Following is a fact sheet that appears in the May issue of the State Department electronic journal Economic Perspectives titled "The Fight Against Money Laundering." The entire journal can be viewed 
at http://usinfo.state.gov/journals/journals.htm:

(begin fact sheet)

Efforts by the United States and international organizations to measure the magnitude of money laundering have proved difficult. In congressional testimony and reports, officials have cited problems concerning data and methodology that must be resolved before reliable, detailed statistics can be generated. Meanwhile, some available estimates provide a rough measure of international money laundering operations. Michel Camdessus, former International Monetary Fund managing director, has estimated that the volume of worldwide money laundering is between 2 and 5 percent of the world's gross domestic product -- some $600,000 million even at the low end of the range.

Several initiatives to curtail this massive criminal activity have been under way since the late 1980s. The body that has most successfully coordinated international anti-money-laundering initiatives is the Financial Action Task Force on Money Laundering, or FATF (see http://www.oecd.org/fatf/).

In 1989, growing concern about money laundering's threat to the international banking system and financial institutions prompted the leaders of the Group of Seven (comprising the heads of state of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) to convene FATF. This new intergovernmental policy-making task force was assigned responsibility for examining money laundering techniques and trends, reviewing prior national and international action, and determining additional anti-money laundering measures.

Currently, FATF membership consists of two regional organizations -- the European Commission and the Gulf Cooperation Council -- and 29 countries and territories: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.

THE FORTY RECOMMENDATIONS

To establish a global framework for anti-money-laundering efforts, FATF issued "The Forty Recommendations" in 1990. Today this comprehensive set of measures is the leading international anti-money-laundering standard. "The Forty Recommendations" and "Interpretative Notes" cover the criminal justice system and law enforcement, the financial system and its regulation, and international cooperation. The recommendations set out principles for action and allow countries flexibility in implementing these principles in accord with their particular circumstances and laws. Many countries have made a political commitment to combat money laundering by implementing the recommendations even though they are not binding agreements (see The Forty Recommendations at http://www.oecd.org/fatf/40Recs_en.htm).

In 2000, FATF launched a comprehensive review to determine whether the recommendations, last revised in 1996, are up to date and provide effective countermeasures. This review exercise is expected to continue into 2001-2002. The recommendations' relevancy is also monitored through the annual "typologies" meeting. At this forum, law enforcement and regulatory experts from FATF member countries and other international organizations discuss prevailing money laundering methods, emerging threats, and any effective countermeasures that have been developed.

A recent FATF brochure summarized some of the recommendations' basic obligations that countries need to implement. These are:

-- Criminalizing the laundering of the proceeds of serious crimes (Recommendation 4) and enacting measures to seize and confiscate the proceeds of crime (Recommendation 7).

-- Requiring financial institutions to identify all clients, including any beneficial owners of property, and to keep appropriate records (Recommendations 10 to 12).

-- Requiring financial institutions to report suspicious transactions to the competent national authorities (Recommendation 15) and to implement a comprehensive range of internal control measures (Recommendation 19).

-- Ensuring adequate systems for the control and supervision of financial institutions (Recommendations 26 to 29).

-- Establishing international treaties or agreements and to pass national legislation that will allow countries to provide prompt and effective international cooperation at all levels (Recommendations 32 to 40).

FATF gauges member governments' progress in implementing the forty recommendations through a yearly self-assessment exercise and a mutual evaluation procedure. In the self-assessment, each member country answers a standard questionnaire about the status of its implementation work. In the mutual evaluation process, each country is examined by a team of four legal, financial, and law enforcement experts, selected from FATF member countries.

When a member country is found to be out of compliance with the forty recommendations, the FATF applies a series of measures to press the member country to tighten its anti-money-laundering system. As a first step, the non-complying member must deliver a progress report at the FATF plenary meeting. If subsequent measures are required, the FATF president will send a letter or a high-level mission to the country. In addition, FATF can issue a statement requiring financial institutions to pay special attention to business relations and transactions with individuals, companies, and financial institutions based in the non-complying country. As a last resort, the country's FATF membership can be suspended.

NON-COOPERATIVE COUNTRIES AND TERRITORIES

To encourage non-member countries with deficient anti-money-laundering provisions to implement new laws, FATF introduced a major project in 1999 known as the Non-Cooperative Countries and Territories (NCCT) initiative. The initiative's first major report, published in June 2000, set forth the criteria for defining non-cooperative countries and territories and identified the specific NCCTs. The 15 jurisdictions with serious, systemic money laundering problems placed on the FATF list were: the Bahamas, the Cayman Islands, the Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, the Marshall Islands, Nauru, Niue, Panama, the Philippines, Russia, St. Kitts and Nevis, and St. Vincent and the Grenadines (see Review to Identify Non Cooperative Countries or Territories at 
http://www.oecd.org/fatf/pdf/NCCT2000_en.pdf).

The report strongly urged these jurisdictions to adopt legislation and improve their rules and practices as expeditiously as possible. It emphasized that FATF would continue its dialogue with the NCCTs and would provide technical assistance, where appropriate, to help the NCCTs design and implement anti-money-laundering systems. In cases where NCCTs maintain their detrimental rules and practices, FATF could employ a host of countermeasures ranging from requiring its FATF members to provide closer scrutiny of transactions with NCCTs to prohibiting financial transactions with non-cooperative jurisdictions.

At each of its plenary meetings -- held in September/October, February, and June -- FATF discusses developments related to its NCCT initiative. At its February 2001 meeting, FATF issued a progress report on the 15 NCCTs. The report states that while none of the 15 jurisdictions has both enacted and implemented all necessary reforms, several of them have taken impressive strides toward improving their counter-money-laundering regimes (see Progress Report on Non-Cooperative Countries and Territories at http://www.oecd.org/fatf/pdf/PR-20010201_en.pdf).

The report noted that the Bahamas, the Cayman Islands, the Cook Islands, Israel, Liechtenstein, the Marshall Islands, and Panama have enacted most, if not all, of the necessary remedial legislation. As a follow-up, FATF has asked these jurisdictions to submit legislative implementation plans. At its next plenary meeting, in June 2001, FAFT will review implementation plans and will discuss a timetable for removing jurisdictions' names from the NCCT list. Also scheduled for this meeting is consideration of countermeasures for those jurisdictions that have not made adequate progress since they were identified as non-cooperative in June 2000.

REGIONAL AND INTERNATIONAL COOPERATION

To foster the global implementation of international anti-money-laundering standards, FATF promotes the establishment of regional groups. These groups have observer status with FATF. The regional FATF-style bodies perform functions for their members similar to those performed by FATF for its own membership. Regional groups, for instance, carry out mutual evaluations of their members and review regional money-laundering trends.

Efforts by FATF to advance regional groups and initiatives in Africa and South America have led to the establishment of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force on Money Laundering in South America (GAFISUD). Other prominent regional FATF-style bodies are the Asia/Pacific Group on Money Laundering (APG), the Caribbean Financial Action Task Force (CFATF), and the Council of Europe PC-R-EV Committee (see Observer Bodies and Organisations at