas of border controls, importation of firearms, counterfeiting computer and telecommunications fraud, revenue and tax fraud, Central Bank Supervision, and export controls.
• INL also developed a fiscal year 1999 $3.4 million dollar program for providing law enforcement, prosecutorial and central bank training to countries around the globe. Throughout 1999, INL also funded over 70 programs to combat international financial crimes and money laundering in 40 countries -- nearly every federal law enforcement agency assisted in this effort by providing basic and advanced training courses in all aspects of financial criminal activity.
• The DEA also provides anti-money laundering training programs. During 1999, seminars were held in: Brussels, Belgium, Dublin, Ireland, Bangkok, Thailand and Bogota and Colombia.
• During 1999, the FBI participated in money laundering training courses in: Santiago, Chile; Bogota; Colombia; Nicosia, Cyprus; London, the U.K.; Tokyo, Japan; and Auckland, New Zealand.
• During 1999, FinCEN consulted with the Ukraine and Chile on drafting and revising their anti-money laundering legislation. FinCEN also hosted numerous foreign visitors and provided orientation and training in financial investigation units and various money laundering related topics with: Paraguay, Costa Rica, Venezuela, Jamaica, El Salvador, Brazil, People's Republic of China, Thailand, Singapore, Chinese Taipei, and Panama.
• During 1999, the IRS's Criminal Investigation Division Training Program entailed: Financial Investigative Techniques training in Budapest, Hungary; Khabarovsk, Russia; and Lagos, Nigeria; Money Laundering training in Vilnius, Lithuania; Santo Domingo, Dominican Republic; and Bogota, Colombia; Advanced Money Laundering and Suspicious Activity Report training in Mexico City, Mexico;
and Complex Financial Investigations training in Bangkok, Thailand which was taught jointly with the U.S. Customs Service.
• During 1999, the U.S. Secret Service, using INL funds, conducted training for foreign law enforcement and financial institutions in Hungary, Nigeria, Ghana, Egypt, Thailand and Romania. The U.S. Secret Service also independently conducted training in Romania, Bulgaria, Germany, the U.K., Peru, Chile, Argentina, South Africa, France, the Netherlands and Italy.
• During 1999, the U.S. Customs Service hosted or co-hosted anti-money laundering and financial crime seminars which included training in: Australia, Belgium, Hong Kong, Republic of Indonesia, Israel, Japan, Malaysia, New Zealand, Peoples Republic of China, Republic of the Philippines, Russia, Singapore, South Korea, Taiwan, Thailand and Turkey.
• As part of U.S. initiatives to combat violence and trafficking in women and children, the U.S. proposed the UN protocol on trafficking in persons, especially women and children. In a Fact Sheet released by the U.S. Senior Coordinator for International Issues 18 January 2000, it was stated that,
Today, trafficking is finally out of the shadows in large part because of the leadership of First Lady Hillary Rodham Clinton, Secretary of State Madeline Albright, and Attorney General Janet Reno. The U.S. is a world leader on this issue. We have mobilized the entire government to prevent trafficking, to protect its victims, and punish its perpetrators. We are working with Congress to enact the strongest possible legislation. We have established a task force that is prosecuting traffickers in the U.S.. We have engaged in anti-trafficking campaigns with many other countries -- from the former Soviet Union to South East Asia. And we are actively leading international efforts, including those developed at the OSCE and the UN, to stop trafficking in every corner of the world.
• Through a coordinated interagency effort spearheaded by Under Secretary for Economic, Business, and Agricultural Affairs, Alan Larson, the U.S. continues to promote ratification by all signatories as soon as possible of the OECD's Convention on Combating Bribery of Foreign Public Officials.
• Long concerned with the corruption of public officials, the U.S. has held international conferences on fighting corruption -- e.g. Fighting Corruption and Safeguarding Integrity Among Justice and Security Officers. The February 1999 Global Forum on Corruption, held by the U.S., also led to the emergence of Principles for Fighting Corruption. A follow-up to this Global Forum has been set for 28-31 May 2001.
• Pursuant to the U.S. Money Laundering and Financial Crime Strategy Act of 1998, the U.S. seeks to strengthen international cooperation to disrupt the global flow of illicit funds. This entails increased pressure on non-cooperative jurisdictions, including such unilateral action as the issuance of bank advisories. This Act calls for the development of a five year plan to combat money laundering with an emphasis on four broad goals: strengthening domestic enforcement; enhancing the measures taken by banks and other financial institutions; building stronger partnerships with state and local governments; and bolstering international cooperation. This approach has resulted in the development of a Steering Committee led by the Deputy Secretary of the Treasury and the Deputy Attorney General to oversee implementation. In collaboration with other relevant agencies, it is expected that reports will be submitted to Congress for review. This strategy will also entail that the U.S. urge G7 nations to consider an initiative to harmonize rules relating to international funds transfers so that the originator(s) of the transfers can be identified.
• During fiscal year 1999 (October 1, 1998 to September 30, 1999), the Internal Revenue Service initiated 2,076 money laundering investigations, many of which were joint investigations with various law enforcement agencies. Of these investigations, 1,710 were recommended for prosecution whereby the approximate value of proceeds laundered on these cases was over $7 billion.
• In 1999, the Department of Treasury's international asset sharing program forfeited approximately $7,889,000 of which $2,944,667 was shared with foreign governments that cooperated and assisted in the investigations.
• Due to the difficulty in detecting crimes committed via new technologies, the FBI has opened the Internet Fraud Complaint Center (IFCC). The IFCC is designed to address Internet crimes regardless of the violation or where the crime originated or was committed. As of May 2000 the IFCC is operational and its is jointly supported by the FBI and the National White Collar Crime Center.
• To combat the Black Market Peso Exchange (BMPE), the U.S. has proposed the formation of an international task force of experts from Colombia, Aruba, Panama and Venezuela to examine the BMPE as a money laundering system. Pending agreement by the governments involved, this task force could convene as early as June 2000.
• In December 1999, President Clinton signed into law the Kingpin Act which provides him with a statutory framework for imposing sanctions against foreign drug kingpins when such sanctions are appropriate.
EXAMPLES OF RELEVANT BILATERAL INITIATIVES/MEETINGS OF G8 SUMMIT MEMBERS POST-1999 KOLN SUMMIT
• In June 1999 the U.S. and Russia signed a Mutual Legal Assistance Treaty which will allow for the provision of evidence and other forms of law enforcement assistance for criminal investigations, prosecutions and related proceedings.
• Canadian Justice Minister Anne McLellan's working visit to France included a meeting with her French counterpart Elisabeth Guigou. Two aspects of the discussion were organized crime and tax havens whereby the Justice Ministers stated that methods to respond to these crimes must be modernized and to do so, the G8 countries must work to bring other countries on-side, so that all countries have tangible, practical counter-measures -- via international standards.
• Emerging from the EU-Russia Summit in Helsinki on 22 October 1999, a joint action plan to cooperate on a number of crime-related issues (European Union Action Plan on Common Action for the Russian Federation on Combating organized Crime). For example, under "Cooperation in other forums" it was stated that,
The European Union and its Member States should work, in so far as possible, with the Russian Federation authorities to ensure appropriate cooperation in relation to organized crime matters within other international forums. For example, such cooperation could apply in the case of negotiations on the draft UN Convention Against TOC and its protocols...
• In December 1999, Canada and the European Union established a joint working group to tackle the spread and destabilizing accumulation of small arms and light weapons. According to the press release, one of the primary, joint goals is to work diligently to ensure the completion of the firearms protocol in the year 2000.
• In December 1999, Canada and the European Union issued a Joint Statement on Electronic Commerce in the Global Information Society. On the issue of Security, Canada and the EU agreed on the necessity of policies to facilitate the use of technologies for authentication and for the conduct of security e-commerce. To this end, they will discuss various technological options for providing authentication and will explore mechanisms to enhance international cooperation to combat e-commerce related illegal activities.
G8 Justice and Interior Ministers' Meeting in Moscow, 19-20 October 1999
• This meeting also resulted in an agreed set of 'Principles on Transborder Access to Stored Computer Data' -- addressing such issues as how a country could access data in a foreign state, how to preserve this data; expedited mutual legal assistance and transborder access to stored data that does not require legal assistance.
G8 Environment Ministers' Meeting in Otsu, 7-9 April 2000
• The G8 Environment Ministers also addressed crime and from this meeting stated that they will provide full support for broader participation in, and effective implementation of, and compliance with, the existing multilateral environmental agreements, and their mechanisms for exchange of information and for achieving their goals. The G8 Environment Ministers accorded appreciation to the ongoing activities by the Lyon Group's subgroup in this area as well.
• From 22-24 May 2000, the Lyon Group met in Kyoto. Lyon subgroup meetings were held on 25 May 2000. Among the issues discussed were the results of the G8 Conference on High-Tech Crime. The Lyon Group was also expected to hold active discussions on cooperation among the G8 members for the early adoption of the UN Convention Against TOC and its protocols. As expected, the Lyon Group did not publish any documents detailing the results of this conference. However, the results are likely to be reflected in the Leaders' discussions at the Okinawa Summit and the pre-Summit Ministerials.
WHAT TO EXPECT AT THE JULY 2000 OKINAWA SUMMIT
Information Technology (IT)
• This topic is expected to be central at the Okinawa Summit
• On 28 February 2000 the then Japanese Prime Minister Obuchi issued a statement on Summit themes of the upcoming Kyushu-Okinawa and indicated that the Information Technology Revolution will be addressed. This includes a discussion on such IT-related problems as high-tech crime. Obuchi also noted that since increasing globalization contributes to the level of crime that transcends borders, IT is of tremendous importance for the G8 to deal with.
• A Lyon Group initiated G8 Conference entitled "A Government/Industry Dialogue on Safety and Confidence in Cyberspace", was held from 15-17 May 2000 for the purposes of discussing common problems and exploring solutions associated with high-tech crime and exploitation of the Internet for criminal purposes. In order to enhance existing G8 initiative on high-tech crime, it was held that G8 States are convinced that faster or more novel solutions should be developed and that government and industry must work together. While the solutions entail a complementary strategy of collaborative and independent initiatives, it was agreed that each should take into account the following: - ensuring the protection of individual freedoms and private life, - preserving governments' ability to fight high-tech crime,
- facilitating appropriate training for all involved,
- defining a clear and transparent framework for addressing cybercriminality,
- ensuring free and fair activities, the sound development of industry, and supporting effective industry-initiated voluntary codes of conduct and standards,
- assessing effectiveness and consequences.
Accordingly, it is likely that the G8 will adopt/endorse a plan of action to combat cybercrime. Among the issues to be addressed are: the digital divide; taxation; the protection of intellectual property rights; and, exploring/devising ways to prevent cyber-terrorism (i.e. computer viruses, computer hacking and the sabotaging of data).
Transnational Organized Crime
• The 1999 Koln commitment which calls for an early conclusion to the UN Convention Against TOC and its protocols will likely be reiterated. From the start of the negotiations on this Convention and its protocols, the goal has been to conclude these negotiations by 2000. Accordingly, this Convention and its protocols are expected to be signed at the high-level conference in Palermo during the Millennium Session later on this year. Therefore, the reiteration of the G8's 1999 Koln commitment constitutes a sustained commitment to achieving a successful conclusion to and immediate adoption of this Convention and its protocols.
• The FATF's Report on Non-Cooperative Countries and Territories and the subsequent Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures will likely be welcomed and the G7/8. The G7/8 will likely call upon its Ministers, just as the Ministerials will also indicate, to coordinate complimentary positions so that the G7/8 can take the lead in addressing those countries and territories that threaten the global fight against money laundering at the G7/8 level and other relevant fora.
• With respect to the actions that might be undertaken against non-cooperative countries and territories, it is likely that the G7/8 will support the FATF's approach (e.g. graduated responses: dialogue -> technical assistance -> collective and unilateral pressure tactics -> Recommendation 21).
• The G8 is also likely to discuss corruption both in the context of supporting the work of the OECD's work and in the advocacy of convening a UN anti-corruption convention.
• The issue of tax evasion/avoidance is also likely to come up, with the G8 expressing its support of the OECD's initiatives and the FATF's acceptance that the "fiscal excuse" (re: overruling confidentiality of tax-related matters) must not prevent the reporting of suspicious transactions.
• There will be recognition of the G8's satisfaction with the completion of the UN Convention for the Suppression of the Financing of Terrorism.
• All countries will be urged to sign this Convention as well as all other conventions against terrorism -- to ensure that there are no safe havens for terrorists; to ensure that terrorism in all of its forms and manifestations are being combated.
• It might also be likely that the G8 will advocate the importance of completing a UN convention against nuclear terrorism.
• The G8 might also support a UN initiative to convene a high-level conference on terrorism in all its forms and manifestations. However, there is some indication that the U.S. is reluctant about supporting this initiative. More specifically, there is some concern about the real value of such a conference in that it could interfere with the momentum of existing efforts against terrorism.
• The G8 is expected to address the drug and money laundering problems in Columbia.
• According to some Japanese government officials, the G8 is also expected to map out measures to control drug trafficking.
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