By Richard Waddington

LISBON, June 3 (Reuter) Big crime syndicates could soon be using the
Internet to launder dirty money and there might not be much authorities can
do about it, an international conference was told on Tuesday.

The international web, which already allows clients to shop and sell around
the globe, could become the perfect medium for the cocaine barons of Colombia
or the Mafia gangs of Sicily to make their illgotten wealth respectable.

International police are already having a hard time keeping up with the
sophisticated manoeuvres of criminals and fraudsters as they switch funds
from country to country, often making use of lax banking regulations.

But with the Internet and the coming introduction of electronic cash,
socalled Ecash, the authorities could lose what has been one of their only
advantages the need for criminal gangs to handle and at some stage deposit
big quantities of cash.

"The biggest impact would be the loss of any audit trail.

Most bank transactions leave some trail within the system and this would be
lost," Dr James Backhouse of Computer Security Research Centre at the London
School of Economics.

Backhouse was one of a number of academics, bankers and international police
officials attending a twoday conference in Lisbon called "Cyberlaundering
and fraud electronic money washes whiter."

Ecash could take the place of physical money in the same way that Email has
replaced the posting of letters. Huge sums could be switched from person to
person without the need to pass through any form of banking system, experts
said.

"With most criminal enterprises, notably the distribution of illegal drugs,
the proceeds are in cash and lawenforcement tactics for countering
moneylaundering depend upon identifying the movement and placement of cash,"
Gareth Maclachlan of the British National Criminal Intelligence Service told
the conference.

Backhouse said that experiments with Ecash, or digital banking, were already
being carried out in around 25 countries and the system could become
commonplace within five years or so.

"What is only a little trickle at the moment will become a roaring torrent,"
he told Reuters.

But the ability to switch faceless funds effortlessly around the world was
not the only danger posed by the revolution under way in international
communications, experts said.

Organised crime could use the Internet to set up webbased companies offering
services of all types to act as vehicles for "washing" their funds.

"The Internet is an ideal medium. It will be difficult to prove that such
companies and transactions are false," said Maclachlan.

Crime gangs could even go so far as to set up their own banking services as
accounts can be established with Internet banks using no more than a
photocopy of a driving licence as proof of identity, experts said.

Global by nature, the network could be particularly difficult to police
because of the tricky question of territoriality. Which country has
responsibility when a bank can be based only in electronic space?