Our correspondent Andreas Frank points out:

In its 2014 International Narcotics Control Strategy Report, the US State Department is updating the list of major money laundering countries and jurisdictions around the world.

Major Money Laundering Countries in 2013 are:

Afghanistan, Antigua and Barbuda, Argentina, Australia, Austria, Bahamas, Belize, Bolivia, Brazil, British Virgin Islands, Burma, Cambodia, Canada, Cayman Islands, China, Colombia, Costa Rica, Curacao, Cyprus, Dominican Republic, France, Germany, Greece, Guatemala, Guernsey, Guinea-Bissau, Haiti, Hong Kong, India, Indonesia, Iran, Iraq, Isle of Man, Israel, Italy, Japan, Jersey, Kenya, Latvia, Lebanon, Liechtenstein, Luxembourg, Macau, Mexico, Netherlands, Nigeria, Pakistan, Panama, Paraguay, Philippines, Russia, Singapore, Somalia, Spain, St. Maarten, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, and Zimbabwe.

A major money laundering country is defined by statute as one “whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking”.

However, the complex nature of money laundering transactions today makes it difficult in many cases to distinguish the proceeds of narcotics trafficking from the proceeds of other serious crime.

This year’s list of major money laundering countries recognizes this relationship by including all countries and other jurisdictions whose financial institutions and/or non-financial businesses and professions or other value transfer systems engage in transactions involving significant amounts of proceeds from all serious crime.

The report which describes the steps taken during the previous year by the governments of nearly 90 countries, to reduce illicit narcotics production, trafficking, and use, as well as money laundering and financial crimes, said that the “complex nature of money laundering transactions today makes it difficult in many cases to distinguish the proceeds of narcotics trafficking from the proceeds of other serious crime.

The United States has named several Caribbean Community (CARICOM) countries as major money laundering states whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.

Germany:

The US State Department urged Germany again to become a party to the UN Convention against Corruption.  Germany is finally ready to sign UNCAC.

On February 21, 2014 the German Bundestag 582 against 7 for German regulations to stop bribery of parliamentarian. The issue is the last major obstacle to Germany’s ratification of the United Nations Convention against Corruption (UNCAC). Germany is expected to ratify UNCAC before the summer.  It has taken 11 years and three different governments to finally reach this breakthrough.

International Narcotics Control Strategy Reports:
Drug and Chemical Control
Money Laundering and Financial Crimes

Note: Banks are not the only financial institutions money laundering.

The crisis-ridden United Bank of India is under the Central Vigilance Commission’s scanner for under reporting its NPAs or bad loans.The anti-corruption watchdog has sought a report from the Finance Ministry about the bank underreporting its gross NPAs that rose by 188.3 per cent to `8,546 crore at the end of December 2013. It had `2,963.8 crore of bad loans as on March 31, last year.

The CVC has asked for the report on the basis of a complaint filed about the alleged irregularities in the bank.  “A factual report has been sought from Department of Financial Services (DFS) under Finance Ministry on a complaint against the United Bank of India (UBI),” a senior CVC official said.

According to laid out rules, DFS has a maximum of 90 days to send the factual report to the anti- corruption watchdog. The Commission has already received a report on the matter from the bank’s Chief Vigilance Officer (CVO), who acts as a distant arm of the CVC.

Sources said there were allegations against the bank about ‘underreporting’ of NPAs and officials said that a DFS probe will lead to detailed understanding of the enormity of the situation.

Meanwhile, with an administrative probe in the matter already underway, the Finance Ministry recently accepted the bank chairman, Archana Bhargava’s application in which she has sought voluntary retirement citing health grounds.

Bhargava, took over as CMD on April 23, 2013, her term was due to end on February 28, next year. The government is looking for a replacement for Bhargava. Sources said that it is probably after Bhargava’s voluntary retirement that the Department of Personnel and Training had come out with a directive that no such request can be accepted if a probe is pending.

According to the new rules notified by the DoPT on February 27, it shall be open to the appropriate authority to withhold permission to a government servant if the he or she is under suspension or if a charge sheet has been issued and the disciplinary proceedings against him or her are pending.

The DoPT said that the rules were revisited as per a 2010 judgment by the Central Administrative Tribunal. (With agency inputs)

China’s leader Xi Jinping has made a crackdown on corruption a centerpiece of his administration. He’s vowed to root out corruption from the bottom to the top, or to use his expression, to “go after the tigers as well as the flies.”

When it comes to corrupt, high-ranking officials, there’s a reliable source for tips: scorned mistresses. Some have even taken to shaming their lovers on social media, and the scandals have made international headlines.  The Mistress Culture in China

Citi announced on Friday that it had discovered a fraud at Banamex, the wholly-owned Mexican subsidiary that has been one of the bank’s best-performing divisions. Earnings for 2013 were reduced by $235m, Citi said.

The bank said the fraud was tied to loans made to Oceanografia, a troubled Mexican oil services company. Banamex was lending to Oceanografia based on invoices for work it said were approved by Petróleos Mexicanos, the state-owned company, which Citi said turned out to be falsified.

In a forceful statement accompanying the earnings revision, chief executive Mike Corbat said the company would be “relentless” in seeking to recover funds lost in “this despicable crime”.

Citi believes the fraud had help from at least one person inside the bank. In his statement on Friday, Mr Corbat pledged punishment for “any employee who enabled it, either through lax supervision, circumvention of our controls, or violating our code of conduct”.

“At this point, we believe this is an isolated incident,” Mr Corbat said. He added: “All will be held equally responsible and we will make sure that the punishment sends a crystal clear message about the consequences of such actions.”

Mr Corbat said the bank was co-operating with Mexican law enforcement. But even if the bank was the victim of the crime, the bank could be questioned by US authorities over its controls and disclosures.

Citi was rebuked by bank regulators in March last year for “deficiencies” in anti-money laundering controls, including at a unit of Banamex.

The country’s president, Goodluck Jonathan, hemmed in by allegations of corruption at the state oil company, has yielded to a reckless gamble. The result has been a mini-crash in Nigeria’s financial markets and a grave setback to the country’s progress towards securing macroeconomic stability.

On February 20th Mr Jonathan suspended Lamido Sanusi, the boss of Nigeria’s central bank, on the grounds that he was guilty of financial misconduct and of distracting his institution from the business of setting interest rates and regulating banks.  Mr Sanusi, who planned to step down in June after a five-year term, was admired for achieving single-digit inflation and for cleaning up the banking system in 2009 after an orgy of ill-advised lending. News of his removal led to a slide in the naira, a sharp drop in the stockmarket and a temporary halt to bond trading. The announcement that Godwin Emefiele, an experienced banker, would succeed him in June has done little to restore confidence.

The sacking of the central-bank governor would cause investors to flee from most places, but it is especially damaging in Nigeria. A fortnight before his removal, Mr Sanusi presented evidence to parliament that $20 billion had gone missing from the state oil company. Such allegations are hardly new, but Mr Sanusi had given them the authority of his office. The timing of his suspension and its vague justification suggests that he is being punished for acting as a responsible public servant.

The consequences will be felt beyond Nigeria. In Africa it is the most populous country and, once revised estimates of GDP are published at the end of March, likely to be confirmed as the largest economy. So its fortunes are central to opinion about Africa, which had greatly improved. The continent’s GDP has grown by a healthy 5.6% a year in the past decade. Foreign-direct investment to Africa has been growing more quickly than to developing countries overall. Private-equity firms have snapped up assets from land to logistics companies. Kenya will soon join the dozen or so African countries that have sold blocks of dollar-denominated bonds to rich-world investors to finance roads, railways and power stations.

Not long ago African countries had to be relieved of the burden of past borrowing. The change in their fortunes owes much to budgetary discipline and to efforts by central banks to cap inflation. But Mr Jonathan’s bid to rid himself of a turbulent central banker is a setback. Investors may doubt that Mr Sanusi’s successor will keep interest rates high in the run-up to next year’s election, lest he incur the president’s displeasure and lose his job. And in a country where the oil industry accounts for almost 80% of government revenue, the sort of leakages alleged by Mr Sanusi undermine the maintenance of foreign-exchange reserves and fiscal buffers.

The damage to Nigeria’s reputation for economic management cannot rapidly be undone. But Mr Jonathan should hurry to mitigate it. He must first ensure that Ngozi Okonjo-Iweala, Nigeria’s respected finance minister, stays in office and is supported in her efforts to curb a pre-election splurge in public spending. Ms Okonjo-Iweala offers perhaps the best reassurance that the central bank’s main task of controlling inflation will not be compromised. Mr Jonathan should now go out of his way to bolster the central bank’s autonomy through his words and his actions.

He must also ensure that Mr Sanusi’s allegations are investigated thoroughly and that a promised audit of oil finances is credible. Tellingly, although Mr Jonathan chose to suspend Mr Sanusi on obscure grounds, he has supported Diezani Alison-Madueke, the oil minister and a close ally, in the face of more serious and concrete allegations against her ministry. Replacing her would send a strong signal that he was serious about fixing Nigeria’s oil industry. It might also go some way to repairing the dents Mr Jonathan has inflicted on Nigeria’s economy by his ill-judged manoeuvre against the central bank.