Saturday, March 5 2005 13:17 Hrs (IST) - World Time -

Washington: India, Pakistan and the US are among 55 money laundering countries of "primary concern", where financial institutions "engage in transactions involving significant amounts of proceeds from serious crime," the State Department has said.

Apart from the US, the countries where "financial institutions engage in transactions involving significant amounts of proceeds from serious crime" include India, Pakistan, Myanmar, China, France, Germany, Singapore, Taiwan, Thailand, Turkey, UAE, and UK, the State Department said in its annual International Narcotics Control Strategy Report.

Referring to money laundering in India, the report, which was released yesterday (Mar 4, 2005) said, "India's status as a growing regional financial centre, the existence of a large system of informal cross-border money flows, and widely perceived tax avoidance make India vulnerable to money laundering activities."

The 'hawala' market was estimated in the report "at anywhere between 20 and 50 per cent of the formal market". Remittances to India reported through legal, formal channels in 2003-2004 amounted to $18 billion, it said.

Linking terrorism in the sub-continent to the 'hawala' system, the State Department stressed that "India should cooperate with international initiatives to provide increased transparency in hawala, and, if necessary, should increase law enforcement actions in this area.

"Increased enforcement action should also be taken to combat invoice manipulation and trade-based money laundering."