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D. Murali

In the IT age, money goes on the line in a maze of electronic transfers, leaving no trail that can be traced to the money launderers.

A FEW weeks ago, Tom K Alweendo, Governor of the Bank of Namibia, spoke at the African Banking Congress in Johannesburg, on the topic `crime and money laundering'.

When discussing "the role played by globalisation and ICT in the concealment process in money laundering," he found a quote from Linda Davies's banking thriller Nest of Vipers as an apt depiction: "Money screamed across the wires, its provenance fading in a maze of electronic transfers which shifted it, hid it, broke it up into manageable wads which would be withdrawn and re-deposited elsewhere, obliterating the trail".

I type `money laundering technology' into Google's ever-waiting query slit, and the first of the finds is www.cambridgetechs.com of Cambridge Technology Solutions, with a home page that's disappointingly empty but for a thanks message for customers' support to its "rules-based transaction-monitoring product SideKYC."

However, second on the list is Davies, again, with a list of scandals involving banks.

Money laundering worries spill over to the day's news too. For instance, there's a report about the new worry of the US that Al-Qaida operatives are ducking the radar screens of international banking systems by resorting to `cash couriers'.

While on the topic of money laundering, a not-to-be-missed report is of the Financial Action Task Force (www.fatf-gafi.org) on `typologies'.

Wire transfers ranked top on the worry list, and the phrase is defined as "any financial transaction carried out for a person through a financial institution by electronic means with a view to making an amount of money available to a person at another financial institution."

To add value to your knowledge, track also Moneyval, another group that's associating with FATF.

The trail of what's happening in the silent fight in the finance jungle can lead one to the recent International Narcotics Control Strategy Report (INCSR) from the US State Department.

It covers drug and chemical control activities in volume I, while volume II is devoted to money laundering and financial crimes.

India figures in the list of `major money laundering countries' and a detailed `country report' describes `hawala' as `the alternative remittance system', estimated at " anywhere between 20 and 50 per cent of the formal market".

The report notes that India's new Financial Intelligence Unit (FIU) "will seek to join the Egmont Group.

True, in November 2004, the Union Cabinet approved the setting up of a Financial Intelligence Unit, India a.k.a. FIU-IND, to "co-ordinate and support the efforts of national and international intelligence, investigation and enforcement agencies in pursuing global efforts against money laundering and related crimes."

And that the FIU is to be the central national agency responsible for receiving, processing, analysing and disseminating information related to suspect financial transactions to these agencies that shall protect the information against misuse.

But what is the Egmont Group? An informal group of FIUs that met in 1995, "at the Egmont Arenberg Palace in Brussels", as www.egmontgroup.org informs.

You'd also learn that "There are currently 94 countries with recognised operational FIU units, with others in various stages of development. Countries must go through a formal procedure established by the Egmont Group in order to be recognised as meeting the Egmont Definition of an FIU."

India is yet to figure in the list of FIUs posted on the site. The IT Working Group or ITWG is one of the five groups in Egmont and it provides advice and technical assistance to new and existing FIUs "to develop, enhance, or redesign their IT systems, and examines new software applications that might facilitate analytical work."

ITWG's importance will only grow as the sophistication of laundering techniques too grows.

The INCSR devotes ample space to a discussion of Egmont. It speaks of the Group's secure Internet system, which permits members "to communicate with one another via secure e-mail, requesting and sharing case information as well as posting and assessing information regarding trends, analytical tools and technological developments."

There's the ESW or the Egmont Secure Web, for the purpose, and it is FinCEN that maintains the Web.

The abbreviation stands for the Financial Crimes Enforcement Network under the US Department of the Treasury.

One may squirm that it's too risky to let Uncle Sam have his control over the entire FIU network, though as a Webmaster.

Keeping aside such political questions, catch up with FinCEN's latest Annual Report on its site www.fincen.gov.

There, William J. Fox, the director, mentions as one of the priorities for 2005, improvement in abilities to use data and technology "to inform the financial industry of financial transaction activity indicative of possible terrorist funding and financing", because the `most pressing need' of financial institutions is "identifying and reporting terrorism-related activity at the earliest possible stage."

When that happens, cops can foil high-tech attempts to steal millions of dollars through money transfers on computer systems.

Don't dismiss such a possibility as an empty dream, because a news report dated March 18, posted on www.banktech.com, is about how the UK police of the National Hi-Tech Crime Unit worked with Israeli authorities to nab a person who was trying to siphon off some $420 million from a Japanese bank. He was allegedly using key-logging software that tracked every button pressed on computer keyboards, but before money could vanish screaming through the wires, cops acted fast. Or so the story screams.

ITworks@TheHindu.co.in

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