A scouring for the money launderers

EARLIER this week, the body of 22-year-old Scott Sheppard was found

within the lift of a tower block in Glasgow's East End. In the words of

the current police parlance, his death is thought to have been

drugs-related.

If that theory is confirmed by a post mortem examination, Scott will

have become another statistic; the twentieth victim of drugs abuse in

Strathclyde this year. More than 130 people, mostly youngsters, have

died in the past three years.

The death of these addicts is ineluctably, if indirectly, linked back

to the dealers of drugs. A recent estimate by the United Nations puts

the global total of their profits at $300 billion each year, including

millions of pounds in Scotland.

But if the gains are staggering, so is the huge variety of methods

employed to convert hard cash into legitimate finance. A dealer can

trade used notes for a Rolex watch, a Jaguar car, or a penthouse flat,

all of which can then be sold on.

There are, though, other criminals who coolly launder their profits by

''legal'' means: via bank or building society accounts, into which

''dirty'' money is placed, emerging later in ''clean'' form.

Since 1986, those institutions have been obliged, under the Drugs

Trafficking Offences Act, to disclose any suspicions they have about

clients who may be dealers.

But on April 1, the obligations were made more demanding, and were

also extended to other white-collar staff. The new Money Laundering

Regulations affect anyone offering financial or credit services, or who

is covered by the Financial Services Act: from the Bank of Scotland to

the small businessman selling insurance policies from a tiny office.

Punishments for breaching the regulations will be severe. Any

individual convicted of not disclosing a suspicion may face a jail

sentence of between two and 14 years, and an unlimited fine.

The new regulations will be explained and discussed in Glasgow today,

at a conference organised by Strathclyde Police, which is thought to be

the first such forum arranged by a UK police force.

A high-class panel of speakers will include representatives from the

Crown Office, the US Embassy in London, and the National Crime

Intelligence Service. Delegates from all areas of the banking and

finance sector are expected to attend.

Detective Superintendent Gordon Ferrie, head of Strathclyde's fraud

squad, said yesterday that, to date, Scotland has been almost unscathed

by large-scale money laundering.

However, he warned: ''This cannot last much longer, so the new

regulations aim to make the financial system an unfriendly environment

for the money launderer. These regulations are about hitting the drug

dealer where it hurts, in his pocket. Anybody can hold the key to where

the money from drugs is being laundered and the new rules mean new

responsibilities for almost everyone in the community.''

Mr Ferrie fully accepts that the regulations will not, by themselves,

end laundering, but believes that they will help engender a new culture,

where disclosure of previously confidential information can become

customary. Educational programmes may also help the message reach

back-street traders.

In any case, if the financial services sector co-operates in full,

then police officers will be able to concentrate on the less legitimate

areas where money is discreetly laundered.

Professor Michael Levi, professor of criminology at the University of

Wales and a speaker at today's conference, says he is ''absolutely

convinced'' that the regulations will not bring an end to laundering,

and agrees that more business will be channelled through unlicensed

firms and individuals.

However, he gives short shrift to the argument that the new rules may

breach civil liberties. Yes, a bank manager appearing in the dock could

utilise an ethical defence for refusing to disclose information, but Mr

Levi says that would be the refuge ''of a fool or a knave'' if the

prosecution of a drugs dealer is jeopardised.

He is concerned, though, that police forces deploy sufficient staff to

cope with the expected explosion of disclosures. If not, he warns,

financial organisations which have ''spent millions'' on the

implementation of new procedures will become quickly disillusioned.

In Strathclyde, Mr Ferrie can call on a four-strong financial

investigation unit. Last year, he says, the number of disclosures

received rose by 500%.

And what is his response to the argument that civil liberties are

being eroded? ''To go back to brass tacks, there are people dying in the

streets, and it is mainly because of people who are laundering money. I

think 130 drug deaths tip the balance. This way, we tackle the basic

problem of drug dealing, not just the symptoms.''