151 - Object? Then Create Your Own

If the FATF continues to march to the sound of one drummer - the United States - then it runs the risk of alienating its many members, most of whom are committed to fighting money laundering by employing objective mechanisms and processes.

The FATF has been steered in too many directions that coincide with the political objectives of a very few. Examples include:

1. Designating Iran for special sanction as a money laundering and terrorist financing hub, yet the nations of the most ardent funders of terrorist activity - including Saudi Arabia, Kuwait and other "allies" for the "War on Terror" - remain unscathed.

2. Including weapons of mass destruction ("WMDs") in the FATF mandate when this is clearly a matter for intelligence services.

3. Ignoring hotbeds of money laundering activity because of a country's support for another political hotbed issue. In other words, old school politics.

If the FATF veers too far from its original intent, others may decide to take matters into their own hands. Ecuador may have trouble leading the pack. Others won't.

"I wouldn't want to join any club that would have me as a member..."

- Groucho Marx

Ecuador To Propose Latam Group To Fight Money Laundering

QUITO (Dow Jones)--Ecuador will propose that the Group of Rio create a Latin American body to fight money laundering, President Rafael Correa said over the weekend.

The Correa proposal is an answer to Ecuador's inclusion on a list of nations with deficiencies in their ability to curb money laundering and terrorist financing.

"What arrogance! And why? Because we have relations with Iran. That's it," Correa said during his weekly media address.

Last week the Financial Action Task Force, or FATF, said Iran, Angola, North Korea, Sao Tome and Principe, Ecuador, Ethiopia, Pakistan and Turkmenistan have those deficiencies.

On Friday the U.S. Treasury Department said it supports the call to increase efforts to combat money laundering and terrorist financing.

"We will take a vigorous protest to the Group of Rio, as well as important initiatives, such as making up our own group to fight against the drug trafficking, money laundering and terrorist financing, without depending on the tutelage of powers outside of the region," Correa added.

Ecuador's Private Banks' Association has said it strictly adheres to norms referred to by the FATF.

Earlier, Foreign Minister Ricardo Patino said the country "completely rejects this perverse insinuation" from FATF.

The Financial Action Task Force's placing of Ecuador on its list of "noncooperative" countries in the battle against money laundering and terrorist financing will have a negative effect on the price of Ecuadorian bonds by reducing the willingness of bondholders to continue to hold them, Credit Suisse Group (CS) said Monday.

"This should also have a negative effect on foreign direct investment and, combined with the most recent default, will likely limit even further the country's ability to tap markets and/or obtain significant multilateral financing in the foreseeable future," it said.

The Group Of Rio is an international organization of Latin American and some Caribbean states.

Argentina, Mexico, Bolivia, Brazil, Chile, Colombia, Ecuador, Venezuela, Nicaragua, among others are in the group.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com