Fool Me Twice - Russian money laundering scheme

Progressive, The, Dec, 1999 by Lucy Komisar

Byrne says a working group of the banks will meet with Treasury officials to discuss the implications of the proposed legislation.

When Treasury Secretary Summers testified before the House Banking Committee in September, it was clear he wanted to target some renegades but preserve the system. His colloquy with Representative Maxine Waters, Democrat of California, went like this:

Representative Waters: "One of my pet peeves is the fact that our respectable banks wire-transfer money to the banking centers in Antigua and other places. And we know why they are establishing what they are doing. What leadership are you going to provide to stop that practice?"

Secretary Summers: "With respect to the general issue of offshore financial centers-sometimes referred to as `havens'--I expect us to provide, in the context of the money laundering strategy, a set of proposals, and I think that it will also indicate--"

Waters: "Do you want to see it stopped?"

Summers: "Yeah, we--"

Waters: "Do you want to see the practice of wire-transferring to money laundering centers that we know about stopped, period?"

Summers: "Congresswoman, we want to see abuses stopped."

But focusing on the "abuses" is disingenuous. Hiding illicit money is the raison d'etre of offshore bank and corporate secrecy. Offshore banks catering to crooks can live with Summers's mild reform proposals. Criminals don't need loans from U.S. banks; they need a place to stash their loot. Summers refuses to cut to the heart of the offshore scheme: the anonymity of account and company owners. There will be more massive money-laundering scandals until the United States says no to dirty money and works to abolish offshore bank and corporate secrecy.

Lucy Komisar is a New York journalist who has spent several years investigating the phenomenon of offshore bank and corporate secrecy havens.