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PL: Well, they are far more active in Italy than many parts of the world and the conviction rate in the UK is abysmal. More resources and more training is a start. Of course, all that needs to start from a base where there is greater agreement on what money laundering actually is, and why it is important that we try to do something about it. Until recently – I’m not sure if it has changed in the past year – Israel had no money laundering laws and, as a result, it was on the American list of undesirable nations.
BL: This is perhaps not surprising when we consider the historical context. Much of the pressure for secrecy in the swiss banking system came from an attempt to protect Jewish money coming out of Germany during the rise of Nazism in the 1930s. And much of the global respectability for secrecy in the last fifty years has come from the reputation given to it by the swiss banks.
PL: But this is changing. And it is important to distinguish between secrecy and anonymity. The Swiss always know who is the owner of the account. Whereas in the State of Delaware in the US the Russians have now realised that they can open corporations there and no-one knows who the beneficial owners actually are. So it is very important to distinguish between secrecy and anonymity.
BL: Yes but, if with that secrecy there is no expectation or obligation to do anything with that information, then it is, in practice, equivalent to anonymity.
PL: Yes but the situation has now changed in Switzerland and most other parts of the world, but not all, where you now have to identify the beneficial owner and the source of the funds.
BL: So an even worse situation seems to exist in Delaware and some other US States, than in the most unregulated off-shore tax haven? The Americans talk about this issue but they don’t even effectively control their own back yard?
PL: Yes and that is a problem for other countries too. Not only are the Americans finding that problem with Russian money but the Swiss have taken a much stronger line over tracking down recent missing Nigerian money than the UK. It took the SFA in the UK nearly a year to start investigating the Nigerian accounts after they had been frozen in Switzerland. The Swiss have the power, and will, to act on their own suspicions but the UK seemed to want to wait until the Nigerians asked them to act.
BL: So a final question. Who is winning?
PL: Well, unfortunately, I think it is probably the criminals and those who are involved in money laundering who are winning at the moment.
A version of this interview appeared in the Spring 2001 edition of "International Finance" magazine.
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