ECONOMIC AND SOCIAL COUNCIL CONCLUDES HIGH-LEVEL DISCUSSION ON ANTI-DRUG EFFORTS
Press Release
ECOSOC/5649
ECONOMIC AND SOCIAL COUNCIL CONCLUDES HIGH-LEVEL DISCUSSION ON ANTI-DRUG EFFORTS
19960627 Money laundering and financial crimes were undermining national economies as a side-effect of international drug trafficking, several delegations agreed as the Economic and Social Council concluded this afternoon the high-level segment of its current substantive session.The theme of the three-day segment was international cooperation against the illicit production, sale, demand, traffic and distribution of narcotics and psychotropic substances. In the last meeting of its high-level consideration of that topic, the Council had an exchange of views on the impact of drug trafficking on the world economy, including strengthening the role of the United Nations in drug control and the impact of drug abuse on societies.
During the exchange of views, Portugal and Germany agreed with the suggestion put forward by Mexico and Colombia this morning that a global convention on money laundering should be drafted. Germany said that if the problem of money laundering was not dealt with multilaterally, there would be unfair distortions in global capital markets.
Japan expressed the view that international financial markets were not yet mature enough for a global initiative. The United States suggested that existing agreements should be better enforced; new texts may overburden governments struggling to comply with current agreements.
Germany cited banking secrecy laws as an impediment to the fight against money laundering, as did the Philippines, suggesting that countries should do away with such financial legislation.
Pakistan and Brazil suggested that the cooperation of the private sector should be sought in connection with the money-laundering issue. Brazil suggested that the proposed 1998 special session of the General Assembly might attempt to induce the international financial community to assist in that regard.
Zambia agreed with Mexico that free trade agreements did not automatically increase drug trafficking. But small countries, as they liberalized their economies, often fell victim to drug traffickers, who were seeking to use legitimate investments to mask tainted funds.
Introducing the topic for discussion, Margot Wallstrom, Minister of Health and Social Affairs of Sweden, said that often people spoke of "waging wars on drugs", but serious consideration should also be given to how to defend the victims of drug abuse.
The Executive Director of the United Nations International Drug Control Programme (UNDCP), Giorgio Giacomelli, said that the majority of laundered funds were dedicated to keeping corruption going. The President of the International Narcotics Control Board (INCB), Oskar Schroeder, said that international anti-drug efforts had been successful in the area of narcotics seizures, crop replacement, awareness and the control of precursor chemicals.
Also taking part in the exchange of views were the representatives of Croatia, Syria, the former Yugoslav Republic of Macedonia, Costa Rica, South Africa, Italy, China, Austria and Bangladesh. Representatives of the International Monetary Fund (IMF), World Bank, International Labour Organisation (ILO) and the United Nations Children's Fund (UNICEF) also took part in the discussion.
The Council will meet again at 10 a.m. tomorrow, 28 June, to hold the high-level meeting of its operational activities for development segment. The topic for discussion is strengthening collaboration between the United Nations development system and the Bretton Woods institutions at all levels, including the field level.
Exchange of Views
MARGOT WALLSTROM, Minister of Health and Social Affairs of Sweden, introduced the discussion on the impact of drug abuse on societies and how the response of the United Nations could be strengthened. She said that often people spoke of "waging wars on drugs", but serious consideration should also be given to how to defend the victims of drug abuse. She hoped that international cooperation, exchanges of experience and assistance programmes would demonstrate the political will of the international community.
The representative of Japan said that bilateral and regional conventions on money laundering had been achieved, but global approaches to that problem were just beginning. Action in the field would be more important than a new legal instrument.
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The President of the International Narcotics Control Board (INCB), OSKAR SCHROEDER, said that there seemed to be broad consensus regarding the deficiencies of international drug control. Drug control should be a major concern of the United Nations; legalization did not seem feasible, he added. Full compliance with the 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, concluded at Vienna, would be a major step in the right direction. Drug interdiction had been successful. Narcotics seizures had been substantial, agricultural production of narcotics had been reduced, and widespread education and awareness campaigns were in place all over the world. Precursor chemicals had also been well-monitored and seized.
The representative of Pakistan said his country was disappointed to see the rather sporadic presence of the Executive Director of the United Nations Drug Control Programme (UNDCP) in the debate. It was a pity that written statements were being read out in the dialogue. He wondered why the emphasis had been on the supply side in combating illicit drugs. Although there was talk of comprehensive action, specific areas for action should be identified. He also wondered why the efforts to curb consumption had shown as little as they had and asked what exactly had been done by the United Nations system to curb money laundering.
Still on the subject of money laundering, he said the figure of $120 billion which had been mentioned by the United Nations was not credible and was outdated. He stressed the need for drawing private finance into dialogue with governments in the Council. Private finance was a full-fledged actor in society which played both a positive and negative role. He called for a dialogue with representatives of United States banks.
The representative of Croatia said in her country refugees and war veterans had been vulnerable to drugs. The number of new addicts had increased by 300 per cent in comparison to pre-war years. She bemoaned the lack of human and financial skills to counter drugs and said her country looked to the United Nations for guidance.
The representative of the Philippines said the major problem in combating illicit drugs was posed by the bank secrecy laws. He stressed that all countries should do away with bank secrecy laws. Regarding integration of drug users with the broader society, he said there should be a broader debate on that. As a developing country, the Philippines needed expertise and help from the international community to combat illicit drugs.
The representative of Germany said that if the problem of money laundering was not dealt with multilaterally, there would be unfair distortions in global capital markets. Bank secrecy was at the core of the
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money laundering problem. He agreed with Japan that the time was not yet right to address money laundering with a global convention. National financial infrastructures were still too varied.
The representative of Zambia said that she agreed with the Minister of Justice of Mexico that free trade agreements did not automatically increase drug trafficking. But small countries, as they liberalized their economies, often fell victim to drug traffickers who were seeking to use legitimate investments to mask tainted funds. More technical assistance and enhanced access to information would help small governments to determine bona fides of potential investors.
The representative of Brazil said that the proposed 1998 special session of the General Assembly might deal with how the international financial community could be induced to assist with controlling money laundering and other issues associated with drug trafficking.
The representative of Syria asked whether national reporting should be adjusted to facilitate the work of the UNDCP.
The representative of Portugal said that his country was being used as a transit point by drug traffickers. His Government was pursuing investigations into dubious financial transactions as a means of combating money laundering. He agreed with Mexico and Colombia that a global instrument should be developed to combat money laundering.
The representative of the former Yugoslav Republic of Macedonia said international cooperation should be more flexible. He also called for a comprehensive approach at the national level to tackle drugs.
Replying to questions raised, GIORGIO GIACOMELLI, Executive Director of the UNDCP, said his identification of money laundering as an area for action by the UNDCP would not serve any purpose since it was already recognized as such. However, the gap between the action of investigating agencies and judicial authorities in drug cases needed to be addressed. It was an understandable gap in the light of independent judiciaries. However, it made it difficult to combat illicit drugs. He stressed the necessity of involving the civil society in the fight against drugs.
In reply to a question on what UNDCP could do in the area of money laundering, Mr. GIACOMELLI said that first of all the approved international laws, including the 1988 Vienna Convention should be implemented. The UNDCP was working with governments in more than a hundred cases to strengthen laws for combating illicit drugs. He emphasized that many of the safeguards on the banking system had to be self-imposed.
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So far as the problem of resources was concerned, the UNDCP was conducting a dialogue with donors to address the problem, he continued. There was a great deal of involvement and coordination with other organizations, including financial institutions. Commenting on trends of drug abuse, he said the problem was getting worse every day. It had geographically expanded and huge new markets were opening up for the drug cartels. Traffickers had become so entrenched as to be able to influence markets and influence both demand and supply.
The representative of Costa Rica said she endorsed what Mexico had said about the need for specific data on the impact of drug sales on the international market. Free trade and privatization should not be linked to money laundering. Costa Rica was also interested in what UNICEF and other agencies were doing for children who were particularly vulnerable to drugs.
A representative of IMF said there had been much reference to the role of the international financial institutions in the debate. He agreed with Member States that accurate data on money laundering was required. However, it was difficult to gather such data since money laundering was illegal. The Fund was looking at ways of tackling money laundering and tax evasion. It was also developing new provisions in the banking legislation of countries and was also looking at banking supervision which was part of internal controls within commercial banks. An effort was being made to pass on to banks ways of detecting unusual developments in accounts. Such detection had to be done preserving the sanctity of banking secrecy acts.
A representative of the World Bank said that the Bank was often asked to include in their projects efforts aimed at reversing the effects of drug trafficking. Economic development and crop substitution in areas in which drugs were produced was an example of such efforts. The Bank was playing its part in the overall equation. It was ready to participate in both prevention and mitigation of the scourge.
A representative of the ILO said that very pertinent issues needed to be addressed in both producer and consumer countries. The creation of employment should be used to benefit all aspects of society.
The representative of South Africa said that nearly all delegations had mentioned globalization, liberalization, information technology and open markets as if they somehow facilitated the commission of crimes. It would be precisely those phenomena that would defeat drug traffickers, he stressed. One should not presume that their use of modern tools made them invincible; it did not.
The representative of Italy expressed the hope that societies would be entrusted to develop their own legal and other "antibodies" against drug trafficking and related criminal activity.
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The representative of China said that the United Nations should fully consider the characteristics of different regions of the world and develop balanced strategies in the fight against drug trafficking. Countries making contributions to the anti-drug efforts of developing countries should do so without conditions.
The representative of Austria said that the UNDCP could play a leadership role only if it had up-to-date and comprehensive information. His Government was concerned that the Programme might be duplicating the work of regional and national bodies in the area of information-gathering. The resources of the international community should be concentrated on the Programme. A new division of the Programme might be created to specifically deal with the issue of money laundering. He agreed with the views of the Minister of Justice of Mexico that privatization could not be blamed for drug trafficking any more than criminality could be blamed on democracy.
The representative of the United States said that casual users of cocaine in her country had been reduced from 8 million in 1988 to 4 million in 1994, adding that the use of methamphetamine was expanding around the world faster than it was in the western hemisphere. Regarding the view expressed by the Minister of Justice of Colombia this morning, that demand reduction was primarily a national issue, she said that her Government would welcome the views of any other government regarding their experiences in demand reduction. Concerning the idea of a global money laundering convention, she said that it would be more productive to concentrate on the fulfilment of existing regional initiatives. The development of a new convention may overburden governments struggling to comply with existing agreements.
The representative of Mexico said that a global approach to the problem of money laundering would not in any way conflict with national approaches. A declaration of principles would be a good first step towardS the development of a global agreement. The Global Financial Task Force of the "Group of Seven" most industrialized countries had, in 1989, identified some 40 recommendations regarding the fight against money laundering. Those ideas had been welcome, but governments could not be expected to accept all of them without the benefit of any negotiation.
The representative of Bangladesh said given the multidimensional characteristics of illicit drug traffic, the UNDCP should play a more coordinating role. The demand aspect of the drug problem should be more of a priority.
A representative of the UNICEF said collaboration between the UNDCP and UNICEF was being strengthened in the area of inter-organizational technical support.
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Answering a question on the movement of laundered money, Mr. GIACOMELLI, the UNDCP Executive Director, said laundered money was an essentially "underground issue". He stressed that laundered money was often money which went from the very poor to the very rich. A large majority of that money was spent in keeping corruption going. Laundered money did not respect the laws of the market. Moreover, it often ended up where it originated, so it went back to the drug cartels. Only some of it was able to get through filters of state systems.
The representative of Japan, speaking in his capacity as the Chairman of the Commission on Crime Prevention and Criminal Justice, said the Commission had agreed on the need for a joint unit on money laundering with the UNDCP.
The representative of Colombia said the informal-discussion format was not a format where decisions should be made. She stressed that the forum should be used only for an open-ended exchange of views. She also emphasized the importance of regional initiatives in combating drugs.
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