These are not the best of times for the Nigerian president,
Chief Olusegun Obasanjo. When he took over the rein of
office for the second time on May 29, 1999, he promised over
one hundred Nigerians he would revamp the economy: three and a
half years and over one hundred foreign trips later, the promised
miracle of growth and prosperity remains a mirage, as money
laundering through illegal flight capital and mispriced
international trade has drained the economy dry. This follows 
on the heel of the antics of the late military dictator of
Nigeria, General Sani Abacha, who through his personal
contacts, cronies and immediate family members salted away
twelve billion to sixteen billion dollars in corrupt and tax
evading money during his murderous five-year regime of
naked terror.

But there is always a payday. Recently, the Financial
Action Task Force (FATF), whose secretariat is part of
the Organization of Economic Cooperation and Development
(OECD) placed Nigeria and some  other countries 
on the 2001-2002 blacklist over their unwillingness to 
decisively tackle the scourge of money laundering and 
financial malpractices, threatening the countries with 
financial surveillance clampdown, warning international 
companies against dealing with them, and hinting at a 
possible withholding of World Bank and International 
Monetary Fund loans.

Apart from Nigeria, the other countries in the blacklist 
are Cook Island, Dominica, Egypt, Grenada, Guatemala,
Indonesia, Marshall Islands, Myanmar, Nauru, Niue, Philippines,
Russia, St Vincent, Ukraine and the Grenadines. Five nations -
Hungary, Burma, Isreal, Lebanon and St Kitts and Nevis - who
were in the 2000-2001 list were removed, in an international crime
brought to world attention by the theft and disappearance of 
resources out of Russia in a post- communist enviroment.
Within a short period of time, Russia has been
impoverished by the greatest illicit diversion of resources that has 
ever occurred out of any country in a short period of time - with
figures as high as five hundred billion dollars being offered. It has 
led to  the collapse of numerous banking entities, the most publicized
being the bankrupcy of Inkombank, where cooperation of its
officials with those of Bank of New York led to transfer of millions
of dollars of dirty money and then to international scandal.
In Egypt, terrorists have been  benefiting from a network of
financial support through money laundering, where transfers 
via banks and other specialist firms facilitated money transfer to 
accounts in the West.

Indonesia has acquired the reputation of a  haven of
world class money launderers, as drug dealers, people traffickers,
terrorists, and corruptors hold their own, especially when there are 
absence of laws on money laundering and being sandwiched between 
Australia and Asia and between the Pacific and Indian Oceans provides 
a favourable geographical location. Last year, the Philippines was 
given a deadline of Sept 30 to crack down on money laundering or face 
sanctions but the problem remains: the flow into American and European 
Banks of billions of dollars in illicit profits from drug trafficking,
prostitution, political corruption and other criminal activities 
continues unabated.

Though Nauru is a tiny nation with about twelve thousand peoples, 
it has about four hundred banks, where millions of dollars from
Russian organized crime groups are believed to have  been laundered,
showing that money laundering activities even in a tiny island
nation in the Pacific can affect the world economy.

Cook Islands, Marshall Islands and Niue are some other
small Pacific countries where FATF have pointed out fundamental
deficiency in  their financial system against money laundering, as 
most of the funds laundered here come from bigger nations and 
eventually make their way out disguised as legal money.

And there have been incalculable damages from money
laundering: it facilitated the shocking terrorists attacks against
the United States on September 11, 2001, a coup d'etat in Pakistan, 
the backing of the surge of drugs in the United States from Mexico, 
poverty and underdevelopment in Nigeria, fuelling of organized crime 
in Russia and the mismanagement of IMF and World Bank loans in 
transitional or developing economies.

In a paper to the United States Senate Committee on
Governmental Affairs in I999, Raymond Baker, a guest scholar, said 
"The facilitation of corrupt and tax evading money drains hard 
currency reserves, heightens inflation, reduces government revenue, 
worsens income gaps, cancels investment, hurts competition, limits 
free trade and solidifies the permanence of poverty."

Though the  nations FATF placed on the blacklist are
to blame, this does not paint the true picture: some blame have
been put on the activities of some Americans and Europeans that
encourage and enable the channeling of illegal flight capital 
out of economies primarily in the Third World. 

The experience of Russia shows some blame has to be put on the 
nations on the blacklist: the Russia Central Bank, for instance, 
had hamstrung the feeble efforts of Arko, the bank restructuring 
agency in that country, to deal with the aftermath of a 1998 crisis 
where banks had gone bust over money laundering. In the wake of the 
latest FATF blacklist the Nigerian Central Bank held a meeting with 
all commercial banks and ordered them to put in place measures to 
prevent banks from being used to launder money by unscrupulous 
persons. Then a criminal charge of money laundering was filed before 
a Federal Court against Olateju Oladeji, a bank chief with Trust Bank 
of Africa, for failing to report to the National Drug Law and 
Enforcement Agency NDLEA) transactions held with some suspected drug 
barons. Save from these measures, no fundamental law is being planned 
to be enacted with which to  combat the menance of money laundering:
the belief has been that since no measure followed FATF's blacklist 
of Nigeria in the 2000-2001 nothing will happen this time around. 

The problem of battling money laundering in big countries 
such as Indonesia and Philippines is as problematic:  there
are inadequate financial regulations and it will involve
the use of more domestic funds, and thenm there is the issue of
the spectre of a thriving underground banking system because the 
formal banking sector is cumbersome and not considered efficient. 
Under a six hundred thousand dollars regional technical assistance 
grant, plans are on to facilitate the adoption and implementation 
of measures against money laundering in Cook Islands, Marshall 
Islands, Nauru, Nepal, Philippines, Samoa, Thailand and Vanuatu 
but time will tell whether this will be effective. 

The cost of illegal capital flights to the United States and 
European countries is that it removes its anti-laundering efforts 
as an effective instrument against the war against crime, drugs 
and terrorism in their territory. For transitional or developing 
economies, inflation, poverty, political instability and others 
are the results. Political will from the United States and Europe 
in removing the offer of safe haven of dirty money for all manner 
of operators will go a long way in solving the problem. 
Then, there will be no need for someone like Olusegun Obasanjo to 
fear being caught up in a FATF blacklist in the coming days.