E-Peso's for tractors - McCaffrey on banking

[Robert Hettinga <rah@shipwright.com>]

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From: "Blair Anderson" <blair@technologist.com>
To: "dcsb@ai.mit.edu" <dcsb@ai.mit.edu>
Date: Sun, 09 Nov 97 01:53:59 +1300
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Subject: E-Peso's for tractors - McCaffrey on banking
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Reply-To: "Blair Anderson" <blair@technologist.com>

06:24 p.m Nov 05, 1997 Eastern

         U.S. drug czar appeals to banks to track laundering

         By Anthony Boadle

         WASHINGTON (Reuters) - Bankers, watch those ``smurf''
         accounts.

         That was the message drug enforcement authorities gave
         the American Bankers Association and the American Bar
         Association at their annual money laundering conference
         Wednesday.

         Any innocent-looking person could be depositing a drug
         baron's cash parceled into amounts smaller that the
         $10,000 reporting threshhold to avoid suspicion, so get
         to know your customer, they warned.

         Traffickers hire individuals or ``smurfs'' who open
         small accounts at U.S. banks in their own or fictitious
         names.

         Once in the system, drug money becomes very hard to
         trace, White House drug policy director Gen. Barry
         McCaffrey said.

         Americans spend $49 billion a year on illegal drugs and
         much of that cash has to go through banks and
         corporations to get back to the Colombian cartels that
         ship cocaine and heroin to the the United States, he
         said.

         McCaffrey said drug traffickers were becoming
         increasingly sophisticated in laundering their proceeds,
         resorting to high tech communication encryption and
         ``cybercash'' transactions over the Internet.

         ``We are not going to find dumb guys stumbling into bank
         branches in New York City with cardboard boxes full of
         $20 bills that test positive for cocaine,'' he said.

         ``We are losing contact with the enemy,'' the general
         said. ''The government cannot follow laundering by
         itself. You are going to have to help.''

         McCaffrey said the drug trade was moving into new areas
         such as the securities industry to launder its profits.

         Treasury Department Undersecretary for Enforcement,
         Raymond Kelly, said Colombian cartels were using a black
         market peso brokering system to send home their profits.

         Cartels sell their dollars at a discount to Colombian
         businessmen who need to buy goods in the United States.
         The dollars go to pay the U.S. manufacturer or exporter.
         The pesos never leave Colombia and end up in the drug
         baron's account.

         A hooded Colombian woman testified in Congress last
         month that she had laundered money through large U.S.
         banks and corporations unwittingly used by black market
         peso brokers.

         She cited the case of drug dollars going to pay for a
         tractor for a Colombian farmer.

         Keely, a former New York City police commissioner,
         warned that money laudering was corroding financial
         institutions.

         ``It is the source and the product of a burgeoning
         global parallel trading system that serves the emerging
         criminal holding companies,'' he told the bankers and
         lawyers.

         Kelly said the Clinton administration has worked to
         lessen the burden of the Suspicious Activity Reports
         that banks are obliged to file under the Banking Secrecy
         Act.

         The banking industry complained it had to file 12
         million such reports in 1996, a time consuming and
         costly activity.

         New regulations exempts banks from reporting on certain
         customers, such as corporations listed on stock markets
         and their subsidiaries.

         But a new set of rules exempting additional businesses
         has caused an uproar among bankers because they would
         have to track the daily currency operations of these
         businesses for one year and project their annual
         currency needs.

         Copyright 1997 Reuters Limited. All rights reserved.


Blair Anderson  (Blair@technologist.com)

International Consultant in Electronic Commerce,
Encryption and Electronic Rights Management

   "Techno Junk and Grey Matter"  (HTTP://WWW.NOW.CO.NZ [moving servers,
currently inactive])
   50 Wainoni Road, Christchurch, New Zealand

          phone 64 3 3894065
          fax     64 3 3894065

Member 	Digital Commerce Society of Boston

---------------------------- Caught in the Net for 25 years
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-----------------
Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
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