Consequences of economic crime

CONSEQUENCES OF ECONOMIC CRIMES AFFECT PEOPLE'S SENSE OF SOCIETY'S
FAIRNESS, CRIME CONGRESS' COMMITTEE 1 TOLD

Activities such as drug trafficking, exploitation of natural resources, corruption and
misappropriation of funds from banks affected the economic well-being of the people, the
representative of Thailand, the Host Country to the Eleventh United Nations Congress on Crime
Prevention and Criminal Justice, told the Congress' Committee I today.

i-Newswire, 2005-04-20 - The consequences of such activities, he said, went well beyond financial
loss and the economic well-being of society. It was important that people felt they were living in
a fair and just society and, if economic and financial crimes were not checked, people would begin
to feel increasingly resentful.

He said people who were behind financial crimes were usually smart and sophisticated, making use of
financial resources to build extensive connections with law enforcement officials. Authorities had
to fight interference from influential powers, and that was often more difficult than the
investigation itself. Strong political will and government commitment was needed to fight such
crime. If the perpetrators were members of the government, decisive and swift action would restore
society's confidence in government policy on the issue.

During consideration of today's topic: "Economic and financial crimes: challenges to sustainable
development", delegates deliberated on the need for a new convention on money-laundering and the
need to share national experiences and cooperate internationally in combating the scourge.

Implementation was the one theme he would like to see emerging from the discussion, the
representative of the United Kingdom said, referring to the fact that four United Nations
conventions -- the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances,
the Convention against Transnational Organized Crime, the Convention against Corruption and the
Convention for the Suppression of the Financing of Terrorism -- all included provisions to combat
money-laundering, but had a poor record in implementation.

On the other hand, Brazil's representative said the main obstacle in the fight against international
crime was the lack of international cooperation. International cooperation in the fight against
international crime seemed to be a kind of taboo. Although his country had received help from
Nigeria in solving an important case, there were lots of cases where it could not get cooperation
from other countries because of a lack of a "culture of cooperation".

The representative of the United States drew attention to the fact that apart from the four United
Nations Conventions, which more countries should ratify, there were also the 40 recommendations of
the Financial Action Task Force. They had been endorsed and recognized as the single international
standard by the International Monetary Fund and World Bank and embraced by the twentieth special
session of the General Assembly as the international standard. "We should not risk creating
conflicting guidance and obligations in this area", she said, opposing elaboration of a new
convention.

Turkey's representative, however, supported the High-Level Panel's recommendation to draft an
international convention on money-laundering. Such a convention, he said, could make non-mandatory
provisions of other United Nations conventions mandatory and adherence to the Financial Action Task
Force recommendations universal.

Nigeria's representative said that corruption, as well as economic and financial crimes, had
distorted the image and reputation of his country. He stressed that Nigeria would tolerate the
problem no more. It had charged five of the largest banks for allowing the flourishing of
corruption in his country, the biggest problem facing African countries. Nigeria had brought
several highly placed people to justice, including the President of the Senate, for embezzlement.
"There is a revolution taking place in Nigeria today, and we are proud of it", he said. Today,
Nigeria was the number one country in fighting corruption and was becoming a sort of model on how to
combat economic and financial crimes.

The representative of Argentina addressed the problem of conceptualization of and defining economic
and financial crimes. He said that conceptualization could be an interesting but difficult subject,
since under the terms of economic and financial crime a whole series of crimes could be included
that was already covered by the criminal code. Tax evasion, for example, was in many countries not
an offence, and there were many obstacles in international legal cooperation in dealing with that
crime.

Also speaking today were the representatives of the Republic of Korea, Italy, Morocco, Luxembourg
( on behalf of the European Union ), Australia, Mauritania, Cameroon, Norway, Denmark, Venezuela,
Ukraine, Switzerland, Finland, Philippines, Germany, France, Sri Lanka, Spain and Peru.

Representatives of the Council of Europe and the Asia Pacific Group on Money-Laundering addressed
the Committee as well, as did the representatives of two non-governmental Organizations: Japan
Federation of Bar Associations and Asia Crime Prevention Foundation.

With today's discussion, the Committee I concluded its consideration of economic and financial
crimes: challenges to sustainable development.

Background

Committee I of the Eleventh United Nations Congress on Crime Prevention and Criminal Justice had
before it a working paper prepared by the Secretariat on Economic and financial crimes: challenges
to sustainable development ( document A/Conf.203/7 ), defining "economic and financial crime"
broadly as any non-violent crime that results in a financial loss. A list of economic crimes
includes cartel offences, fraudulent practices, computer crime, violation by a company of standards
of security and health concerning employees, fraud to the detriment of creditors, unfair competition
and fiscal offences. Technical change has had a significant impact on overall levels of economic
and financial crime.

According to the working paper, understanding the impact of economic and financial crime in the
current global context, and on developing countries in particular, is complicated by the difficulty
of determining an all-encompassing definition of the concept and by the fact that both the extent
and costs of such crimes are difficult to measure. There is growing evidence, however, that
economic and financial crimes are increasing, mostly in sectors affected by rapid advances in
technology.

One area requiring particular attention is money-laundering, given its links not only to other areas
of illicit activity in the financial sector, but also because of its use by organized criminal
groups involved in a variety of illegal activities. The High-Level Panel on Threats, Challenges and
Change suggests that a global legal instrument is required on money-laundering. That provides a
renewed focus on the effectiveness of current arrangements and the viability of possible future
arrangements to counter the laundering of criminal proceeds.

Available evidence also suggests that the costs of economic and financial crime, while often eluding
exact measurement in the short term, are severe for many societies seeking to achieve sustainable
levels of development. Such practices undermine, in the medium and long term, effective economic
management, transparent practices and the rule of law. They also benefit only a few people in
society, leaving the majority poorer and with fewer resources.

The working paper recommends that the Congress consider:

-- Establishment of mechanisms at the national, regional and international level to improve data
collection on economic and financial crimes;

-- Ways to improve the global legal framework to counter economic and financial crimes;

-- Provision of effective technical assistance to developing countries to improve their capacity to
confront the problem;

-- Agreement on measures to improve cooperation between government and the private sector in
preventing such crimes; and

-- Identification of effective measures to curb money-laundering in countries where participation in
the "formal" financial system is low, including in the areas of research, training, skills
development, technical assistance programmes and regional and international cooperation.

Statements

PRIDIYATHORN DEVAKULA, Governor, Bank of Thailand, said it was well known that activities such as
drug trafficking, exploitation of natural resources, corruption and misappropriation of funds from
banks affected the economic well-being of the people. The consequences of undesirable activities
went well beyond financial loss and the economic well-being of society. More important was the
feeling among the people that they were living in a fair and just society. When economic financial
crimes were committed, prompt action against the perpetrators was needed. If left unchecked, people
's feelings of resentment would accumulate. They would feel alienated and resent their governments.
The feeling that one lived in a fair society was even more important than economic well-being. The
question was how to prevent feelings of resentment from deepening.

The harmful consequences of normal crime were easily felt and observed, he said. Common crimes were
also less likely to be compromised in the law enforcement process. Economic crimes did not have
direct and immediate impact due to their non-violent nature. Hence, such crimes did not receive
public attention. People who were behind financial crimes were usually smart and sophisticated,
making use of financial resources to build extensive connections with law enforcement officials.
Authorities had to fight interference from influential powers, and that was often more difficult
than the investigation itself. Strong political will and government commitment was needed to fight
such crime. Economic and financial crimes were destructive enemies of nations. Governments needed
to fight against financial crimes in every shape and form. Stock price manipulation, insider
trading, while not directly harming people's lives, made people feel slighted. If the perpetrators
were members of the government, decisive and swift action would restore society's confidence in
government policy on the issue.

Cross-border economic crime was more difficult to combat, he added. The Congress was a good example
of collaboration at the international level. Modern forms of such crimes could be seen in cases of
individual businessmen from big countries moving into small countries under the pretext of
technological advancement. There were cases of certain medicines banned in more developed markets
which could be found on the shelves on less developed markets. In such cases, it was clear that the
small nations were being exploited by bigger nations with greater economic clout. He did not have a
solution to the problem, but only hoped that an internationally neutral body such as the United
Nations would look at the issue of economic exploitation of smaller nations and set appropriate
rules of the game. Protecting the interests of smaller nations would help those in developing
nations think they were living in a fair world.

MARY LEE WARREN ( United States ) concurred with the assessment of the discussion paper regarding
the seriousness of transnational economic crime and the harm it caused to the well-being of many
people. Her country had updated existing laws on money-laundering after 11 September. She did not,
however, join in the suggestion that there was a compelling need for a new convention on
money-laundering. She disagreed that existing mechanisms were inadequate. Four United Nations
Conventions currently addressed that matter, including the Convention against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances, the Convention against Transnational Organized Crime,
the Convention against Corruption and the Convention on the Suppression of the Financing of
Terrorism. Those instruments covered the spectrum of serious crime, and statistics showed that 163
countries had criminalized money-laundering beyond drugs, and 113 countries had criminalized
terrorist financing.

There was still much work to be done with the existing conventions before determining that there was
need for yet another convention, she said. That would be premature. Rather, all countries should
be encouraged to ratify the existing treaties, implement them and provide the basis for
international cooperation. In addition, the 40 recommendations of the Financial Action Task Force
( FATF ) were the universally recognized international standards for anti-money-laundering efforts.
"We should not risk creating conflicting guidance and obligations in this area", she said.

She said the Tasks Force's 40 recommendations had been endorsed and recognized as the single
international standard by the International Monetary Fund and World Bank. At its twentieth special
session, the General Assembly had, in resolution S-20/4 embraced the recommendations as the
international standard. Another concern was that the Secretariat had suggested that a
money-laundering convention might be too difficult to undertake and that a more limited approach
should be taken, one that focused on the Internet. Her country opposed such a piecemeal approach
since the focus would be solely on the instrument or conduit used to commit the crime, rather than
the type of particular offences.

NAM-GEUN YOON ( Republic of Korea ) said technology was being used exponentially in economic
financial crime, adding sophistication to traditional crime. It was timely that the Congress would
focus on high-tech crime under the broader rubric of economic and financial crime. National borders
were becoming irrelevant as world financial systems became increasingly integrated. Over the last
10 years, the Republic of Korea had had many high-profile cases. The country had made sacrifices to
deal with financial debt in the wake of fraudulent lending schemes. The Government had initiated a
series of measures in that regard. Unfortunately, the number of financial crimes was on the rise.
While about 33,000 cases had been reported in 2001, in 2004, the number had increased to about
68,000. What was even more alarming was the number of minors involved in cyber crime.

In the Republic of Korea, new crimes were exploiting high-tech advances both at home and abroad, he
said. Law enforcement agencies needed a system that facilitated information sharing to address the
global threat of e-crime. Identity theft was usually associated with other crimes and, as such,
needed to be criminalized. In 2001, the Republic of Korea had enacted a law that prohibited public
associations from providing information to third parties. Money-laundering was also a problem, and
the proceeds of such crime were often used to commit other crimes. Money-laundering, however, was
not a punishable crime in itself, and legislation was needed to outlaw that form of financial crime.
With advanced information technology, national boundaries were no longer the obstacles they once
were in carrying out financial and economic crime. To stem the tide of financial and economic
crime, advanced nations needed to provide developing countries with financial, educational and
technical assistance. The Republic of Korea was poised to provide its expertise in that regard.

NUHU RIBADU ( Nigeria ) said that, in his country, addressing economic and financial crimes had been
problematic for a long time. However, those crimes had now been identified as the biggest problem
facing the country, and the battle against corruption and economic and financial crimes was on. The
Government had established a high-powered commission in 2003 to address the problem. Tragically,
economic and financial crimes and corruption had distorted the image and reputation of Nigeria. His
country was one of the largest oil producers in the world, but had a big problem of theft of crude
oil, mainly by foreigners. The Commission also addressed that problem.

He stressed that Nigeria would tolerate the problem no more. It had charged five of the largest
banks for allowing the flourishing of corruption in his country, the biggest problem facing African
countries. Nigeria had brought several highly placed people to justice, including the President of
the Senate, for embezzlement. "There is a revolution taking place in Nigeria today, and we are
proud of it", he said. The problem had to be solved to regain the respect of the international
community.

He said his country had also developed strong international working relations, among others with the
Interpol and the Europol, the United States, South Africa and the United Arab Emirates, because most
of the crimes were transnational, and money was being brought out of the country. Moreover, his
country was working with the Financial Action Task Force. Today, Nigeria was the number one country
in fighting corruption and was becoming a sort of model on how to combat economic and financial
crimes.

BRUNO BURATTI ( Italy ) noted that, for some time, the fight against organized crime had focused on
the economic context. The acknowledgement of the presence of illegal financial flows and their
effects on the economic system as a whole had created a growing awareness of the need to fight
economic crimes. The fight against economic crime, in particular money-laundering, must be carried
out with both a repressive approach and a preventive approach. In that regard, Italy had seen
significant innovation in terms of broadening the range of illegal activities. Regarding
prevention, it was important to, among other things, report suspicious transactions. Recently,
Italy's anti-money-laundering legislation had extended to activities considered to be at risk for
money-laundering.

Regarding the role of law enforcement in fighting money-laundering, he said it was important that
investigations into money-laundering must be assigned to a specialized police force. With regard to
money-laundering methodologies, it was important to mention the fundamental role played by both
money transfer systems and unofficial banking circuits. Every system could be improved, even the
most advanced. In that connection, it was important to continue harmonizing national legislation.
Until that was achieved, criminal organizations would continue to move considerable amounts of money
through countries where regulation did not allow for the effective monitoring of money flows. It
was also important to improve the effectiveness of the analysis of transactions in international
financial markets, possibly by means of real-time modules to manage information flows.

PETER STORR ( United Kingdom ) said it was clear that there were weaknesses, and not only criminals,
but also terrorists would exploit them. Criminals targeted those countries where there was an
absence of strong regulations. That sent a strong message to those countries about developing such
regulations. There was a lot that the international community could do, and there was no shortage
of international regional instruments and forums. Apart from the four United Nations conventions
mentioned by other delegates, there was also the Council of Europe money-laundering convention.
There were also regional instruments that laid down the standards for tackling money-laundering, and
the 40 recommendations of the Financial Action Task Force had been recognized broadly as the
international standard.

He said that his country found it difficult to see what value would be added by elaborating a new
United Nations convention. The international community should avoid seeing new conventions as the
automatic solution. If there was one theme he would like to see emerging from the deliberations it
was "implementation, implementation and implementation". The record of implementation was a poor
one.

Another way to battle the crime was through the use of financial disincentives, such as the
confiscation of criminal assets, he said. There was far more that could be done in that regard, and
there was no greater disincentive to organized criminals than the thought of losing the fruits of
his activities. It had taken the United Kingdom three attempts to get its law on the matter
working, but it was proving to be successful now. There was an irony about what his country was
doing, as a significant portion of seized assets would be plowed back into crime prevention and
anti-crime measures. Criminals were now contributing to their own downfall.

MUSTAPHA HALMI ( Morocco ) said money-laundering constituted a new form of crime in both the
developing and the developed world. The crime had seeped into different areas of economic life and
it was necessary to adopt a global policy on the crime of money-laundering in the form of modern
laws and the enhancement of financial systems. To fight money-laundering, Morocco had made great
efforts, including the promulgation of a law that criminalized money-laundering and the creation of
national institutions to check suspect financial transactions. It was now in the process of
ratifying that law. The anti-terrorism law allowed for the tracking down of terrorism-related
transactions. Judges and prosecutors had the authority to coordinate with other States to track
down terrorist-related financing.

The Moroccan justice system had also studied the issue of computer-related crimes, also resulting in
the promulgation of a new law, he said. Morocco also had a number of laws criminalizing tax evasion
and embezzlement -- all crimes related to money-laundering. Morocco intended to reformulate its
criminal law to take into account the latest developments with due respect for human rights and
basic freedoms.

MARIE-LISE STOLL ( Luxemburg ), speaking on behalf of the European Union, said the Union was not in
favour of drafting a convention on money-laundering. A number of international conventions
addressing the issue already existed, and the focus should now be on implementing the existing ones.

Moreover, a number of regional and international groupings had dealt with international standards
and norms in that area, she said. The Union fully supported the work done by those groups and
considered that the time was not yet ripe to engage in very resource-demanding negotiations on that
issue. The European Union, however, would be willing to consider ways and means to advance the
issue with its partners, so that a solution could be found that was acceptable to all.

ANTHONY COLES ( Australia ) said that, while economic and financial crimes were not new, the methods
used to perpetrate those crimes had become increasingly complex, involving high-tech crime, identity
fraud, Internet fraud, money-laundering and terrorist financing. What had also changed was the
methodology being used to commit financial crimes. The readiness of consumers, businesses and
governments around the world to embrace new technologies had provided a range of new opportunities
for people to act illegally. Governments and the private sector faced the same challenge, namely
how to respond to the uptake of new technologies by criminals, particularly organized criminals.
Australia was committed to the fight against economic and financial crimes, not only in that country
but internationally. As part of its commitment to combating financial crime internationally,
Australia had ensured that its regulatory bodies had adequate legal and administrative resources to
respond to the requests of other States.

Australia had introduced a range of legislative measures in the fight against economic and financial
crime, he said, including the introduction in 2000 of the Commonwealth Criminal Code Amendment,
which introduced offences specifically designed to cover fraudulent conduct involving computers.
Australia was leading a multifaceted national strategy to combat high-tech crime, including banking
fraud. Economic and financial crimes were multifaceted and complex crimes, constantly evolving due
to changes in globalization, demographics and technology. Australia was committed to undertaking a
range of strategies to combat those crimes, by introducing new legislation and tightening the
process to prevent and identify new and emerging crimes.

AMDELLAHI OULD KEDB ( Mauritania ) said that among the challenges of the third Millennium were those
of organized crime; trafficking in drugs, weapons and persons; money-laundering and terrorism.
Organized crime led to terrorism, insecurity, civil strife and corruption which had a great impact
on judicial systems and law enforcement offices. Corruption undermined development and destabilized
economies. Therefore, the international community must coordinate its efforts and cooperate more
closely to deal with transnational organized crime at its roots.

He agreed with the representative of the United States that there were sufficient international
instruments to combat the scourge, but that those instruments needed to be implemented. The major
obstacles to that were national barriers which still continued to block international cooperation.
Mauritania had ratified the 1988 Vienna convention which provided for investigation of
money-laundering and confiscation of illegal drug profits. Its national law provided for severe
sentences for those involved in money-laundering -- up to 40 years in prison, fines and confiscation
of property. Money-laundering had not yet been detected in the country, but no country would be
spared.

He said the implementation of the 40 Financial Action Task Force recommendations gave rise to
practical problems in his country because of the absence of specialized services to deal with the
matter, as well as the lack of financial resources and the fact that national legislation had not
yet been adapted. An inter-ministerial committee had been established to draft legislation to
punish money-laundering and strengthen international cooperation. That body was also drafting a law
to combat the financing of terrorism.

MICHEL MAHOUVE ( Cameroon ) said economic and financial crime was affecting the development efforts
of countries such as his. It was, therefore, necessary to review and update legislation to curb the
upsurge of such crime. Cameroon was countering white collar crime both nationally and regionally.
At the regional level, it was working within the Economic and Monetary Community of Central Africa
( CEMAC ) to set up various bodies to suppress money-laundering in the Central African subregion.
Cameroon's criminal code dealt with the issue of counterfeit bank notes and article 98 severely
suppressed money-laundering in the context of narcotic sales.

He noted that an ad hoc coordination committee had also been established to deal with the issues of
fraud, smuggling and counterfeiting with the mission of cleaning commercial transactions. Regarding
the detection of counterfeited checks, training seminars were being conducted. Monitoring and
surveillance were ongoing activities in that regard. The weak link, however, was the lack of an
appropriate framework to deal with cyber crime. That framework was currently being drafted and the
Congress would provide an opportunity to address the issue.

ANTENOR MADRUGA ( Brazil ) said his country agreed that international standards should be
established by the United Nations, and it would welcome, in principle, a new convention on
money-laundering. However, there were already international standards to be applied by most of the
United Nations members. The main obstacle in the fight against international crime was
international cooperation. To the words of the United Kingdom representative, he would add,
"cooperation, cooperation, cooperation".

He said that Nigeria had helped his country in a very important case as a result of international
cooperation. However, there were lots of cases where Brazil could not get cooperation from other
countries because of a lack of a "culture of cooperation". International cooperation in the fight
against international crime seemed to be a kind of taboo. He asked the Congress to discuss those
issues. Instead of a broad and shallow final declaration he would prefer that the Congress give
guidelines on how to overcome the problems. International cooperation should be stressed in the
Final Declaration.

ELSE METTE NAESS ( Norway ) said her country accorded high priority to the issue of economic and
financial crime. The adoption of the milestone United Nations conventions against corruption and
transnational organized crime was evidence of that commitment. She agreed with the delegates from
the United States, the United Kingdom and the European Union on the question of negotiating a new
convention. The United Kingdom representative had rightly emphasized the importance of implementing
already existing conventions. Since 2001, the Government had secured the adoption of a number of
amendments to the penal code, the rules concerning tax administration, and the right to request
audit information from banks and financial institutions. It had also adopted a new money-laundering
act and foreign exchange registering act. Norway's penal code also contained proposals regarding
the employees of financial institutions.

Norway had sound legislation for preventing economic crime, she said. The practical follow-up of
the various amendments was now a major priority, however. Efforts to combat financial crime must be
carried out at different levels. To strengthen the fight against money-laundering and corruption,
the Norwegian Government had a money-laundering project which addressed the issue at both the
national and international levels. While considerable efforts were being made to combat economic
and financial crime, there was considerable room for improvement. The effective combating of
economic and financial crime was important for maintaining confidence in the police and the courts.
Failure in that area could weaken public trust in government authorities. While important steps had
been taken internationally, much work remained to be done. The growth of economic and financial
crime posed a significant challenge to the international community, and international cooperation in
that regard was therefore of great importance.

HENNING FODE ( Denmark ) said the result of the work of the United Nations was a number of important
comprehensive conventions, such as the United Nations convention on narcotics, the Palermo
convention, the convention on corruption, and the one on the suppression of the financing of
terrorism. Those conventions were all dealing with various aspects of economic crime, including
money-laundering, and had been signed and ratified by a large number of Member States. There were
also the 40 Financial Action Task Force recommendations that covered the definition of
money-laundering, as well as preventative measures.

In that context, he said, the question of the added value of a new convention on money-laundering
could very well be raised. The focus of the United Nations should not be on elaborating a new
convention on money-laundering. Instead, there should be a focus on a rapid and effective
ratification of the existing instruments. Further international cooperation was also important, for
example in the sense of technical assistance.

MIRNA MASYRUBI ( Venezuela ) said her country belonged to the Financial Action Task Force and other
international networks to supervise capital flows and had also established domestic legislation in
that regard. Her country had established an oversight body under the organic law on drugs and

psychotropic substances. It had a number of control and regulatory measures to monitor businesses
that conducted international transactions.

She said Venezuela was prepared to enforce legislation to ensure that it was not used for the
purpose of organized crime. It was also important to ensure, however, that cooperation to combat
organized crime not result in intervention or veiled intervention of any kind.

VALERIY PIDPALY ( Ukraine ) said that, in his country, measures were being taken to implement the
Vienna Convention. Ukraine, a former Soviet republic, was in the process of liberalizing the
economy. The detection of economic and financial crimes was difficult, as they were committed by
groups using new technologies. Another problem was that criminals did not respect borders and were
truly transnational. In Ukraine, criminals often used false documents in committing economic and
financial crimes. Also, economic and financial crimes were often impossible unless there was
support from highly placed people, which pointed towards corruption. Currently, his country was
setting up a bureau to counter organized crime and deal with high-level corruption.

Among the needs his country had to address were the strengthening of police, identification of the
interests of crime and making legislation against economic and financial crimes stronger, he said.
It was also important to identify what the consequences of economic and financial crimes were in
terms of their impact on society. One had to realize that the criminal work was often linked with
politics as some criminal structures tried to lobby the authorities. The number of prosecutions for
economic and financial crimes was rising.

He said that another cause for concern was the question of money-laundering. His country did not
have well-trained specialists but was, however, very active in its campaign against
money-laundering. In 2003, more than 200,000 illicit financial operations had been detected that
had led to 105 legal cases involving many people. Ukraine had been excluded from the blacklist
regarding money-laundering. The problem was that there was limited access to information on
monetary transactions, bank accounts and "off-shore zones". He would appreciate hearing about
experiences from the international community in countering economic and financial crimes and the way
money was laundered and hidden.

DAVID BEST ( Switzerland ) noted that Swiss regulations to combat money-laundering were among the
most effective in the world. As one of the most important financial centres in the world,
Switzerland had to make particular efforts to ensure that criminal funds did not flow into it.
Switzerland provided judicial assistance on the basis of its own legislation. The Swiss criminal
code had provisions for crimes conducted in Switzerland or abroad. While frameworks were necessary,
alone they were not sufficient. It was also necessary to focus on specific measures to implement
obligations arising from the different frameworks. Strengthening the powers of bodies overseeing
financial transactions was also needed. It was at the stage of entering the financial system that
the funds of criminal organizations were easiest to detect, and it was crucial, therefore, to
develop a level of monitoring and training of the people responsible for those tasks. In that
connection he noted the important role of the UNODC in providing technical assistance.

Regarding a new international convention on money-laundering, he said there were already a large
number of international obligations in that regard. The rules of the Financial Action Task Force
had been broadly adopted throughout the world. He did not see any reason for calling them into
question.

Action

At the outset of the afternoon meeting, the Committee elected by acclamation Anna Mphetlhe (
Botswana ) as its Vice-Chairperson and Khondaker Showkat Hossain ( Bangladesh ) as its Rapporteur.

Statements

REIJO POYHONEN ( Finland ), associating himself with the statement made on behalf of the European
Union, said economic and financial crimes was a real challenge. In a short time, a lot had been
achieved by the United Nations, most importantly the adoption of the four conventions. It was
important to put every effort into the full implementation of those conventions. Money-laundering
was mentioned in the conventions, as well as in the recommendations of the Financial Action Task
Force.

He said Finland had implemented all relevant conventions and the Task Force recommendations.
According to his country's money-laundering legislation, predicate offences to money-laundering
could be any crime. Also, there was no need to start negotiations on a money-laundering convention;
that might risk the effective implementation of existing instruments. It was important to start
working with the exact definitions of money-laundering and other international economic crimes.

He said it was important to concentrate efforts on implementing the existing conventions and the
recommendations of the Financial Action Task Force and to cooperate internationally regarding
money-laundering and help other countries in need to ratify and implement already existing
instruments.

VICENTE S. AQUINO ( Philippines ) said developed countries did not have a monopoly on economic and
financial crimes. Developing countries also had their share of such criminal activities, which
constituted major obstacles to political and social stability and to economic progress. A sustained
international approach was imperative and must involve coordinated action and cooperation supported
by the free exchange of information, mutual legal assistance and extradition measures. The
Philippines had been a proactive partner in collective efforts to detect and deter financial and
economic crimes and bring to justice the perpetrators. The Philippines revised penal code, the new
Central Bank Act, the Securities Regulation Code and other pertinent laws listed many financial and
economic crimes, including manipulation, insider trading, falsification of commercial documents and
theft.

The Philippines had the necessary public and private institutional infrastructure to meet the
challenges that hampered efforts towards sustainable economic development, he said. The private
sector had also been involved in the war against economic and financial crimes. The financial
sector liaison committee, for example, was composed of 39 private sector agencies. The Philippines
judiciary was also involved in the fight. Such unrelenting, comprehensive efforts had not gone
unnoticed or unrewarded. The Philippines had been removed from the Financial Action Task Force's
list of Non-Cooperative Countries and Territories in February 2005.

The world had witnessed the collapse of big corporations and the downfall of corporate executives
because of the deficiency in corporate governance and defective and deceptive practices of the board
and senior management. Good corporate governance was an effective tool that set the acceptable
standards of transparency and disclosure practices by management to their boards of directors, and
by the boards to their employees, the stockholders and other stakeholders. Combating financial and
economic crimes necessarily required not only domestic cooperation but also transnational efforts of
all jurisdictions. The Philippines would continue to cooperate with other countries in the
investigation and prosecution of financial crimes, including money-laundering and terrorist
financing cases through mutual legal assistance, extradition and exchange of material information.

CEREN VANLIOGLU ( Turkey ) said the international community had set up a series of international
instruments to fight against economic crimes, included the four United Nations conventions. Taking
into account the difficulties to reach a consensus on a legal definition of economic and financial
crimes, he supported the High-Level Panel's recommendation to draft an international convention on
money-laundering. Such a Convention could make non-mandatory provisions of other United Nations
conventions mandatory and adherence to the Financial Action Task Force recommendations universal.

He said that, as the fight against economic and financial crimes was a top priority for his
Government, a Law on the Prevention of Money-laundering had established the Financial Crimes
Investigation Board ( MASAK ), which was responsible for evaluating denunciations in relation to
money-laundering, carrying out investigations, and providing the Public Prosecutor with all relevant
information relating to the commission of money-laundering offences. A new Penal Code, entering
into force in June, would establish the laundering of proceeds derived from crime as a criminal
offence, with a minimum punishment of one year of imprisonment. The scope of the crime of fraud was
expanded so as to include the usage of information systems, banks and credit institutions, as an
instrument.

Parallel to its national efforts, his country attached great importance on its cooperation with
international organizations, he continued. It was party to the United Nations Convention against
Illicit Traffic in Narcotic Drugs and Psychotropic Substances, had ratified the Convention on
Transnational Organized Crime and its Protocols and signed the Convention on Corruption. It had
also ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of
the Proceeds from Crime. Turkey was also a member of the South East European Cooperation Initiative
( SECI ). The National Police had established a "Computer-supported urgent intervention system"
with some of its regional partners, which had facilitated exchange of information on criminal
matters.

HERBERT MAASSEN ( Germany ) said the fight against white-collar crime was a focal point of his
country's policy in the field of national security. Modern industrial societies were characterized
by a dense network of global business relations, new and swift communication paths and more likely
possibilities of manipulation and fraud. The huge pressure from international competition was also
encouraging more persons involved in business to use illegal methods and instruments. The fight
against white-collar crime was becoming more difficult and complex. Germany had set five goals in
the fight against white-collar crime. Comprehensive information on the scale of white-collar crime
and the methods used to commit such crime was needed. The forms in which white-collar crime
manifested itself were just as diverse as the ways in which the commissioning of white-collar crime
was complex. To combat white-collar crime efficiently, comprehensive know-how was needed.

He said it was also necessary to intensify cooperation between public authorities and ministries.
Joint investigation groups comprising the police forces, customs and labour administration were, for
example, used in the fight against money-laundering and illegal employment. He also stressed the
need to step up prevention and involve businesses, which could play their part in fighting
white-collar crime. White-collar crime was not a national problem and could not be prevented by
countries going it alone. International links made it necessary to adopt an international
prevention strategy and, thus, to engage in international cooperation. Germany supported the
relevant initiatives launched by the international community, including the Lyon Group of the G-8
States and the European Antifraud office.

He also believed that another money-laundering convention would be counterproductive, as it would
weaken existing instruments. The relevant standard applying to the prevention of money-laundering
in the fight against terrorist financing had been set up by the FATF on money-laundering. The
United Nations had also issued relevant regulations to combat money-laundering, including the
Convention on Corruption. Another international instrument would increase the risk of conflicting
international standards and could hamper rather than promote a uniform strategy to combat
money-laundering. The focus should rather be on strengthening and implementing already existing
instruments.

JEAN-LOUIS BERTRAND ( France ) said economic and financial crime was one of the most serious threats
for the security and stability of nations, regions and the world. The crimes were growing at an
alarming rate and were linked to the growing integration of the world economy. Once that fact had
been accepted, there was a paradox. There was a big problem giving a clear definition of economic
and financial crimes, as those crimes were on the sidelines of other types of crime such as
transnational organized crime, fraud, counterfeiting, tax evasion and corruption.

The theme of money-laundering seemed to be the simplest and most practical way to tackle that kind
of criminology, since blood-money must at one time be laundered, he said. His country was not in
favour of a new convention on money-laundering. That position was based on notions of feasibility
and efficiency. There was no vacuum of regulation regarding money-laundering. Each of the four
Conventions covered money-laundering. What was at stake was implementation of the texts by the
international community.

The recommendations of the Financial Action Task Force already constituted an international
standard. Those standards would be undermined by new standards. Moreover, it would be impossible
to reach agreement within the United Nations on standards that were as strong as the Financial
Action Task Force recommendations. Moreover, a follow-up mechanism to the Convention would have no
effect on countries that had not ratified the Convention.

DHARSHANA PERERA ( Sri Lanka ) said that, with estimates of a staggering $500 billion annually,
money-laundering was now accepted as a serious challenge to the international community. Prominent
cases of fraud in the banking system had had huge impacts globally, affecting people from a wide
range of socio-economic backgrounds. Predictions that the proceeds from economic and financial
crimes for terrorist groups might even rival the proceeds from trafficking in narcotics were
alarming. The input of ill-gotten gains into mainstream economic activity must also be addressed.
The potential threat to national and international economic systems must be taken seriously.

He said people in developing countries were particularly vulnerable and, given the nature of the
problem and related cross-border activities, the need for international cooperation to interdict
those crimes was obvious. It was also necessary that a normative legislative framework be
established, although some difficult issues such as the conceptualization of economic and financial
crimes needed to be addressed. It might be a useful way forward to address some of the crimes on a
sectoral basis.

He said his country was in the process of drafting national legislation to criminalize economic and
financial crimes. Such legislation, when adopted, would provide the authorities with a sound basis
for action. He urged that the United Nations Crime Prevention and Criminal Justice Programme and
its associated technical assistance programme be expanded.

MODESTO GARCIA ( Spain ) said an appropriate response to the issue of economic and financial crime
should include measures to dismantle the economic foundations of criminal organizations. Spain's
criminal code addressed the issue of money-laundering and the fight against it was being carried out
at the administrative, judicial and law enforcement levels. Spain also had a specialized unit for
the investigation of financial crime, which had reported some 300,000 cases, leading to the opening
of about 1,600 cases of suspicious transactions. Some 50 million euros in assets had been seized
and reinvested in the fight against transnational crime.

Spain had also signed bilateral agreements with many countries, he said.