Money laundering is under the spotlight as the campaign to combat the financing of terrorism gains momentum. Speaking at a lunch meeting yesterday, Hong Kong Monetary Authority (HKMA) deputy chief executive David Carse said checks had been put in place in Hong Kong to implement UN resolutions targeting the Taleban and Osama bin Laden. The regulations were aimed at prohibiting anyone from making funds available to 'individuals or entities' connected with either the Taleban or bin Laden, and freezing their funds. Also in the pipeline was a procedure to implement Resolution 1373 of the UN, which would enable terrorist funds in general to be frozen, Mr Carse said. Meanwhile, Hong Kong banks were warned to brace themselves for a big increase in attempts to use the anonymity provided by Internet banking services to 'launder' money or change its identity or source so that it appears to have originated from a legitimate source. The warning came from Mike Watson, senior manager of forensic accounting at KPMG's Financial Advisory Services. 'The present scale of money laundering has been estimated by the Financial Action Task Force [FATF] at between US$590 billion and US$1.5 trillion, and by the IMF at between 2 per cent and 5 per cent of global gross domestic product,' Mr Watson told an executive breakfast briefing. 'The Internet can now be used in a big way to launder more money,' he warned. Data compiled by FATF, the world body established to combat money laundering, showed that between 1994 and 1999 a total of 22,097 reports of suspicious transactions were made in Hong Kong. Despite the high and rising incidence of reports, the number of convictions in the SAR had never exceeded 0.5 per cent of reports. 'This has impacted the banking industry significantly, with freezing and seizing orders amounting to US$57 million between 1994 and 1999, but confiscation and forfeiture orders amounting to only US$8 million over the period - a meagre 14 per cent recovery ratio,' the report said. Mr Watson said concerns had been expressed about the low rate of successful prosecutions brought in Hong Kong. 'What we are looking at is a high level of proof, and there may be a valid reason to try and amend the wording of present legislation, which is now under review,' he said. KPMG had generated a list of 'alerts', which could be applied to accounts to determine whether any suspicious transactions may have taken place, Mr Watson said. Heading the list was monitoring accounts to check for any large cash deposits - a duty frontline staff should be trained in. Mr Watson said this required applying the ''foundation stone' of anti-money laundering operations, which was the principle of ''know your customer', the source of his wealth and the pattern of his normal transactions. 'Know your customer' policies rely primarily on appropriate customer data management, KPMG said in its report, and the secret to risk control was information. Mr Watson said other transactions, which ought to trigger alerts in banks, included large sums deposited and instantly transferred, especially into accounts operated in non-complying countries and territories which had not adopted global standards aimed at combatting money laundering.