Cleanup Time

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Austria came under fire at the FATF for its anonymous savings-account passbooks, which could be used for money laundering by concealing the true identity of the owner of an account. There are 24 million such accounts at Austrian banks, about three times the number of the entire population, a clear indication the bankbooks are used by foreigners as well. After a threat to kick Austria out of the FATF by June 15 unless the system was changed, a newly elected Austrian government relented--sort of. Amended laws require any passbook accounts opened after Nov. 1, 2000, to identify the owner. After June 30, 2002, deposits to or withdrawals from any accounts will be banned unless the owner is identified. "Anonymous passbook-savings accounts have been a critical loophole in the international consensus to combat money laundering," said Stuart Eizenstat, Deputy U.S. Treasury Secretary. "This victory represents a clear demonstration of FATF resolve and credibility."

Other havens in Europe are also feeling pressure. Switzerland, for generations a watchword for banking secrecy, two years ago began to allow the financial curtains to be parted in investigation of possible criminal offenses. In two of the more recent high-profile cases, authorities investigated nearly $500 million deposited in 19 banks by former Nigerian dictator Sani Abacha and an undisclosed sum frozen in nine bank accounts controlled by the Ivory Coast's former leader, Henri Konan Bedie. James Nason, a Swiss Bankers Association official, says that since a new money-laundering law went into effect in April 1998, the number of cases of suspected laundering being reported by banks has jumped from 30 a year to 370 this year.

Is banking finally freeing itself from the money-laundering blight? Maybe not. The FATF report cited a new and disturbing channel through which money launderers can escape attention: the Internet. So far there have been no cases of money laundering detected on the Net. But that may only mean that criminals are very good at it already.