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Re: [NEWS] Crypto-relevant wire clippings

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From: Troy Varange <[email protected]>
Message-Id: <[email protected]>
Subject: Re: [NEWS] Crypto-relevant wire clippings
To: [email protected] (Dr.Dimitri Vulis KOTM)
Date: Wed, 18 Sep 1996 07:01:50 -0700 (PDT)
In-Reply-To: <[email protected]> from "Dr.Dimitri Vulis KOTM" at Sep 17, 96 10:32:37 pm
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> Money Laundering Alert: August 1996
> 'Unauthorized' Banks Pose Laundering Threat
> They are subject to none of the recordkeeping or reporting requirements
> of the Bank Secrecy Act, receive no examinations from any banking
> regulator, and may be on your bank's currency transaction reporting
> exemption list.
> The Office of the Comptroller of the Currency refers to them as
> "entities that may be conducting banking operations in the U.S. without
> a license." Money launderers probably refer to them as dreams come true
> and, unless legitimate financial institutions are alert, can use them to
> place illicit proceeds into the financial system.
> They are "unauthorized" banks, and for the past five years the OCC has
> been disseminating advisories to legitimate U.S. banks - but not to
> consumers - in an effort to expose their existence and halt their
> illegal operations.
> These so-called "banks" offer a variety of banking services, often at
> lower fees and better interest rates than legitimate banks offer. What
> makes them different from a legitimate bank - and attractive to money
> launderers -- is that they are not licensed by any U.S. banking agency
> and thus do not have to meet regulatory standards.
> Because the OCC and other federal bank regulators are not investigative
> agencies, they can do little more than report these institutions to
> those who are. If the entities are found to be operating a bank without
> a license they can be prosecuted under the Glass-Steagell Act (Title 12,
> USC Sec. 378(a)(2)).
> Such prosecutions are rare. In one case in 1994, initiated by Federal
> Reserve Board examiners, the principals of Lombard Bank, Ltd., were
> charged with operating an unauthorized bank through a payable-through
> account at American Express Bank International in Miami. Lombard, which
> had been "licensed" in the South Pacific money laundering haven of
> Vanuatu, offered its Central American customers virtually full banking
> services in the U.S. through its PTA (MLA, Sep. 1994).
> Earlier this year, the OCC released a list of more than 50 "banks" known
> to be operating without authorization. OCC officials say the number
> grows steadily. Some of the "banks" say they are licensed by foreign
> countries or U.S. states to conduct banking business. Others, such as
> the Swiss Trade & Commerce Trust, Ltd., of Belize, continue to offer
> services in the U.S. despite edicts from foreign banking authorities to
> cease doing business.
> The unauthorized entities have a common trait. They usually have names
> that are similar to those of well-known legitimate institutions. The OCC
> list includes the Bank of England, a Washington, D.C., entity not
> associated with London's famous "old lady on Threadneedle Street" and
> Citicorp Financial Services, a Beverly Hills firm not associated with
> the better-known institution of that name. It also includes the First
> Bank of Internet, which heralds itself as the first bank in cyberspace.
> Through its periodic "special alerts," the OCC warns banks to "view with
> extreme caution any proposed transaction involving any of the listed
> entities." It makes no effort to educate members of the general public
> who unknowingly place their money and trust in those uninsured
> institutions.
> American Banker: Friday, August 30, 1996
> Swift Near Alliance in Trade Document Automation
> Swift, the international banking telecommunications network, wants to
> play a bigger role in trade finance and the exchange of related
> documentation.
> Sources said the Brussels-based organization will soon take a position--
> perhaps as early as its September board meeting-- on whether to work on
> trade automation in cooperation with another consortium, called Bolero.
> Such a move would involve an increase in nonbank participants on a
> bank-owned network that has approached such liberalization cautiously.
> Swift, formally the Society for Worldwide Interbank Financial
> Telecommunication, is used by 5,300 banks for exchanging messages in
> such areas as funds transfer, foreign exchange, and securities.
> The network averaged about 2.7 million messages a day in July,
> representing daily dollar volumes exceeding $2 trillion.
> Officials said Swift is nearing a decision to work with the Bolero
> Association, which is forming an electronic registry for the so-called
> "dematerializing" of trade documents. Swift could provide the "platform"
> for allowing banks and corporations to exchange such documentation as
> letters of credit and bills of lading.
> Bolero was formed in 1994 with funding from the European Commission, but
> has not formulated concrete operating plans. Its members include
> Citicorp, Barclays Bank PLC, and other multinational banks and
> corporations.
> Peter Scott, trade services market director at Swift, said it has been
> in discussions with London-based Bolero since December 1995 about
> joining forces to automate the exchange of trade documents.
> "Bankers are beginning to sense both the opportunities in those areas
> and the threats to them from an intermediary stepping in and potentially
> taking away the business," Mr. Scott said.
> Trade-document capability "is not a heavily utilized area within Swift
> at the present time," he said.
> The potential in automation is obvious to Bolero officials. At the New
> York Banktrade Conference recently, John McKessy, the association's
> North American representative, said the annual value of goods moved
> internationally approaches $4 trillion.
> He estimated current international trade requires some three billion
> documents to be issued and managed.
> The cost of dealing with paper alone eats up about 7% of the total value
> of those goods, as much as $280 billion, Mr. McKessy said.
> Bank revenues from issuing letters of credit last year were just over $1
> billion, according to a soon-to-be-released survey by the U.S. Council
> on International Banking.
> Anthony K. Brown, senior vice president of trade services at MTB Bank,
> described trade transaction processing as "extremely cumbersome and
> tedious, prone to mistakes and delays (that) can be a hindrance to the
> completion of a transaction."
> MTB is a $400 million-asset merchant bank based in New York. About 80%
> of its $100 million in loans are trade-related.
> The paper-shuffling costs are not borne entirely by banks. Import/export
> companies, insurers, freight forwarders, and various government
> inspection agencies are also involved.
> "The question is whether Swift wants to do it," said Dan Taylor,
> president of the New York-based U.S. Council.
> "Swift is going to act fairly quickly on this," he added.
> Mr. Taylor said Swift officials will likely grapple once again with the
> political and philosophical issues of giving nonbanks more access to
> Swift, and to payment systems generally.
> In 1995, the network granted partial access to nonbanks after years of
> heated debate.
> "You always have this push and pull, where some banks would like Swift
> to do certain things" while others want the network to focus on the
> money transfer business, Mr. Taylor said.
> "If Bolero succeeds and Swift joins, I think it will move fairly
> rapidly, but I'm not sure that Bolero is going to be the only thing out
> there."
> He said Bolero might evolve using value-added networks - or intranets -
> like the IBM Global Network and General Electric Information Services
> Co., or perhaps even the Internet.
> Indeed, another member of Bolero, CSI Complex Systems Inc., New York, is
> apparently talking to several providers of private, value-added networks
> and may soon enter a contract with one.
> CSI letter-of-credit software leads the pack in banking, with about a
> 16% market share, Mr. Taylor said.
> The company recently formed a business unit called Electronic Documents
> International, which has developed an Internet-based system for
> initiating letters of credit. CSI spokesman George Capsis said the
> software, Import.com, creates "about 30 key documents involved in
> international trade."
> The Internet, enhanced with security features, may help the trade
> industry reduce paper-related costs, especially at smaller companies
> overseas.
> CSI managing director Andre Cardinale said customers need only to "dial
> into a bank's Internet server, pull up the Import.com application, and
> actually fill in the details to create a new letter of credit or an
> amendment to an existing one."
> While Bolero may find a place on the Internet or a GE-type network, Mr.
> Cardinale said the ultimate push may yet come from the banking industry
> working collectively through Swift.
> He said Swift opposition from nonbank constituencies that are concerned
> the telecommunications cooperative will be more sympathetic to banks
> when disputes arise.
> But "if Swift does it," he added, "it will bring banks into the universe
> far more - pardon the pun - swiftly."
> Crain's New York Business: August 26, 1996
> Bloomberg to Detail Growth of Information Empire
> Michael Bloomberg made a name for himself on Wall Street with his
> trading acumen and mastery of the computer systems that were becoming
> crucial to success in the securities business.
> But no one suspected when he left Salomon Brothers in 1981 that in the
> next decade he would build the fastest-growing provider of financial
> information in the world.
> Mr. Bloomberg, whose company Bloomberg Financial Markets has estimated
> sales of $600 million, will be the keynote speaker at the fifth annual
> Crain's ''Growing a Business Expo,'' to be held this year on Thursday,
> Oct. 24.
> The event will take place at the New York Hilton & Towers from 8 a.m. to
> 1 p.m. It is presented by Citibank and co-sponsored by Con Edison and
> Empire Blue Cross and Blue Shield.
> Last year, more than 1,000 growing business owners and managers attended
> the expo, which provides information for companies operating in the city
> regarding potential suppliers, financial resources and government
> programs.
> The cost to attend the event is $45 and includes a continental
> breakfast. Individuals registering before Sept. 6 can bring a colleague
> for free. To register, call Flagg Management at (212) 286-0333.
> In addition to Mr. Bloomberg's speech, attendees will be able to attend
> seminars on financing and other help available from the city, financing
> techniques, energy cost savings programs and how to reduce health
> insurance costs. An expected 135 exhibitors will be offering products
> and services of use to growing companies.
> Crain's New York Business editors will discuss how a growing business
> can get coverage in Crain's and in other publications.
> The heart of Mr. Bloomberg's empire is a news gathering operation that
> sends information through 62,000 computer terminals installed on the
> desks of investment professionals around the nation. His company
> provides the latest financial news and sophisticated tools to analyze
> information.
> The company he has built is noted for its lack of bureaucracy despite
> its growth to 2,000 employees. Its hallmarks are hands-on leadership and
> an entrepreneurial atmosphere where employees receive perks such as free
> food.
> Mr. Bloomberg has extended his reach to include an all-news radio
> station in New York, WBBR; Bloomberg Personal TV; syndicated television
> shows; a monthly personal finance magazine; and a similar magazine for
> institutional investors.
> American Banker: Friday, September 6, 1996
> America Online Opens a New Banking Channel
> Nineteen banks - national home banking stalwarts such as Citicorp and
> BankAmerica, plus a complement of less prominent regionals - have
> climbed onto the America Online bandwagon.
> Most already offer their customers several options for banking via
> personal computer and view America Online, with its six million
> subscribers, as a way to appeal to a broad cross-section of computer-
> literate consumers.
> Fourteen of the AOL banking partners will be delivering services through
> BankNow, a software package developed for the interactive network by
> Intuit Inc.
> The other five banks have opted to use their own software. One of them -
> Security First Network Bank, which operates entirely on the Internet -
> will invite AOL users in through their Web browsers.
> With its announcement this week, America Online Inc. takes its place
> among the many alternative "channels" for on-line banking.
> Many of the banks on AOL's list are simultaneously cooperating with
> other companies that are themselves competitors, such as Intuit and
> Microsoft Corp., suppliers of the Quicken and Money financial management
> software, respectively.
> Also crossing competitive lines, America Online said its subscribers
> will be able to bank from home with PC software from three suppliers
> other than Intuit: Checkfree Corp., Online Resources and Communications
> Corp., and Visa Interactive.
> "Everyone understands that there is competition in the home banking
> arena," said David Baird, general manager of the personal finance
> division at America Online, based in Dulles, Va. "To align ourselves
> with exclusively one company would be a mistake."
> Intuit can count on 14 initial bank users of BankNow. Spokesmen for the
> other three system vendors declined to say when they expect to have home
> banking products available for the AOL channel.
> Experts noted that AOL and Intuit could be a strong tandem, in that they
> dominate their respective businesses.
> Intuit's Quicken is the leading brand in personal finance software. The
> company claims more than 9 million active users and a market share of
> about 80%.
> America Online's subscriber base of six million is as big as those of
> its next two competitors, Compuserve and Prodigy, combined.
> The financial institutions currently offering BankNow are: American
> Express, Bank of Stockton (Calif.), Centura Banks Inc., Commerce Bank of
> Kansas City, Mo., Commercial Federal of Omaha, Compass Bank of Alabama,
> CoreStates Financial Corp., Crestar Financial Corp., First Chicago NBD
> Corp., Laredo (Tex.) National Bank, M&T Bank of Western New York,
> Marquette Bank of Minneapolis, Sanwa Bank California, and Union Bank of
> California.
> More plan to offer BankNow-based services through AOL later this year:
> BankAtlantic of Florida, Bank of Boston, First Hawaiian Bank, First
> Michigan Bank, Mellon Bank, Signet Bank, and U.S. Bank of Oregon.
> Unlike Quicken, BankNow software is available free to America Online
> subscribers.
> Banks' fees will vary. First National Bank of Chicago said it will
> charge $3.95 a month for on-line banking and $9.95 a month for other
> services that include bill payment.
> Centura Banks Inc. said it will offer on-line banking free, and charge
> $5.95 a month for bill payment.
> Intuit officials declined to disclose what its Intuit Services Corp.
> processing unit will charge to handle these transactions for banks.
> Some of Intuit's larger bank partners chose not to offer BankNow because
> they already promote their own PC banking programs.
> For example, Citicorp, First Union, and Wells Fargo each support
> Quicken, but passed on BankNow. Instead, they are paying a premium for a
> "button" on America Online's banking screen that will eventually link
> users to a proprietary home banking program.
> AP Online: Thursday, September 5, 1996
> House Probes Money Laundering
> House Banking Committee members on Thursday urged a Treasury Department
> agency to step up its efforts to halt money laundering by Mexican drug
> lords.
> Rep. Spencer Bachus, R-Ala., urged the Financial Crimes Enforcement
> Network to put in place new regulations to plug a significant loophole
> that allows Mexico's drug dealers to place their ill-gotten profits back
> into the U.S.
> Bachus, chairman of the House Banking oversight subcommittee, said
> Congress gave authority to FinCen in 1994 to put in place new rules that
> would prevent drug dealers from using foreign bank drafts, a type of
> check, to evade currency reporting restrictions.
> ''That effort is long, long overdue,'' Bachus said.
> Rep. Henry Gonzalez, D-Texas, asked the agency to provide further
> details about suspected money laundering in his home town of San
> Antonio, particularly the source of a $3 billion cash surplus in the San
> Antonio Federal Reserve Bank.
> The issue arose as Bachus' panel began exploring the dramatic rise of
> narcotics traffic along the 2,000 mile long U.S.-Mexico border, and the
> ease with which drug dealers can ship their profits to the south. Money
> laundering refers to the practice by which drug dealers, mobsters and
> others funnel their illegal profits into the banking system through
> businesses or other means.
> Bachus said estimates of drug profits laundered through Mexico range
> from $6 billion to $30 billion per year. Stanely E. Morris, FinCen's
> director, defended his agency's record, saying a combination of new
> rules and tougher enforcement in the past decade has ''made it more
> difficult to launder money in the U.S.'' and increased the costs of
> money laundering. Morris' agency enforces the Bank Secrecy Act, a key
> weapon against money laundering.
> As for the new rules aimed at foreign bank drafts, Morris said the
> regulations are more difficult than first expected because such
> restrictions also could hinder legitimate commerce. He said the proposal
> would be released soon.
> FinCen is working on other fronts to combat money laundering, which
> includes a new computer system that tallies bank fraud to help
> regulators gain an early warning of money laundering.
> In addition, the Clinton Administration assisted Mexico in adopting new
> anti-money laundering rules earlier this year. And Treasury Secretary
> Robert Rubin convened a conference of 29 nations in December 1995 to
> focus on the money laundering problem.
> One committee member, Rep. Maxine Waters, D-Calif., addressed the
> political context of the hearings.
> Waters said she was suspicious that the Republican-led Congress was
> holding ''a rash of hearings this month ... on the subject of drugs just
> as Presidential candidate Dole tries to use the issue as part of his
> campaign strategy against President Clinton.''
> Waters said if the GOP-led House ''is truly serious about the impact of
> drugs'' it should hold hearings about charges raised in a San Jose
> Mercury News investigative series last month concerning the role
> CIA-backed rebels in Nicaragua played in bringing crack cocaine and
> weapons to Los Angeles and other cities.
> Bachus told Waters the hearing wasn't motivated by politics and that he
> had personally been involved in anti-drug efforts prior to his election
> to Congress.
> ---
> <a href="mailto:[email protected]">Dr.Dimitri Vulis KOTM</a>