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IMF report: Offshore banks lax in blocking terror funds

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Monday, December 22, 2003< /FONT>

LONDON The International Monetary Fund has warned that offshore financial institutions have not done enough to stop the flow of funds to Islamic insurgency groups.

The IMF said in a report that offshore centers were not taking seriously the prospect of insurgency financing. The report said the offshore institutions were taking a more cautious approach to the prevention of money-laundering.

"Supervision and regulation of the non-banking sector in particular needed to be strengthened in many offshore financial centers," the report said.

Several offshore financial centers have been wooing Saudi Arabia and other Gulf Cooperation Council countries as a venue for holding assets of prominent Arab princes, Middle East Newsline reported. Bahrain has also been touted as a leading offshore financial center.

Saudi Arabia has been searching for a venue to invest the nearly $100 billion withdrawn from the United States in the wake of the Al Qaida suicide attacks on New York and Washington in 2001.

The IMF report sought to review 44 offshore centers as to their compliance with international counter-insurgency regulations. So far, the report said, a third of the institutions examined complied with basic principles of international banking.

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