FOR IMMEDIATE RELEASE: September 26, 2001


SCHUMER: WEBSITES ENABLE TERRORIST CELLS TO LAUNDER MONEY IN OFF-SHORE BANKS, OBTAIN FAKE PASSPORTS

Senator demonstrates Websites that facilitate laundering money in these off-shore accounts and enable people to obtain false identities

Schumer: Anti-terrorism package must include provisions to make off- shore banks doing business with the US subject to strong reporting requirements

Countries and institutions around the world have launched Internet websites to advertise their opaque bank secrecy laws in order to attract dirty money. US Senator CHARLES E. SCHUMER warned today that these instant banks, trusts and corporations provide safe havens for terrorist networks like Osama Bin Laden's Al Qaeda to store their money and said that any anti-terrorism package that comes up in Congress this year must provide provisions to crack down on these institutions.

These financial centers - often based in obscure countries - have become havens for trillions of dollars in dirty money because they are designed specifically to block action by international law enforcement. As such, they are a critical tool used by terrorists, drug traffickers, organized crime and tax evaders to launder money. "There is a vast and fierce competition on the Internet between mostly small island countries for the motherlode of terrorism, illegal drug and fraud money. An international terrorist with relatively modest resources can simply point, click and pump money into the black hole of the world's most secret financial markets," said Schumer.

Unveiling a series of websites on a computer, Schumer warned that the proliferation of money laundering sites on the Internet facilitates the easy storage of terrorist money in the safe havens of instant banks, trusts and corporations. "You don't need to have the level of sophistication of Al Qaeda to use these off-shore banks," said Schumer. Any terrorist with a personal computer and enough money can create his own individual bank or corporation in a faraway land to deposit dirty money on the back end and withdraw clean money on the other."

These sites tout maximum secrecy and privacy protection and offer easy point and click instructions to open banks and corporations, order offshore credit and ATM cards and obtain passports and citizenships using "any" name. Many sites assure visitors that no identification, credit checks or references from an existing bank are needed to open an account. www.offshoresecrets.com states, "This need for ID is a major drawback to anyone, private individual or corporate, who wishes to maintain a low profile. We have done our best to reduce or eliminate this for you."

According to the Treasury Department's Financial Crimes Enforcement Network - FinCEN - $4.8 trillion in assets is held in countries with secrecy laws so strict that they have spawned a mysterious web of offshore foundations, trusts, trust companies, banks and bank accounts designed to help people evade taxes, hide their money and defeat the laws of their home country. "That's more hidden money than the combined GDPs of France, Germany and Italy," said Schumer.

Most countries with offshore financial centers have no mutual legal assistance treaty with the U.S., so American legal authorities cannot bring money launderers to justice and making these banks, according to the United Nations Office for Drug Control and Crime Prevention, a "Bermuda triangle for financial investigations."

The Cayman Islands, with a population of less than 36,000, has almost 600 chartered banks. In contrast, there are approximately150 banks chartered in all of New York State.

Schumer said that any anti-terrorism package that Congress takes up this year must include provisions that prohibit U.S. banks from opening or maintaining accounts for foreign entities that don't supply information on the direct and beneficial owners. Additionally, he said this package should also prohibit banks from opening or maintaining U.S. accounts with so called "brass plate" banks - banks which are not licensed to provide services in their home countries and are not subject to comprehensive home country supervision.

"These two provisions are an essential first step for the US to lead the international community by example," said Schumer. "The Administration has expressed a willingness to support this effort, and I look forward to working with the Administration and my colleagues in Congress to craft this legislation to make sure law enforcement has the tools to tackle this problem."

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