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Official: money laundering is 20 percent of Iran's economy

A banking official said in Tehran on Wednesday that the domestic trend of money laundering has been on the rise since the end of the imposed war in 1988, IRNA reported.

A member of Financial Research Center of Central Bank of Iran (CBI) Hossein Heshmati Moulai said the amount of money laundered in Iran has jumped from about six percent of gross domestic product (GDP)in mid 1970's to close to 15 percent in 1980's.

Speaking at the 13th annual meeting of monetary and fiscal policies, he said the under-development of financial institution leads to an imbalance in financial markets causing underground financial activities to flourish.

The experience also shows in countries with a developed financial markets, "the underground economy constitutes less than one percent of the economy."

Financial markets including banks, stock exchanges and insurance companies and other non-banking institutions are faced with many obstacles in developing countries.

Alleviating illegal financial activities is predicated on such steps as strengthening the national currency, controlling inflation, promoting private sector, enacting stringent banking regulation and monitoring policies, and expansion of social and job-related insurance, he underlined.

An Iranian official stressed last week on the need for drawing up a plan to bring transparency in the underground economic activities in the country.

Head of the Economic and Financial Affairs Organization of the Tehran Province Mohammad Reza Tajalipour told IRNA that all the clandestine economic activities can be divulged and transparent in a five-year period.

The amendment of the tax laws and regulations and the alleviation of the tax rates would also be very effective in bringing transparency to the hidden economic activities.

Clandestine economic activities entail high risks, he said adding if the active individuals were asked for 25 percent tax instead of 60 percent, they would have less tendencies toward embarking on the secret financial transactions.

Depositors may have to fill out special forms at Iranian banks in which they are obliged to specify their source of earning for large sums of money to be deposited in saving accounts.

The new policy is part of the government-proposed bill to counter money laundering, which is in stage of investigation at specialized commissions of Majlis.

The income invoice system, that would be followed by banks, would help in the campaign against smuggling of drugs and goods as well as tax evasion.

... Payvand News - 5/22/03 ... --

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