Press Release - 16 July 2001
Jersey Finance Regulation Chief Calls For Crackdown On Proceeds Of Corruption
Jersey's financial regulation chief today (July 16, 2001) called for tougher measures to prevent the proceeds of corruption from infiltrating the international financial system.
Speaking at a seminar on financial crime in Jersey, Richard Pratt, Director General of the Jersey Financial Services Commission, said that the current safeguards against funds from corruption by public figures, their allies and other high net worth individuals worldwide were extensive - but they did not go far enough. He said: "Corruption is a terrible disease. Its victims are primarily the poor in the corrupt countries. It inhibits development, deters inward investment and diverts scarce resources away from their intended target and into the pockets of some undeserving member of the elite.
"Information is the key to sealing the loopholes. But getting information about corrupt regimes is often obstructed by fear and the lack of information and common standards. The following measures would help close off the present loopholes:
Widening of the 'know your customer' rule for banks to investigate fully the true owner of wealth and the source of transactions, particularly in the case of companies and trusts.
Establishing a comprehensive international database of senior public officials and Ministers to help banks assess the risk. Such a database could be provided by the private sector. Where possible it should include close relatives of senior officials where they were deemed to be at risk.
Regular reviews of banks' customers to establish whether or not they have moved into an area that makes them vulnerable to corruption.
Establishment of an international clearing-house for information on suspicious transactions carried out by serving officials. This could be provided by INTERPOL and would allow information to be gathered confidentially during a corrupt regime and, even where immediate action were impossible, the information would be retained for potential action or prosecution at a later date.
The setting up of an international fund for the temporary placement of assets identified as proceeds of corruption but where the true ownership has not been determined. The fund, run, for example, by the United Nations, would allow time to establish rightful ownership and ensure that the funds are returned to the right quarter - whether to individuals or to the new leadership of a country."
Richard Pratt said: "More can be done and must be done to ensure that in the long run corruption does not pay. Practical measures such as those I have proposed will give us the weapons we need in Jersey and other international financial centres to crack down hard on corrupt political leaders and other servants of the State."