Introduction

Money laundering is probably one of the more prevalent crimes in modern society, and one that is – in the view of some – inextricably linked to the ‘Offshore’ environment. Whether this is fair or not remains to be seen, but clearly, because it is trans-national in character, it requires a global response. ‘The overall concept and fundamental principle of international cooperation is based on the functional theory of collective security. The assumption that nations could deal with common problems through collective and concerted efforts is better than acting in isolation.’

In respect of the tragic events which took place on 11 September 2001, one commentator has drawn attention to the following general weaknesses in the financial system:

• While the Al-Qaeda terrorists were able to send US$500,000 from Dubai for use at ATMs in Florida, it has not been possible to trace the remitter of the funds.

• Massive outflows of money preceded the collapse of the peso in Mexico in 1994.

• Vast sums of money vanished as governments collapsed in Ecuador, Peru and Argentina.

• Pyramid schemes caused major upheaval in Albania, Bulgaria and Latvia.

• Theft of money from the governments of the Democratic Republic of the Congo/Zaire, Indonesia, Nigeria and Russia.

• Financial losses in Japan, South Korea and Taiwan, which were hidden offshore.

• Enron was a large user of ‘Offshore Centres’.

Note the spread of these weaknesses across the ‘Offshore’/‘Onshore’ divide.