future of offshore jurisdictions -- by threatening to cut off any jurisdiction which fails to meet French openness requirements.

French Finance Minister Dominique Strauss-Kahn said on Wednesday he had proposed an international plan against money-laundering, including the option of cutting financial links with renegade offshore tax havens.

Mr. Strauss-Kahn said he had submitted his plan to the Financial Action Task Force, a forum coordinating efforts by 26 countries on money laundering under instructions from a summit of the Group of Seven in 1998.

Under this plan, banks and other offshore financial firms would have to report all suspect transactions or face a freeze on their offshore business.

France threatens offshore havens "The final step -- if it proved necessary and we believe it could be avoided -- would be the `atomic bomb' in the operation,'' Mr. Strauss-Kahn told a news conference in Paris.

"Financial relations would simply be severed -- partially or entirely -- between financial institutions of these countries and those based in offshore centres which fail to comply with the transparency recommendations put to them,'' he said.

"There is a step-by-step process that would be followed and we can obviously hope that there would be no need to resort to the ultimate sanction,'' the French Finance Minister said.

Mr. Strauss-Kahn said he had sent the proposals a few weeks ago to the international task force, whose members include most of the 29 countries in the Organisation for Economic Co-operation & Development (OECD), a grouping of mainly industrialised nations.

Agreement on France's plan would mark an significant advance in the regulation of "offshore centres, which everyone knows are at least in part directly linked to money laundering and financial delinquency,'' he said.

The minister avoided naming names, but the proposals would put pressure on several countries, including Britain, with links to offshore centres.

He said the Financial Action Task Force had already produced a proposal for a code of conduct for offshore financial institutions and that the first step would be to ensure these were respected. If pressure to comply failed, the next step would be to make it obligatory for offshore institutions to report all doubtful transactions to an international agency called TRACFIN.

This body had received 648 reports of dubious transactions in 1993 and the number of annual tip-offs had now mounted to around 1,200, Mr. Strauss-Kahn said, which illustrated the scale of the problem.

The ultimate sanction of severed financial ties would only kick in where these other steps failed to bear fruit, he said.

Mr. Strauss-Kahn unveiled the proposals at a news conference with Justice Minister Elizabeth Guigou on France's attempts to combat corruption in business and the laundering of "hot money'' generated by organised crime.

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