CRIMINAL PROFIT FROM BORDERS

Money launderers evade the law by moving their cash from one country to
another. That's why international co-operation is important, a Montreal
conference is told.

There wasn't really any reason to be suspicious about the two men who
walked into a Slovenian bank and asked to open a non-resident account.

They were carrying diplomatic passports from Sealand, an island nation with
a stable, democratic government that invested in agriculture and industry
in eastern Europe.

The principality was expecting payments from Luxembourg, Germany and the
United Kingdom, the men told the banker.

A few days later, $12 million in German deutsche marks was transferred into
the account.

What the Slovenian banker didn't know - and what police in Europe
eventually discovered - was that the bank account was one small part of a
tangled money-laundering web involving 60 million German deutsche marks and
a Polish-based pyramid-betting scheme involving 30,000 people.

The people behind the intrigue moved piles of money through banks all over
Europe to avoid paying taxes. And, police discovered, Sealand, the country
on the diplomatic passports, didn't exist - it was a steel structure
floating in the waters off the west coast of England.

After untangling the complicated system, investigators came to realize what
was going on, but three years later, they had yet to arrest anyone.

``The legal authorities in each country didn't look at the over-all
picture,'' Mauro Falesiedi, an Interpol investigator who was part of the
police task force that cracked the case, told a Montreal conference on
international money laundering yesterday.

The big problem - one that came up again and again at the conference - is
that criminals around the world are taking advantage of a lack of
international co-operation to expand their money-laundering activities.

The Sealand ploy was carried out in at least eight European countries, but
the different laws in each country allowed police to investigate only parts
of the scam - such as money laundering in one country and tax fraud in
another.

``Most sophisticated money-laundering schemes are international in scope,''
said RCMP Inspector Peter German. ``They can cross borders with great
rapidity.''

To fight it, there needs to be a combination of strong domestic
legislation, combined with financial intelligence, effective law
enforcement and seamless international co-operation, he said.

The UN estimates that criminal organizations launder about $400 billion
every year.

Montreal, with its port, airports, proximity to the U.S. border and long
history of organized crime, is a hub for money laundering in Canada. That's
part of the reason the conference is being held here.

Governments around the world are taking money laundering seriously, said
Timothy Lemay, an adviser to the UN Office for Drug Control and Crime
Prevention.

His office helps countries draw up anti-money-laundering legislation, and
trains law-enforcement agents on how to enforce the laws.

Pressure is growing on countries that act as tax havens - those with lax
restrictions on banking and currency transactions who don't co-operate
fully with criminal investigations, said Michael Levi, a criminology
professor at the University of Cardiff in Wales.

Still, of the 500 delegates at the conference, there is no representation
from ``tax havens'' like Liechtenstein, the Canary Islands or Monaco.

Part of the problem for law enforcement, said researcher Michel Koutouzis,
is that some countries - especially in the developing world - welcome money
launderers.

``In Western countries, the money launderer keeps a low profile. He wants
to make as few waves as possible,'' Koutouzis said.

``But in southern countries, the money launderer is seen as someone who is
bringing money into their financial system - a do-gooder, in fact.''

Those countries accept the money launderer, who gains respectability and
continues his criminal activities, he said.

``The money confers a certain level of respectability and impunity on the
money launderer, so the world is topsy-turvy,'' Koutouzis said.

The conference winds up today.

Checked-by: Joel W. Johnson