Natural Resources and Violent Conflict - WaterWiki.net

follow the money 193laundering and terrorist finance. These follow on FATF and OECDrecommendations and have received International Monetary Fund andWorld Bank assistance. Offshore money laundering havens, jurisdictionsoffering nontransparent international business companies, andtrusts that can be readily used as fronts are already under substantialpressure to replace their current laws with regimes that meet prevailinginternational standards. Geographic regions that remain largely uncoveredby money laundering and financial transparency frameworks,especially the Middle East and most of Sub-Saharan Africa, will remainthe object of ongoing efforts to bring about reform regardless ofwhether the financing of illicitly extracted natural resources is includedwithin the scope of the reform efforts.Other important financial mechanisms used to launder the proceedsof illicit resource extraction have yet to be subject adequately to internationalregulatory and enforcement standards or action. Some of thesemechanisms, especially alternative remittance systems such as hawalaand hundi, are now being developed to counter terrorist finance. Othermechanisms associated with illicit resource extraction, such as the useof gold and precious metals to launder proceeds, have not yet been subjectto international disclosure rules. An effective response to illicit resourceextraction requires coverage of high-value barter commodities.Developing a strategy to integrate such commodities in internationalfinancial transparency and disclosure mechanisms might properly beundertaken by an intergovernmental organization focused on combatingthe extraction of illicit resources.Any intergovernmental organization mandated to combat illicitresource extraction must also work (a) to develop mechanisms bywhich the financial movements of the proceeds can be incorporated intothe reporting of suspicious activity and due diligence requirements ofexisting frameworks and (b) to devise mechanisms for enabling internationalmutual legal assistance in connection with investigations of illicitextraction. Such an organization would need to assure compliance bythe affected industries and promote a regulatory scheme that harmonizesinternational standards rather than impedes legitimate trade.One alternative to creating a new intergovernmental organizationwould be for the G-8 to establish a steering group to review the recommendationsmade here and in the other papers in this study andto provide a consensus view of whether an international frameworkand intergovernmental organization are necessary or whether existingframeworks and organizations could be reoriented to deal with illicitresource extraction. For example, the World Customs Organization hasextensive experience in developing standard certifications and perhapscould develop such certifications for commodities that require more