U.S., COLOMBIA SMASH MONEY-LAUNDERING RING

U.S. and Colombian law enforcement officials yesterday announced the breakup
of what they described as a major network of drug money-launderers, the
first significant result of a stepped-up program of U.S. training and
financial cooperation between the two governments.

In raids Monday and Tuesday, agents arrested 29 people in the United States,
most of them believed to be Colombian nationals, and eight people in
Colombia. They are expected to be extradited here under federal indictments
issued in New York's southern district. As part of the two-year undercover
investigation, officials seized more than $8 million in cash and hundreds of
pounds of cocaine.

"If you think the U.S. is too preoccupied with the war on terrorism . . .
you're wrong," Jimmy Gurule, the Treasury Department's chief of enforcement,
said at a news conference attended by other U.S. and Colombian officials.

The investigation targeted a program known as the Black Market Peso
Exchange, which turns an estimated $5 billion a year into Colombian pesos.
The money is obtained by drug kingpins through illegal U.S. sales of
Colombian cocaine and heroin.

Under the exchange system, a Colombian drug trafficker contracts with an
independent money broker in that country to launder the cash proceeds of
drug sales. The broker uses his U.S. agents to pick up the cash and deposit
it into broker accounts at U.S. financial institutions.

Once a broker confirms that the money has been deposited in accounts he
controls, he turns over an equivalent amount of pesos to the trafficker,
minus a commission. In a variation of the system, the dollars are used by
brokers to purchase U.S. export goods, which are then smuggled duty-free
into Colombia and sold.

Money for stepped-up cooperation between the two government's financial
enforcement agencies was contained in the $1.3 billion Plan Colombia
anti-drug program initiated by the Clinton administration and passed by
Congress in 2000.

The arrests of eight senior money brokers in Colombia and dozens of U.S.
agents allegedly working for them here was the culmination of an
investigation that included undercover work by U.S. and Colombian agents
posing as money brokers, along with wiretaps and extensive surveillance.
U.S. officials said it marked the first time that such money-laundering
transactions were followed through from their initiation in Colombia to U.S.
contacts and activities and back to Colombia in real time.

The operation encountered a huge potential setback Sept. 11. The task force
office at 6 World Trade Center was destroyed when one of the trade center
towers fell on it. New York firefighters lifted Customs agents in buckets to
the still-standing fifth-floor portion of the building to recover evidence
related to the case.