MONEY LAUNDERING: Kink in the Drug Pipeline

In a country that prizes the secrecy of banking transactions, Luxembourg's ) Bank of Credit and Commerce International grew to become one of the world's largest financial institutions (assets: $21 billion). But in Tampa last week the bank lifted its veil of secrecy when two of its subsidiaries pleaded guilty in the first U.S. money-laundering case against a major international banking house. In a plea-bargaining deal, the two subsidiaries -- one based in Luxembourg and the other in the Cayman Islands -- agreed to surrender $14.7 million of alleged drug profits.

The penalty was attacked as too light by critics, who argued that some of the bank's branches should have been shut down. But the bank agreed to cooperate with federal prosecutors in other cases. Among them: the drug- trafficking trial of General Manuel Noriega, which is to begin in March in Miami. The ousted Panamanian strongman reportedly controlled $23 million in accounts at the Luxembourg bank's branches.