LLOYD'S HUNTS 'DIRTY MONEY' GANGSTERS

Lloyd's, the world's most prestigious insurance market, is creating a
special unit to tackle drug dealers and vice barons trying to use the
300-year-old institution to launder their money.

Last year, former Chancellor Ken Clark shocked the City of London by
revealing that money laundering is now the world's third-largest industry.

Lloyd's concedes it is vulnerable to the practice, dubbed "financial
rape", because of its status as the best known insurance market in the
world.

John Baker, head of the new unit, will work with underwriting agents
to hunt suspicious transactions. Officials believe billions of pounds
in illegal funds are laundered through the UK each year. London's
speed in financial transactions has made it a top target for
international criminals trying to legitimise proceeds from
drug-dealing, financial fraud, illegal gambling, prostitution and extortion.

Last week, a businessman was fined UKP1m and jailed for 14 years at
Knightsbridge crown court, in London, for using a bureau de change as
a front for Europe's largest money-laundering operation.

Ussama el-Kurd was the first person in England to be prosecuted and
convicted solely as a money-launderer. The Government had introduced
legislation in 1993 compelling financial institutions to combat money
laundering.

Irregularities are now reported to the National Criminal Intelligence
Service (NCIS). In 1996, NCIS dealt with 16,125 disclosures, an
increase of 17.7 per cent on the previous year's 13,170. Reports came
from banks, building societies, accountants, solicitors, bureaux de
change and insurance companies.

Lloyd's has been rebuilding its reputation after the debacle of the
early 1990s when hundreds of investors or "names" lost everything they
had after a series of huge payouts on insurance claims.

And Lloyd's does not want to lose business to rival insurance
institutions in Frankfurt, which is competing with London to be
Europe's leading financial market.

One way criminals are trying to launder money through Lloyd's
insurance policies uses the rule that payments do not have to be made
to the person who has suffered the loss. A payment for a disaster in
the UK could be made to a criminal in the US.

Lloyd's is also monitoring abnormal transactions where money may pass
through a number of sources and through different people.

Mr Baker says laundering is financial rape because the criminals are
abusing Lloyd's good name.

"The Government has said to people that it wants them to be more alert
to suspicious transactions because it does not want it to become a
haven for criminals," he added. "London is a also a target because it
is ideally situated on timezones."