MONEY LAUNDERING UNDER ATTACK

Latin Nations Put New Emphasis On Fighting Operations

RIO DE JANEIRO -- When Brazil and Bolivia announced recently that they had
cracked a $260 million money laundering operation, the investigation was
hailed as proof of a new commitment to stop an often-ignored crime that has
flourished in a region where drug lords and corrupt politicians still hold
considerable sway.

Watchdog groups say that while money laundering remains a relatively
unchallenged practice in Latin America, a wave of high-profile
investigations like the Brazil-Bolivia cooperation, new regulations and
tighter enforcement indicate that recent international scrutiny is forcing
governments to take money laundering more seriously.

Contraband Capital

Even Paraguay, called South America's contraband capital because of its
brisk trade in everything from black market compact discs to arms and
drugs, is now pursuing violators with a new money laundering law.

After joining the international Financial Action Task Force in 2000,
Brazil, Argentina and Mexico have stepped up new probes, and traditional
Caribbean havens such as the Cayman Islands and the Bahamas are enforcing a
raft of new regulations.

"It is money laundering that facilitates drug trafficking and any illegal
activity, so I suspect this is why the focus has shifted particularly in
Latin America to include money laundering in the fight against drug
trafficking and terrorism," Donnie Marshall, a former head of the U.S. Drug
Enforcement Administration, said recently.

Multibillion Dollar Business

There are few reliable regional statistics, but Brazilian officials
estimate that money laundering from drug trafficking in Brazil alone
reaches about $15 billion a year.

To discuss the region's progress and the deadly money-drug-terrorism
connection, Paraguay is to host a regional meeting of defense leaders,
finance experts and other officials from five Latin American countries and
the United States in December.

While investigations and meetings are laudable, criminal convictions in
such cases traditionally have been scarce in Latin America, critics say.

"The big problem that impedes progress against money laundering in Latin
America is corruption--there is tons of it," said Charles Intriago, a
former Florida federal prosecutor who publishes a Miami- based newsletter
called Money Laundering Alert.

"We have totally corrupt public officials or quasi public officials selling
out to drug traffickers and the terrorists," he said.

One of the most embarrassing cases, according to regional investigators,
probably was that of Vladimiro Montesinos, Peru's former intelligence chief.

Montesinos fled Peru last year as investigators were beginning to uncover a
trail of clandestine accounts totaling more than $100 million that littered
the financial systems of several countries, including the United States.

Awaiting trial in Peru on allegations of crimes ranging from embezzlement
and money laundering to drug trafficking and murder, Montesinos was tracked
down through an emissary he allegedly sent to Miami to withdraw $38 million
from U.S. banks, investigators say.

Other investigations--from Brazil's convicted ex-president of the Sao Paulo
Labor Court, Judge Nicolau dos Santos Neto, who had his riches tucked away
in Miami and Switzerland, to Brazil's top drug dealer who had ties with
Colombia's guerrillas--reveal that many of the region's most powerful
figures have been well-acquainted with money laundering.

But government officials and finance experts say there has been significant
progress, arguing that the current barrage of investigations is proof that
things are changing.

"Today, we are able to know things that would have been impossible before
because we are no longer blocked by bank secrecy laws and now governments
are working together and exchanging information," said Adrienne Senna,
president of Brazil's Council of Financial Activity Control, an agency set
up to fight money laundering.

In the past year, Senna's agency has been juggling several investigations,
including dos Santos', in relation to allegations of money siphoned from a
botched Sao Paulo construction project.

A Swiss Connection

Dos Santos' assets were frozen after investigators found he had hidden $4
million in a Swiss account and also owned a Miami apartment valued at $1
million, Senna said.

Two weeks ago, the most recent sting was announced. Its target was a money
laundering operation that funneled cash from Brazil to Bolivia to the
United States to Lebanon via several operatives, including a travel agent
identified by investigators as a courier for Luiz Fernando da Costa, a
Brazilian drug lord with connections to the Revolutionary Armed Forces of
Colombia. He is suspected of trading cash and guns for cocaine with leftist
guerrillas. He was arrested in Colombia earlier this year.