Pubdate: Sun, 6 Jun 1999
Source: Observer, The (UK)
Copyright: Guardian Media Group plc. 1999
Author: Tony Thompson, Crime Correspondent


Coutts & Co, bankers to the Royal family, is being targeted by
money-launderers and criminals who are laundering millions of pounds
of drug profits through its branches.

Coutts and other private banks have been criticised by the National
Criminal Intelligence Service (NCIS) for failing to co-operate fully
in the fight against money-laundering. All banks have a legal duty to
report suspicious transactions.

Around 30 per cent of all such reports add significantly to existing
police or customs investigations.

The most recent figures released by NCIS show that in 1998 it received
14,129 disclosures, the vast majority from banks and bureaux de change.

During that same period, Coutts made no reports of suspicious
transactions, claiming there were none to report.

Although it will not comment on specific banks, NCIS is disappointed
by this. Simon Goddard, of NCIS's Strategic and Specialist
Intelligence Branch, said: 'A large number of financial institutions,
including private and investment banks - some highly respected names -
make little or no disclosures to NCIS. Of the over 500 deposit-taking
institutions in the United Kingdom, only eight are responsible for 70
per cent of the disclosures.

'It is our strong view that financial institutions seem increasingly
split between those with proper reporting systems, trained staff and
motivated money-laundering reporting officers, and those where the
disclosure regime is somewhat lacking.'

Private banks such as Coutts are far more likely to be targeted by
major money-launderers. The nature of their business and financial
background of their clientele means they are far more used to, and far
more likely to be dealing with, extremely large transactions or large
quantities of cash on a regular basis than their high-street cousins.
The fact that they have a network of branches around the world makes
it even easier to launder cash.

The reputation of banks such as Coutts means that other financial
institutions are far less likely to question the origin of money sent
to them from a Coutts bank.

In public, Coutts says its superior vetting procedures ensure that
unsavoury customers are not able to open accounts, and that this means
it simply does not have any suspicious transactions to report.

In private, bank officials are said to believe that a regime of
reporting would be unpopular with clients, who might take their
business elsewhere.

There is no suggestion that Coutts is actively assisting in the
laundering of money through its branches. The most recent Home Affairs
Select Committee report suggested that British banks were unknowingly
helping to launder around pounds 2 billion each year.

But, despite its safeguards, Coutts has fallen victim to launderers in
the past. The infamous Mafia mobster Emilio Di Giovine, who is now
serving time for extortion, drug running and manslaughter, laundered
nearly pounds 2 million of cash from his criminal empire through his
Coutts account.

In 1995 the former deputy finance director of Scotland Yard was jailed
after stealing more than pounds 5 million from a secret police
account. He opened an account at Coutts to help to launder the
proceeds and even received a coveted gold card.
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