Czech Republic to combat money laundering

The Czech Republic has been stepping up the fight against economic crime. Thursday the 7th of February 2002 saw the formal launch a twinning project between the United Kingdom and the Czech Republic entitled "Strengthening Actions against Proceeds from Money Laundering", aimed at reinforcing measures to combat money laundering and associated financial crimes and to seize and confiscate proceeds from crime.

Clive Welsh, the project leader for the United Kingdom, and the head of the judicial cooperation unit in the organized crime, drugs and international group of the Home Office. Mr. Welsh highlighted the importance of combating money laundering:

"Money laundering not only enables organised criminals to keep their ill-gotten profits. It can lead to corruption of people and institutions, to reduce revenue for the state, and it can undermine markets. September 11th gave a fresh impetus to the EU's fight against money laundering as a way of combating the financing of terrorism. Money laundering, particularly as committed by organised criminals and corrupt foreign leaders is constantly developing. Thi fight against money laundering both at the European Union level and within each country needs to develop even quicker."

According to the head of the EU delegation to Prague, Ramiro Cibrian, the Czech Republic is doing well in fighting economic crime, yet there is room for improvement:

"There is one comparator that is very simple: the fact is that one of the candidate countries two years ago was placed on the black list of the OECD concerning the quality of measures and actions against money laundering. Certainly, that country was not the Czech Republic, so it is perfectly clear that the Czech Republic, as regards the candidate countries is in a good position, certainly it is not at the bottom, that is absolutely evident and never was at the bottom. In my view, the quality of fight against money laundering in the Czech Republic has always been of a relatively good level. There were particular problems, including the problem of anonymous savings accounts, but these problems are in the process of being solved. Of course, we have additional requirements in the context of the post-September 11th world because the European community's acquis is expanding and developing but my personal view is the the Czech Republic is maintaining a good level of harmonization with EU requirements.

In my view, the problem number one is administrative capacity, coordination between different ministries and institutions etc. I believe, as regards administration, the basic picture is good, but there is still room for legislative improvements in particular in order to catch up with the latest European norms that were adopted after the September 11th events."

Under the project, the Czech Republic will receive assistance in various forms. Mr. Welsh again:

"This project should enable the Czech republic to make the necessary legislative, institutional and technical changes for the fight against money laundering and associated financial crimes. Under this project, experts will be providing assistance to the Czech Republic. We hope as a result there will be a higher rate of successful prosecutions for money laundering and increased seizure and confiscation of the proceeds of crime. Advanced training and analytical techniques will be provided to personnel from a wider range of institutions than under previous projects. The training both in the Czech Republic and the UK will be aimed at increasing the knowledge of personnel from both law enforcement agencies and the private financial sector about money laundering and counter-money laundering techniques. Technical and analytical assistance will also be given to increase the awareness of legislators and the policy and operational staff of the relevant legislative and practical arrangements relevant to the EU acquis and this will include arrangements for judicial cooperation and mutual legal assistance that are available within and between existing EU states."

The financial analysis department of the Ministry of Finance is to become the main Czech anti-money laundering body. It already gathers and analyses information about suspicious transactions, but has to rely on information provided by the capital markets, banks and other financial institutions, as well as for example casinos. Its head, Karel Korynta said that its role should not be strengthened and under the new project, the financial analysis department would obtain new IT equipment, including specialized software to be able to analyse all the information and put it in context so that it will be possible to follow often extremely complicated flows of money designed to cover their real origin and destination.

A new system is to be build for data exchange between the financial analysis department, the revenue offices and the law enforcement agencies.

Changes are also to take place in the legislation. Currently, tax advisors, auditors, and advocates are bound by secrecy. But a radical change in the legislation is being prepared to break this principle, so that these professions would have the obligation to report suspicious transactions made by their clients. This is a major breakthrough and experts say it could substantially limit manoeuvring space for financial criminals.