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Narcotics Control Board: Former Socialist Countries Vulnerable To Money Laundering




Prague, Mar. 4 (RFE/RL) - An annual report released worldwide last week by the International Narcotics Control Board (INCB) says Russia and the formerly communist countries of eastern Europe are particularly vulnerable to money laundering.

The board's findings were announced last week at a news conference at the United Nations information center in Prague. The board is an independent control agency for the implementation of U.N. drug conventions. The report was based on information provided by governments, the international police organization "interpol," national police and non-governmental organizations.

The 1995 report focuses on Russia and eastern Europe, but also comments on the spread of cocaine abuse in West Africa, the increasing worldwide use of the stimulant methylphenidate and the continuing unregulated global flow of chemicals needed for the manufacture of cocaine and heroin. Andreas Nicklisch, the head of the U.N. information center in Prague, says the on-going privatization of state-owned properties and weaknesses in the supervision of increasing numbers of financial institutions increase the chances for money laundering in eastern Europe. He noted that money from drug-related crimes is either integrated into the economy, or it is used to "corrupt and undermine the political and official structures in the process of buying into public opinion." He said the money integrated into the economy creates "competitive advantages" for criminals.

Nicklisch said that the link between money laundering and drug trafficking is strong in Russia "where money laundering is not a criminal offense under current national legislation." He noted that money laundering there is often conducted through private businesses, insurance companies, financial institutions, and newly privatized factories, companies and hotels.

He said trafficking groups from CIS members have established international links by "outposting their members into foreign countries." He noted that what he called the "Russian mafia" is especially active in Austria, Cyprus, the Czech Republic, Germany, Hungary and Poland.

The report says that the absence of comprehensive drug legislation in eastern Europe is a key reason for the growing problem of money laundering there. The report notes that legislation has been drafted in several countries, but has not yet been adopted. Hungary and the Czech Republic have adopted laws against money laundering.

According to the report, Russia, Ukraine, Poland and several countries in southeastern Europe are increasingly being used by South American drug cartels as transit countries for cocaine destined for western Europe. The use of these countries as transit routes for drugs is a factor contributing to an increase in drug-related crimes and local drug abuse.

The Czech Republic, Hungary, Slovenia and Croatia also have reported increased trafficking and abuse of LSD (a hallucinogen). The study found that most of the LSD found in Europe originates in the U.S.

The report concludes by noting that fighting money laundering is an effective way to combat drug trafficking and organized crime. Among the report's recommendations are the establishment of a "comprehensive worldwide framework to more effectively coordinate action against money laundering," the introduction of legislation against money laundering, and the reporting of suspicious transactions to a specialized body. But Nicklisch noted that the board is only "an international watchdog" of the global drug scene. "Decisive action is up to governments," he said.
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