SAR WORKS FOR REMOVAL FROM US DRUG 'HIT-LIST'

Considerable luck would still be needed for Hong Kong to be struck from an
American global "hit list" of major illegal drug trafficking and money
laundering centres, a senior SAR official warned yesterday.

Commissioner for Narcotics Clarie Lo Ku Ka-lee said she had been given
assurances from US officials that Hong Kong would be dealt with fairly and
squarely but no guarantees that it would be pulled from the list.

"I am confident there is now a greater understanding of all our efforts in
Washington and I think they are impressed at everything we are doing," Ms
Lo said after a week-long trip to the US capital. "We are still going to
need some luck I think . . . this is an issue we will have to keep working on."

Hong Kong's position on an annually updated White House list of drug
centres has been a source of increasing annoyance and embarrassment to the
Government, ranking the SAR along with countries including Panama, Vietnam
and Columbia. The list, last revealed by President Bill Clinton on State
Department recommendations in March, included the SAR in a list of states
co-operating with US government efforts as well as taking their own
enforcement action but still deemed major transit points.

Ms Lo met senior State Department, Customs, FBI and Drug Enforcement
Administration officials as well as the White House's "drug czar", General
Barry McCaffrey. Getting Hong Kong off the list was the priority of the
trip - her second in less than a year to claim firm enforcement action.

Mr McCaffrey visited Hong Kong last month and expressed satisfaction at the
territory's efforts and said he would be recommending its removal from the
list.

However, his is just one of several opinions involved in the decision and
other officials warned that no final decisions have been made, Ms Lo said.

She said she outlined legislative proposals to make money laundering easier
to enforce, and recent regulations to tighten supervision of the SAR's
extensive network of money changers and remittance agencies.