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How To Stop Illicit Money

In response to:

Illicit Money: Can It Be Stopped? from the December 3, 2009 issue

To the Editors:

Raymond Baker and Eva Joly’s article about the odious plague of illicit international money transfers [“Illicit Money: Can It Be Stopped?,” NYR, December 3, 2009] is magisterial and deserves wide recognition. But short of the complex international interdictions they advocate, we must—and can easily—begin to stem the flow of stolen money by a simple method: G-8 countries can refuse to grant visas to applicants who should not have them.

The G-8 first established its “No Safe Haven” policy at its economic summit of 2004, and has articulated it at every summit since, but seldom or never invokes it. The measure would deny entry to G-8 countries for corrupt officials and their immediate families, hitting them where it most hurts: their health and vacation junkets, their spouses’ shopping adventures at Harrod’s, and their sons’ and daughters’ costly education in our fine secondary and tertiary institutions. What an effective measure it would be, if only the G-8 nations would implement it.

US Presidential Proclamation 7750, issued at the Western Hemispheric Summit in Monterrey, Mexico, in January 2004, has now entered into US law with Senator Patrick Leahy’s amendment 2766 to the Senate Fiscal Year 2008 Senate Appropriations Bill (introduced in September 2007). The mechanism provides convenient cover for US diplomats suffering from clientitis, shifting the burden and embarrassment of visa refusals from consulates overseas to authorities in Washington. If only it were used more often, as intended by law.

New York Times reporter Ian Urbina referred directly to the measure in his November 17, 2009, article on the corrupt leader of Equatorial Guinea, whose son owns a sprawling estate in Malibu, California. Alas, not one week later, Senate confirmation hearings for the current candidate to be US ambassador to Equatorial Guinea dodged the issue. Asked how he would stem corruption in Equatorial Guinea, the nominee responded, “Well, we can encourage them to continue their successful participation in EITI [the Extractive Industries Transparency Initiative],” which in this case must surely be an instance of the rooster guarding the henhouse.

While I highly respect Baker and Joly’s macro approach to the issue, I hope they in turn recognize the urgency of immobilizing the assailants. A little paranoia on the part of the latter would go a long way to diminishing the problem from the grotesque to the merely objectionable.

Daniel Whitman
American University
Washington, D.C.

Raymond Baker replies:

Daniel Whitman’s letter is right on the mark, illustrating both a specific and a larger point. The process of deciding whether to deny US visas to corrupt foreign officials is shrouded in secrecy. Senator Carl Levin and Global Financial Integrity, the organization I direct in Washington, D.C., have each requested the State Department to provide information on how many times this powerful instrument in our diplomatic arsenal has been utilized. Neither request has produced an answer.

Meanwhile, the US Treasury Department continues to allow dubious funds from abroad to enter the country. Many forms of money illegally generated beyond our borders can come legally into our financial system. If the funds in question are believed to derive from various criminal activities, banks are supposed to file Suspicious Activities Reports. I have asked Treasury officials to explain why this isn’t the worst of all worlds —file the reports but by all means allow the money into the country! No answer.

When we figure out that illicit money harms us far more than helps us, this matter will move toward much-needed change.

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