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2010 International Narcotics Control Strategy Report (INCSR)--Volume II: Money Laundering and Financial Crimes Country Database--Afghanistan through Colombia


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Bureau of International Narcotics and Law Enforcement Affairs
May 4, 2010

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All Money Laundering and Financial Crimes Countries/Jurisdiction: Afghanistan through Colombia

Afghanistan

Afghanistan’s formal financial system is expanding rapidly while its traditional informal financial system remains significant in reach and scale. Afghanistan currently is experiencing massive outflows of currency to foreign countries--capital flight--which threatens its long-term financial stability and security. Hundreds of millions of dollars are transported out of the country through a variety means on an annual basis. At the same time, terrorist and insurgent financing, money laundering, cash smuggling, and other activities designed to finance organized criminal activity continue to pose a serious threat to the security and development of Afghanistan. Afghanistan remains a major drug trafficking and drug producing country and the illicit narcotics trade is the primary source of laundered funds. Despite ongoing efforts by the international community to build the capacity of Afghan police and customs forces, Afghanistan does not have the capacity at this time to consistently uncover and disrupt sophisticated financial crimes, in part because of few resources, limited capacity, little expertise and insufficient political will to seriously combat financial crimes. The most fundamental obstacles continue to be legal, cultural and historical factors that conflict with more Western-style proposed reforms to the financial sector. Public corruption is also a significant problem. Afghanistan ranks 179 out of 180 countries in Transparency International’s 2009 Corruption Perception Index.

Offshore Center: No

Free Trade Zones:

No information available.

Criminalizes narcotics money laundering: Yes

Narcotics-related money laundering constitutes an offense under Article 3 of the Anti-Money Laundering and Proceeds of Crime Law No. 840 (AML Law). Afghanistan does not have explicit legislation criminalizing narcotics money laundering.

Criminalizes other money laundering, including terrorism-related: Yes

Afghanistan has criminalized money laundering under the AML Law, which is broadly-written, encompassing the laundering of proceeds of virtually any criminal offense. A predicate money laundering offense, as defined by the AML Law, means “any criminal offence, even if committed abroad, enabling its perpetrator to obtain proceeds.” Article 3 of the AML Law criminalizes money laundering according to a list of actions which constitute an offense whether they are committed within Afghanistan or in another jurisdiction.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Terrorist financing has been criminalized under the Law on the Combating the Financing of Terrorism No. 839 (CFT Law).

Know-your-customer rules: Yes

Articles 9-13 of the AML Law deal with rules regarding KYC policies. These articles cover responsibilities for covered institutions on acquiring and verifying customer identification (both natural and legal persons), due diligence measures for politically exposed persons, occasional customers, the identification of customers in a series of related transactions, special monitoring of transactions, and consequences for failure to identify customers.

Bank records retention: Yes

Article 14 of the AML Law covers record keeping requirements for all covered institutions, including the maintenance of both domestic and international transactions for at least five years. Additionally, reporting entities are required to keep customer identification data for at least five years after the business relationship has ended.

Suspicious transaction reporting: Yes

Article 16 of the AML Law sets forth the legal requirements for covered institutions to report suspicious transactions. A reporting entity must submit a report when it suspects that any transaction (including an attempted transaction) is derived from the commission of an offense, or funds are to be used or linked to terrorism, terrorist groups or terrorist acts. Suspicious transaction reports (STRs) are submitted to the Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA), the financial intelligence unit (FIU) of Afghanistan.

Large currency transaction reporting: Yes

Under Article 15 of the AML Law reporting entities forward large cash transaction reports to FinTRACA. In 2008, approximately 22,000-25,000 large cash transaction reports were received. The FIU currently has approximately 500,000 large currency transaction reports in a secure database that can be searched using a number of criteria.

Narcotics asset seizure and forfeiture: Yes

The AML Law contains provisions authorizing the temporary freezing of accounts and transactions; the seizure of funds and property associated with a predicate offense of money laundering; and, the confiscation of such assets upon conviction of an offense of actual or attempted money laundering. In addition, the Afghan Counter Narcotics (CN) Law No. 875 (CN Law) provides for the forfeiture of assets acquired directly or indirectly from the commission of a narcotics offense under the CN Law. Assets directly or indirectly used, or intended to be used, in the commission of a CN offense also are subject to forfeiture. If assets subject to an order of forfeiture are unavailable, other assets of an equivalent value may be forfeited.

Narcotics asset sharing authority: Yes

Article 56 of the AML law provides for the disposal of confiscated funds and property per the request of foreign authorities. Afghanistan may conclude agreements with foreign countries to institutionalize the process or execute asset sharing on a case-by-case basis. Requests for confiscation apply to funds and proceeds—including corresponding value-- or instrumentalities of an offense under AML Law.

Cross-border currency transportation requirements: Yes

Customs and FinTRACA require incoming and outgoing passengers to fill out declaration forms when carrying cash or negotiable bearer instruments in an amount more than 1 million Afghanis (approximately $20,900) under Article 6 of the AML Law. There is no restriction on transporting any amount of declared currency. Customs is required to submit to FinTRACA all declaration forms once per month and notify FinTRACA five days after a seizure. If a passenger is found carrying undeclared cash or bearer instruments above the threshold, the money is seized and will be forfeited to the state pending conviction.

Cooperation with foreign governments:

The AML Law’s chapters on “International Cooperation,” “Extradition,” and “Provisions common to requests for mutual assistance and requests for extradition” may be used in money laundering and terrorist financing cases. These chapters, and more specifically, Articles 51-73, outline the requirements and procedures for making requests for mutual assistance and extradition in connection with offenses under both the AML Law and the CFT Law.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Money laundering and terrorist finance investigations in Afghanistan have been hampered by a lack of capacity, awareness, and political commitment. Corruption permeates all levels of Afghan government and society and directly impacts the lack of financial crimes enforcement.

Border security continues to be a major issue throughout Afghanistan. In 2008 there were 14 official border crossings that came under central government control, utilizing international assistance as well as local and international forces. However, many of the border areas are under policed or not policed at all. These areas are therefore susceptible to illicit cross-border trafficking, trade-based money laundering, and bulk cash smuggling. Furthermore, officials estimate there are over 1,000 unofficial border crossings along Afghanistan’s porous border. Customs authorities, with the help of outside assistance, have made important improvements, but much work remains to be done.

Currently, only 3% of the Afghan community is banked. Afghanistan is widely served by the traditional and deeply entrenched hawala system, which provides a range of financial and non-financial business services in local, regional, and international markets. It is estimated that between 80 percent and 90 percent of all financial transfers in Afghanistan are made through hawala. Financial activities include foreign exchange transactions, funds transfers (particularly to and from neighboring countries with weak regulatory regimes for informal remittance systems), micro and trade finance, as well as some deposit-taking activities. Although the hawala system and formal financial sector are distinct, the two systems have links. Hawala dealers often keep accounts at banks and use wire transfer services, while banks will occasionally use hawaladars to transmit funds to hard-to-reach areas within Afghanistan. There are some 300 known hawala dealers in Kabul, with branches or additional dealers in each of the 34 provinces. There are approximately 1,500 dealers spread throughout Afghanistan that vary in size and reach. Given how widely used the hawala system is in Afghanistan, financial crimes – including terrorist financing - undoubtedly occur through these entities. However, no STRs have been submitted by money service provider (MSPs), including licensed hawaladars. This needs to be addressed immediately, while continuing to license the remaining 50%-60% of MSPs still operating outside the formal sector.

U.S.-related currency transactions:

There is a significant amount of U.S. currency in Afghanistan that is used in both the licit and illicit economies. Each week, the Afghan Central Bank auctions millions of U.S. dollars to influence the Afghan money supply. In 2008 alone, the Central Bank auctioned more than $1.2 billion to banks, money service providers, and individuals.

Records exchange mechanism with U.S.: Yes

The Afghan government has no formal extradition or mutual legal assistance arrangements with the United States. In the absence of a formal bilateral agreement between Afghanistan and the United States, requests for extradition and mutual legal assistance have been processed on an ad hoc basis, largely with the assistance of the Afghan Attorney General’s Office. The 2005 Afghan Counter Narcotics law, however, allows the extradition of drug offenders under the 1988 UN Drug Convention.

FinTRACA and the Financial Crimes Enforcement Network (FinCEN), the FIU of the United States, have an exchange of letters outlining the procedure for information sharing between their respective units.

International agreements:

FinTRACA is a signatory to a number of information exchange agreements with other FIUs. FinTRACA is not a member of the Egmont Group.

Afghanistan is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism – Yes
  • the UN Convention against Transnational Organized Crime – Yes
  • the 1988 UN Drug Convention – Yes
  • the Convention against Corruption - Yes

Afghanistan is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. The APG plans to conduct its first mutual evaluation of Afghanistan in the first quarter of 2010. Afghanistan is also an observer of the Eurasian Group on combating money laundering and financing of terrorism (EAG), a FATF-style regional body.

Recommendations:

The Government of the Islamic Republic of Afghanistan (GOA) has made progress over the past year in developing its overall anti-money laundering/counter-terrorist financing (AML/CFT) regime. Recent improvement includes encouraging steps at the FIU, an increase in the reporting of large cash transactions, active participation in international AML bodies, continued work to improve AML compliance awareness among Afghan banks, and development and integration of information technology systems. However, Afghanistan must commit additional resources and find the political will to aggressively combat financial crimes, including corruption. Increasing the capacity of the authorities to conduct onsite AML/CFT supervision of both the formal and informal banking sectors must be a priority. Specifically, the GOA must develop, staff, and fund a concerted effort to bring hawaladars into compliance in Kabul and other major areas of commerce. Afghanistan should also continue efforts to develop the investigative capabilities of law enforcement authorities in various areas of financial crimes, particularly money laundering and terrorist financing. Judicial authorities must also become proficient in understanding the various elements required for money laundering prosecutions. The FIU should become autonomous and increase its staff and resources. Afghan customs authorities should learn to recognize forms of trade-based money laundering. Border enforcement should be a priority, both to enhance scarce revenue and to disrupt narcotics trafficking and illicit value transfer.

Albania

Albania is not considered an important regional financial or offshore center. Albania continues to be a source country for human trafficking. As a transit country for trafficking in narcotics, arms, contraband, and humans, Albania remains at significant risk for money laundering. The major sources of criminal proceeds in the country are trafficking offenses, official corruption, and fraud. Corruption and organized crime are likely the most significant sources of money laundering, but the exact extent to which these activities contribute to overall crime proceeds and money laundering is unknown. Organized crime groups use Albania as a base of operations for conducting criminal activities in other countries and often return their illicit gains to Albania. Because of its high level of consumer imports and weak customs controls, Albania has a significant black market for certain smuggled goods such as tobacco, jewelry, and mobile phones.

Because Albania’s economy, particularly the private sector, remains largely cash-based, the proceeds from illicit activities are easily laundered in Albania. Albanian customs authorities report that organized criminal elements launder their illegal proceeds by smuggling bulk cash into and out of Albania by using international trade and fraudulent practices through import/export businesses. Criminals frequently invest tainted money in real estate and business development projects. According to the Bank of Albania (BOA), 24 percent of the money in circulation is outside of the banking system. A significant portion of remittances enters the country through unofficial channels. It is estimated only half of total remittances enter Albania through banks or money transfer companies. The BOA estimates that in 2008, remittances comprised nearly 9.3 percent of Albania’s annual gross domestic product (GDP). Albania has made limited progress in its fight against organized crime and money laundering.

Offshore Center:

No information available.

Free Trade Zones:

Although current law permits free trade zones, none are currently in operation.

Criminalizes narcotics money laundering: Yes

Albania criminalizes money laundering through Article 287 of the Albanian Criminal Code of 1995, as amended.

Criminalizes other money laundering, including terrorism-related: Yes

In June 2003, Parliament approved Law No. 9084, which improves the Criminal Code and the Criminal Procedure Code, redefines the legal concept of money laundering, revises its definition to harmonize it with international standards, outlaws the establishment of anonymous accounts, and permits the confiscation of accounts. Albania’s law sets forth an “all crimes” definition for the offense of money laundering; however, Albanian courts require a conviction for the predicate offense before issuing an indictment for money laundering.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Article 230/a of the Penal Code criminalizes terrorist financing. In 2007, the GOA amended its penal code to include a more specific definition for terrorist organizations. In addition, actions for terrorist purposes were identified and Albania’s jurisdiction in terrorist financing cases was extended to include both resident and nonresident foreign citizens.

Know-your-customer rules: Yes

Law No. 9084 mandates the identification of beneficial owners and places reporting requirements on both financial institutions and individuals. Law No. 9917, “On Money Laundering and Terrorist Financing” (AML Law) entered into force in September 2008. The anti-money laundering law AML Law strengthens customer due diligence (CDD) requirements by reducing to ALL 1,500,000 (approximately $15,000) the transaction threshold at which institutions are required to obtain the identification of customers, mandating that covered institutions maintain on-going due diligence of clients, and establishing the requirement to perform enhanced due diligence on a risk sensitive basis. The AML Law also defines “client” to include any natural or legal person that is party to a business relationship, and mandates that CDD measures apply in transactions where terrorist financing is suspected. The law also increases the number of reporting entities.

Bank records retention:

Article 16 of the AML Law requires entities to store the documentation of a transaction and that used for the identification of the client and the client’s beneficiary owner for five years from the date of termination of the business relation with the client.

Suspicious transaction reporting: Yes

Covered institutions are required to report transactions that involve suspicious activity, regardless of amount, to Albania’s financial intelligence unit (FIU).

Large currency transaction reporting: Yes

The AML Law lowers the reporting threshold for cash transactions from $20,000 to $15,000.

Narcotics asset seizure and forfeiture:

Law No. 9284, the “anti-mafia law,” enables civil asset sequestration and confiscation provisions in cases involving organized crime and trafficking. The law applies to the assets of suspected persons, their families, and close associates and places the burden on the defendant to prove a legitimate source of income to support the volume of owned assets. During the first ten months of 2009, the Serious Crimes Prosecution Office rendered 18 sequestration and confiscation decisions pursuant to the anti-mafia law. The properties sequestered include one site of 1,060 sqm and 36 bank accounts with approximately $5 million.

In 2004, Albania enacted Law No. 9258, “On Measures against Terrorist Financing.” This law provides a mechanism for the sequestration and confiscation of assets belonging to terrorist financiers, particularly with regard to the UN lists of designees. While comprehensive, it lacks implementing regulations and thus is not fully in force. As of September 2009, the GOA claimed to maintain asset freezes against two individuals and ten foundations and companies from the UN Security Council’s list of identified terrorist financiers. During the third quarter of 2009, the Ministry of Finance issued eight orders to sequester bank accounts of euro 388,901 belonging to terrorist financiers. In total, the Agency for the Administration of the Sequestration and Confiscation of Assets (AASCA) has $14.8 million in assets seized under the “Law on the Prevention and Fight Against Financing of Terrorism”.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements:

Individuals must report to customs authorities all cross-border transactions that exceed approximately $10,000. Reportedly, Albania provides declaration forms at border crossing points but only to those individuals who voluntarily make a declaration that would require completing the form.

Cooperation with foreign governments (including refusals):

No information available.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Individuals and entities reporting suspicious transactions are protected by law if they cooperate with and provide financial information to the FIU and law enforcement agencies. Reportedly, however, leaks of financial disclosure information from other agencies have compromised client confidentiality. Since 2007, the FIU has referred to the Prosecutors Office 87 cases of both money laundering and terrorist financing, 59 of which were reported during the first nine months of 2008. One case of money laundering has been prosecuted, and currently two cases are ready to be sent to the court. However, prosecution was declined for the rest. In January 2008, the first terrorist financing criminal case began against a Jordanian citizen accused of concealing funds allegedly intended to finance terrorism. This case is still pending.

Although regulations also cover nonbank financial institutions, enforcement remains poor in practice.

Customs controls on cross-border transactions lack effectiveness due to a lack of resources, poor training and, reportedly, corruption of customs officials.

AASCA was created in 2004, and is charged with the responsibility of administering confiscated assets. So far the agency has failed to function in a meaningful fashion, although recent pressure from U.S. government officials has prompted it to perform better.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

No information available.

International agreements:

The FIU has signed memoranda of understanding with 32 countries, Kosovo and Argentina being the most recent. The FIU is in process of signing MOUs with its counterparts in Italy, Russia and Canada.

Albania is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Albania is a member of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Albania_en.asp

Recommendations:

Although there are continuing initiatives to improve Albania’s capacity to deal with financial crimes and money laundering, the lack of positive results and apparent inability to adequately address program deficiencies continue to hamper progress. In addition, although the current AML Law was adopted in May 2008, it is difficult to evaluate the effectiveness of the measures as implementing regulations have not yet been passed. The Government of Albania (GOA) must provide the competent authorities adequate resources to administer and enforce the anti-money laundering/counter-terrorist financing (AML/CFT) measures included in the May 2008 law. Albania also should incorporate into AML legislation specific provisions regarding negligent money laundering, corporate criminal liability, comprehensive customer identification procedures, and the adequate oversight of money remitters and charities. The GOA should remove the requirement of a conviction for a predicate offense before a conviction for money laundering can be obtained. The FIU, police and prosecutors should enhance their effectiveness through improved cooperation with one another and outreach to other entities. The FIU should take steps to achieve effective analysis of the large volume of currency transaction reports and STRs received. The GOA should enact its draft law on FIU operations and promulgate implementing regulations for all applicable laws as soon as possible. Albania should ensure those charged with pursuing financial crime increase their technical knowledge to include modern financial investigation techniques. The GOA should provide its police force with the means to adequately maintain and retrieve its case files and records. The link between criminal intelligence and investigations remains weak as there is a lack of coordination between the prosecutors and the police. Investigators and prosecutors should implement case management techniques, and prosecutors and judges need to become more conversant with the nuances of money laundering. The GOA should devise implementing regulations for Law 9258 regarding sequestration and confiscation of assets linked to terrorist financing so that it can be fully effective. Albania also should improve the enforcement and enlarge the scope of its asset seizure and forfeiture regime, including fully funding and supporting the AASCA.

Algeria

The extent of money laundering through formal financial institutions in Algeria is thought to be minimal due to stringent exchange control regulations and an antiquated banking sector. The partial convertibility of the Algerian dinar enables the Banque Nationale Algerienne (Algeria’s central bank) to monitor all international financial operations carried out by public and private banking institutions. Notable criminal activity includes trafficking, particularly of drugs and cigarettes, but also arms; kidnapping; theft, particularly of vehicles; extortion; and embezzlement. Public corruption remains a major concern as does terrorism. Algerian authorities are increasingly concerned with cases of customs fraud and trade-based money laundering. Other risk areas for financial crimes include unregulated alternative remittance and currency exchange systems; tax evasion; abuse of real estate transactions; commercial invoice fraud; and a cash-based economy. Most money laundering is believed to occur primarily outside the formal financial system, given the large percentage of financial transactions occurring in the informal gray and black economies. Al-Qaida in the Islamic Maghreb (AQIM), which originated in Algeria, has a history of terrorist activities in Algiers and elsewhere in the country, including suicide attacks, kidnappings for ransom, roadside bomb attacks, and assassinations.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

All crimes qualify as predicates for money laundering. In February 2005, Algeria enacted Law No. 05.01, Prevention and Combating of Money Laundering and the Financing of Terrorism (hereinafter Preventative AML/CFT Law). Article 3 of the Preventative AML/CFT Law incorporates by reference Penal Code provisions on terrorism and prohibits the financing of all conduct described by those provisions.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Penal Code, Section 4 bis, Article 87 bis 4 references Ordinance No. 95-11 and makes the financing of terrorism punishable by imprisonment and subject to a fine.

Know-your-customer rules: Yes

Articles 7-9 of the Preventative AML/CFT Law require customer identification and verification, including in trustee and beneficial ownership circumstances, by “banks, financial establishments and other related financial institutions.” In cases where a transaction is of unusual or unwarranted complexity or without economic justification or lawful objective, information on the origin and destination of the funds as well as the aim of the transaction, and identity of “the economic operators” must be obtained.

Bank records retention: Yes

Article 14 of the Preventative AML/CFT Law requires “banks, financial establishments and other related financial institutions” to maintain customer identification information for five years after closing the account or terminating the business relationship and five years after the execution of a transaction.

Suspicious transaction reporting: Yes

Articles 19 and 20 of the Preventative AML/CFT Law require reporting of suspicious transactions to the Cellule du Traitement du Renseignement Financier (CTRF) (the Algerian financial intelligence unit (FIU)). This obligation applies not only to banks and financial institutions, but also to a number of other institutions and businesses to include the post office, insurance companies, gaming establishments, investment houses, attorneys and notaries, accountants, real estate agents, customs agents, and dealers of gems, precious metals, antiques and artwork. Article 21 places a similar obligation on customs and tax agencies. The CTRF transfers files to the prosecutors when its analysis upholds the conclusion of suspected money laundering or terrorist financing. The CTRF reports receipt of 508 suspicious transaction reports (STRs) since 2005; with 260 of the 508 received in 2009. Of this total, two have been referred to the Ministry of Justice (MOJ) for prosecution, with one referral resulting in a prosecution.

Large currency transaction reporting: No

However, Executive Decree 05-442, issued in 2005, prohibits cash transactions exceeding 50,000 Algerian dinars (approximately $713), requiring that they be made by check, credit card, wire transfer or other specified methods that are traceable.

Narcotics asset seizure and forfeiture:

Asset seizure provisions are included in Penal Procedure Code; Preventative AML/CFT Law; and respective laws governing the tax and customs authorities. The Preventative AML/CFT Law provides authority to the CTRF to freeze bank transactions strongly presumed to be connected to money laundering or terrorist financing for a maximum period of 72 hours absent an extension based on a judicial decision. The Penal Code includes provisions for confiscation of assets of natural persons and legal entities.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements:

Article 19 of Regulation No. 07-01 permits travelers to import bank notes and traveler’s checks subject to a declaration requirement for amounts in excess of a threshold yet to be established by the Bank of Algeria. As a matter of practice, Algerian authorities interpret the provision as requiring declaration of all amounts. Records of declared amounts in excess of the equivalent of $5,000 are electronically available, including to the CTRF. Ordinance 96-22 prescribes punishments including for failure to declare and false declarations to include confiscation, fines and imprisonment. Travelers departing Algeria may export bank notes and travelers checks subject to certain conditions. In the case of non-residents, the amount exported cannot exceed the amount declared upon entry minus amounts used while in-country. Currency export by residents is strictly controlled in the formal sector and is limited to an amount fixed by the Bank of Algeria, presently approximately $10,200. Exceptions for residents exist for amounts covered by “currency exchange authorizations” established to address particular circumstances (e.g., travel abroad for the Hadj, business, health, education purposes).

Cooperation with foreign governments:

The Algerian Banking Commission, the CTRF, and the Algerian judiciary have wide latitude to exchange information with their foreign counterparts in the course of money laundering and terrorist financing investigations. A clause excludes the sharing of information with foreign governments in the event legal proceedings are already underway in Algeria against the suspected entity, or if the information is deemed too sensitive for national security reasons.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Algerian authorities are taking steps to coordinate information sharing between concerned agencies. In 2008, the Ministry of Justice established a specialized cadre of investigators, prosecutors and judges who are being trained in the investigation and prosecution of financial crimes.

U.S.-related currency transactions:

There appears to be no connection between illegal drug sales in the U.S. and currency transactions in Algeria.

Records exchange mechanism with U.S.:

No information available.

International agreements:

Algeria is a signatory to various UN, Arab, and African conventions against terrorism, trafficking in persons, and organized crime. The CTRF is not a member of the Egmont Group.

Algeria is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

In November 2004, Algeria became a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Algeria underwent a mutual evaluation in December 2009; once finalized, it will be found here: http://www.menafatf.org/TopicList.asp?cType=train

Recommendations:

The Government of Algeria has taken many steps to enhance its statutory regime against money laundering and terrorist financing. It needs to move forward to implement those laws and eliminate bureaucratic barriers among various government agencies. The CTRF should be the focal point for anti-money laundering/counter-terrorist financing (AML/CFT) suspicious transaction report analysis and information exchange, which would require the CTRF to develop in-house analytical and information technology capabilities. The CTRF should continue outreach to the formal and informal financial sectors and continue efforts to adhere to international standards. In addition, given the scope of Algeria’s informal economy, new efforts should be made to identify value transfer mechanisms not covered in Algeria’s AML/CFT legal and regulatory framework. Algerian law enforcement and customs authorities should enhance their ability to investigate trade-based money laundering, value transfer, and bulk cash smuggling used for financing terrorism and other illicit financial activities.

Andorra

Andorra has a well developed financial infrastructure. In 2009, the Organization for Economic Co-operation and Development (OECD) designated and subsequently delisted Andorra as a tax haven due to its low or nonexistent taxes and maintains that Andorra still needs to make its banking system more transparent.

Offshore Center: Yes

No additional information available.

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

Andorra substantially revised its anti-money laundering regime in December 2000 with the passage of its Law on International Criminal Co-operation and the Fight against the Laundering of Money and Securities Deriving from International Delinquency (December 2000 Act). Subsequent amendments to the Andorran Criminal Code extend the predicate offenses for money laundering to all serious offenses that are punishable by a prison term of at least six months. Tax evasion is not a crime in Andorra.

Criminalizes terrorist financing: Yes

In 2008, Andorra ratified the UN Convention for the Suppression of the Financing of Terrorism. The implementation of the Convention led to a separate offense of terrorism financing within the Andorra Criminal Code – Article 366 bis.

Know-your-customer rules: Yes

Banks and other financial institutions are required to know, record, and report the identity of customers engaging in significant transactions. Customer identification, including identification of the beneficial owner, is required at the time a business relationship is established and before any applicable transaction.

Bank records retention: Yes

Banks and other reporting entities are required to keep records of obligated transactions for five years. Records verifying customer identity must be kept for a period of at least ten years from the date when the business relationship ends.

Suspicious transaction reporting: Yes

The December 2000 Act imposes reporting obligations upon Andorran financial institutions, insurance and re-insurance companies, and natural persons or entities whose professions or business activities involve the movement of money or securities that may be susceptible to laundering. It specifically covers external accountants and tax advisors, real estate agents, notaries, and other legal professionals when they are acting in certain professional capacities, as well as casinos and dealers in precious stones and metals. Obligated entities must report suspicious transactions regardless of the amount involved. Reports of suspicious transactions (STRs) are made to the Unit for the Prevention of Laundering Operations (UPB), Andorra’s financial intelligence unit (FIU).

Large currency transaction reporting: Yes

Currency transaction reports must be forwarded to the UPB for any cash transactions over euros 30,000 (approximately $41,000).

Narcotics asset seizure and forfeiture: Yes

Substitute assets can be seized. In 2008, $48,915 was frozen, seized, and/or forfeited.

Narcotics asset sharing authority:

The Government of Andorra (GOA) has signed asset sharing agreements with France, Spain, and Switzerland.

Cross-border currency transportation requirements: Yes

Mandatory declaration forms are used at the borders.

Cooperation with foreign governments:

No impediments to cooperation are known to exist.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In 2008, there were 26 investigations for suspicion operations; no figures are available for 2009.

The GOA has circulated to its financial institutions the list of individuals and entities included on the UN 1267 sanctions committee's consolidated list

U.S.-related currency transactions:

No currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States are believed to occur in Andorra.

Records exchange mechanism with U.S.:

The UPB is able to exchange information with the Financial Crimes Enforcement Network.

International agreements:

The UPB has signed cooperation agreements with the FIUs of Spain, France, Belgium, Portugal, Luxembourg, Monaco, Poland, Netherlands Antilles, Bahamas, Thailand, Albania, Mexico, Panama and Peru.

Andorra is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - No
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

Andorra is a member of MONEYVAL, a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Andorra_en.asp

Recommendations:

Andorra should continue to improve its anti-money laundering/counter-terrorist financing counter-measures. The Government of Andorra should become a party to the UN Conventions against Corruption and Transnational Organized Crime.

Angola

Angola is neither a regional nor an offshore financial center and has not prosecuted any known cases of money laundering. Angola does not produce significant quantities of drugs, although it continues to be a transit point for drug trafficking, particularly cocaine brought in from Brazil or South Africa destined for Europe. The laundering of funds derived from continuous and widespread high-level corruption is a concern, as is the use of diamonds as a vehicle for money laundering. The Government of the Republic of Angola (GRA) has implemented a diamond control system in accordance with the Kimberley Process. However, corruption and Angola’s long and porous borders further facilitate smuggling and the laundering of diamonds.

Angola currently has no comprehensive laws, regulations, or other procedures to detect money laundering and financial crimes. Efforts to combat money laundering and terrorist financing are hampered by a very significant lack of capacity resulting from decades of civil war. The various ministries with responsibility for detection and enforcement are revising a draft anti-money laundering law. Angolan banks have few, but growing, linkages to the international financial system.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Angola’s counter-narcotics laws criminalize money laundering related to narcotics trafficking.

riminalizes other money laundering, including terrorism-related: No

Angola currently has no comprehensive laws, regulations, or other procedures to detect money laundering and financial crimes, although provisions of the criminal code do address some related crimes.

Criminalizes terrorist financing: No

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Angola currently has no comprehensive laws or regulations covering terrorist financing. Angola has not signed the UN International Convention for the Suppression of the Financing of Terrorism.

Know-your-customer rules: No

The Central Bank’s Supervision Division, which has responsibility for money laundering issues, exercises some authority to detect and suppress illicit banking activities under legislation governing foreign exchange controls. The Central Bank has limited capacity to conduct customer due diligence compliance investigations. It is inadequately staffed and trained.

Bank records retention: No

Banks are required to maintain records of significant transactions, though it not known for how long they are required to keep the records.

Suspicious transaction reporting: No

The Central Bank has no workable data management system and only rudimentary analytic capability. The Central Bank falls under the Ministry of Finance and does not have operational or budgetary independence.

There is a financial intelligence unit (FIU) but its basic function is to ensure that Angola’s banking regulations are being adhered to by commercial banks. It appears to be more of an administrative body rather than analytic. It is not focused on money laundering or terrorist financing to any significant degree. The FIU has authority to investigate commercial banks. Statistics of suspicious transaction reports (STRs) are unknown. The banking system is ill-equipped to detect and report suspicious activity.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture: Yes

The GRA can seize narcotics-related assets under its counter-narcotics laws. The Central Bank has the authority to freeze assets, but Angola does not presently have an effective system for identifying, tracing, or seizing assets.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements: Yes

Angolan currency (kwanza) cannot be taken out of Angola. The law limits individuals to bringing no more than $15,000 in currency into or out of the country. However, the restrictions are based on foreign exchange controls and are not meant to combat international money laundering. Travelers boarding international flights are asked to declare the amount of currency they are carrying and are subject to physical search. Cash in excess of this amount is confiscated and the traveler is given a receipt, with which he can appeal to the GRA for return of the cash based on justification for carrying currency out of the country. The GRA requires declaration forms, but foregoes the use of them when they run out of printed forms.

Cash declaration reports are not entered into databases. Information technology infrastructure within government entities is very limited.

Cooperation with foreign governments:

Although there is a lack of capacity throughout relevant government ministries, there are no known instances of refusal to cooperate with other governments against money laundering and terror finance.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The Ministry of Justice is responsible for investigating financial crimes. The level of competence and staffing is unknown, but believed to be low. There were no known arrests, prosecutions, or convictions for money laundering or terrorist financing in 2009.

Diamonds are believed to be used in trade-based money laundering. In May 2009, the U.S. Department of the Treasury designated Kassim Tajideen as a supporter of the Hizballah terrorist organization. Kassim Tajideen is an important financial contributor to Hizballah who operates a network of businesses in Lebanon and Africa. In 2003, Tajideen was arrested in Belgium in connection with fraud, money laundering, and diamond smuggling. Kassim is chairman of Luanda-based Golfrate Holdings (Angola) Lda, which is Angola's leading producer and distributor of essential consumer goods, providing up to 60 percent of Angola’s imported food stuffs.

U.S.-related currency transactions:

Angola is effectively dollarized— nearly all businesses, formal and informal, readily accept U.S. dollars. In 2009, the Governor of the Central Bank announced steps to require the payment of all debts to be carried out in kwanzas – the Angolan currency. In 2008, it was reported the local banking system imports approximately $200-300 million in currency per month, largely in dollars, without a corresponding cash outflow. Local bank representatives have reported that clients have walked into banks with up to $2 million in a briefcase to make a deposit.

Records exchange mechanism with U.S.:

There is no agreement with the U.S. on exchange of records relating to financial crimes or other investigations. Exchange of records for investigations is done on a case-by-case basis.

International agreements:

Angola is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - No
  • the UN Convention against Transnational Organized Crime - No
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Recommendations:

The Government of Angola (GRA) should pass its pending legislation to criminalize money laundering beyond drug offenses. The GRA should enact legislation that adheres to international standards to establish a system of financial transparency reporting requirements and a corresponding financial intelligence unit. The GRA should then move quickly to implement this legislation and bolster the capacity of law enforcement to investigate financial crimes. Angola’s judiciary, including its Audit Court (Tribunal de Contas) should give priority to prosecuting financial crimes, including corruption. The GRA should become a party to both the UN Convention against Transnational Organized Crime and the UN International Convention for the Suppression of the Financing of Terrorism. The GRA should increase efforts to combat official corruption, by establishing an effective system to identify, trace, seize, and forfeit assets and by empowering investigative magistrates to actively seek out and prosecute high profile cases of corruption.

Antigua and Barbuda

Antigua and Barbuda has comprehensive legislation in place to regulate its financial sector, but remains susceptible to money laundering due to its offshore financial sector and Internet gaming industry. As of 2008, Antigua and Barbuda had eight domestic banks, seven credit unions, seven money transmitters, 18 offshore banks, two trusts, three offshore insurance companies, 2,967 international business corporations (IBCs), and 20 licensed Internet gaming companies. Noted money laundering problems in Antigua and Barbuda appear to be generated by schemes involving investment fraud and advance fee fraud. Drug-related matters have concerned not only narcotics but other controlled pharmaceutical substances being illicitly distributed over the Internet.

Offshore Center: Yes

The International Business Corporations Act of 1982 (IBCA), as amended, is the governing legal framework for offshore businesses in Antigua and Barbuda. Offshore financial institutions are exempt from corporate income tax. All licensed institutions are required to have a physical presence, which means presence of at least a full-time senior officer and availability of all files and records. Shell companies are not permitted.

Free Trade Zones: Yes

The Antigua and Barbuda Free Trade and Processing Zone was established by an Act of Parliament in 1994, based on the legal foundation enacted twelve years earlier, which set guidelines for the establishment of IBCs in Antigua and Barbuda. The Zone is administered by a Commission, empowered by the Free Trade and Processing Zone Act No. 12 of 1994, to function as a private enterprise.

Criminalizes narcotics money laundering: Yes

The Money Laundering Prevention Act of 1996 (MLPA), as amended, is the cornerstone of Antigua and Barbuda’s anti-money laundering legislation. The MLPA makes it an offense for any person to obtain, conceal, retain, manage, or invest illicit proceeds or bring such proceeds into Antigua and Barbuda if that person knows or has reason to suspect that they are derived directly or indirectly from any unlawful activity.

Criminalizes other money laundering, including terrorism-related: Yes

The Proceeds of Crime Act (Amendment) (POCA) entered into force on December 30, 2009. This regulation mandates that all serious offenses (defined as all offenses which carry a penalty of one year or more imprisonment) are specified activities for money laundering.

Criminalizes terrorist financing: Yes

The Government of Antigua and Barbuda (GOAB) enacted the Prevention of Terrorism Act 2001 (PTA), amended in 2005, to implement the UN conventions on terrorism. The GOAB amended the PTA in 2008 to provide the Supervisory Authority and the Office of National Drug and Money Laundering Control Policy (ONDCP) the power to direct a financial institution to freeze property for up to seven days while the authority seeks a freeze order from the court.

Know-your-customer rules: Yes

Financial institutions must undertake full customer identification procedures under the following circumstances: a) formation of a business relationship; b) carrying out a one-time transaction of EC $25,000 (approximately $9,900) or more; c) carrying out one-time wire transfers; d) if there is any suspicion that a onetime transaction involves money laundering or terrorist financing. Internet gaming companies also are required to enforce know-your-customer verification procedures.

Bank records retention: Yes

Financial institutions are required to maintain records for six years after an account is closed. Internet gaming companies also are required to maintain records relating to all gaming and financial transactions of each customer for six years.

Suspicious transaction reporting: Yes

Reporting institutions include banks, offshore banks, IBCs, money transmitters, credit unions, building societies, trust businesses, casinos, Internet gaming companies, and sports betting companies. The MLPA requires reporting entities to report suspicious activity whether a transaction was completed or not. The Office of National Drug and Money Laundering Control Policy Act, 2003 (ONDCP Act) establishes the ONDCP as the financial intelligence unit (FIU) which receives and analyzes suspicious transaction reports.

Large currency transaction reporting:

There is no reporting threshold imposed on banks and financial institutions. Internet gaming companies, however, are required by the Interactive Gaming and Interactive Wagering Regulations to report to the ONDCP all payouts over $25,000.

Narcotics asset seizure and forfeiture:

Both the MLPA and the POCA provide for the forfeiture, freezing and seizing of the proceeds of crime. Legislative provisions in relation to the freezing of funds used for terrorist financing are to be found mainly in the PTA. The MLPA also provides specifically for civil forfeiture procedures. The definition of property in the MLPA does not expressly include income, profits or other benefits from the proceeds of crime. In the POCA, the definition of property is limited. However, the definition of ‘proceeds of crime’ includes benefits derived from unlawful activity and in this context the term can be said to cover income, profits and benefits. The term property is even more narrowly defined in the PTA. The Misuse of Drugs Act empowers the court to forfeit assets related to drug offenses. The ONDCP is responsible for tracing, seizing and freezing assets related to money laundering, and has the ability to direct a financial institution to freeze property for up to seven days, while it makes an application for a freeze order.

Narcotics asset sharing authority: Yes

The GOAB has entered into an asset sharing agreement with Canada and is currently working on asset sharing agreements with other jurisdictions, including the U.S. The director of ONDCP, with Cabinet approval, may enter into agreements and arrangements that cover matters relating to asset sharing with authorities of a foreign State. There are asset sharing agreements in place with some countries, while with others arrangements are negotiated on an ad hoc basis.

Cross-border currency transportation requirements: Yes

Under the MLPA, a person entering or leaving the country is required to report to the ONDCP whether he or she is carrying $10,000 or more. In addition, all travelers are required to fill out a customs declaration form indicating if they are carrying in excess of $10,000. If so, they may be subject to further questioning and possible search of their belongings by Customs officers.

Cooperation with foreign governments: Yes

The GOAB continues its bilateral and multilateral cooperation in various criminal and civil investigations and prosecutions.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The ONDCP is the agency responsible for money laundering, terrorist financing and illegal drugs intelligence and investigations. The biggest challenge faced by the FIU is that the subjects of its money laundering investigations reside outside the jurisdiction, and therefore, conducting interviews may be difficult. There have been no investigations involving terrorist financing.

While a conviction for a predicate offense is not necessary for the initiation of money laundering proceedings, the majority of prosecutions are for predicate offenses only, and relatively few prosecutions have been brought under the MLPA. The reason for the latter may lie in the tripartite prosecutorial regime which permits prosecutions to be brought by the Director of Public Prosecutions (DPP), the Police Prosecuting Unit and the Supervisory Authority.

Because of Antigua and Barbuda’s increased efforts to implement stricter standards to restrict the movement of value through the financial system, as well as to curb the physical, cross-border movement of illicit money, the use of trade-based money laundering methods has become a greater threat. The vulnerabilities of the international trade system to things such as over- and- under-invoicing of goods and services, over- and under-shipment of goods and services, and multiple invoicing of goods and services are a growing concern.

U.S.-related currency transactions:

Illicit proceeds from the transshipment of narcotics and from financial crimes occurring in the U.S. also are laundered in Antigua and Barbuda.

Records exchange mechanism with U.S.: Yes

In 1999, a Mutual Legal Assistance Treaty and an extradition treaty with the United States entered into force. The GOAB signed a Tax Information Exchange Agreement with the United States in December 2001.

International agreements:

The ONDCP has signed memoranda of understanding (MOUs) with its counterparts in Canada and Panama.

Antigua and Barbuda is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism -Yes
  • the UN Convention against Transnational Organized Crime -Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Antigua and Barbuda is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Recommendations:

The Government of Antigua and Barbuda (GOAB) should take steps to amend its legislation to cover intermediaries, enhanced due diligence for politically exposed persons (PEPs) and other high-risk customers, and to provide for enforceable provisions on the prohibition of correspondent accounts for or with shell banks. The GOAB also should implement and enforce all provisions of its anti-money laundering/counter-terrorist financing (AML/CFT) legislation, including the comprehensive supervision of its offshore sector and gaming industry. The ONDCP should be given direct access to financial institution records in order to effectively assess their AML/CFT compliance. Continued efforts should be made to enhance the capacity of law enforcement and customs authorities to recognize money laundering typologies that fall outside the formal financial sector, particularly trade-based money laundering. Continued international cooperation, particularly with regard to the timely sharing of statistics and information related to offshore institutions, and enforcement of foreign civil asset forfeiture orders will likewise enhance Antigua and Barbuda’s ability to combat money laundering.

Argentina

Argentina is neither an important regional financial center nor an offshore financial center. Money laundering related to narcotics trafficking, corruption, contraband, and tax evasion is believed to occur throughout the financial system, in spite of the efforts of the Government of Argentina (GOA) to stop it. Transactions conducted through nonbank businesses and professions, such as the insurance industry, financial advisors, accountants, notaries, trusts, and companies, real or shell, remain viable mechanisms to launder illicit funds. Tax evasion is the most frequent predicate crime in Argentine money laundering investigations. Argentina has a long history of capital flight and tax evasion, and Argentines hold billions of dollars outside the formal financial system (both offshore and in-country), much of it legitimately earned money that was not taxed. To combat capital flight and encourage the return of these undeclared billions, the GOA approved a capital repatriation law offering a tax amnesty to persons who repatriated undeclared offshore assets during a six-month window from March 1 to August 31, 2009. The law prohibits tax authorities from investigating the provenance of declared funds. Critics raised concerns that this initiative could facilitate money laundering. When the GOA’s financial intelligence unit (FIU), the UIF, promulgated implementing regulations in May 2009, it required financial institutions to file reports on suspicious transactions by participants in the program. The program yielded declarations of approximately $4.7 billion, a small fraction of assets held abroad, and much of the declared funds and assets were actually not repatriated but were simply a declaration of funds already in Argentina.

Offshore Center:

No information available.

Free Trade Zones:

No information available.

Criminalizes narcotics money laundering:

Money laundering was first criminalized in 1989 under Article 25 of Narcotics Law 23.737.

Criminalizes other money laundering, including terrorism-related:

Law 25.246 of May 2000 expands the predicate offenses for money laundering to include all crimes listed in the Penal Code. The law does not criminalize money laundering as an offense independent of the underlying crime or self laundering. Additionally, only transactions (or a series of related transactions) exceeding 50,000 pesos (approximately $13,000) constitute money laundering. Transactions below 50,000 pesos constitute concealment, a lesser offense.

Criminalizes terrorist financing:

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Law 26.268, “Illegal Terrorist Associations and Terrorism Financing,” enacted in 2007, amends the Penal Code and Argentina’s anti-money laundering law, Law No. 25.246, to criminalize acts of terrorism and terrorist financing, and establishes terrorist financing as a predicate offense for money laundering. To date, Argentine prosecutors have not filed charges under the statute.

Central Bank Circular B-6986 requires financial institutions to check transactions against the terrorist lists of the United Nations, United States, European Union, Great Britain, and Canada. No assets have been identified or frozen to date.

Know-your-customer rules: Yes

Law 25.246 requires customer identification.

UIF Resolution 137/2009 addressing repatriated funds under the tax amnesty program requires financial institutions to determine whether the taxpayer had the economic capacity to obtain the funds sent abroad, and accordingly, to determine the source of the funds.

Bank records retention: Yes

Obligated entities are required to maintain a database of information related to client transactions, including suspicious or unusual transaction reports, for at least five years.

Suspicious transaction reporting: Yes

Law 25.246 requires financial institutions to file suspicious transaction reports (STRs). Under UIF-issued resolutions obligated entities include the tax authority (AFIP), Customs, banks, currency exchange houses, casinos, securities dealers, insurance companies, postal money transmitters, accountants, notaries public, and dealers in art, antiques and precious metals. As of September 2009, according to its own statistics, the UIF had received 5,272 STRs since its inception in November 2002, and forwarded 738 suspected cases of money laundering to prosecutors for review.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture:

Argentina’s Narcotics Law of 1989 authorizes the seizure of assets and profits. Argentine courts and law enforcement agencies have used the authority to seize and utilize assets on a selective and limited basis, although complex procedural requirements complicate authorities’ ability to take full advantage of the asset seizure provisions.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: Yes

Resolutions 1172/2001 and 1176/2001, issued by the Argentine Customs Service in 2001, require declarations to be made by all individuals entering or departing Argentina with over $10,000 in currency or monetary instruments. The UIF receives copies of the declarations.

Cooperation with foreign governments (including refusals):

Argentina’s financial secrecy restrictions on UIF access to large cash transactions could limit its ability to provide assistance in money laundering and terrorist financing investigations.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Law 25.246 still limits the UIF’s role to investigating only money laundering arising from seven specific or “predicate” crimes, including narcotics and arms trafficking and fraud in public administration.

Although Law 26.087 reduces restrictions that have prevented the UIF from obtaining information needed for money laundering investigations by granting greater access to STRs filed by banks, the law does not lift financial secrecy provisions on records of large cash transactions, which are maintained by banks when customers conduct a cash transaction exceeding 30,000 pesos (approximately $7,800).

There have been only two convictions for money laundering since it was first criminalized in 1989, and none since the passage of Law 25.246 in 2000.

Working with the USG, Argentina has established a Trade Transparency Unit (TTU). The TTU examines anomalies in trade data that could be indicative of customs fraud and international trade-based money laundering. One key focus of the TTU is financial crime occurring in the Tri-Border Area.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

The GOA and the U.S. government have a Mutual Legal Assistance Treaty that entered into force in 1993, and an extradition treaty that entered into force in 2000.

International agreements:

Argentina participates in the “3 Plus 1” Security Group (formerly the Counter-Terrorism Dialogue) between the United States and the Tri-Border Area countries. The UIF has signed memoranda of understanding regarding the exchange of information with a number of other FIUs.

Argentina is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Argentina is a member of the Organization of American States Inter-American Control Commission (OAS/CICAD) Group of Experts. Argentina is also a member of the Financial Action Task Force (FATF) and the Financial Action Task Force for South America (GAFISUD), a FATF-style regional body.

Recommendations:

With passage of counterterrorist financing legislation and strengthened mechanisms available under Laws 26.119, 26.087, 25.246, and 26.268, Argentina has the legal and regulatory capability to combat and prevent money laundering and terrorist financing. The national anti-money laundering/counter-terrorist financing agenda provides the structure for the Government of Argentina (GOA) to improve existing legislation and regulation, and enhance inter-agency coordination. The ongoing challenge is for Argentine law enforcement and regulatory agencies, and institutions to implement fully the National Agenda and enforce the newly strengthened and expanded legal, regulatory, and administrative measures available to them to combat financial crimes. The GOA should further improve its legal and regulatory structure by enacting legislation to expand the UIF’s role to enable it to investigate money laundering arising from all crimes, rather than just seven enumerated crimes and to have access to all information and documentation necessary to conduct money laundering and terrorist financing investigations; establishing money laundering as an autonomous offense; and eliminating the current monetary threshold of 50,000 pesos (approximately $13,000) required to establish a money laundering offense. To comply fully with international standards on the regulation of bulk money transactions, Argentina should review policy options that are consistent with its MERCOSUR obligations. Other continuing priorities are the effective sanctioning of officials and institutions that fail to comply with the reporting requirements of the law, the pursuit of a training program for all levels of the criminal justice system, and the provision of the necessary resources to the UIF to carry out its mission.

Armenia

Armenia is a not a regional financial center and is not believed to be at major risk for money laundering and terrorist financing. However, governmental corruption, an organized crime presence and a large shadow economy make the country vulnerable. The major sources of laundered proceeds stem from tax evasion and fraudulent financial activity, particularly transactions with forged credit cards. Money laundering in Armenia generally takes place through the banking system, through informal remittances from Armenians living abroad, and through high-value transactions such as real estate purchases.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

Armenia’s anti-money laundering regime is based on Article 190 of the Armenian Criminal Code, enacted in 1993, which criminalizes money laundering; and on the Law on Combating Money Laundering and Terrorism Financing (AML/CFT Law), adopted in December 2004 and revised in May 2008. Armenia uses a “list” approach for predicate offenses for money laundering. Amended Article 190 of the Criminal Code refers to 94 specific crimes listed elsewhere in the Code, e.g. kidnapping, embezzlement, drug trafficking, trafficking in persons, extortion, bribery, etc. These predicate offenses, necessary for a money laundering prosecution, are based on those stipulated by the Financial Action Task Force (FATF).

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Armenia criminalized the financing of terrorism under amendments to the Criminal Code in December 2004.

Know-your-customer rules: Yes

Obligated entities are required to practice know-your-customer and due diligence procedures.

However, there appear to be no prohibitions on opening a business relationship through or using bearer bank records or other bearer securities.

Bank records retention: Yes

Under Article 15 of the AML/CFT Law, financial institutions must keep records for all completed or ongoing financial transactions for at least five years.

Suspicious transaction reporting: Yes

Revision to the AML/CFT Law in 2008 significantly expanded the range of “reporting entities” required to report suspicious transactions. The law now covers not only banks and non-bank financial institutions, but also exchange houses, casinos, real estate agents, dealers in precious metals and stones, lawyers, accountants, auditors, and trust companies, among others. All the obligated entities are required to file suspicious transaction reports (STRs) with the Financial Monitoring Center (FMC), Armenia’s financial intelligence unit (FIU). The criminal code also requires the entities to inform law enforcement authorities about any detected criminal activity. During the first ten months of 2009, the FMC received 79 STRs. Three cases were subsequently referred to law enforcement authorities.

Large currency transaction reporting: Yes

Financial institutions must report to authorities currency transactions over 20 million Armenian drams (AMD) and real estate transactions over 50 million AMD (approximately $66,000 and $166,000 respectively.)

Narcotics asset seizure and forfeiture:

Under Armenia’s Criminal Code, Criminal Procedure Code, and the AML/CFT Law, reporting entities and the CBA can freeze, investigators and prosecutors can seize, and courts can confiscate assets derived from or intended for criminal activity, including both illegal drug trafficking and terrorism. There is no civil forfeiture.

Narcotics asset sharing authority: No

No laws have been enacted to allow for asset sharing.

Cross-border currency transportation requirements:

Armenian law requires any currency export transaction exceeding five million Armenian drams (approximately $16,000) to be conducted strictly as a non-cash transfer. Currency exports below that threshold can be conducted in cash and do not have to be documented. There are no limitations for currency imports, but imports of cash over the equivalent of 15,000 euros (approximately $20,400) must be declared. Few currency declarations are actually filed.

Cooperation with foreign governments:

Armenia regularly cooperates with foreign jurisdictions on money laundering and financial crimes investigations.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In 2009, Armenia achieved its first successful money laundering prosecution. A total of 22 money laundering cases were filed, out of which 17 were sent to court, two were suspended due to the lack of an identified suspect, and three remained in the preliminary investigation stage at the end of the year. Authorities obtained money laundering convictions against four defendants in three cases in 2009.

The list of individuals and entities included on the UN 1267 sanctions committee’s consolidated list are regularly circulated to financial institutions.

U.S.-related currency transactions:

Armenian financial institutions are not engaged in transactions of international narcotics proceeds that derive from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

The FMC cooperates with USG law enforcement agencies when requested. The FMC is able to exchange information with the Financial Crimes Enforcement Network.

International agreements:

Armenia is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Armenia is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a FATF-style regional body. Its most recent mutual evaluation report can be located here: http://www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL%282009%2925Rep-ARM3_en.pdf

Recommendations:

Armenia should continue its efforts to enhance its anti-money laundering/counter-terrorist financing regime and to successfully investigate and prosecute money laundering and terrorist financing. Armenia should prohibit bearer bank books and certificates of deposit or other bearer securities.

Aruba

Aruba is not considered a regional financial center. Money laundering in Aruba is primarily the result of foreign criminal activity pertaining to the proceeds from the illicit narcotics trade. Other sources of illicit proceeds include revenue from the falsification of documents. Of interest is the increase in money laundering cases over the past few years stemming from public corruption. Money laundering occurs mainly in the formal financial sector and to, a lesser extent, within the offshore financial center.

Offshore Center: Yes

Two offshore banks and four offshore insurance companies (captives) are licensed in Aruba. On February 5, 2009 the State Ordinance on the Supervision of Company Service Providers (SOSCSP) was enacted to bring the company service providers under supervision of the Central Bank of Aruba (CBA). One bank is a subsidiary of Citibank NA, with no physical presence in Aruba. The other bank is affiliated with a Venezuelan bank; its activities are restricted to the Venezuelan market. Offshore banks require a banking license from the CBA. Background checks are performed on applicants for a banking license; shareholders are tested on financial standing and reputation. Furthermore, in accordance with CBA’s policy, the control of financial institutions may only be exercised by an international financial group subject to effective consolidated supervision.

Free Trade Zones: Yes

By law, Aruba has three free trade zones (FTZs), all under the management of Free Zone Aruba (FZA) NV (a government-owned limited liability company). The companies admitted to the FTZs conduct trade, light industrial and/or service activities, with the exception of financial services. The types of goods vary as well as the trading partners. All companies must have a physical presence in the FTZ, be active and - if foreign-owned and managed - have a local representative with sufficient authority to manage the business on a day-to-day basis. Also, all administration must be kept in Aruba. A preventive comprehensive anti-money laundering/counter-terrorist financing (AML/CFT) compliance system designed by FZA is in place.

Criminalizes narcotics money laundering: Yes

Money laundering is criminalized through articles 430b, 430c and 430d of the Criminal Code of Aruba (CrCA).

Criminalizes other money laundering, including terrorism-related: Yes

The predicate offenses for money laundering cover a broad range of offenses, including, but not limited to: participation in an organized criminal group and racketeering; terrorism, including terrorist financing; trafficking in persons and immigrant smuggling; sexual exploitation, including sexual exploitation of children; illicit trafficking in narcotic drugs and psychotropic substances; illicit arms trafficking; illicit trafficking in stolen and other goods; corruption and bribery; fraud; counterfeiting of currency; murder; grievous bodily injury; kidnapping; illegal restraint and hostage-taking; robbery; and theft. Aruba’s money laundering laws do not cover proceeds generated from counterfeiting and piracy of products, insider trading and market manipulation, many types of environmental crimes and fraud.

Criminalizes terrorist financing: No

There is no separate offense for terrorist financing included in the CrCA. However, the present legal system does allow for the prosecution of terrorist financing under certain circumstances through reliance on ancillary offenses such as the preparation for, participation in, or complicity with a terrorist attack, or through being a member of a terrorist organization. Legislation has been drafted to provide for a separate terrorist financing offense.

Know-your-customer rules: Yes

The State Ordinance on the Identification when Providing Services (SOIPS) mandates and regulates the identification of clients when providing certain financial and non-financial services. Banks, life insurance companies, money transfer companies, lawyers, civil notaries, accountants, tax advisors, casinos, dealers in jewels and precious metals, realtors and high-worth dealers in art, antiques, vehicles, aircraft and ships are required to have proper identification, know your customer (KYC), and due diligence procedures in place.

Banks or other CBA-regulated financial institutions, except for trust company service providers, are allowed to issue bearer shares. However, all persons or entities holding 5% or more of the issued shares or voting rights must obtain prior written approval from the CBA for such shareholding. Thus, all persons or entities with such holdings are identified and subject to the fit and proper criteria laid down in the supervisory laws.

Bank records retention: Yes

Banks and other financial institutions are required to retain KYC data for at least five years after the termination of the customer relationship or after the execution of a transaction.

Suspicious transaction reporting: Yes

The State Ordinance on the Reporting of Unusual Transactions (SORUT) requires the same institutions subject to the SOIPS to report unusual transactions to the financial intelligence unit (FIU). Such transactions, whether executed or not, are to be reported if a transaction reaches a certain predetermined threshold, a certain predetermined service is requested, and if a transaction is suspected of involvement in money laundering and/or terrorist financing. Varying thresholds (AWG 20,000, 100,000 and 1,000,000) exist depending on the type of transaction. It should be noted that Aruba does not have a suspicious transactions reporting system, but a broader unusual transactions reporting (UTR) system. In the first ten months of 2009, a total of 5,298 UTRs were received. During the same period 24 investigations -- totaling 272 transactions and 330 subjects -- were disseminated to police and justice authorities. Three UTRs regarding terrorist financing have been received; no terrorist financing activity has been detected in Aruba.

Large currency transaction reporting: Yes

See above.

Narcotics asset seizure and forfeiture: Yes

The provisions for seizing, freezing, and confiscating proceeds of crime are set out in various Articles of the CrCA and the Code of Criminal Procedure of Aruba (CCrPA). Both the CrCA and the CCrPA provide for the confiscation of laundered property, criminal proceeds, and instruments used or intended for use in the commission of offenses. They also provide for ancillary measures such as seizure and, freezing of assets. The confiscation provision permits the court to order confiscation following a criminal conviction. The CrCA provides that a defendant must either deliver the subject property or otherwise pay an amount equivalent to the property’s value. However, Aruba’s confiscation laws do not permit confiscation of assets derived indirectly from crime, or, with knowledge exceptions, of property in the names of third parties. A special confiscation procedure (using a civil standard of proof), which can occur within two years after conviction, permits the confiscation of substitute property.

The Ordinance on Sanctions 2006 (AB 2007 no. 24), to enhance the GOA’s compliance with the requirements of UNSCRs 1267 and 1373 regarding the timely freezing of terrorist assets came into effect in 2007. The Ordinance was modified in February 2009 to extend its scope beyond banks to insurance companies, money transfer companies, and trust company service providers. However, although the CBA and FIU circulate the 1267 Sanctions Committee’s; the EU’s consolidated lists; and the list of Specially Designated Global Terrorists designated by the United States pursuant to Executive Order (E.O.) 13224, Aruba does not have an independent legal mechanism for freezing, without delay or a judicial order, terrorist assets.

Narcotics asset sharing authority: Yes

Asset sharing takes place as much as possible on a treaty basis or a reciprocity basis.

Cross-border currency transportation requirements: Yes

In 2003, Aruba enacted a State Ordinance on the Reporting of the import and export of money, making it a legal requirement to report to Customs Department officials at Aruban ports of entry the movement of currency in excess of AWG 20,000 (approximately $11,000) via harbor, airport, postal, and express courier mail services. The head of the FIU must confirm receipt of the reports.

Cooperation with foreign governments (including refusals):

The laws in Aruba concerning mutual legal assistance in AML/CFT investigations, prosecutions, and related proceedings are primarily set out in Articles 555 to 567 and 579 CCrPA. As part of the Kingdom of the Netherlands, Aruba is a party to a number of international conventions that include provisions permitting mutual legal assistance. The SORUT provides formal mechanisms to share information internationally with other FIUs.

Aruba cooperates with the Drug Enforcement Administration and other US authorities if so requested. For example, rights on two time share units in Aruba were frozen/confiscated based on a US court order. Aruba also assisted the Peruvian authorities and Belgian authorities in confiscating documents related to their respective investigations into fraud and money laundering.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

As of January 1, 2009, 20 money laundering cases have been registered at the public prosecutor’s office. Fifteen of the cases are still under investigation or otherwise pending, four have been brought before the judge, and one case was settled.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

Aruba has entered into a bilateral mutual legal assistance treaty (MLAT) with the United States. Other applicable agreements include the 1981 Treaty between the Kingdom of the Netherlands (KON) and the USG on mutual assistance in criminal matters; the 1992 Agreement between the KON and the USG regarding mutual cooperation in the tracing, freezing, seizure and forfeiture of proceeds and instrumentalities of crime and the sharing of forfeited assets; and the 2003 Tax Information Exchange Agreement (TIEA). The FIU is able to exchange information with FinCEN.

International agreements:

Aruba has entered into bilateral MLATs with Suriname, Canada, Australia, and Hong Kong. TIEAs have been signed with Spain, Denmark, Norway, Sweden, Finland, Iceland, Greenland, Faroe Islands, Bermuda, British Virgin Islands, Saint Kitts & Nevis, and Saint Vincent & Grenadines. TIEAs with Canada and Australia are awaiting signature and TIEA negotiations have been concluded with Belgium, Germany and France. The FIU has concluded memoranda of understanding (MOUs) with FIUs in the Kingdom of the Netherlands, Colombia, Belgium, Switzerland, Germany, Canada, Chile, Mexico, and Peru. More than ten additional MOUs are in process.

The Kingdom of the Netherlands, of which Aruba is a semi-autonomous constituent part, extended the application to Aruba of the1988 UN Drug Convention in 1999, the UN International Convention for the Suppression of the Financing of Terrorism in 2005, and the UN Convention against Transnational Organized Crime in 2007. The Kingdom has not yet extended the application of the UN Convention against Corruption to Aruba.

Aruba is a member of the Caribbean Financial Action Task Force, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Aruba_3rd_Round_MER_%28Final%29_English.pdf

Recommendations:

The Government of Aruba (GOA) has shown a commitment to combating money laundering and terrorist financing by establishing an AML/CFT regime that is generally consistent with international standards. Aruba should take additional steps to immobilize bearer shares under its fiscal framework and to enact its long-pending ordinance addressing the supervision of trust companies. The GOA should ensure all obligated entities are fully complying with their AML/CFT reporting requirements. Aruba also should make every effort to pass the drafted legislation to criminalize terrorist financing as a separate offense.

Australia

Australia is one of the major capital markets in the Asia-Pacific region. In 2007-08, Australia had the fastest growing foreign exchange market in the Asia-Pacific and seventh largest market in terms of global turnover. The Australian dollar (A$) was the sixth most traded currency. The Australian Stock Exchange is the 12th largest stock exchange in the world and, as of December 2008, the market capitalization of shares of domestic companies on the Australian Stock Exchange (ASX) was approximately $700 billion, the fourth largest in the Asia-Pacific region. In terms of share capital freely available to investors, the ASX is the eighth largest in the world. Australia has the third highest number of listed domestic companies in the Asia-Pacific.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Australia criminalized money laundering related to serious crimes with the enactment of the Proceeds of Crime Act (POCA) 1987.

Criminalizes other money laundering, including terrorism-related: Yes

The POCA 2002 repealed existing money laundering offenses and replaced them with updated offenses that have been inserted into the Criminal Code.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

In June 2002, Australia passed the Suppression of the Financing of Terrorism Act 2002 (SFT Act). It criminalizes terrorist financing and substantially increases the penalties that apply when a person uses or deals with suspected terrorist assets that are subject to freezing. The Anti-Terrorism Act (No.2) 2005 (AT Act), which took effect on December 14, 2006, amends offenses related to the funding of a terrorist organization in the Criminal Code so that they also cover the collection of funds for or on behalf of a terrorist organization. The AT Act also inserts a new offense of financing a terrorist.

Know-your-customer rules: Yes

The Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CFT Act), as amended in April 2007, covers the financial sector, gaming sector, bullion dealers and any other professionals or businesses that provide particular “designated services.” The Act imposes a number of obligations on entities, including customer due diligence, reporting obligations, and record keeping obligations. The AML/CFT Act will gradually replace the Financial Transaction Reports Act 1988 (FTR Act) which currently operates concurrently to the AML/CFT Act.

Bank records retention: Yes

Under provisions of the FTR Act, transaction records must be kept for at least seven years after the day the account is closed or the transaction takes place.

Suspicious transaction reporting: Yes

The FTR Act also establishes suspicious transaction reporting requirements for Australia’s cash dealers. The SFT Act requires cash dealers to report suspected terrorist financing transactions to the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Australian financial intelligence unit. During the 2008-09 Australian financial year, AUSTRAC received 43,565 suspicious transaction reports (STRs).

Large currency transaction reporting: Yes

The FTR Act establishes reporting requirements for Australia’s cash dealers. Reporting requirements include cash transactions equal to or in excess of A$10,000 (approximately $9,200), and all international funds transfers into or out of Australia, regardless of value. The FTR Act reporting also applies to nonbank financial institutions, such as money exchangers, money remitters, stockbrokers, casinos and other gaming institutions, bookmakers, insurance companies, insurance intermediaries, finance companies, finance intermediaries, trustees or managers of unit trusts, issuers, sellers, and redeemers of travelers’ checks, bullion sellers, and other financial services licensees. The FTR Act will continue to apply to entities who are not reporting entities under the AML/CFT Act. Solicitors (lawyers) are also required to report significant cash transactions. During the 2008-09 Australian financial year, AUSTRAC received 19,771,903 financial transaction reports.

Narcotics asset seizure and forfeiture:

The POCA 2002 enables the prosecutor to apply for the restraint and forfeiture of property from the proceeds of crime. The law further creates a national confiscated assets account from which, among other things, various law enforcement and crime prevention programs may be funded. The POCA 2002 (Consequential Amendments and Transitional Provisions) also provides for civil forfeiture of the proceeds of crime. The Australian Federal Police restrained A$37,831,143 (approximately $24,630,000) of which A$341,923 (approximately $6,082,000) was forfeited.

The POCA 2002 also enables freezing and confiscation of property used in, intended to be used in, or derived from, terrorism offenses. It is intended to implement obligations under the UN Convention for the Suppression of the Financing of Terrorism and resolutions of the UN Security Council relevant to the seizure of terrorism-related property.

Narcotics asset sharing authority: Yes

Under POCA 2002, recovered proceeds can be transferred to other governments through equitable sharing arrangements.

Cross-border currency transportation requirements: Yes

Australia has a system for reporting cross-border movements of currency above A$10,000. Cross-border movements of physical currency (CBM-PC) reports are primarily declared to the Australian Customs Service (ACS) by individuals when they enter or depart from Australia. This information is forwarded to AUSTRAC.

Cooperation with foreign governments (including refusals): Yes

No known impediments to cooperation with foreign governments.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues/comments:

Designated services provided by real estate agents, dealers in precious stones and metals, and specified legal, accounting, trust, and company services are not yet covered by reporting and record keeping requirements.

From July 2007 through mid-May 2008, the Commonwealth Director of Public Prosecutions reported that 68 indictments for money laundering were issued. The seven principles behind Australia’s largest ever money laundering investigation were sentenced on December 17, 2009 to serve periods of imprisonment up to 12.5 years. They were charged with conspiring to launder up to A$68 million (approximately $62.5 million) of narcotics-related proceeds of crime. In all, 73 persons were charged and in excess of 50 convicted with money laundering and serious drug offenses.

U.S.-related currency transactions:

The US$-A$ is the fourth most traded currency pair.

Records exchange mechanism with U.S.:

In September 1999, a Mutual Legal Assistance Treaty between Australia and the United States entered into force. In January 1996, AUSTRAC and FinCEN signed a memorandum of understanding (MOU) to exchange information.

International agreements:

Australia is a party to various information exchange agreements with countries in addition to the United States. AUSTRAC has signed Exchange Instruments, mostly in the form of MOUs, allowing the exchange of financial intelligence the FIUs of 55 other countries.

Australia is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism: - Yes
  • the UN Convention against Transnational Organized Crime: - Yes
  • the 1988 UN Drug Convention: - Yes
  • the UN Convention against Corruption: - Yes

Australia is a member of the Financial Action Task Force (FATF). It also serves as permanent co-chair, and hosts and funds the Secretariat of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Australia’s most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Australia%20ME2.pdf

Recommendations:

The GOA continues to pursue a comprehensive anti-money laundering/counterterrorist financing regime. The GOA should continue to work toward a second tranche of AML/CFT reforms, which will extend regulatory obligations to designated services provided by real estate agents, dealers in precious stones and metals, and specified legal, accounting, trust and company services. The GOA should continue its exemplary leadership role in emphasizing money laundering/terrorist finance issues and trends within the Asia/Pacific region (now expanding into Africa), and its commitment to providing training and technical assistance to the jurisdictions in that region. Having significantly enhanced its focus on AML/CFT deterrence, the GOA should increase its efforts to prosecute and convict money launderers.

Austria

Austria is a major regional financial center; and Austrian banking groups control significant shares of the banking markets in Central, Eastern and Southeastern Europe. According to the Austrian National Bank, Austria ranks among those countries with the highest numbers of banks and bank branches per capita in the world, with 867 banks total and one bank branch for every 1,630 people. Money laundering occurs within the Austrian banking system as well as in non-bank financial institutions and businesses. The volume of undetected organized crime may be enormous, with much of it reportedly coming from the former Soviet Union. Money laundered by organized crime groups derives primarily from serious fraud, smuggling, corruption, narcotics trafficking, and trafficking in persons. Theft, drug trafficking and fraud are the main predicate crimes in Austria according to the statistics of convictions and investigations. Austria is considered by EUROPOL as one of the four main destination countries for human beings trafficking in the European Union (EU). Criminal groups use various instruments to launder money, including remittance services, informal money transfer systems such as hawala, and the Internet.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

In Austria, Article 165 of the StGB sets forth the offense of money laundering, which includes narcotics trafficking as a predicate offense for money laundering. The offense was established in 1993 and amended several times.

Criminalizes other money laundering, including terrorism-related: Yes

With the notable exception of counterfeiting and piracy of products, predicate offenses include terrorist financing, all serious crimes carrying a minimum sentence of three years imprisonment as well as listed misdemeanors. The law is stricter for money laundering by criminal organizations and terrorist “groupings”. Self-laundering is not criminalized in Austria as Article 165 limits the scope of the ML offenses to assets derived from the crime of another person. Effective September 1, 2009, the Government of Austria (GOA) amended and defined more precisely the strict new criminal regulations against corruption, also a predicate offense for money laundering.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Austria criminalized terrorist “grouping,” terrorist criminal activities, and financing of terrorism in 2002. The Criminal Code defines financing of terrorism as a separate criminal offense category, punishable in its own right. Terrorist financing is also included in the list of criminal offenses subject to domestic jurisdiction and punishment, regardless of the laws where the act occurred.

Know-your-customer rules: Yes

The Banking Act establishes customer identification and record keeping obligations for the financial sector. Entities subject to the Banking Act include banks, leasing and exchange businesses, safekeeping services, and portfolio advisers. The law requires financial institutions to identify all customers when beginning an ongoing business relationship. In addition, the Banking Act requires customer identification for all transactions of at least 15,000 Euros (approximately $21,150) for non-customers. Moreover, all transactions on passbook savings accounts of at least 15,000 Euros (approximately $21,150) require identification of all customers. Trustees of accounts must appear personally and disclose the identity of the account beneficiary. Banking Act regulations require institutions to determine the identity of beneficial owners and introduce risk-based customer analysis for all customers. Financial institutions require customer identification for all fund transfers of 1,000 Euros (approximately $1,400) or more.

Bank records retention: Yes

Austrian law requires financial institutions to retain identification documents for at least five years after the termination of the business relationship and documentation and records of all transactions for a period of at least five years after their execution.

Suspicious transaction reporting: Yes

All obligated entities must file a suspicious transaction report (STR) in all cases of “suspicion or probable reason to assume” that a transaction serves the purpose of money laundering or terrorist financing, or that a customer has violated his duty to disclose trustee relationships. STRs are filed with Austria’s financial intelligence unit (FIU). By mid-November 2009, the FIU had received approximately 1,100 STRs.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture:

Since 1996, legislation has provided for asset seizure and the confiscation and forfeiture of illegal proceeds, however, in practice this does not seem to work effectively, given the low amounts thus far seized or forfeited/confiscated. Austria has regulations in the Code of Criminal Procedure that are similar to civil forfeiture in the U.S. In connection with money laundering, organized crime and terrorist financing, all assets are subject to seizure and forfeiture, including bank assets, other financial assets, cars, legitimate businesses, and real estate. Courts may freeze assets in the early stages of an investigation. In 2008, Austrian courts froze assets worth more than 12 million Euros (approximately $16,900,000) on interim injunctions.

Narcotics asset sharing authority:

Austria has not enacted legislation that provides for sharing forfeited narcotics-related assets with other governments. A bilateral U.S. - GOA agreement on sharing of forfeited assets is pending signature in both the U.S. and Austria.

Cross-border currency transportation requirements: Yes

The Customs Procedures Act and the Tax Crimes Act address cash couriers and international transportation of currency and monetary instruments from illicit sources. Austrian customs authorities do not automatically screen all persons entering Austria for cash or monetary instruments. However, to implement the EU regulation on controls of cash entering or leaving the EU, the GOA requires an oral or written declaration for cash amounts of 10,000 Euros (approximately $14,100) or more. This declaration, which includes information on source and use, must be provided when crossing an external EU border. Spot checks for currency at border crossings and on Austrian territory do occur. Customs officials have the authority to seize suspect cash, and will file a report with the FIU in cases of suspected money laundering.

Cooperation with foreign governments:

Austria may provide a range of measures of mutual assistance in AML/CFT investigations initiated by other countries. These measures may be granted on the basis of multilateral or bilateral agreements as well as, where no such agreement exists, on the basis of reciprocity.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Reportedly, the most significant money laundering problems faced by Austria are money remittance systems, offshore business and hawala. Austrian authorities should try to improve enforcement to tackle these various and complex methods used by criminals to launder their funds.

Bearer shares are permitted in Austria for banks and for non-banks.

All customs declaration forms are stored in hard copy at separate customs offices throughout Austria and there is currently no central database where these reports can be stored and analyzed for potential criminal activity.

The number of convictions for drug trafficking, theft, smuggling, corruption and bribery decreased sharply since 2004. There were 18 money laundering convictions in 2007 and seven in 2008.

Austrian authorities distribute to all financial institutions the names of suspected terrorists and terrorist organizations listed on the UN 1267 Sanctions Committee’s consolidated list, as well as the list of Specially Designated Global Terrorists that the United States has designated pursuant to Executive Order 13224, and those distributed by the EU to members. According to the Ministry of Justice and the FIU, no accounts found in Austria have shown any links to terrorist financing.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

Austria exchanges information on criminal matters through its mutual legal assistance treaty (MLAT) with the United States, which entered into force August 1, 1998. Through the MLAT, the two countries are able to exchange financial intelligence and cooperate on a variety of money laundering and financial crimes matters. The Austrian FIU exchanges information regularly with the FIU of the United States, FinCEN.

International agreements:

Austria is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism -Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Austria is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/22/50/44146250.pdf

Recommendations:

The Government of Austria (GOA) should criminalize self-laundering. It should also ease legal restrictions to allow authorities to have access to information held by financial institutions and legal professionals. Similarly, it should extend the FIU’s functions, allowing it access to appropriate records of other governmental bodies. Austria should also take steps to be sure customs declaration forms are available to the FIU and appropriate law enforcement agencies. The GOA should strengthen licensing requirements and sanctions for financial institutions. The GOA should widen the scope of customer diligence obligations and ensure adequate transparency of beneficial ownership of legal persons and legal arrangements, including the elimination of bearer shares.

Azerbaijan

At the crossroads of Europe and central Asia and with vast amounts of natural resources, Azerbaijan is a rapidly growing economy. Much of the international trade and foreign investments took place in the energy sector. All other sectors lag energy in growth and sophistication, to include the financial sector. As a result, Azerbaijan is neither an important financial center nor a major location where foreign entities look to conduct money laundering/terrorist financing transactions. The major source of criminal proceeds in Azerbaijan is from the endemic public corruption that occurs in all sectors and at all levels. As a transit country for the Afghan drug trade, Azerbaijani authorities suspect the illicit drug trade also generates a significant amount of illicit funds. Other generators of illicit funds include robbery, tax evasion, smuggling, trafficking, and organized crime. Money laundering likely occurs in the formal financial sector, non-bank financial systems, and alternative remittance systems. There is a significant black market for smuggled goods in Azerbaijan, which serves as a transit country for illicit goods.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

In 2002, the GOAJ passed “Legalization of Money Proceeds or Other Property Obtained Through criminal acts” which criminalizes money laundering. The law is wide in scope and applies to a many methods of obtaining criminally obtained funds, not only drug related.

Criminalizes other money laundering, including terrorism-related: Partially

In February 2009, the long-awaited law on “preventing Legalization of Money and Property Obtained in Criminal Ways and Financing of Terrorism” (AML/CFT Law) was passed. The law covers credit institutions; insurers, re-insurers, and insurance intermediaries; securities brokers; organizations that transfer funds; pawnshops; investment vehicles; dealers of precious stones, precious metals, jewelry or other goods made of precious stones and metals; non-governmental organizations or religious organizations; lottery organizers; and real estate intermediaries. Auto dealers and lawyers are not covered by the law. The GOA executed an Executive Order on October 21 that provides an action plan on improvement of the AML/CFT law.

Criminalizes terrorist financing: No

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Know-your-customer rules: Yes

The AML/CFT Law details the “know your client” requirements. All banks and other financial institutions shall identify their customers and beneficial owners before establishing business relations; before carrying out occasional transactions above 20,000 AZN; and before carrying out wire transfers.

Bank records retention: Yes

The identification documents of a customer, beneficial owner, or authorized representative must be kept for five years after the account is closed or the relationship terminated. Documents on specific transactions must be kept for at least five years following completion of the transaction.

Suspicious transaction reporting: Yes

Under the AML/CFT Law all financial institutions are required to report suspicious transactions according to a list of indicators, including any transaction: of 20,000 AZN or greater; associated with the citizens of a particular country deemed to be suspicious by the GOA; involving politically exposed persons of a foreign country; and, to or from anonymous accounts that are out of the jurisdiction of the GOA. The Financial Monitoring Service (FMS) will analyze the information submitted and refer suspected criminal activities to the General Prosecutor’s Office for review. Because the law is so new, to date, no reports have actually been filed, therefore making it difficult to assess effectiveness.

Large currency transaction reporting: No

The suspicious transaction reporting system uses a threshold.

Narcotics asset seizure and forfeiture:

New legislation was introduced in October 2009. The Prosecutor General’s office is responsible for identifying, tracing, freezing, seizing, and forfeiting narcotics-related assets as well as assets derived from, or intended for terrorist financing and other serious crimes. Any asset can be seized, including instruments of crime such as conveyances used to transport narcotics, property on which illicit crops are grown, or used to support terrorist activity, and intangible assets such as bank accounts. Substitute assets can be seized as well as legitimate businesses if used to launder drug money, support terrorist activity, or otherwise are related to criminal proceeds. In 2009, $100,000 was frozen. The government does not have an independent national system and mechanism for freezing terrorist assets.

Narcotics asset sharing authority:

The country does not have laws for the sharing of seized assets with other governments. At this time, the government is actively engaged in bilateral and multilateral negotiations with other governments to enhance asset tracing, freezing, and seizure.

Cross-border currency transportation requirements: Yes

The currency reporting requirement for both inbound and outbound transportation is 5,000 manat. Mandatory declaration forms are used at border crossings.

Cooperation with foreign governments (including refusals):

Azerbaijan has cooperated with appropriate USG law enforcement agencies and other governments investigating financial crimes. Azerbaijan is currently investigating, along with the USG, a corrupt practice and fraud case against a U.S. business.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

After enactment of the February 2009 law, the Government of Azerbaijan (GOA) decided that the FMS, its new financial intelligence unit (FIU) would be located within the Central Bank. After several months of working on budget issues, amendments, and an action plan, the FMS began operations in late 2009.

One person has been arrested for money laundering since January 1, 2009. This individual was a high ranking government official accused of embezzling and laundering $100,000. The case is currently being investigated.

Azerbaijan has circulated to its financial institutions the names of individuals and entities that have been included on the UN 1267 Sanctions Committee’s consolidated list and a list of terrorist organizations/financiers that the USG and the European Union have designated under relevant authorities. Azerbaijan did not identify, freeze, seize, or forfeit related assets in 2009.

U.S.-related currency transactions:

Azerbaijan’s financial institutions do not engage in currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

The GOA has not reached an agreement for the exchange of records with the United States on investigations and proceedings related to narcotics, all-source money laundering, terrorism, and terrorist financing on a bilateral basis. The United States, however, utilizes agreements with multilateral organizations for the exchange of records.

International agreements:

The FIU was just established in 2009 and is not a member of the Egmont Group.

Azerbaijan is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Azerbaijan is a member of MONEYVAL, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Evaluations/Evaluation_reports_en.asp

Recommendations:

The adoption of the new AML/CFT law is a good first step for Azerbaijan. The Government of Azerbaijan must work to fully implement the law and raise the capacity of obligated entities and government agencies, in particular the FIU and other supervisory bodies, to ensure all of them are aware of and fulfill their responsibilities. Azerbaijan should provide the necessary resources and authorities to its new FIU. The GOA should criminalize terrorist financing in line with international standards.

Bahamas

The Commonwealth of The Bahamas is an important regional and offshore financial center. The gross domestic product (GDP) of The Bahamas is heavily reliant upon tourism and tourist driven construction. Eighty percent of tourists who visit The Bahamas are from the United States. The Bahamas is a transshipment point for cocaine bound for the United States and Europe. Money laundering trends include the purchase of real estate, large vehicles and jewelry, as well as the processing of money through a complex web of legitimate businesses, and international business companies registered in the offshore financial sector. Strict know your customer (KYC) laws make it difficult for money launderers to penetrate the Bahamian financial sector.

Offshore Center: Yes

The Bahamas is considered an offshore financial center. Offshore financial institutions include banks and trust companies, insurance companies, securities firms and investment fund administrators, financial and corporate service providers, cooperatives, and societies. There are approximately 160,000 registered international business companies, only 44,000 of which are active.

Free Trade Zone: Yes

The Bahamas has one free trade zone located in Freeport.

Criminalizes narcotics money laundering: Yes

The Proceeds of Crime Act, 2000 criminalizes three main money laundering offenses: the transfer or conversion of property with the intent to conceal or disguise the property; assisting another to conceal the proceeds of criminal conduct; and the acquisition, possession or use of the proceeds of crime.

Criminalizes other money laundering, including terrorism-related: Yes

See above. Additionally, the Anti-Terrorism Act of 2004 (ATA), as amended in 2008, addresses terrorism-related activity.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The Anti-Terrorism Act of 2004 as amended in 2008.

Know-your-customer rules: Yes

The Financial Transaction Reporting Act, 2000 (FTRA), as amended in 2008, establishes KYC requirements. The FTRA requires the verification of the identity of any customer before establishing a business relationship; executing transactions exceeding $15,000; executing structured transactions in the amount exceeding $15,000; when it is known or suspected a customer’s transaction is the proceeds of crime; when there is doubt of a customer’s identity; and when transactions are conducted on behalf of a third party.

Bank records retention: Yes

Financial institutions must retain records for a minimum of five years.

Suspicious transaction reporting: Yes

Reporting was established by the FTRA. The 2004 ATA provides for the reporting of suspicious transactions related to terrorist financing. Covered entities include banks and trust companies, insurance companies, securities firms and investment fund administrators, financial and corporate service providers, cooperatives, and societies. Regulated designated non-financial businesses and professions include casinos; lawyers; accountants; real estate agents; and company service providers. Dealers in precious metals and stones are not included. The Bahamian financial intelligence unit (FIU) received approximately 129 STRs in 2008.

Large currency transaction reporting: Yes

Transactions of $10,000 or greater are reported to the Central Bank.

Narcotics asset seizure and forfeiture:

The Bahamas is able to trace, freeze and seize assets. During 2009, nearly $4 million in cash and assets were seized or frozen.

The ATA, as amended in 2008, implements the provisions of UN Security Council Resolution 1373 and provides for the seizure and confiscation of terrorist assets. The 2008 amendments clarify aspects of the legislation and further comply with UN Conventions related to terrorist financing.

Narcotics asset sharing authority: Yes

Seized assets may be shared with other jurisdictions on a case by case basis. Several recent successful cases involving asset sharing have occurred between the United States and The Bahamas resulting in large amounts being shared by each government.

Cross-border currency transportation requirements: No

Persons entering The Bahamas are not required to provide a written declaration.

Cooperation with foreign governments (including refusals): Yes

There are no legal issues which would hamper the Bahamian government's ability to assist foreign governments in mutual legal assistance requests.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

No implementation issues were noted.

U.S.-related currency transactions:

The Bahamian dollar is pegged to the U.S. dollar at an exchange rate of one. The U.S. dollar and the Bahamian dollar are universally accepted in The Bahamas. The Bahamas receives a large influx of U.S. dollars from the tourism industry.

Records exchange mechanism with U.S.:

The Bahamas and the United States are parties to a bilateral mutual legal assistance treaty which entered into force in 1990 and provides for exchange of information. The Financial Crimes Enforcement Network (FinCEN) and the Bahamian FIU share information on a routine basis. The Bahamas has an information exchange agreement with the U.S. Securities and Exchange Commission to ensure that requests can be completed in an efficient and timely manner.

International agreements:

The Bahamas is a party to various information exchange agreements with countries in addition to the United States; authorities can share information or provide assistance to foreign jurisdictions in matters relating to money laundering or other financial crimes without need for a treaty.

The Bahamas is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

The Bahamas is a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Recommendations:

The Government of the Commonwealth of the Bahamas should provide adequate resources to its law enforcement, judicial, and prosecutorial bodies in order to enforce existing legislation and safeguard the financial system from possible abuses. The Bahamas should continue to enhance its anti-money laundering/counter-terrorist financing regime by implementing the National Strategy on the Prevention of Money Laundering. It should also ensure there is a public registry of the beneficial owners of all entities licensed in its offshore financial center.

Bahrain

Bahrain is the leading financial center in the Gulf region. In contrast with its Gulf Cooperation Council (GCC) neighbors, Bahrain has a service-based economy, with the financial sector providing more than 20 percent of GDP. It hosts a diverse group of financial institutions, including 188 banks, 22 moneychangers and money brokers, and several other investment institutions, including 87 insurance companies. The greatest risk of money laundering stems from illicit proceeds of foreign origin that transit the country. The vast network of Bahrain’s banking system, along with its geographical location in the Middle East as a transit point along the Gulf and into Southwest Asia, may attract money laundering activities. Bahrain does not have a significant black market of smuggled goods or known linkages to drug trafficking.

Offshore Center: No

Free Trade Zones: Yes

Mina Sulman, Bahrain's major port, provides a free transit zone to facilitate the duty-free import of equipment and machinery. Another free zone is located in the North Sitra Industrial Estate. Raw materials intended for processing in Bahrain, and machinery imported by Bahraini-owned firms, are also exempt from duty; the imported goods may be stored duty-free.

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

In January 2001, the Government of Bahrain (GOB) enacted an anti-money laundering law (AML Law) that criminalizes the laundering of proceeds derived from any predicate offense.

Criminalizes terrorist financing: Partially

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The 2001 AML Law was amended in August 2006 by Law 54/2006, which criminalizes the undeclared transfer of money across international borders for the purpose of money laundering or in support of terrorism. A controversial provision of Law 54 is a revised definition of terrorism that is based on the Organization of the Islamic Conference definition. Article 2 excludes from the definition of terrorism acts of struggle against invasion or foreign aggression, colonization, or foreign supremacy in the interest of freedom and the nation’s liberty.

Know-your-customer rules: Yes

Customer due diligence (CDD) is covered briefly in Decree Law 4/2001, which is applicable to all financial institutions. CDD must be performed before an account is opened and must also be carried out on occasional transactions above BD 6,000 (approximately $15,915). Anonymous accounts are not permitted in Bahrain. Outbound wire transfers are required to include details of the originator’s information; records of all originator information must be maintained for incoming transfers.

Bank records retention: Yes

Obligated entities must maintain records of the identity of their customers for five years or in accordance with the Central Bank’s AML regulations, as well as the exact amount of transfers.

Suspicious transaction reporting: Yes

The 2001 AML law provided for the creation of the Anti-Money Laundering Unit (AMLU) as Bahrain’s financial intelligence unit (FIU). The AMLU receives STRs from banks and other financial institutions, investment houses, broker/dealers, moneychangers, insurance firms, real estate agents, gold dealers, financial intermediaries, and attorneys. Filing entities must also file STRs with their respective supervisors. From January through November 2009, the AMLU received and investigated 243 STRs, 46 of which have been forwarded to the courts for prosecution.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture: Yes

Under the provisions of DL 4/2001 it is possible to confiscate all property directly or indirectly derived from any criminal activity, as well as substitute assets and income yields. Alternatively, all other property belonging to the convicted person, his spouse, or minor children is subject to confiscation up to the value equivalent of the laundered assets.

Narcotics asset sharing authority:

The Bahrain authorities have not considered the establishment of an asset forfeiture fund.

Disposal of confiscated assets are devolved to the Treasury. In theory, asset sharing with other countries is made possible by Article 8.6 of DL 4/2001. However, there is no information that assets have ever been shared.

Cross-border currency transportation requirements: No

Law 54 also codified a legal basis for a disclosure system for cash couriers, though supporting regulations still must be enacted. In June 2008, the government moved to increase supervision of its borders, by placing ports and customs inspections under the Ministry of Interior which subsequently instructed its officials to strictly enforce laws against the illegitimate movement of currency.

Cooperation with foreign governments:

Mutual legal assistance between judicial authorities is generally governed by Article 426 – 428 of the 2002 Code of Criminal Procedure (“Letters rogatory”). In money laundering related matters, Article 8 of the AML Law 4/2001 gives the AMLU a specific responsibility in the execution of foreign assistance requests that goes beyond cooperation at the FIU level.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The system of requiring dual STR reporting is described as a backup system.

In June 2008, authorities arrested two Bahrainis and one Syrian on charges of financing terrorism. In February 2009 all three suspects were convicted of financing terrorism. The one Bahraini in custody was sentenced to a one-year prison term; the other two, tried in absentia, were both sentenced to prison terms of five years. In April 2009, the Bahraini in custody was released several weeks early as part of a general pardon of 177 other security detainees.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

Bahrain does not have a mutual legal assistance agreement with the United States. Bahrain is able to share financial intelligence with the Financial Crimes Enforcement Network (FinCEN).

International agreements:

Bahrain is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

In December 2009, the government announced that Bahrain would become a party to the UN Convention against Corruption in the first half of 2010.

Bahrain hosts the Secretariat and is a member of the Middle East and North Africa Financial Action Task Force (MENFATF), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/images/UploadFiles/MutualEvaluationReportOfBahrain.pdf

Recommendations:

The Government of Bahrain (GOB) has demonstrated a commitment to establishing an AML/CFT system and appears determined to engage its large financial sector in this effort. The AMLU should maintain its efforts to obtain and solidify the necessary expertise to track suspicious transactions. Nevertheless, there should not be an over-reliance on suspicious transaction reporting to initiate money laundering investigations. Authorities should continue to raise awareness within the capital markets and designated non-financial businesses and professions regarding STR reporting obligations and consider applying sanctions for willful noncompliance. Adequate resources should be devoted to the Ministry of Social Development to increase its oversight of NGOs and charities. Regulations should be enacted and enforced governing bulk cash smuggling and requiring the declaration of cash both going into and leaving Bahrain. The GOB should follow through to ensure Bahrain becomes a party to the UN Convention against Corruption. Bahrain should consider revising its definition of terrorism.

Bangladesh

Bangladesh is not a regional financial center. Money transfers outside the formal banking and foreign exchange licensing system are illegal and therefore not regulated. The principal money laundering vulnerability remains the widespread use of the underground hawala or “hundi” system to transfer money and value outside the formal banking network. The vast majority of hundi transactions in Bangladesh are used to repatriate wages from expatriate Bangladeshi workers. The Central Bank (CB) reports a considerable increase in remittances since 2002 through official channels; in 2009, remittances through official channels were $ 9.78 billion between January and November. The increase is due to competition from commercial banks through improved delivery time, guarantees, and value-added services such as group life insurance. However, hundi remains entrenched because it is used to avoid taxes, customs duties, and currency controls. The non-convertibility of the local currency (the taka) coupled with intense scrutiny on foreign currency transactions in formal financial institutions also contribute to the popularity of hundi and black market money exchanges. In 2009, Bangladesh was ranked 139 out of 180 countries surveyed, an improvement on its ranking of 147 in 2008.

Offshore Center: No

Free Trade Zones: Yes

Bangladesh has three Export Processing Zones (EPZs), in Chittagong, Mongla and Dhaka. The EPZs offer tax breaks and other incentives to export-oriented industries.

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

In 2009, the Money Laundering Prevention Act (MLPA 2009) and the Prevention of Terrorism Act (PTA) were enacted. Although not fully compliant with international standards, the laws address many flaws in the preceding 2002 money laundering law. Under the provisions of the MLPA 2009, money laundering is a criminal offense. The MLPA 2009 applies to money laundering through the commission of a predicate offense. A list of offenses is detailed in the MLPA 2009, and includes corruption and bribery; counterfeiting currency, deeds and documents; extortion; fraud; forgery; illegal trade in narcotics, arms and stolen goods; kidnapping; murder; black marketing; theft; illegal immigration; dowry crimes; and any other offense the GOB subsequently declares to be a predicate offense. Terrorism is not among the listed predicates.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The PTA introduces terrorist financing into the Bangladeshi legal system for the first time. The PTA authorizes the filing of suspicious transaction reports (STRs) related to terrorist financing, empowers the Central Bank (CB) to monitor suspect financial transactions related to terrorist financing and prohibits a person from using or possessing property or the proceeds of terrorist activity.

Know-your-customer rules: Yes

Since Bangladesh only began in mid-2007 to develop a national identity card (in the form of a voter registration card) and because the vast majority of Bangladeshis do not have a passport, there are difficulties in enforcing customer identification requirements. In most cases, banking records are maintained manually.

Bank records retention: Yes

Banks must keep customer identification and transaction records for five years after termination of the relationship with the customer.

Suspicious transaction reporting: Yes

Banks and financial institutions are required to report suspicious transaction reports (STRs) to the Central Bank. The MLPA 2009 also lists other reporting organizations that are required to submit STRs; these include: insurance companies, money changers and remitters, fund-transfer companies or organizations, and companies permitted to operate as business organizations under the CB’s authority. The CB also has the right to notify other organizations that they must function as reporting entities for purposes of the MLPA 2009.

In May 2007, the GOB identified the CB’s Anti-Money Laundering Department (AMLD) as Bangladesh’s financial intelligence unit (FIU). The FIU depends on the CB for its operation and budget. In the first ten months of 2009, the AMLD received 37 STRs, all of which are currently under analysis nd have not as yet been forwarded to the law enforcement agencies.

Large currency transaction reporting:

The CB mandates cash transaction reports (CTRs). In September 2007, the CTR threshold increased from 500,000 to 700,000 takas (approximately $10,200).

Narcotics asset seizure and forfeiture:

The MLPA 2009 allows the CB, without a court order, to order any bank or financial institution to suspend a transaction or freeze an account for a period of 30 days when there are reasonable grounds to suspect that a transaction involves the proceeds of a crime. The CB may extend such orders for an additional 30 days for the purpose of further investigation.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: No

Bangladeshis are not allowed to carry cash outside of the country in excess of the equivalent of $3,000 to South Asian Association for Regional Cooperation (SAARC) countries and the equivalent of $5,000 to other countries. The reporting requirements are not geared towards detecting money laundering but rather enforce currency exchange controls. The GOB does not place a limit on how much currency can be brought into the country, but amounts over $5,000 must be declared within 30 days. The Customs Bureau is primarily a revenue collection agency, accounting for 40-50 percent of Bangladesh’s annual government income.

Cooperation with foreign governments:

The Attorney General’s Office is the central authority for mutual legal assistance requests. In August 2008, the GOB signed the South Asian Association for Regional Cooperation (SAARC) Convention on Mutual Assistance in Criminal Matters. The government has so far sent Mutual Legal Assistance Requests on tracing, freezing and seizure to foreign jurisdictions. The MLPA of 2009 allows the FIU to enter into agreements with foreign FIUs to exchange information. However, many counterparts require that the Bangladesh FIU be a member of the Egmont Group before negotiating MOUs with Bangladesh.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In Bangladesh, the hawala/hundi system is the primary means to transfer money and value. Although primarily used to remit wages, the system is also used by criminals and criminal organizations. The regional hundi system primarily uses trade goods to provide counter valuation or a method of balancing the books in transactions. It is part of trade-based money laundering and a compensation mechanism for the significant amount of goods smuggled into Bangladesh. An estimated $1 billion dollars worth of dutiable goods are smuggled every year from India into Bangladesh. A comparatively small amount of goods are smuggled out of the country into India. Hard currency and other assets flow out of Bangladesh to support the smuggling networks.

Bangladesh authorities have not yet tried any cases under the newly enacted PTA 2009. However, in October the government declared the militant outfit Hizb-ut-Tahrir to be a banned organization under the PTA 2009, and CB issued an order to all banks across the country to freeze all accounts of the organization. In November 2009, the CB ordered accounts of three members of Lashkar-e-Tayyiba to be frozen in conjunction with ongoing investigations. Since 2003, Bangladesh has frozen nominal sums in accounts of three designated entities on the UNSCR 1267 Sanctions Committee’s consolidated list.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

The Bangladeshi FIU does not currently have an information sharing agreement with the Financial Crimes Enforcement Network.

International agreements:

The Bangladeshi FIU is not a member of the Egmont Group of FIUs.

Bangladesh is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - No
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Bangladesh is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. The 2009 mutual evaluation will be available here:

http://www.apgml.org/documents/default.aspx?DocumentCategoryID=17

Recommendations:

Although positive legislation has been passed and progress has been made, the Government of Bangladesh (GOB) should continue to strengthen its anti-money laundering/counter-terrorist financing regime so that it adheres to international standards. While the FIU is growing steadily, the FIU analysts and investigators need to enhance their ability to conduct analysis and investigations, understand money laundering and terrorist financing methodologies and guide the reporting entities. Other key challenges the GOB must address include encouraging cooperation among myriad GOB entities and increasing the capacities of investigators and prosecutors. Bangladeshi law enforcement and customs should examine forms of trade-based money laundering and proactively initiate money laundering and financial crimes investigations. A crackdown on pervasive customs fraud would add new revenue streams for the GOB. Continued efforts should be made to fight corruption, which is intertwined with money laundering, smuggling, customs fraud, and tax evasion. The GOB should ratify the UN Convention against Transnational Organized Crime and encourage international cooperation through the establishment of a functioning mutual legal assistance regime.

Barbados

Barbados remains vulnerable to money laundering, primarily in the formal banking system. Domestically, money laundering is largely drug-related and appears to be derived from the trafficking of cocaine and marijuana, as Barbados is a transit country for illicit narcotics. There is also evidence of Barbados being exploited in the layering stage of money laundering with funds originating abroad. The major source of these funds appears to be connected to fraud.

Offshore Center: Yes

As of October 2009, the offshore sector includes 2,927 international business companies (IBCs), compared to 4,635 in 2008; 153 exempt insurance companies and 73 qualified exempt insurance companies; ten mutual funds companies and two exempt mutual fund companies; nine trust companies; five finance companies; and 52 offshore banks. There are no domestic or offshore casinos, or internet gaming sites. The International Business Companies Act (1992) provides for the general administration of IBCs. The International Business (Miscellaneous Provisions) Act 2001 enhances due diligence requirements for IBC license applications and renewals. Bearer shares are not allowed. The International Financial Services Act (IFSA) requires offshore applicants to disclose directors’ and shareholders’ names and addresses; companies are not allowed to have anonymous directors. The Central Bank regulates and supervises domestic and offshore banks, trust companies, and finance companies. Offshore banks must submit quarterly statements of assets and liabilities and annual balance sheets to the Central Bank, which has the mandate to conduct on-site examinations of offshore banks. Financial statements of IBCs are audited if total assets exceed $500,000.

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

The Government of Barbados (GOB) criminalizes drug money laundering through the Proceeds of Crime Act and the Drug Abuse (Prevention and Control) Act, 1990-14.

Criminalizes other money laundering, including terrorism-related: Yes

The Money Laundering (Prevention and Control) Act 1998 (MLPCA) and subsequent amendments extend the offense of money laundering by criminalizing the laundering of proceeds from unlawful activities. However, it is unclear whether human trafficking and some corruption categories, such as bribery, have been made predicate offenses for money laundering in Barbados. The MLPCA applies to a wide range of financial institutions, including domestic and offshore banks, IBCs, insurance companies, money remitters, investment services, and any other services of a financial nature.

Criminalizes terrorist financing: Yes

The Anti-Terrorism Act of 2002, as well as provisions of the Money Laundering Financing of Terrorism (Prevention and Control) Act (MLFTA), criminalizes the financing of terrorism.

The GOB circulates to financial institutions the names of suspected terrorists and terrorist organizations listed on the UNSCR 1267 Sanctions Committee’s Consolidated List and the list of Specially Designated Global Terrorists designated by the United States. In 2009, the GOB found no evidence of terrorist financing.

Know-your-customer rules: Yes

The MLPCA requires covered institutions to identify their customers. Customer due diligence (CDD) measures include customer identification; beneficial ownership requirements; and enhanced due diligence for new technologies, correspondent banking, and high risk customers such as politically exposed persons and non-face-to-face customers. Financial institutions are required to conduct ongoing due diligence on business relationships engaging in exchanges of $10,000 or more, and all international funds transfers of $10,000 or more, or those transiting Barbados. However, Barbados does not have stringent beneficial ownership identification requirements or strong CDD regulations regarding non-customer transactions of a suspicious nature.

Bank records retention: Yes

Covered institutions must maintain records of all transactions exceeding $5,000 for a period of five years.

Suspicious transaction reporting: Yes

Under the MLPCA, covered institutions must report suspicious transactions, including those that may be indicative of terrorist financing, to the Barbados Financial Intelligence Unit (BFIU). Between January 1, 2009 and November 30, 2009, the FIU received 125 Suspicious Activity Reports; one was referred to the Commissioner of Police.

Large currency transaction reporting: Yes

Under the MLPCA, covered institutions must report all transactions exceeding $5,000

Narcotics asset seizure and forfeiture:

The MLPCA provides for criminal asset seizure and forfeiture; however it applies only to traceable proceeds of crime, and not to instrumentalities or other assets of a convicted defendant. In 2001, the GOB amended legislation to shift the burden of proof to the accused to demonstrate that property in his or her possession is derived from a legitimate source. The law also enhances the GOB’s ability to freeze bank accounts. Tracing, seizing and freezing assets may be done by the FIU and the police. Freezing orders are usually granted for six months after which they need to be reviewed. Frozen assets may be confiscated by the Director of Public Prosecutions and are paid into the National Consolidated Fund. Despite the use of freezing mechanisms, and having both criminal and civil asset forfeiture laws, Barbados has not completed any forfeitures, either domestically or at the request of the United States.

In 2009, the Chief Parliamentary Counsel (CPC) drafted new legislation to strengthen the existing MLFTA. One significant change would provide for payment to the government of an amount equal to the value of the property where the property is no longer available for forfeiture. This legislation is pending action by the Cabinet and is expected to proceed with no obstacles.

Narcotics asset sharing authority: Yes

No asset sharing law has been enacted, but bilateral treaties as well as the Mutual Assistance in Criminal Matters Act have provisions for asset tracing, freezing and seizure between countries.

Cross-border currency transportation requirements:

Barbados has a cross-border reporting system for all persons carrying BDS 10,000 (approximately $5,000) entering or leaving Barbados. It should be noted that suspicion of money laundering, terrorist financing, or making a false declaration does not provide a basis for stopping a person and seizing currency and negotiable instruments. The MLFTA contains provisions to control bulk cash smuggling and the use of cash couriers. The international transportation of currency and monetary instruments is limited by the Exchange Control Cap Act 71 and the MLPCA Act Cap 129. Permission must be obtained from the Central Bank to move currency in excess of $10,000 abroad.

Cooperation with foreign governments (including refusals):

Barbados’ inability to freeze terrorist assets could hinder its cooperation with investigations of terrorist financing. Although Barbados has frozen some funds at the request of foreign governments, it has not yet obtained final forfeiture or sharing of any of those assets.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The FIU is inadequately staffed to meet growing demands.

There is no requirement to freeze terrorist funds or other assets of persons designated by the UNSCR 1267 Sanctions Committee.

The GOB has not taken any specific initiatives focused on alternative remittance systems or the misuse of charitable and nonprofit entities.

U.S.-related currency transactions:

No information available.

Records exchange mechanism with U.S.:

A Mutual Legal Assistance Treaty (MLAT) and an extradition treaty between the United States and Barbados entered into force in 2000. Barbados has a bilateral tax treaty with the United States. The Barbados FIU is able to exchange information with the Financial Crimes Enforcement Network through the Egmont Group.

International agreements:

Barbados has bilateral tax treaties that eliminate or reduce double taxation with the United Kingdom, Canada, Finland, Norway, Sweden, and Switzerland. The treaty with Canada currently allows IBCs and offshore banking profits to be repatriated to Canada tax-free after paying a much lower tax in Barbados. The FIU has entered into memoranda of understanding with other FIUs.

Barbados is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - No
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

Barbados is a member of the Organization of American States Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering. Barbados also is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Recommendations:

The Government of Barbados has taken a number of steps in recent years to strengthen its anti-money laundering/counter-terrorist financing legislation, and should continue to implement these reforms. The GOB should devote sufficient resources to ensure the FIU, law enforcement, supervisory agencies, and prosecutorial authorities are properly staffed and have the capacity to better perform their duties. The GOB should amend its legislation to allow for the seizure of suspected illegal funds at the border and to allow the freezing of funds or assets linked to terrorist financing, al-Qaida or the Taliban. Barbados should consider the adoption of civil forfeiture and asset sharing legislation. Supervision of nonprofit organizations, charities, designated nonfinancial businesses and professions, and money transfer services should be strengthened, as should information sharing between regulatory and enforcement agencies. Finally, to further enhance its legal framework against money laundering, Barbados should move expeditiously to become a party to the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

Belarus

A general lack of transparency throughout the Belarus financial sector means that assessing the level of or potential for money laundering and other financial crimes is difficult. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. Due to excessively high taxes, underground markets, and the dollarization and eurozation of the economy, a significant volume of foreign-currency cash transactions eludes the banking system, and smuggling is widespread. Corruption is a serious problem in Belarus, which hinders law enforcement and impedes much-needed reforms. Economic decision-making in Belarus is highly concentrated within the top levels of government. Recent decrees, although substantially liberating the country’s business climate, have nevertheless left all major economic levers in the hands of the president and the Government of Belarus (GOB).

Offshore Center: No

Free Trade Zones: Yes

Based on a 1996 Presidential Decree, Belarus has established one free economic zone (FEZ) in each of Belarus’ six regions. The president creates FEZs upon the recommendation of the Council of Ministers and can dissolve or extend the existence of a FEZ at will. The Presidential Administration, the State Control Committee (SCC), and regional authorities supervise the activities of companies in the FEZs. According to the SCC, applying organizations are fully vetted before they are allowed to operate in an FEZ. Presidential Decree 66 tightens FEZ regulations on transaction reporting. Banks in the zones are currently subject to all regulations that apply to banks outside the zones.

Criminalizes narcotics money laundering: Partially

Belarus’ “Law on Measures to Prevent the Laundering of Illegally Acquired Proceeds” (AML/CFT Law), most recently amended in 2005, establishes the legal and organizational framework to prevent money laundering and terrorist financing. The AML/CFT Law does not fully incorporate provisions necessary to adequately criminalize all aspects of drug money laundering. Belarus criminalizes self-laundering, but restricts the self-laundering offense to cases that involve using the illicit proceeds to carry out entrepreneurial or other business activities.

Criminalizes other money laundering, including terrorism-related: Yes

Although Belarus has adopted an all crimes approach to money laundering predicate offenses (with some exceptions for tax evasion crimes), it does not criminalize insider trading and market manipulation, and therefore does not meet international standards. The law defines “illegally acquired proceeds” as currency, securities or other assets, including real and intellectual property rights, obtained in violation of the law. A money laundering conviction does not require conviction of the predicate offense.

Criminalizes terrorist financing: Yes

Terrorism is a crime in Belarus and the willful provision or collection of funds in support of terrorism by Belarus nationals or persons in its territory constitutes participation in terrorism by aiding and abetting. In December 2005, the Parliament amended the Criminal Code to explicitly define terrorist activities and terrorism finance. Article 290-1 of the Criminal Code explicitly criminalizes terrorist financing. However, the law does not criminalize indirect provision of money; provision of funds for a terrorist organization or an individual terrorist, if the funds are not intended for a specific act of terrorism; or the financing of theft of nuclear materials for terrorist purposes. Legal entities are not criminally liable for terrorist financing but may be liquidated upon indictment by the General Prosecutor.

Know-your-customer rules: Yes

Belarusian AML/CFT legislation does not contain a clear requirement to perform customer due diligence upon establishing business relations with a customer. However, under Article 5, persons carrying out transactions subject to mandatory suspicious or large currency transaction reporting must be identified.

Bank records retention: Yes

Article 5 of the AML/CFT Law requires all financial institutions to retain documents relating to financial transactions for at least five years from the date of their completion – not from the end date of a business relationship as recommended by the relevant international standard.

Suspicious transaction reporting: Yes

Under Article 1 of the AML/CFT Law, the following are subject to suspicious transaction reporting requirements (STRs): banks and non-bank financial credit institutions; professional operators of the securities market; persons engaged in exchange transactions, including commodity exchanges; insurance firms and insurance brokers; postal service operators; and firms leasing out property. All financial institutions are obligated to report suspicious transactions regardless of value to the financial intelligence unit (FIU) – the Financial Monitoring Department (DFM). The AML/CFT Law exempts most government transactions and those sanctioned by the President from reporting requirements. The government also has used the AML/CFT Law as a pretext for preventing several pro-democracy NGOs from receiving foreign assistance.

Large currency transaction reporting: Yes

Belarus has created a system of mandatory reporting whereby financial institutions must report to the DFM all large-value transactions over 2,000 basic units for natural persons or over 20,000 basic units (approximately $24,500 and $245,000, respectively) for organizations and individual entrepreneurs. However, presidential edict 601 signed on November 4, 2008 exempts Belarusian banks from this requirement and introduces a requirement for banks to identify one-time clients with transactions equal to or exceeding $12,280.

Narcotics asset seizure and forfeiture: Yes

Belarusian legislation provides for broad seizure powers enabling law enforcement to identify and trace assets. The Criminal Code provides for asset forfeiture for all serious offenses, including money laundering where narcotics trafficking is the predicate offense. Seizure of assets from third parties appears possible but is not specifically codified. The seizure of funds or assets held in a bank requires a court decision, a decree issued by a body of inquiry or pre-trial investigation, or a decision by the tax authorities.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: Yes

Upon entry into or departure from the country, travelers must declare in writing any sum over $3,000. Travelers departing Belarus with sums exceeding $10,000 are required to secure permission from the National Bank to carry that amount of currency. However, the declaration system was not designed nor is it used to prevent and interdict bulk cash smuggling. Individuals may import or export securities certificates and payment instruments denominated in foreign currencies without any limitations on the amount and without the declaring them. Customs authorities are unable to apply sanctions on the basis of suspicion of money laundering or terrorist financing against persons moving funds cross-border.

Cooperation with foreign governments:

Belarusian legislation does not contain any conditions that would excessively restrict the provision of mutual legal assistance. The GOB has entered into a number of bilateral agreements. Within the Commonwealth of Independent States (CIS) mutual legal assistance is provided under the Convention on Legal Assistance and Legal Relations in Civil, Family, and Criminal Cases.

U.S. or international sanctions or penalties: Yes

After a presidential election in 2006 that was condemned as fraudulent, senior Belarusian officials were barred from traveling to the United States and the European Union.

In 2007, the United States imposed sanctions on the state petrochemical conglomerate, Belneftekhim, which U.S. officials believe is personally controlled by President Alexander Lukashenko. The company accounts for about one-third of Belarus’ foreign currency earnings.

In December 2009, the European Parliament adopted a resolution that supports maintaining sanctions against Belarusian officials in order to prompt greater democratization.

Enforcement and implementation issues and comments:

Belarus has made an effort to ensure cooperation and coordination between state bodies through the Interdepartmental Working Group established specifically to address AML/CFT issues.

Although the DFM is an autonomous unit within the State Control Committee of Belarus with the rights of a legal entity, it does not have an independent budget and cannot independently hire staff.

Belarus does not have an adequate system in place to freeze without delay terrorist assets. The AML/CFT Law (Article 5) requires banks and designated non-bank financial institutions to suspend a financial transaction if one of its participants is a person suspected of being involved in terrorist activities or controlled by terrorists. The National Bank provides banks with the State Security Committee’s lists of persons suspected of being involved in terrorist activities or controlled by persons engaged in terrorism—including persons on the UNSCR 1267 Sanctions Committee’s consolidated list. Other non-bank financial institutions do not receive the terrorist lists and have little awareness of freezing requirements.

U.S.-related currency transactions:

The U.S. dollar is commonly used in both the legitimate and underground economies and, together with the euro, is the currency of choice for money laundering.

Records exchange mechanism with U.S.:

The United States and Belarus do not have a mutual legal assistance agreement in place.

International agreements:

Belarus has signed bilateral treaties on law enforcement cooperation with Afghanistan, Bulgaria, India, Latvia, Lithuania, the People’s Republic of China, Poland, Romania, Syria, Turkey, the United Kingdom, and Vietnam. In 2009, the DFM signed an AML agreement with its Macedonian counterpart. The DFM cooperates with counterparts in foreign states and with international organizations.

Belarus is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Belarus is a member of the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a Financial Action Task Force-style regional body. Its mutual evaluation can be found here: http://www.eurasiangroup.org/en/mers.html

Recommendations:

The Government of Belarus (GOB) has taken steps to construct a legal and regulatory framework to fight money laundering and terrorist financing. It should focus on the full implementation of existing legislation and enact amendments to its laws, where necessary, to accomplish the following: implementing strict regulation of industries operating within the FEZ areas; reinstating the identification requirement for foreign currency exchange transactions; extending the AML/CFT Law’s application to the governmental transactions that are currently exempted under the law; and honing its guidance on and enforcement of suspicious transaction reporting. The GOB also should bring the non-financial sectors under the same AML/CFT requirements that it imposes on the financial sector, and ensure resources for supervision, monitoring and a sanctions regime for noncompliance. Belarus’ AML/CFT legislation should be further amended to comport with international standards and to provide for more transparency and accountability. The GOB should ensure the regulations and guidance provided by the National Bank and other regulators are legally binding. Similarly, the National Bank should be given the authority to carry out its responsibilities, and not be subject to influence by the Presidential Administration. The GOB should provide law enforcement agencies and the judiciary with appropriate resources and training to increase their capacity to investigate and prosecute money laundering and terrorist financing offenses. Belarus should provide adequate staff, tools, training and financial resources to its FIU so it can operate effectively. The GOB must work to further improve the coordination among agencies responsible for enforcing AML/CFT measures. Belarus should implement measures to provide for the timely freezing of assets of individuals and entities designated by the UNSCR 1267 Sanctions Committee. The GOB should take serious steps to combat corruption in commerce and government. The GOB also should take steps to ensure the AML/CFT framework operates more objectively and less as a political tool.

Belgium

Belgium’s banking industry is of medium size, with assets of over $2 trillion dollars in 2009. Illicit funds, formerly consisting mostly of narcotics trafficking proceeds, now derive mainly from serious forms of financial crime, including tax crime. Other noteworthy predicate offenses include trafficking in persons and goods. Authorities note that criminals are increasing their use of remittance transactions and shell companies, and are abusing non-financial sectors, in particular lawyers, real estate and nonprofit organizations to launder money. The Belgian diamond industry also has been used to launder money.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

Article 505 of the Belgian Penal Code criminalizes laundering of money derived from any criminal offense. Belgium’s anti-money laundering/counter-terrorist financing (AML/CFT) system is contained in its Law of 11 January 1993 (AML/CFT Law) on preventing use of the financial system for the purpose of money laundering or terrorist financing.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

In January 2004, the Belgian Parliament passed legislation criminalizing terrorist acts and material support (including financial support) for terrorist acts, and allowing judicial freezes on terrorist assets. The law prohibits the provision of material support to terrorists groups by nonprofit organizations. Article 140 of the Penal Code criminalizes participation in the activity of a terrorist group, and Article 141 criminalizes the provision of material resources, including financial assistance, to terrorist groups.

Know-your-customer rules: Yes

Belgium’s AML/CFT law mandates customer due diligence and reporting requirements that apply to the formal financial sector as well as non-financial businesses and professions, including estate agents, private security firms, funds transporters, diamond merchants, notaries, bailiffs, auditors, chartered accountants, tax advisors, certified accountants, surveyors, lawyers and casinos. Financial institutions must comply with know your customer principles, regardless of transaction amount.

Bank records retention: Yes

Institutions must maintain records on the identities of clients engaged in transactions that are considered suspicious or that involve an amount equal to or greater than 10,000 euros (approximately $15,000) as well as retain records of suspicious transactions reported to the financial intelligence unit (FIU) for at least five years.

Suspicious transaction reporting: Yes

Belgian law mandates reporting of suspicious transactions to the FIU by a wide variety of financial institutions and non-financial entities, including notaries, accountants, bailiffs, real estate agents, casinos, cash transporters, external tax consultants, certified accountant-tax experts, and lawyers. The FIU’s primary mission is to receive, analyze, and disseminate all suspicious transaction reports (STRs) submitted by obligated entities. In 2008, the FIU received 15,554 disclosures and transmitted 937 cases to the public prosecutor.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture:

The Government of Belgium (GOB) has created a sophisticated and comprehensive confiscation and seizure regime, encompassing the Central Office for Seizure and Confiscation (COSC), operating under the auspices of the Ministry of Justice. The COSC ensures that authorities execute confiscations and seizures smoothly and efficiently in accordance with the law. Belgian law requires a judicial order to execute confiscations and seizures, and allows civil as well as criminal forfeiture of assets. Seizures in Belgium can be direct or indirect. Direct seizures involve the seizure of items linked directly to a crime. Indirect seizures are “seizures by equivalence,” usually of homes, cars, jewels and other items not directly linked to the crime in question.

The Ministry of Finance can administratively freeze assets of individuals and entities who are on the UNSCR 1267 Sanctions Committee’s consolidated list and/or those covered by a European Union (EU) asset freeze regulation.

Narcotics asset sharing authority:

A law passed in July 2006 allows for the possibility of the sharing of seized assets from serious crimes, including those related to narcotics, on a reciprocal basis.

Cross-border currency transportation requirements: Yes

A Royal decree on measures to control cross-border transportation of cash came into force on June 15, 2007. The Royal decree stipulates the obligation to declare transportation of currency worth 10,000 euros or more entering or leaving the EU/Belgium. In cases of failure to declare, or if there is a suspicion that the cash declared originates from illegal activities or is intended to finance such activities, the Belgian Customs and Excise administration may confiscate the cash for up to 14 days and send a report to the FIU. From June 2007 to December 2008, Belgian Customs filed 815 reports with the FIU, representing 37.2 billion euros.

Cooperation with foreign governments:

Belgium is a cooperative and reliable partner in law enforcement efforts. The federal police enjoy cross-border cooperation with other police and investigative services in neighboring countries. Belgium does not require an international treaty as a prerequisite to lending mutual assistance in criminal cases.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Authorities believe that 3,500 phone shops, small businesses where customers can make inexpensive phone calls and access the internet, are operating in Belgium. Only an estimated one-quarter of these shops are formally licensed. Since 2004, Belgian police have made a series of raids on these businesses. In some phone shops, authorities uncovered money laundering operations and hawala-type banking activities. Raids in some locations uncovered numerous counterfeit phone cards in addition to evidence of money laundering activities. Authorities have closed more than 200 such shops since 2004, and estimate that the Belgian state loses up to $256 million in tax revenue each year through tax evasion by these businesses. Authorities report that phone shops often declare bankruptcy and later reopen under new management, making it difficult for officials to trace ownership and collect tax revenues.

Fully 80 percent of the world’s rough diamonds and 50 percent of polished diamonds pass through Belgium. The GOB recognizes the particular importance of the diamond industry, as well as the potential vulnerabilities it presents to the financial sector. Belgium’s robust diamond industry presents special challenges for law enforcement, but authorities have transmitted a number of cases relating to diamonds to the public prosecutor, and they monitor the sector closely in cooperation with local police and diamond industry officials.

Money laundering legislation imposes restrictions on cash payments for real estate. Only an amount not exceeding 10% of the sales price, up to a maximum of 15,000 euros (approximately $22,500), can be paid in cash. The agreement and deed of sale must specify the number of the financial account from which the amount was or will be debited. Cash payments over $25,000 for goods are also illegal.

In 2008 the federal police referred to the public prosecutor 385 individual cases involving money laundering, fraud, and corruption.

U.S.-related currency transactions:

No reliable estimates exist for the amount of US currency in circulation in Belgium. However, US currency in Belgium does not significantly affect the U.S. market or impact the number of dollars in circulation. Belgium has an open market economy and received $21 billion worth of goods from the U.S. in 2009, exporting $13 billion back to the U.S. Remittances both ways are insignificant. Belgium does not produce illegal drugs or counterfeit items for sale in the U.S., and despite being a transport hub for Europe, does not export or re-export significant amounts of these items directly to the U.S.

Records exchange mechanism with U.S.:

A mutual legal assistance treaty (MLAT) between Belgium and the United States has been in force since 2000. Belgium and the United States have since amended and supplemented this treaty, in implementation of the U.S. - EU extradition and mutual legal assistance agreements.

International agreements:

The FIU shares information with its European colleagues.

Belgium is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Belgium is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/40/39/42761756.pdf

Recommendations:

The Government of Belgium’s (GOB) continuing implementation of the international standards complements an already solid anti-money laundering regime and a clear official commitment to fighting financial crimes, including the financing of terrorism. The GOB should expedite the adoption of legislation aligning the country’s laws with the third EU Directive.

Belize

Belize is not a major regional financial center. In an attempt to diversify Belize’s economic activities, authorities have encouraged the growth of offshore financial activities that are vulnerable to money laundering, and continue to offer financial and corporate services to non-residents in the offshore financial sector. Belizean officials suspect that money laundering occurs primarily within that sector. Belize has pegged the Belizean dollar to the U.S. dollar. There is a significant black market for smuggled goods in Belize.

Offshore Center: Yes

Belize is considered an offshore financial center. Offshore banks, international business companies, and trusts are authorized to operate from within Belize, although shell banks are prohibited within the jurisdiction. The Offshore Banking Act, 1996 governs activities of Belize’s offshore banks. By law, offshore banks cannot serve customers who are citizens or legal residents of Belize. To legally operate, all offshore banks must be licensed by the Central Bank of Belize and be registered with the International Business Companies (IBCs) registry. Before the Central Bank issues the license, the Central Bank must verify shareholders’ and directors’ backgrounds, ensure the adequacy of capital, and review the bank’s business plan. Presently, there are six licensed offshore banks, approximately 40,000 active registered IBCs, 15 licensed offshore insurance companies, five mutual fund companies, and 26 trust companies and agents operating in Belize. Belize does not have offshore casinos.

Free Trade Zones: Yes

There are two free trade zones (called Commercial Free Zones or CFZs) operating in Belize. There is a large one at the border with Mexico, the Corozal Commercial Free Zone, and a small one at the western border with Guatemala, the Benque Viejo Free Zone. There are also designated free trade zones in Punta Gorda and Belize City, but they are not operational. Commercial free zone (CFZ) businesses are allowed to conduct business within the confines of the CFZ, provided they have been approved by the Commercial Free Zone Management Agency (CFZMA) to engage in business activities. All merchandise, articles, or other goods entering the CFZ for commercial purposes are exempted from the national customs regime. However, any trade with the national customs territory of Belize is subject to the national Customs and Excise law. The CFZMA, in collaboration with the Customs Department and the Central Bank of Belize, monitors the operations of CFZ business activities.

The CFZs generate a significant volume of cash transactions, much of which is not subject to auditing. This vulnerability could allow for the entrance of illicit cash into the formal financial system if not monitored closely. There have been incidents involving the import of counterfeit goods, and, more recently, pharmaceuticals, such as ephedrine and pseudoephedrine, within the CFZs.

Criminalizes narcotics money laundering: Yes

The Money Laundering (Prevention) Act (MLPA), as amended in 2002, criminalizes money laundering related to many serious crimes, including drug trafficking, forgery, terrorism, blackmail, arms trafficking, kidnapping, fraud, illegal deposit taking, false accounting, counterfeiting, extortion, robbery, and theft. Other legislation to combat money laundering includes the Money Laundering Prevention Guidance Notes; the Financial Intelligence Unit Act, 2002; the Misuse of Drugs Act; The International Financial Services Practitioners Regulations (Code of Conduct), 2001 (IFSPR); Money Laundering Prevention Regulations 1998 (MLPR); and the Offshore Banking Act, 2000, renamed the International Banking Act, 2002 (IBA).

Criminalizes other money laundering, including terrorism-related: Yes

See above.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Belize criminalizes terrorist financing via amendments to its anti-money laundering legislation, The Money Laundering (Prevention) (Amendment) Act, 2002.

Know-your-customer rules: Yes

Licensed banks and financial institutions are required to establish due diligence provisions and monitor their customers’ activities.

Bank records retention: Yes

Belizean law obligates banks and other financial institutions to maintain business transaction records for at least five years.

Suspicious transaction reporting: Yes

Suspicious transactions are reported, primarily by banks and credit unions. Reports from the other obligated entities are almost non-existent. Financial institutions are required to pay special attention to all complex, unusual, or large transactions or patterns of transactions, whether completed or not, and to insignificant but periodic transactions, which have no apparent economic or lawful purpose. If there is reasonable suspicion that the transactions described above could constitute or be related to money laundering, a financial institution is required to report the suspicious transactions to the FIU. There were 78 suspicious transaction reports (STRs) filed during 2009. Six became the subject of investigations.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture: Yes

Belize law provides for the tracing, freezing, and seizure of assets and makes no distinctions between civil and criminal forfeitures. The Money Laundering (Prevention) (Amendment) Act 5 of 2002 provides for the freezing of funds and other financial assets of terrorists and money launderers. All forfeitures resulting from money laundering or terrorist financing are treated as criminal forfeitures. The banking community cooperates fully with enforcement efforts to trace funds and seize assets. The FIU and the Belize Police Department are the entities responsible for tracing, seizing, and freezing assets related to money laundering or terrorist financing, and may do so with prior court approval, though the Ministry of Finance can also confiscate frozen assets.

Narcotics asset sharing authority:

Belizean law states that it is up to the discretion of the Minister of Finance to decide what to do with seized assets; there is nothing in the law prohibiting the GOB from sharing seized assets with foreign governments. Currently, the GOB is not engaged in any bilateral or multilateral negotiations with other governments to enhance asset tracking and seizure. However, the GOB cooperates with the efforts of foreign governments to trace or seize assets related to financial crimes.

Cross-border currency transportation requirements: Yes

The reporting of all cross-border currency movement is mandatory. All individuals entering or departing Belize with more than $5,000 in cash or negotiable instruments are required to file a declaration with the authorities at Customs, the Central Bank, and the FIU.

Cooperation with foreign governments: Yes

The Money Laundering (Prevention) (Amendment) Act of 2002 requires the GOB to cooperate with the appropriate authority of another jurisdiction to provide assistance in matters concerning money laundering offenses within the limits of their respective legal systems. This includes requests related to asset identification and forfeiture.

On several occasions, the FIU has cooperated with the United States on investigations of financial crimes.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In 2009, Belize arrested nine persons in connection with money laundering and seized over $750,000. Two major cases are currently before the courts, but there have been no convictions to date. Approximately $8,500,000 has been frozen pending the outcome of the cases.

Alternative remittance systems are illegal in Belize. However, Belizean authorities acknowledge the existence and use of indigenous alternative remittance systems that bypass, in whole or part, financial institutions, and these systems have not yet been deterred through fines or criminal prosecution.

Internet gaming is regulated by a Gaming Control Board, which is guided by the Gaming Control Act. There is one licensed internet gaming site, but there are an undisclosed number of Internet gaming sites illegally operating from within the country. In addition, many cases of money laundering in the country are related to the proceeds from U.S. residents participating in unlawful Internet gaming.

GOB authorities have circulated the names of suspected terrorists and terrorist organizations listed on the United Nations (UN) 1267 Sanctions Committee’s consolidated list and the list of Specially Designated Global Terrorists designated by the United States, pursuant to Executive Order (E.O.) 13224 to all financial institutions in Belize. The GOB did not identify, freeze, seize, and/or forfeit any assets related to terrorist organizations/financiers in 2009.

U.S.-related currency transactions:

GOB officials have reported an increase in financial crimes, such as bank fraud, cashing of forged checks, suspicious transactions, and counterfeit Belizean and United States currency.

These financial crimes are often conducted in U.S. currency or monetary instruments (i.e., U.S. denominated checks or other instruments).

Records exchange mechanism with U.S.:

Belize has signed and ratified a Mutual Legal Assistance Treaty with the United States. It entered into force in 2003. The FIU is empowered to share information with FIUs in other countries.

International agreements:

Belize is a party to various information exchange agreements with countries, and authorities can share information or provide assistance to foreign jurisdictions in matters relating to money laundering or other financial crimes without an agreement or a treaty.

Belize is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

Belize is a member of Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Recommendations:

The Government of Belize (GOB) should take steps to address the vulnerabilities in its supervision of alternative remittance systems that bypass financial institutions and of the gaming sector, including Internet gaming facilities. It should do the same regarding its offshore sector. Belize should immobilize bearer shares and ensure the offshore sector complies with anti-money laundering and counter-terrorist financing reporting requirements. The GOB should also become a party to the UN Convention against Corruption.

Bermuda

An overseas territory of the United Kingdom (UK), Bermuda is a major offshore financial center. It is the third largest reinsurance center in the world and the second largest captive insurance domicile. Bermuda is not considered a major drug transit country; however, the majority of the money laundering that occurs in Bermuda is believed to be related to the domestic drug trade. Money laundering proceeds are controlled primarily by gangs, which have proliferated in recent years. There is no significant black market for smuggled goods in Bermuda.

Offshore Center: Yes

According to the Registrar of Companies, at the end of September 2009, there were 13,634 exempted or international companies registered in Bermuda, 1,230 exempted partnerships, 536 overseas companies and 70 overseas partnerships. In March 2008, there were a total of 1,315 investment funds in Bermuda: 883 mutual funds, 80 umbrella funds, and 388 segregated accounts. There were also 106 unit trusts and 168 umbrella trusts. The majority of international businesses are exempted companies, which means they are exempt from Bermuda laws that apply to local entities, including the restriction that at least 60 percent of local entities must be owned by Bermudan residents. An exempt company is not subject to currency controls or capital controls, and is free from all forms of direct taxation on income and capital gains. The majority of Bermuda’s exempt companies are not required to have a physical presence on the island. Local directors (generally a local lawyer and secretary) are designated to manage corporate affairs in Bermuda. Directors must be natural persons. Before exempt companies can be established or any shares transferred between nonresidents, the owners and controllers must be vetted by the Bermuda Monetary Authority (BMA), the sole regulatory body for financial services. Bermuda does not permit offshore banks or bearer shares.

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

In 1997, the Government of Bermuda (GOB) first passed specific anti-money laundering legislation, enacting the Proceeds of Crime Act (POCA) to apply money laundering controls to financial institutions such as banks, deposit companies, and trust companies. Subsequent amendments expanded the scope of the legislation to cover the proceeds of all indictable offenses and added investment businesses, including broker-dealers and investment managers, to the list of regulated institutions.

In December 2009, to implement Schedule 7 of the UK Counter Terrorism Act 2009, the Bermuda Parliament passed the Anti-Terrorism (Financial and Other Measures) Amendment Act 2009 and the Proceeds of Crime (Anti-Money Laundering and Terrorist Financing) Regulations 2009. The act and regulations are expected to be enacted on January 13, 2010. The Minister of Justice is empowered, under certain strictly defined conditions, to give directions relating to enhanced due diligence, enhanced ongoing monitoring, systematic reporting and limiting/ceasing business.

Criminalizes terrorist financing: Yes

Bermuda has criminalized the financing of terrorism. The act of terrorism is defined in section 3 of the Anti-Terrorism (Financial and Other Measures) Act 2004 (ATFA) and also the Terrorism (United Nations Measures) (Overseas Territories) Order 2001, which the U.K. enacted and which is applicable to Bermuda. Effective January 1, 2009, the Anti-Terrorism (Financial and Other Measures) Amendment Act 2008 broadens the meanings of terrorism and terrorist financing and adds the offenses of tipping-off, directing others to commit offenses, and “offenses by bodies corporate, partnerships, and unincorporated associations.”

Know-your-customer rules: Yes

The POCA includes know-your-customer requirements and provides for the monitoring of accounts for suspicious activity. Furthermore, the GOB performs due diligence on persons seeking to undertake business on the island at the time of incorporation. A personal declaration form must be submitted for beneficial owners of international businesses prior to incorporation. Similar requirements apply to proposals to transfer shares. Additionally, a company must detail its business plan and maintain a register of shareholders at its registered office. Legislation requires financial institutions to verify the accuracy of the information on the payer/originator before transferring funds via wire.

Bank records retention: Yes

Banks and other financial institutions are required to retain records for a minimum of five years.

Suspicious transaction reporting: Yes

Bermuda established the Financial Intelligence Agency (FIA), as its financial intelligence unit (FIU) in November 2008 to replace the FIU housed within the Police Department. The FIA acts as an independent agency authorized to receive, analyze and disseminate information and suspicious activity reports (SARs). The FIA received 651 SARs in 2009; of those, it referred 73 to investigatory authorities.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture: Yes

Bermuda has enacted asset forfeiture and seizure legislation. Any payment received by a defendant in connection with a money laundering offense is subject to confiscation. For persons convicted of money laundering, the POCA Amendment Act 2008 empowers the court to order the forfeiture of any property used for the purposes of the money laundering offense. Bermuda law allows for civil as well as criminal forfeiture. In 2009, $70,096 in cash was forfeited pursuant to the Misuse of Drugs Act 1974. Confiscation orders made under the POCA totaled $104,329 in 2009.

Narcotics asset sharing authority: Yes

Seized assets are placed into the Confiscated Assets Fund and may be shared with other jurisdictions at the direction of the Minister of Finance.

Cross-border currency transportation requirements: Yes

In March 2009, Bermuda updated the Revenue Act 1898 to strengthen the requirements relating to cross border transportation of currency and monetary instruments. The threshold for reporting is $10,000. Mandatory declaration forms are used for all incoming passengers (regardless of point of embarkation) and for outgoing passengers to the US. For outgoing passengers to Canada and the U.K. there is a disclosure system in place. Additionally, goods, currency and negotiable instruments may be forfeited if not declared or falsely declared.

Cooperation with foreign governments:

Bermuda cooperates well with the United States and other governments investigating financial crimes relating to narcotics, terrorism, and terrorist financing. In 2009, Bermuda moved onto the Organization for Economic Co-operation and Development’s “white list” with the signing of Tax Information Exchange Agreements (TIEAs) with multiple jurisdictions.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Bermuda averaged 200-250 STRs per year from 2003-2008. Of those, only a fraction was investigated. In 2009, the GOB arrested 15 persons on suspicion of money laundering. Of the 15 arrested, two people were charged and five people are waiting to be charged. In the past five years there has been one prosecution and conviction for money laundering (in 2008).

Bermuda has circulated to its financial institutions all of the relevant lists relating to terrorist organizations/financiers. There have been no arrests, prosecutions or convictions for terrorist financing in Bermuda nor have there been any asset seizures or forfeitures.

U.S.-related currency transactions:

The National Anti-Money Laundering Committee (NAMLC) believes the currency used in Bermuda for payment to international narcotics traffickers is the US dollar and that there have been cases where traffickers utilized the formal financial sector for money laundering purposes. The proceeds of narcotics trafficking may be destined for the U.S. or may pass through the U.S. for transmission to some other country.

Records exchange mechanism with U.S.:

On January 12, 2009, the United States and the GOB signed a mutual legal assistance treaty. Bermuda executed its first TIEA in 1986 in a treaty between the United States, the United Kingdom, and Bermuda. The FIA is able to exchange information with the Financial Crimes Enforcement Network (FinCEN).

International agreements:

As a Crown dependency, Bermuda relies on the UK to extend to it provisions from relevant international conventions, treaties and resolutions. The UK extends coverage of the 1988 Drug Convention to Bermuda. Bermuda has TIEA arrangements with other jurisdictions. As of December 21, 2009, Bermuda has signed 18 TIEAs with the following jurisdictions: Aruba, Australia, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, Ireland, Japan, Mexico, the Netherlands, New Zealand, Norway, Sweden, the United Kingdom and the United States. Bermuda expects to sign additional TIEAs in early 2010 with Belgium, Canada, Japan, Portugal, and Spain. The FIA signed Memoranda of Understanding with Armenia, Australia, Belgium, Canada, Indonesia, Korea, Monaco, Montenegro, the Netherlands Antilles, Nigeria, the Philippines, Romania, St. Vincent and the Grenadines, United Arab Emirates, the United Kingdom, and the United States.

Bermuda is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Recommendations:

The Government of Bermuda should ensure that its offshore sector and exempt companies are subject to the appropriate safeguards to prevent their misuse as potential conduits of money laundering, tax evasion, and other financial crimes. The low number of money laundering prosecutions and convictions suggests an over-reliance on STRs to initiate investigations. More emphasis should be given to the police and customs to identify and pursue financial crimes investigations proactively. The GOB should use the same mandatory declaration system for all persons leaving the country, no matter their destination.

Bolivia

Although Bolivia is not a regional financial center, money laundering activities continue to take place. These illicit financial activities are related primarily to narcotics trafficking, public corruption, smuggling and trafficking of persons, as well as Bolivia’s long tradition of bank secrecy and the lack of effective government oversight of non-bank financial activities. Most entities that move money in Bolivia continue to be unregulated. Hotels, currency exchange houses, illicit casinos, cash transporters, informal exchange houses, and wire transfer businesses are known to transfer money freely into and out of Bolivia without being subject to anti-money laundering controls. The ultimate result is the easy laundering of the profits of organized crime and narcotics trafficking, the evasion of taxes, and the laundering of other illegally obtained earnings.

Offshore Center: No

Free Trade Zones: Yes

Bolivia has 13 free trade zones for commercial and industrial use. Free trade zones are located in EI Alto, Cochabamba, Santa Cruz, Oruro, Puerto Aguirre, and Desaguadero.

Criminalizes narcotics money laundering: Yes

The current anti-money laundering law is based on Article 185 of Law 1768 of 1997. Law 1768 modifies the penal code and criminalizes money laundering related only to narcotics trafficking offenses, organized criminal activities, and public corruption. Article 185, however, cannot be applied unless the prosecution demonstrates in court that the accused participated in and was convicted of the predicate crime.

Criminalizes other money laundering, including terrorism-related: Yes

As indicated above, the law addresses other offenses, but it is limited and does not include terrorism-related crimes.

Criminalizes terrorist financing: No

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Although terrorist acts are criminalized under the Bolivian Penal Code, the Government of Bolivia (GOB) lacks actual statutes that specifically criminalize the financing of terrorism or that grant the GOB authority to identify, seize, or freeze terrorist assets.

Know-your-customer rules: Yes

Under Supreme Decree 24771, obligated entities such as banks, insurance companies and securities brokers are required to identify their customers.

Bank records retention: Yes

Under Supreme Decree 24771, obligated entities are required to retain records of transactions for a minimum of ten years.

Suspicious transaction reporting: Yes

Supreme Decree 24771 obligates entities to report to the financial intelligence unit (FIU), the Unidad de Investigaciones Financieras (UIF), all transactions considered unusual (without apparent economic justification or licit purpose) or suspicious (customer refuses to provide information or the explanation and/or documents presented are clearly inconsistent or incorrect).

Large currency transaction reporting: Yes

The GOB’s Superintendent of Banks recently mandated that national banks report any cash transactions in excess of $10,000 to the UIF.

Narcotics asset seizure and forfeiture: Yes

Law 1768 defines the application of asset seizure beyond drug-related offenses. While traditional asset seizure is employed by counter-narcotics authorities, the ultimate forfeiture of assets continues to be problematic. The Directorate General for Seized Assets (DIRCABI) is responsible for confiscating, maintaining, and disposing of the property of persons either accused or convicted of violating Bolivia’s narcotics laws. In October 2008 draft asset seizure and forfeiture legislation was submitted to congress and is still being considered.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: Yes

As of August 2008, Supreme Decree No. 29681 obligates every natural or corporate person, public or private, domestic or foreign, to declare any incoming or outgoing currency and register the declaration with customs on a provided form. No threshold amount is provided. The same decree states that physical transportation of currency from Bolivia, as well as importation of currency into Bolivia, between $50,000 and $500,000 must be authorized by the Central Bank of Bolivia. Additionally, the decree states all transactions reported to customs in excess of $10,000 must be reported to the UIF on a monthly basis.

Cooperation with foreign governments:

Bolivia cooperates with foreign jurisdictions on financial crimes investigations on a case-by-case basis.

U.S. or international sanctions or penalties: Yes

In July 2007, as a result of Bolivia's lack of terrorist financing legislation, the UIF received a “Letter of Suspension” from the Egmont Group of FIUs. The GOB’s continued lack of terrorist financing legislation resulted in Bolivia’s expulsion from the Egmont Group in December 2008 – an unprecedented move by the Egmont Group. The expulsion bars the UIF from participating in Egmont meetings or using the Egmont Secure Web (the primary means of information exchange among Egmont member FIUs). To regain Egmont membership, Bolivia must criminalize terrorist financing, reapply to Egmont and provide written evidence of the UIF’s compliance with Egmont requirements.

The Financial Action Task Force of South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body, placed sanctions on Bolivia in July 2007 as a result of the GOB’s failure to pay three years of its membership dues. The GOB has since paid its arrears to GAFISUD and the sanctions were lifted in November 2009.

Enforcement and implementation issues and comments:

The expulsion of U.S. Drug Enforcement Agency (DEA) agents from the country in November 2008 has seriously diminished the effectiveness of several financial investigative groups operating in the country, including Bolivia’s Financial Investigative Team (EIF), the Bolivian Special Counternarcotics Police (FELCN), and the Bolivian Special Operations Force (FOE). Most money laundering investigations continue to be in the Department of Santa Cruz and are associated with narcotics trafficking organizations. During the period January – October 2009, the EIF reported ten new money-laundering cases and a total of approximately $18.245 million in related assets seized.

Corruption remains a serious issue in Bolivia. In the past, allegations against high-ranking law enforcement and other GOB officials were routinely dismissed without further investigation. While some improvement in the effectiveness of investigations is apparent, few cases are fully prosecuted. As of October 2009, the Bolivian National Police’s Office of Professional Responsibility (OPR) reports it investigated a total of 2,753 cases in 2009 involving allegations of misconduct and/or impropriety by Bolivian National Police officers.

The UIF has endured substantial turmoil since 2006, when the GOB issued Supreme Decree 28695 proposing the replacement of Bolivia’s UIF with a new “Financial and Property Intelligence Unit” focused on combating corruption rather than money laundering. Although the new unit was never created, the decree resulted in the UIF losing a significant amount of its staff. The continued lack of personnel, combined with inadequate resources and weaknesses in Bolivia’s basic legal and regulatory framework limits the UIF’s reach and effectiveness. Given the UIF’s limited resources relative to the size of Bolivia’s financial sector, compliance with reporting requirements is extremely low. The exchange of information between the UIF and appropriate police investigative entities is also limited or, in most cases, non-existent. In December 2009, the Bolivians indicated the UIF had hired more analysts, received training from the international community, increased the number of obligated entities, and received 280 suspicious transaction reports.

U.S.-related currency transactions:

The Bolivian financial system is highly dollarized, with approximately 66 percent of deposits and loans distributed in U.S. dollars rather than Bolivians, the local currency.

Records exchange mechanism with U.S.:

Bolivia does not have a mutual legal assistance treaty with the United States.

International agreements:

Bolivia is a party to the Inter-American Convention on Mutual Assistance in Criminal Matters.

Bolivia is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Bolivia is a member of the Organization of American States Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group on Money Laundering. Bolivia is also a member of the GAFISUD.

Recommendations:

The Government of Bolivia (GOB) should take all necessary steps to ensure that draft anti-money laundering legislation is enacted and conforms to international standards. Among the most important legislative adjustments, it is imperative the GOB criminalize terrorist financing and allow for the blocking of terrorist assets. Doing so is not only mandated by Bolivia’s commitments as a member of the United Nations and GAFISUD, but could improve the likelihood that the UIF may successfully re-apply for Egmont Group membership.

In addition, money laundering should be an autonomous offense without requiring prosecution for the underlying predicate offense, and unregulated sectors, particularly designated non-financial businesses and persons, should be subj

Bosnia and Herzegovina

Bosnia and Herzegovina (BiH) has a primarily cash-based economy and is not an international or regional financial center. Most money laundering activities in BiH are for purposes of evading taxes. A lesser portion involves concealing the proceeds of illegal activity (trafficking, drugs, corruption, etc.). BiH authorities have had some success in clamping down on money laundering in the formal banking system. However, with porous borders and weak enforcement capabilities, BiH is a significant market and transit point for smuggled commodities including cigarettes, narcotics, firearms, counterfeit goods, lumber, and fuel oils. Bosnia is also vulnerable to terrorist financing. The cash-based economy and weak border controls on bulk cash couriers contribute to BiH as an attractive venue for organized criminal elements and potential terrorist financiers. There is no indication that law enforcement has taken action to combat the trade-based money laundering likely to be occurring in BiH. Corruption is endemic, affecting all levels of the economy and society. The European Commission’s November 2009 Progress Report on Bosnia identified widespread corruption as one of the key problems in the country and noted that BiH has made little progress in combating it.

Bosnia’s political structure and ethnic politics hinder its anti-money laundering/counter-terrorist financing (AML/CFT) regime. Coordination of financial law enforcement among the multiple jurisdictional levels in Bosnia and Herzegovina -- the State, the two entities (the Federation of Bosnia and Herzegovina and the Republika Srpska), and Brcko District – is poor. Criminal codes and criminal procedure codes from the State, the two entities, and Brcko District were enacted and harmonized in 2003. The jurisdictions, however, maintain separate financial supervision and enforcement bodies. Although State-level institutions are becoming more firmly grounded and are gaining increased authority, overlapping responsibilities regarding investigation of money laundering and terrorist financing cause confusion and impede efforts to improve operational capabilities.

Offshore Center: No

Free Trade Zones: Yes

There are four active free trade zones in BiH, with production based mainly on automobiles and textiles. There have been no reports that these areas are used in trade-based money laundering. The Ministry of Foreign Trade and Economic Relations is responsible for monitoring free trade zone activities.

Criminalizes narcotics money laundering: Yes

The criminalization of money laundering is based on a very extensive all crimes approach as the scope of predicate offenses explicitly covers all criminal offenses, including narcotics related money laundering.

Criminalizes other money laundering, including terrorism-related: Yes

Money laundering is a criminal offense in all State and entity criminal and criminal procedure codes. At the State level, the Law on the Prevention of Money Laundering (LPML), as amended in June 2009, determines the measures and responsibilities for detecting, preventing, and investigating money laundering and terrorist financing. The lack of a clear demarcation among the scopes of the money laundering offenses in the different Criminal Codes may result in conflict or overlap of responsibilities.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The LPML as well as Article 202 of the Criminal Code criminalize terrorist financing.

Know-your-customer rules: Yes

Bosnian law requires banks and other financial institutions to know, record, and report the identity of customers engaging in significant transactions. Specifically, the LPML requires obliged entities and persons to apply know-your-customer (KYC) rules when establishing a business relationship with a client; when conducting a transaction of 30,000 KM (approximately $22,000) or over; when there is a question of authenticity or adequacy of previously received information; or when there is a suspicion of money laundering or terrorist financing, regardless of the amount of the transaction.

Bank records retention: Yes

The LPML requires financial institutions to retain records for at least ten years after identification, completion of transaction, closing of an account or the termination of the validity of a contract.

Suspicious transaction reporting: Yes

The LPML identifies 21 institutions or legal entities required to report all transactions -- regardless of amount -- suspected of connections to money laundering or terrorist financing. The requirements apply to all banks, individuals, nonbank financial institutions, and designated nonfinancial businesses and professions, including post offices, investment and mutual pension companies, stock exchanges and stock exchange agencies, insurance companies, casinos, currency exchange offices, and intermediaries such as lawyers and accountants. From January 1 to December 7, 2009, the FIU received 249 suspicious transaction reports (STRs).

Large currency transaction reporting: Yes

The entities required to report STRs are also required to report all transactions of KM 30,000 (approximately $22,000) or more to the BiH financial intelligence unit (FIU).

Narcotics asset seizure and forfeiture:

BiH has no single asset forfeiture law. However, there are a number of criminal code provisions that provide it with all the legal tools and authority to locate, freeze and confiscate assets tied to money laundering. These provisions include Article 209 of the BiH Criminal Code which specifically allows forfeiture of money and property. BiH authorities rarely use these forfeiture provisions and their interpretation is subject to great debate. The courts administer asset forfeiture, which can only take place as part of a verdict in a criminal case. Article 133 of the criminal code also allows the courts to seize property as punishment for criminal offenses for which a term of imprisonment of five years or more is prescribed. In such cases, asset seizure is possible without proving a specific relationship between the assets and the crime.

Entity banking agencies are cognizant of the requirements to sanction individuals and entities listed by the UNSCR 1267 Sanctions Committee’s consolidated list.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements: Yes

Bosnian law requires customs officials and the Indirect Tax Administration (ITA) to report to the FIU all cross-border transportation of cash and securities in excess of KM 10,000 (approximately $7,000). However, due to confusing and possibly conflicting laws at the state and entity levels, weak enforcement and corruption, large amounts of currency leave and enter the country undetected. In addition, the ITA has no authority to seize currency from the carrier upon discovery of a false declaration or suspicion of illegal activity. Although the government of BiH recognizes the threat of money laundering posed by bulk cash couriers, it has been unable to manage the problem.

Cooperation with foreign governments (including refusals):

BiH provides mutual legal assistance on the basis of bilateral and multilateral international treaties to which BiH is party, and the principle of reciprocity. BiH can provide assistance to foreign states regarding all investigative measures and procedures for which the domestic authorities have jurisdiction.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The Court of BiH issued four verdicts in money laundering cases in 2009, only one of which is legally binding as the other three have been appealed.

In practice, most of the institutions subject to the STR requirements, other than commercial banks, have not received guidance and, consequently, do not understand their obligations or comply with the law.

Officially, the FIU has access to other government entities’ records, and formal mechanisms for interagency information-sharing are in place. In practice, however, the FID has only limited access to the full range of databases required to perform proper analysis, and cooperation between the FIU and other government agencies – particularly the different police forces -- is weak, with little information shared among agencies. A key reason for the FIU’s failure to share the results of its analysis with other law enforcement agencies is an ambiguous provision in the anti-money laundering law that does not clearly define its obligation to disseminate such information. All entity police agencies lack adequate resources and training and acknowledge that the level of cooperation and information exchange with the FIU is poor and needs improvement.

BiH lacks the institutional capacity and personnel for managing forfeited assets. Additionally, the courts do not have the administrative mechanisms in place to seize assets, maintain them in storage, or dispose of them. There has been no move to implement asset forfeiture as a regular tool in money laundering cases. The law does not provide for the seizure and forfeiture of the instrumentalities of illegal activity.

U.S.-related currency transactions:

There is not a significant level of US- related currency transactions related to Bosnia and Herzegovina.

Records exchange mechanism with U.S.:

Bosnia and Herzegovina has no Mutual Legal Assistance Treaty with the United States. BiH succeeded to the 1902 extradition treaty concluded between the Kingdom of Serbia and the United States. While this treaty covers some financial crimes, it does not address contemporary forms of money laundering. There is no formal bilateral agreement between the United States and BiH regarding the exchange of records in connection with narcotics investigations and proceedings, but authorities have made good faith efforts to exchange such information informally. Although no memorandum of understanding is in place, the Bosnian FIU regularly shares information with the Financial Crimes Enforcement Network, the U.S. FIU.

International agreements:

BiH adopted a new law on Mutual Legal Assistance in Criminal Matters in July 2009. Agreements on legal assistance in civil and criminal matters and on mutual enforcement of court verdicts in criminal matters were signed with Croatia, Serbia, Montenegro, the former Yugoslav Republic of Macedonia, Slovenia and Turkey. Authorities can share information or provide assistance to foreign jurisdictions in matters relating to money laundering or other financial crimes without need for a treaty.

Bosnia and Herzegovina is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Although BiH is a party to these international agreements, on many occasions the government of BiH has not passed implementing legislation for the conventions to which it is a party.

Bosnia and Herzegovina is a member of the FATF-style regional body MONEYVAL. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/ )

Recommendations:

The Government of Bosnia and Herzegovina (GOBiH) should continue to strengthen institutions with responsibilities for money laundering prevention, particularly those at the State level. Due to a lack of resources and bureaucratic politics, the FIU, like many State institutions, remains under-funded and under-resourced. The GOBiH should make efforts to increase funding for its AML/CFT programs and enhance cooperation between concerned departments and agencies. The GOBiH should amend its AML law to clarify the FIU’s obligation to disseminate information outside the organization. Although prosecutors, financial investigators, and tax administrators have received training on tax evasion, money laundering, and other financial crimes, BiH should enhance their capacity to understand diverse methodologies, and aggressively pursue investigations. BiH authorities should undertake efforts to understand the illicit markets and their role in trade-based money laundering and alternative remittance systems. In addition, Bosnia should implement formal supervisory mechanisms for nonbank financial institutions and intermediaries, and NGOs. BiH law enforcement and customs authorities should take additional steps to control the integrity of the borders and limit smuggling. BiH should take specific steps to completely implement its anti-corruption strategy and to combat corruption at all levels of commerce and government. BiH also should adopt a comprehensive asset forfeiture law that provides a formal mechanism for the administration of seized assets. The government should enact implementing legislation for the international conventions to which it is a party.

Botswana

Botswana’s relatively well-developed but small banking sector and its growing International Financial Service Center (IFSC) are vulnerable to money laundering. While the sale of illegal narcotics or the laundering of narcotics-related proceeds does not appear to be a major problem in Botswana, reports of narcotics trading, predominantly of marijuana, are on the rise. Reportedly, counterfeit goods are smuggled from South Africa and Namibia into Botswana. Other reports describe limited illegal trade of cigarettes, mostly from Zimbabwe, as well as the smuggling of diamonds from Zimbabwe and from Angola (via Namibia).

Offshore Center:

The Bank of Botswana (BOB) licenses offshore banks; to date only two licenses have been issued. One bank closed in 2008. Background checks are performed on applicants for offshore banking and business licenses, as well as on their directors and senior management. The supervisory standards applied to domestic banks are also applicable to offshore banks. Anonymous directors and trustees are not allowed. As of March 2007, IFSC had 35 accredited companies focusing on funds management, banking services, international insurance and financial intermediary services. Currently, no offshore trusts operate in Botswana. Shell companies are prohibited and a physical presence is required.

Free Trade Zones:

No information available.

Criminalizes narcotics money laundering: Yes

See below.

Criminalizes other money laundering, including terrorism-related: Yes

Section 14 of the Proceeds of Serious Crime Act (PSCA) criminalizes money laundering related to all serious offenses, defined as any offense with a minimum penalty of at least two years imprisonment, or some sort of unlawful activity. In April 2009, the National Assembly enacted the Financial Intelligence Act (FIA), the basic anti-money laundering legislation for Botswana. Botswana authorities are in the process of proposing amendments to the PSCA (as amended in 2000) to harmonize it with the overlapping provisions of the FIA.

Criminalizes terrorist financing:

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Terrorist financing is not criminalized as a specific offense in Botswana. Acts of terrorism and related offenses, such as aiding and abetting, can be prosecuted under the Penal Code and under the Arms and Ammunitions Act.

Know-your-customer rules: Yes

The PSCA requires identification of financial bodies and owners of corporations and accounts. The Banking (Anti-Money Laundering) Regulations (AML Regulations), which are minimum guidelines to banks on the application of international best practices on anti-money laundering, require banks to record and verify the identification of all personal and corporate customers. The AML Regulations do not apply to non-bank entities.

Bank records retention: Yes

Banks must maintain all records on transactions for either five years after the account has been closed, or until any ongoing investigation relating to those records is closed by law enforcement officials.

Suspicious transaction reporting: Yes

The PSCA and AML Regulations require banks to report any suspicious activities by their customers. The Ministry of Finance and Development Planning prepared a planning document for establishing the Financial Intelligence Agency (the financial intelligence unit (FIU) of Botswana to be established under the FIA). Until the FIU is fully functioning, the Directorate on Corruption and Economic Crime (DCEC) is responsible for receiving and processing suspicious transaction reports (STRs). The DCEC received 39 reports of suspicious activities, 21 of which are being investigated. From January to November 2008, the DCEC conducted 40 money laundering investigations, one of which is currently before the court. The other investigations are ongoing.

Large currency transaction reporting: Yes

The BOB requires financial institutions to report any transaction in which BWP (Botswana Pula) 10,000 (approximately $1,499) or more is transferred in an “outward transfer.” Under the PSCA and AML Regulations banks are required to report any transaction involving large amounts of money or suspicious activities by its customers. The term “large amounts” is not defined.

Narcotics asset seizure and forfeiture:

The PSCA grants the courts power to order the confiscation of property that has been laundered or which constitutes money laundering or the proceeds from a serious offense. During an investigation, the government may appeal to the High Court for a restraining order effectively freezing the financial assets of a suspect, but only for a non-renewable, seven-day period. Current legislation does not provide for civil forfeiture.

The Government of Botswana (GOB) does not have a legal framework to implement UNSCR 1267 and 1373. There is no legal basis to freeze assets based on UNSCR 1267 lists; nor is there a legal framework to freeze assets based on a domestic or foreign designation of terrorists or terrorist organizations in the framework of UNSCR 1373.

Narcotics asset sharing authority: No

There are no laws for the sharing of seized assets with other governments.

Cross-border currency transportation requirements:

Customs regulations require travelers carrying the equivalent of BWP 10,000 (approximately $1,499) or more to declare that currency upon entering Botswana.

Cooperation with foreign governments:

Botswana’s lack of a legal framework to implement UNSCRs 1267 and 1373 may impede cooperation.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Non-financial businesses and professions are generally not included in the AML/CFT framework in Botswana, and little is currently done to monitor the activities and financial transactions of non-profit organizations.

There were no arrests, prosecutions, or convictions for money laundering during 2009.

The BOB circulates to financial institutions the names of suspected terrorists and terrorist organizations listed on the UN 1267 Sanctions Committee’s consolidated list, the list of Specially Designated Global Terrorists designated by the United States pursuant to Executive Order 13224, and the European Union’s list.

U.S.-related currency transactions:

Botswana’s financial institutions do not engage in currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

Although there are no formally adopted laws or regulations that allow for the exchange of records with the United States on investigations and proceedings related to narcotics, money laundering, terrorism and terrorist financing, the GOB has historically been very accommodating with the exchange of information on law enforcement and security concerns.

International agreements:

Botswana is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

Botswana is a member of the Eastern and South African Anti-Money Laundering Group, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/reports/view_me.php?id=167

Recommendations:

The Government of Botswana has set up the key fundamental components of an AML regime. The GOB should continue its efforts to establish an anti-money laundering/counter-terrorist financing regime that comports with international standards. The GOB should criminalize terrorist financing. Botswana should become a party to the UN Convention against Corruption.

Brazil

Brazil is the world’s fifth largest country in size and population, and as of 2009 its economy is the tenth largest in the world. Brazil is considered a regional financial center for Latin America. It is also a major drug-transit country. Brazil maintains some controls of capital flows and requires disclosure of the ownership of corporations. Money laundering in Brazil is primarily related to domestic crime, especially drug trafficking, corruption, organized crime, gambling, trade in various types of contraband, and also to proceeds coming from the Tri-Border Area (TBA) of Brazil, Argentina, and Paraguay. Laundering channels include the use of banks, real estate investment, financial asset markets, luxury goods, remittance networks, informal financial networks, and trade-based money laundering. An Inter-American Development Bank study of money laundering in the region found that Brazil’s incidence of money laundering is below average for the region.

The TBA is a widely recognized source of money laundering and terrorist financing. In addition to weapons and narcotics, a wide variety of counterfeit goods, including CDs, DVDs, and computer software (much of it of Asian origin), are routinely smuggled across the border from Paraguay into Brazil. In addition to the TBA, other areas of the country are also of growing concern. The Government of Brazil (GOB) and local officials in the states of Mato Grosso do Sul and Parana, for example, have reported increased involvement by Rio de Janeiro and Sao Paulo gangs in the already significant trafficking in weapons and drugs that plagues the states in the TBA

Offshore Center: No

Free Trade Zones: Yes

The GOB has granted tax benefits for certain free trade zones. The most prominent of these is the Manaus Free Trade Zone, in Amazonas State, which has attracted significant foreign investment, including from U.S. companies. Most of these free trade zones aim to attract investment to the North and Northeast of Brazil.

Criminalizes narcotics money laundering: Yes

Brazil’s first anti-money laundering legislation was enacted in 1998 and has since been amended by subsequent legislation, decree and regulation.

Criminalizes other money laundering, including terrorism-related: Yes

Law 9.613 criminalizes money laundering related to drug trafficking, terrorism, arms trafficking, extortion by kidnapping, public administration, the national financial system and organized crime. Subsequent modifications to the law and associated regulations criminalize the corruption or attempted corruption of foreign public officials involving international commercial transactions, and establish terrorist financing as a predicate offense for money laundering. The current legal regime also establishes crimes against foreign governments as predicate offenses.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Law 10.701 of 2003 amends Law 9.613 of 1998 to include the financing of terrorism as a predicate offense for money laundering. Terrorist financing is not an autonomous offense in Brazil, although a bill awaiting legislative action contains language effecting that change.

Know-your-customer rules: Yes

Entities under the authority of the Central Bank, the Securities Commission (CVM), the Private Insurance Superintendence (SUSEP), and the Office of Supplemental Pension Plans (PC), are required to know and record the identity of customers. Brazil’s financial intelligence unit (FIU), the Council for the Control of Financial Activities (COAF) directly regulates and receives information from those financial sectors not already supervised by another entity, such as commodities traders, real estate brokers, credit card companies, money remittance businesses, factoring companies, gaming and lottery operators, bingo parlors, dealers in jewelry and precious metals, and dealers in art and antiques.

Bank records retention: Yes

Entities supervised by the authorities named directly above are required to maintain identifying information obtained during account opening. The current legal regime also requires the Central Bank to create and maintain a registry of information on all bank account holders.

Suspicious transaction reporting: Yes

Supervised entities are required to file suspicious transaction reports (STRs) with their respective regulator, which passes them to COAF. The FIU also receives STRs from the entities it directly regulates.

Large currency transaction reporting: Yes

In addition to filing STRs, banks are required to inform the Central Bank of institutional transactions exceeding 100,000 Reais (approximately $55,000) and “unusual” amounts transacted by individuals. Lottery operators must notify COAF of the names and identifying information of winners of three or more prizes equal to or higher than 10,000 Reais (approximately $5,500) within a 12-month period. Insurance companies and brokers are required to report large policy purchases, settlements or otherwise suspicious transactions. In addition, on January 8, 2008, the CVM extended monitoring/reporting requirements to include dealers in luxury goods, and persons or companies that engage in activities involving a high volume of cash transactions. During the first 10 months of 2008, COAF received information regarding 226,413 cash and 296,070 non-cash transactions. During the same period, the Central Bank received 830,257 reports of transactions exceeding 100,000 Reais; and 367,566 reports were submitted to SUSEP regarding activities in the insurance sector.

Narcotics asset seizure and forfeiture: Yes

Brazil has established systems for identifying, tracing, freezing, seizing, and forfeiting narcotics related assets. The COAF and the Ministry of Justice manage these systems jointly. Police and the customs and revenue services are responsible for tracing and seizing assets, and have adequate law enforcement powers and resources to perform such activities.

Narcotics asset sharing authority: Yes

The judicial system has the authority to forfeit seized assets, and Brazilian law permits the sharing of forfeited assets with other countries. The Justice Ministry’s Department of Asset Recovery, among other duties, is responsible for international cooperation on money laundering cases and is empowered to share seized forfeited assets with other countries.

Cross-border currency transportation requirements: Yes

The 1998 money laundering statute requires that individuals bringing more than 10,000 Reais (approximately $5,500) in cash, checks, or traveler’s checks into Brazil must fill out a customs declaration, but there is no currency limit to move money in or out of Brazil.

Cooperation with foreign governments (including refusals): Yes

The GOB regularly cooperates with other jurisdictions to combat international money laundering and financial crimes. Operationally, elements of the GOB responsible for combating terrorism, such as the Federal Police, Customs, and the Brazilian Intelligence Agency (ABIN), work effectively with their U.S. counterparts, investigating potential terrorist financing, document forgery networks, and other illicit activity. However, Brazil’s judicial system, which permits multiple appeals by both defendants and the prosecutors’ offices, delays the finality of sentences and forfeiture judgments for many, many years. Thus, often Brazil does not submit a final order for registration for nearly ten years, after which many assets which could be forfeited have disappeared.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues:

The GOB achieved visible results from recent investments in border and law enforcement infrastructure that were executed with a view to gradually control the flow of goods, both legal and illegal, through the TBA. Anti smuggling and law enforcement efforts by state and federal agencies have increased. Brazilian Customs and the Brazilian Tax Authority (Receita Federal) continue to take effective action to suppress the smuggling of drugs, weapons, and contraband goods along the border with Paraguay. According to the Receita Federal, in 2009 the agency interdicted a large volume of smuggled goods, including drugs, weapons, and munitions. Because of the effective crackdown on the Friendship Bridge connecting Foz do Iguaçu, Brazil, and Ciudad del Este, Paraguay, most smuggling has migrated to other sections of the border. The Federal Police have Special Maritime Police Units that aggressively patrol the maritime border areas.

The GOB has generally responded to U.S. efforts to identify and block terrorist-related funds. None of the individuals and entities on the UNSCR 1267 Sanctions Committee’s consolidated list has been found to be operating or executing financial transactions in Brazil, and the GOB insists there is no evidence of terrorist financing in Brazil.

In 2009, based on information provided by the F.B.I., a man was arrested in Sao Paulo on suspicion that he was connected to the Jihad Media Battalion, a known terrorist organization with possible ties to Al Qaeda. However, a Brazilian judge ordered his release after several weeks, and the GOB has taken the position he had no demonstrable ties to any terrorist activity. As Brazil continues to emerge as a global economic and political player, its efforts to render assistance in such cases will likely increase. However, its failure to enact terrorist financing laws is a huge gap.

U.S.-related currency transactions:

Most high-priced goods in the TBA are paid for in US dollars, and cross-border bulk cash smuggling is a major concern. Large sums of US dollars generated from licit and suspected illicit commercial activity are transported physically from Paraguay through Uruguay and Brazil to banking centers in the United States.

Records exchange mechanism with U.S.:

The Mutual Legal Assistance Treaty between Brazil and the United States entered into force in 2001, and a bilateral Customs Mutual Assistance Agreement became effective in 2005. Using the Customs-to-Customs Agreement framework, the GOB and U.S. Immigration and Customs Enforcement (ICE) in 2006 established a Trade Transparency Unit (TTU) in Brazil to detect money laundering via trade transactions. The GOB also participates in the “3 Plus 1” Security Group with the United States and the other TBA countries.

International agreements:

Brazil is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism -Yes
  • the UN Convention against Transnational Organized Crime -Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Brazil is a member of the Organization of American States Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering. Brazil also is a member of the Financial Action Task Force (FATF) and the Financial Action Task Force against Money Laundering in South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found here: www.gafisud.org

Recommendations:

The Government of Brazil (GOB) should criminalize terrorist financing as an autonomous offense. In order to successfully combat money laundering and other financial crimes, Brazil should ensure the passage of legislation to regulate the sectors in which money laundering is an emerging issue. Brazil should enact and implement legislation to provide for the effective use of advanced law enforcement techniques in order to provide its investigators and prosecutors with more advanced tools to tackle sophisticated organizations that engage in money laundering, financial crimes, and terrorist financing. Brazil should also enforce currency controls and cross-border reporting requirements, particularly in the Tri-Border Area and among designated non-banking financial businesses and professions. The GOB should initiate mandatory outbound cross-border reporting requirements. Additionally, the GOB must continue to fight against corruption and ensure the enforcement of existing anti-money laundering laws, including the obligation for all financial institutions to report transactions suspected of being related to terrorist financing.

Brunei

Brunei is not a regional financial center. There are no significant trends with respect to emergent crime, other than an increase in cyber crime, and in particular, financial fraud such as pyramid schemes and email scams.

Offshore Center: Yes

In 2001, Brunei established the Brunei International Financial Center (BIFC). The relevant implementing laws are: the International Business Companies Order 2003 (amended in 2005); the International Banking Order 2000; the Registered Agents and Trustees Licensing Order 2000; the International Trusts Order 2000; the International Limited Partnerships Order 2000; the Mutual Fund Order 2001; the Securities Order 2003; and, the International Insurance and Takaful Order 2002.

The BIFC offers general banking, Islamic banking, insurance, international business companies (IBCs), trusts (including asset protection trusts), mutual funds, and securities services. There are six offshore banks licensed in Brunei. Bearer shares are not permitted, but nominee shareholders are allowed for IBCs. Brunei residents are allowed to become shareholders of IBCs. As of November 30, 2009 there have been 10,066 IBCs registered in the BIFC database. Reportedly, many may be inactive. The 11 registered agents and licensed trustees are responsible for filing all IBC compliance documents and for the international trusts and asset protection trusts. The BIFC also launched a virtual Stock Exchange in 2002 that offers securities and mutual funds.

Free Trade Zones: None

Criminalizes narcotics money laundering: Yes

Narcotics-related money laundering is an offense under sections 20 and 22 of the Drug Trafficking (Recovery of Proceeds) Act (DTROP), enacted in 2002.

Criminalizes other money laundering, including terrorism-related: Yes

Sections 21, 22 and 23 of the Criminal Conduct (Recovery of Proceeds) Order 2000 (CCROP) criminalize money laundering related to all serious crimes. The Anti-Terrorism (Financial and other Measures) Order was introduced in 2002. The latter explicitly criminalizes the financing and support of terrorism.

Criminalizes terrorist financing: Yes

See above.

Know-your-customer rules: Yes

Under the Money Laundering Order (MLO), introduced in 2000, financial institutions are to have know-your-customer policies and procedures.

Bank records retention: Yes

Financial businesses are required to maintain the necessary records in relation to a customer’s identity and all details of transactions carried out by such customers. Such records must be maintained for five years commencing from the date on which a customer account or business relationship was terminated, and in relation to one-off transactions, the date on which the transaction was completed.

Suspicious transaction reporting: Yes

Pursuant to the MLO, covered financial businesses such as financial institutions are required to maintain internal procedures relating to reporting of suspicious transactions. Suspicious transactions, including attempted suspicious transactions, are not differentiated by the amount, type or nature of transaction. Institutions in Brunei that are classified as designated non-financial businesses and professions (DNFBPs) include real estate agents, dealers in precious metals and stones, lawyers, accountants and trust/company service providers. Suspicious transactions are to be forwarded to the financial intelligence unit (FIU) located within the Ministry of Finance.

Large currency transaction reporting: No

Narcotics asset seizure and forfeiture:

Two pieces of legislation provide powers for the authorities to confiscate, freeze and seize proceeds of crime. The DTROP applies specifically to the proceeds of drug-related crime, and the CCROP applies to all other designated predicate offenses.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: No

There is no system for detecting or preventing cross border currency or negotiable instrument transfers.

Cooperation with foreign governments:

The Mutual Assistance in Criminal Matters Order came into force in 2006. Nevertheless, international cooperation to foreign counterparts is limited and given on an ad-hoc basis.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Primary responsibility for the investigation of money laundering and the financing of terrorism rests with the Royal Brunei Police Force (RBPF). There are no reported arrests, prosecutions or convictions for money laundering.

U.S.-related currency transactions:

There are no indications that currency transactions in Brunei involve international narcotics trafficking proceeds or significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.: None

International agreements:

Brunei is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Brunei is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/8/Brunei%20Darussalam%20Mutual%20Evaluation%20Executive%20Summary.pdf

Recommendations:

The Government of Brunei should adequately regulate its offshore sector to reduce its vulnerability to misuse by money launderers and financiers of terrorism. For all IBCs, Brunei should ensure identification of all beneficial owners. The GOB should provide for adequate supervision of all covered DNFBPs.

Bulgaria

While Bulgaria is not considered an important regional financial center, it is significant in terms of its geographical position, its well-developed financial sector relative to other Balkan countries, and its relatively lax regulatory control. Bulgaria is a major transit point for the trafficking of drugs and persons into Western Europe, generating criminal proceeds that are subsequently laundered in Bulgaria. According to Bulgarian law enforcement, the main sources of laundered funds in 2009 were from drug trafficking, smuggling, human trafficking, tax fraud, internet fraud, and banking fraud, from both domestic and foreign criminal activity. A significant flow of money from Russia, routed through Baltic countries, was observed; and the Bulgarian Financial Intelligence Directorate (FID) also observed funds originating from Arab countries to Bulgaria with possible links to terrorist financing. Public corruption is a pervasive problem in Bulgaria, but the new government has made significant efforts to attack this longstanding issue.

Smuggling remains a problem, reportedly sustained by corrupt Bulgarian businessmen and politicians smuggling goods to avoid paying value added taxes. The smuggling of illegal cigarettes and gasoline along with its derivatives is especially common. Contraband, including Chinese cargo, stolen cars, and clothes, likely generates funds laundered through the financial system. Organized crime groups are moving into legitimate business operations, making it difficult to determine the origins of their wealth. Tourism and construction have become favorite money laundering routes for organized crime groups with suspected ties to politicians from previous governments. Money laundering proceeds have also been invested in expensive cars, boats, and other luxury goods imported from the U.S. and Europe.

Offshore Center: No

Free Trade Zones: Yes

There are six free trade zones in Bulgaria, supervised by the Ministry of Finance. The free trade zones are located in Burgas, Vidin, Ruse, Svilengrad, Plovdiv and Dragoman. The goods produced in these zones are exported without duties. Many believe these zones are used to avoid paying customs fees, especially on gas derivatives.

Criminalizes narcotics money laundering:

Article 253 of the Bulgarian Penal Code criminalizes money laundering related to all crimes. As such, drug trafficking is but one of many recognized predicate offenses.

Criminalizes other money laundering, including terrorism-related:

Amendments made to the Penal Code in 2006 increased penalties, clarified that predicate crimes committed outside Bulgaria can support a money laundering charge brought in Bulgaria, and allowed for prosecution on money laundering charges without first obtaining a conviction for the predicate crime. The Law on Administrative Violations and Penalties, as amended, establishes the liability of legal persons for crimes committed by their employees.

Criminalizes terrorist financing:

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Article 108a of the Penal Code criminalizes terrorism and terrorist financing. Article 253 of the Penal Code qualifies terrorist acts and terrorist financing as predicate crimes under the “all crimes” approach to money laundering.

Know-your-customer rules:

The Law on Measures against Money Laundering (LMML) is the legislative backbone of Bulgaria’s anti-money laundering (AML) regime. Adopted in 1998, the LMML has since been amended several times, most recently in November 2009. Banks and the 29 other reporting entities are required to apply know-your-customer standards. All entities are required to ask for the source of funds in any transaction greater than BGN 30,000 (approximately $22,500) or foreign exchange transactions greater than BGN 10,000 (approximately $7,500). Bearer shares can be issued by joint stock companies

Bank records retention:

The LMML obligates financial institutions to a five-year record keeping requirement.

Suspicious transaction reporting:

Under the LMML, 30 categories of entities, including lawyers, real estate agents, auctioneers, tax consultants, and security exchange operators are required to file suspicious transaction reports (STRs). In February 2003, the Bulgarian government enacted the Law on Measures against Terrorist Financing which compels all covered entities to report any suspicion of terrorist financing. The FID is Bulgaria’s financial intelligence unit (FIU), responsible for receiving and processing STRs. As of October 2009, the FID received 646 STRs valued at euros 323,559,692 (approximately $485,339,538). Of these, 429 were forwarded to law enforcement for further investigation.

Large currency transaction reporting:

Reporting entities are required to notify the FID of any cash payment, currency exchange or deposit greater than BGN 30,000 (approximately $22,500).

Narcotics asset seizure and forfeiture:

The Law on Forfeiture of Proceeds of Criminal Activity, enacted in 2005, allows the government to identify, trace, freeze and seize any assets derived from serious crimes, including drugs-related crimes, terrorism, money laundering, etc. Instruments of crime are subject to criminal forfeiture under the Penal Code. The law instructs the prosecution service, courts, and police to notify the Asset Forfeiture Commission (AFC) when a subject is formally charged with a crime at the end of the investigation, which leaves a (sometimes very long) period for a person under investigation to conceal property. The Law on Forfeiture of Proceeds from Criminal Activity also allows for civil forfeiture of criminal proceeds. The procedure for freezing terrorist assets is the same system for freezing criminal assets. As of November 24, 2009, the AFC froze assets valued at BGN 242,157,539 (approximately $185,324,174). The AFC also launched forfeiture proceedings in 77 cases with assets valued at $51,100,119.

Narcotics asset sharing authority:

As a member of the European Union (EU), Bulgaria adheres to the December 2007 Council of Europe decision 2007/845/JHA, which outlines cooperation among member states’ asset recovery offices on tracing and identification of criminal proceeds.

Cross-border currency transportation requirements:

Individuals importing or exporting BGN 5,000 (approximately $3,846) or the equivalent in either foreign currency or traveler’s checks must make a customs declaration. For the export of cash over BGN 25,000 (USD 19,240) individuals must declare to Customs the amount and origin of the cash, and present a certificate from the Bulgarian regional internal revenue service proving they do not owe taxes, unless the sum is less than the amount originally declared when brought into the country.

Cooperation with foreign governments (including refusals):

In the past, Bulgaria has cooperated, when requested, with USG law enforcement agencies and other governments investigating financial crimes related to narcotics, terrorism, terrorist financing, and other crimes. Bulgarian legislation empowers the FID to exchange financial intelligence on money laundering and terrorist financing cases not only on the basis of international agreements but also on the principle of reciprocity. However, in practice, it is unclear to what extent FID can still carry out this practice given its loss of autonomy.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

A common criminal practice is to re-import stolen clothes valued far below their real price. The clothes are then sold in “outlet” stores for a considerable profit. Corrupt customs officials also devalue merchandise at ports of entry at the bidding of organized crime groups.

Because of the absence of clear withdrawal reporting requirements, a loophole exists, leaving an unknown percentage of large cash withdrawals unreported. As of January 2009, Bulgarian banks are required to include the actual amount of all cash deposits above the cash transaction reporting threshold. As of yearend 2009, the government is currently considering issuing new guidance to ensure cash withdrawals are unambiguously included in the reporting requirements.

In December 2007, the Parliament passed legislation that came into force on January 1, 2008, which limited the FID’s effectiveness and autonomy. This law restructured the FID by changing its status from an independent agency within the Ministry of Finance to a directorate within the State Agency of National Security. Consequently, the FID is no longer an individual legal entity with its own budget.

Historically lower rates of reporting compliance by exchange bureaus, casinos, and other non-bank financial institutions can be attributed to numerous factors, including a lack of understanding of, or respect for the legal requirements; lack of inspection resources; and the general absence of effective regulatory control over the non-bank financial sector.

The FID and the Bulgarian National Bank circulate the names of suspected terrorists and terrorist organizations found on the UNSCR 1267 Sanctions Committee’s Consolidated List, the list of Specially Designated Global Terrorists designated by the U.S. pursuant to Executive Order 13224, and those designated by the relevant EU authorities. Bulgaria did not identify, freeze, seize, or forfeit any terror-related assets in 2009.

From January 1 to December 1, 2009 there were 20 prosecutions, 15 convictions, and one acquittal for money laundering. In addition, as of December 1, there are 75 money laundering cases being investigated that the FID believes will lead to indictments. In August 2009, controversial businessmen Mario Nikolov and Ludmil Stoykov, along with five accomplices, were indicted for laundering approximately $9.8 million of EU agricultural subsidies. According to prosecutors, the money was laundered through a US-registered offshore company and then reinvested in a Bulgarian sea resort. The case is ongoing. There were no prosecutions or convictions for terrorist financing.

U.S.-related currency transactions:

There is no evidence of Bulgarian financial institutions engage in currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States.

Records exchange mechanism with U.S.:

In September 2007, the U.S. and Bulgaria signed a mutual legal assistance treaty (MLAT), implementing the U.S. - EU Mutual Legal Assistance Agreement, which has yet to come into force.

International agreements:

The FID has signed 32 memoranda of understanding with FIUs from Europe, the Americas and Australia.

Bulgaria is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Bulgaria is a member of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Bulgaria_en.asp

Recommendations:

The Government of Bulgaria has taken several steps to improve its anti-money laundering/counter-terrorist financing regime. The GOB should enact legislation to strengthen its asset forfeiture program by explicitly reversing the burden of proof, allowing for the seizure of assets transferred to family members and other associates, and shortening the notification time so that a subject cannot secrete or dispose of assets prior to seizure. Bulgaria also should issue new guidance to ensure cash withdrawals are unambiguously included in the reporting requirements. The GOB should systematically track cross-border electronic currency transactions to prevent Bulgaria from being an entry point to funnel illicit money into the European financial system. The FID should be given full autonomy and an independent budget, and investigative and prosecutorial entities should receive continued training to allow those entities to effectively fulfill their responsibilities. The GOB should undertake an awareness campaign and provide for effective supervision of non-financial businesses and professions to ensure those entities comply with identification, reporting and record keeping obligations. Finally, the GOB should continue its efforts to curb corruption.

Burkina Faso

Burkina Faso is not a regional financial center. Burkina Faso’s economy is primarily cash-based; and most economic activity takes place in the informal sector. Only an estimated six percent of the population has bank accounts. Burkina Faso lacks the resources necessary to protect its borders adequately and to monitor the movement of goods and people. Because the country’s borders tend to be largely unregulated, illegal narcotics operations and black market currency exchanges could easily flow in an unregulated manner in and out of the country and from one country to another within the region. Regional corruption, a lack of resources, and overburdened and weak judicial and law enforcement systems are also major challenges.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Article 5 of the 1999 Law 17/99 on the Drug Code in Burkina Faso addresses and defines money laundering.

Criminalizes other money laundering, including terrorism-related: Yes

In March 2003, the West African Economic and Monetary Union (WAEMU) adopted a uniform law to combat money laundering from a variety of sources. All member states are bound to enact and implement the common laws passed by the members of the WAEMU. In late 2006, Burkina Faso adopted law 026-2006/AN, an anti-money laundering and financial crimes law. This anti-money laundering/counter-terrorist financing (AML/CFT) legislation states “it is illegal to transform, conceal, or acquire any goods or funds that result from participation in a criminal action.” The law specifically includes the following entities: the Treasury, the Central Bank of West African States (BCEAO), all financial organizations, the national lottery, members of the judicial profession who counsel clients on the purchase or sale of goods, commercial enterprises, real estate agents, merchants selling high value items, fund transporters, casino owners, travel agents and non-governmental organizations (NGOs).

Criminalizes terrorist financing: No

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Burkina Faso does not have specific terrorist financing legislation.

Know-your-customer rules: Yes

Financial institutions are obligated to confirm the identity and address of their clients before they enter into any type of financial transaction or open an account. Clients must present their original national identity card and provide current home and work addresses.

Bank records retention: Yes

Financial organizations must keep records of accounts for ten years following closure of an account or finalization of a transaction.

Suspicious transaction reporting: Yes

In March 2003, the WAEMU adopted a uniform law to combat money laundering which includes provisions that mandate financial institutions to report suspicious transactions to the Cellule Nationale de Traitement des Informations Financieres (CENTIF), the financial intelligence unit established in June 2007.

Large currency transaction reporting:

The BCEAO, the central bank for countries in the WAEMU, requires all bank deposits over the equivalent of $13,500 in member countries to be reported.

Narcotics asset seizure and forfeiture: Yes

Burkina Faso allows criminal and civil forfeiture.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements:

There are cross-border currency transportation reporting requirements for amounts over CFAF 5 million (approximately $10,300) or equivalent. The declarations are primarily for currency exchange control purposes.

Cooperation with foreign governments:

The GOBF is a member of the Economic Community of West African States (ECOWAS).

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Burkina Faso has a very low capacity to conduct financial investigations due a significant lack of equipment and training. There were no arrests, prosecutions, or convictions for money laundering or terrorist financing in 2009.

The Ministry of Security is designated as the coordinator of AML/CFT activities. An AML/CFT Committee has been established, but remains ineffective.

June 2003, WAEMU issued a directive which provides a legal basis for governments to implement the asset freeze provisions of UNSCR 1373. It also directs member governments to circulate the names of suspected terrorists and terrorist organizations on the UNSCR 1267 Sanctions Committee’s Consolidated List to all financial institutions.

U.S.-related currency transactions:

There are no indications that currency transactions in Burkina Faso involve international narcotics trafficking proceeds or significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

Burkina Faso law enforcement will cooperate on a case-by-case basis.

International agreements:

Burkina Faso is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Burkina Faso is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Burkina Faso’s mutual evaluation was completed in 2009. Once published, the report can be found here: http://www.giaba.org/index.php?type=c&id=24&mod=2&men=2

Recommendations:

The Government of Burkina Faso should continue to implement AML/CFT countermeasures that adhere to international standards. The GOBF should criminalize terrorist financing as an autonomous crime.

Burma

Burma is a major drug-producing country and its economy remains dominated by state-owned entities, including those affiliated with the military. Drug trafficking is a major source of money laundering in Burma. Wildlife, gems, timber, human trafficking victims, and other contraband originate in or flow through Burma and are additional sources of money laundering, as is public corruption. The steps Burma has taken over the past several years have reduced vulnerability to drug money laundering in the banking sector. However, with an underdeveloped financial sector and a large volume of informal trade, Burma remains a country where there is significant risk of drug money being funneled into commercial enterprises and infrastructure investment. Regionally, value transfer via trade is of concern and hawala/hundi networks frequently use trade goods to provide counter-valuation. Burma’s border regions are difficult to control and poorly patrolled. In some remote regions where smuggling is active, ongoing ethnic tensions and, in some cases armed conflict, impede government territorial control. In other areas, collusion between traffickers and Burma’s ruling military government, the State Peace and Development Council (SPDC), allows organized crime groups to function with minimal risk of interdiction. Although progress was made in 2009, the criminal underground faces little risk of enforcement and prosecution. Corruption in business and government is a major problem. Burma is ranked 178 out of 180 countries in Transparency International’s 2009 Corruption Perception Index.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

The Government of Burma’s (GOB) 2004 anti-money laundering (AML) measures amended regulations instituted in 2003 that set out 11 predicate offenses, including narcotics trafficking. In 2007, the GOB further expanded the list of predicate offences to all serious crimes.

Criminalizes other money laundering, including terrorism-related: Yes

See above.

Criminalizes terrorist financing: No

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

It appears that Burma’s AML measures do not account for funds derived from legitimate sources which may be used to finance acts of terrorism. Burma has not enacted a law specifically criminalizing terrorist financing and designating it as one of the predicate offenses to money laundering as well as making it an extraditable offense.

Know-your-customer rules:

Information is not available.

Bank records retention: Yes

Reporting entities are obligated to maintain records for seven years.

Suspicious transaction reporting: Yes

Regulations require banks, customs officials and the legal and real estate sectors to file suspicious transaction reports (STRs). In July 2007, the Central Control Board issued five directives to bring more non-bank financial institutions under the AML compliance regime. As of August 2008, a total of 1,495 STRs had been received, of which seven cases were identified as potential money laundering investigations. The Burmese financial intelligence unit (FIU) has investigated eight cases to date, three of which were sent to the courts for prosecution.

Large currency transaction reporting: Yes

Regulations set a threshold amount for reporting cash transactions by banks and real estate firms at 100 million kyat (approximately $100,000 at the prevailing unofficial exchange rate in December 2009).

Narcotics asset seizure and forfeiture:

GOB case law for seizing assets falls under the Narcotic Drugs and Psychotropic Substance Law as well as the 2002 Control of Money Laundering Law. Under these laws, the GOB can seize instruments of crime such as conveyances used to transport narcotics, property on which illicit crops are grown or are used to support terrorist activity, or intangible property such as bank accounts.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: Yes

Foreign currency importation over $2000 must be reported at the port of entry. Mandatory declaration forms are used. There are no known outbound currency requirements. Burmese citizens are not permitted to possess foreign currency.

Cooperation with foreign governments: Yes

There is cooperation on a case-by-case basis.

U.S. or international sanctions or penalties: Yes.

The United States maintains sanctions on Burma, which include restrictions on trade, new investment, and financial transactions, as well as a visa ban on selected individuals and a targeted asset freeze. Under the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008, the Burmese Freedom and Democracy Act, and several Executive Orders, the United States bans the exportation of financial services to Burma from the United States or by any U.S. person, freezes assets of the SPDC and other designated individuals and entities, including banks, parastatals and regime cronies, and prohibits the importation of Burmese-origin goods into the United States, as well as jadeite, rubies, and articles of jewelry containing them (even if the jadeite or rubies have been substantially transformed in third countries). Additionally, other U.S. legislation, such as the Narcotics Control Trade Act, the Foreign Assistance Act, the International Financial Institutions Act, the Export-Import Bank Act, the Export Administration Act, and the Customs and Trade Act, the Tariff Act (19 USC 1307), place further restrictions on financial transactions and assistance to Burma.

In September 2008, the United States Government identified Burma as one of three countries in the world that had “failed demonstrably” to meet its international counter-narcotics obligations. On November 13, 2008, the Office of Foreign Assets Control in the Department of the Treasury named 26 individuals and 17 companies tied to Burma’s Wei Hsueh Kang and the United Wa State Army (UWSA) as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Wei Hsueh Kang and the UWSA were designated by the President as Foreign Narcotics Kingpins on June 1, 2000 and May 29, 2003, respectively.

Enforcement and implementation issues and comments:

The GOB established a Department against Transnational Crime in 2004. Its mandate includes anti-money laundering activities. It is staffed by police officers and support personnel from banks, customs, budget, and other relevant government departments. There has been only one conviction for money laundering since 2004 out of 23 money laundering investigations.

U.S.-related currency transactions:

The prevalent informal use of the U.S. dollar in Burma makes cash courier/currency smuggling of U.S. dollars a common and attractive method of laundering illicit proceeds. The criminal underground faces little risk of enforcement and prosecution.

Records exchange mechanism with U.S.: None

International agreements:

Burma’s Mutual Assistance in Criminal Matters Law (MACML) 2004 Act provides that Burma can provide legal assistance according to stipulated conditions. Over the past several years, the GOB has expanded its counter narcotics cooperation with other states. The GOB has bilateral drug control agreements with India, Bangladesh, Vietnam, Russia, Laos, the Philippines, China, and Thailand. These agreements include cooperation on drug-related money laundering issues. Burma is not a member of the Egmont Group of Financial Intelligence Units.

Burma is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism – Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - No

Burma is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Myanmar%202008.pdf

Recommendations:

The Government of Burma (GOB) has in place a framework to allow mutual legal assistance and cooperation with overseas jurisdictions in the investigation and prosecution of serious crimes. To fully implement a strong anti-money laundering/counter-terrorist financing regime, Burma must provide the necessary resources to administrative and judicial authorities who supervise the financial sector so they can successfully apply and enforce the government’s regulations to fight money laundering. Burma also must continue to improve its enforcement of the new regulations and oversight of its financial sector. The GOB should end all government policies that facilitate the investment of drug money and proceeds from other crimes in the legitimate economy. The FIU should become a fully funded independent agency that is allowed to function without interference. Customs should be strengthened and authorities should monitor more carefully trade-based money laundering and how trade is used to sometimes provide counter-valuation for hawala/hundi networks. Burma should become a party to the UN Convention against Corruption. The GOB should take serious steps to combat smuggling of contraband and its link to the pervasive corruption that permeates all levels of business and government. The GOB should respond adequately to any foreign requests for cooperation. The GOB should criminalize the financing of terrorism. Finally, the GOB should adhere to all laws and regulations that govern anti-money laundering and counter-terrorist financing to which it is committed by virtue of its membership in the UN and the APG.

Burundi

Burundi is not a regional financial center. There are seven commercial banks operating in Burundi. The shareholders in these commercial banks frequently change; besides Burundian nationals (public and private), major foreign shareholders are West Africans (especially Nigerians), Rwandans, and Belgians. There is no significant black market for goods smuggled into the country. To date, there have been no reported cases of money laundering. However, reports exist indicating corrupt Burundian politicians are adept at devising methods of money laundering abroad, and they historically enjoy near-absolute impunity on their thefts of public funds.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

The Burundian penal code specifically makes money laundering illegal in Chapter 8, Article 441.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The penal code criminalizes terrorist financing in Chapter 4, Article 616.

Know-your-customer rules:

No information available.

Bank records retention: Yes

Burundian banks must retain records of financial transactions for a minimum of 15 years, and must surrender banking information if properly requested by judicial authorities.

Suspicious transaction reporting: No

A financial intelligence unit (FIU) in the Ministry of Finance has been created. No Suspicious Activity Reports were filed during 2009.

Large currency transaction reporting: No

A law requiring banks to report large deposits or transactions is under consideration.

Narcotics asset seizure and forfeiture: Yes

The Judicial Police or, alternatively, the Office of the National Prosecutor is responsible for tracing, seizing and freezing assets.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: No

Cooperation with foreign governments:

Burundi regularly cooperates in international criminal inquiries via Interpol.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Anti-money laundering/counter-terrorist financing (AML/CFT) legislation has been enacted, but the Government of Burundi (GOB) has made no related arrests or seizures of assets or conducted any investigations. Although the laws exist, the GOB has made no apparent effort to execute them, and shown little ability to do so.

No oversight or reporting obligations are applied to other, non-banking institutions, including exchange houses, cash couriers, and casinos, among others.

The Judicial Police are responsible for circulating lists of individuals and entities linked to Usama Bin Ladin, al-Qaida and the Taliban to banks and financial institutions, as stipulated in UNSCR 1267. The government has identified no terrorism-related assets as defined in UNSCR 1267.

U.S.-related currency transactions:

There are no indications that currency transactions in Burundi involve international narcotics trafficking proceeds or include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

The GOB has adopted no laws to allow for the exchange of records with the United States on money laundering investigations. However, it has expressed its willingness to cooperate with the U.S. on narcotics-trafficking, terrorism, and terrorist financing.

International agreements:

Burundi is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - No
  • the UN Convention against Transnational Organized Crime - No
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Recommendations:

Although anti-money laundering laws exist, there appears to be little will by the Government of Burundi to prosecute or commit resources to investigate alleged crimes, particularly those that could implicate high-level government officials. Furthermore, Burundian law enforcement officials lack training and the experience necessary to effectively investigate financial crimes. The GOB should develop the capacity of law enforcement, prosecutors and supervisory personnel and fully fund, implement and train the new financial intelligence unit as well as the Financial Crimes Investigation Unit. The GOB should ratify the UN International Convention for the Suppression of the Financing of Terrorism and become a party to the UN Convention against Transnational Organized Crime.

Cambodia

The major sources of money laundering in Cambodia are drug-trafficking, widespread human trafficking and corruption. Cambodia serves as a transit route for drug-trafficking from the Golden Triangle to international drug markets such as Vietnam, mainland China, and Taiwan. Cambodia’s fledgling anti-money laundering regime, a cash-based economy with an active informal banking system, porous borders with attendant smuggling, limited capacity of the National Bank of Cambodia (NBC) to supervise the rapidly expanding financial and banking sectors, and widespread corruption contribute to a significant money laundering risk.

Offshore Center:

No information provided.

Free Trade Zones:

No information provided.

Criminalizes narcotics money laundering: Yes

In 1996, Cambodia criminalized money laundering related to narcotics-trafficking through the Law on Drug Control.

Criminalizes other money laundering, including terrorism-related: Yes

With the 2007 enactment of the “Law on Anti-Money Laundering and Combating the Financing of Terrorism” (AML/CFT Law) and the subsequent May 2008 implementing regulations, Cambodia has created a foundation to combat acts of money laundering and terrorist financing within the banking sector. The 2009 Penal Code criminalizes money laundering in relation to proceeds from all serious crime, and makes the crime of money laundering a punishable offense.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The AML/CFT Law criminalizes terrorist financing.

Know-your-customer rules: Yes

Financial institutions are required to conduct customer due diligence when carrying out transactions that involve a sum in excess of 40 million riel (approximately $9,630) or foreign currency equivalent or a wire transfer that involves a sum in excess of 4 million riel (approximately $963) or other equivalent foreign currency.

Bank records retention: Yes

Article 11 of the AML/CFT Law requires reporting entities to keep records of customer identification and of transactions for at least five years after the account has been closed or the business relationship with the customer has ended.

Suspicious transaction reporting: Yes

The AML/CFT Law provides the framework for banks, casinos, realtors, and designated money service businesses to report suspicious transaction reports (STRs) to the Cambodian Financial Intelligence Unit (CAFIU). CAFIU analyzes received information and, when appropriate, may refer its analyses to law enforcement bodies. In 2009, CAFIU received 64 STRs.

Large currency transaction reporting: Yes

The AML/CFT Law requires banks and other financial institutions to report transactions over 40,000,000 Riel (approximately $9,630). However, large cash reporting is not yet consistently implemented due to lack of a unified reporting mechanism and a CAFIU database. In 2009, CAFIU received 162,126 currency transaction reports.

Narcotics asset seizure and forfeiture:

Article 30 of the AML/CFT Law provides for confiscation of property in cases where someone is found guilty of money laundering as stipulated in the penal code.

Under the 2007 Law on Counter Terrorism, the Minister of Justice may order the prosecutor to freeze property of a legal or natural person if that person is listed on the list of persons and entities belonging or associated with the Taliban and Al Qaeda issued by the UNSCR 1267 Sanction Committee’s consolidated list. There have been no reports of designated terrorist financiers using the Cambodian banking sector.

Narcotics asset sharing authority:

No information provided.

Cross-border currency transportation requirements: Yes

Although there is a legal requirement to declare to Cambodian Customs the movement of more than $10,000 into or out of the country, in practice there is no effective oversight of cash movement across the border or reporting to the CAFIU.

Cooperation with foreign governments:

There is no clear legal basis for such cooperation but Cambodian authorities have cooperated with foreign authorities in conducting investigations.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

There is a large black market in Cambodia for smuggled goods, including drugs and imported substances for local production of amphetamine-type stimulants such as methamphetamine. However, most smuggling is intended to circumvent official duties and evade tax obligations and involves items such as fuel, alcohol, optical disks, and cigarettes. Corruption influences some government officials and private sector associates that have control over the smuggling trade and its proceeds. Such proceeds are rarely transferred through the banking system or other financial institutions. Instead, they are readily channeled into land, housing, luxury goods or other forms of property.

Although the Ministry of Interior has a legal responsibility for general oversight of casino operations, in practice it exerts little supervision. Additionally, regulations necessary to establish reporting procedures and formats for designated nonfinancial businesses and professions (DNFBPs) to fully implement the AML/CFT Law are still in draft form.

U.S.-related currency transactions:

Bank operations are widely conducted on a cash basis and predominantly in U.S. dollars. The smuggling trade is usually conducted in U.S. dollars.

Records exchange mechanism with U.S.:

No information provided.

International agreements:

The AML/CFT Law authorizes the CAFIU to exchange information with its foreign FIU counterparts, and to conclude reciprocal cooperation agreements. Three MOUs have been signed with the FIUs in Malaysia, Sri Lanka, and Bangladesh, which allow the CAFIU to cooperate and exchange information on criminal activities connected with money laundering, financial crime, and terrorist financing.

Cambodia is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

In June 2004, Cambodia joined the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://apgml.org/documents/default.aspx?DocumentCategoryID=17

Recommendations:

Cambodia has yet to strengthen controls over its porous borders as well as significantly increase the capability of the CAFIU. The Government of Cambodia should issue additional decrees necessary to fully implement the AML/CFT Law - particularly implementing provisions relating to designated non-financial businesses and professions mandating compliance with reporting requirements. Cambodia should develop the capability of its law enforcement and judicial authorities to investigate, prosecute, and adjudicate financial crimes. Establishing a national coordination group, including all relevant agencies involved in AML/CFT issues should be considered a high priority. Cambodia should take specific steps to combat corruption.

Cameroon

A major regional financial center within the context of Central Africa, Cameroon is increasingly involved in international financial transactions. Most financial crimes occurring in Cameroon are derived more from domestic corruption and embezzlement rather than external malfeasance. However, instability in neighboring countries has resulted in Cameroon being used as a conduit to move funds from those countries to Europe. Cameroon is not a major narcotics destination. Trade-based money laundering (TBML) is rampant, utilizing the banking system or microfinance institutions. Cameroon is particularly vulnerable to cross-border bulk currency transactions and to companies transferring money internationally. There are currently no laws to regulate such transfers. Cameroon’s economy is heavily cash dependent, relying very little on electronic transfers and checks. Laundering money through investment in real estate is a growing problem.

As a member of the Economic and Monetary Community of Central African States (CEMAC), Cameroon shares a regional Central Bank (BEAC) with other member countries which have ceded banking regulatory sovereignty to this Central Bank.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related:

Anti-money laundering (AML) legislation exists in Cameroon, although its implementation is not yet complete. The CEMAC has promulgated two AML regulations which are considered law in Cameroon: Regulation No. 01/03-CEMAC/UMAC, on the Prevention and Combating of Money Laundering and Terrorism Financing in Central Africa, and Regulation No. 02/00/CEMAC/UMAC to Harmonize Exchange Control Regulations in CEMAC member states.

Following the adoption of UNSCRs1267 and 1373, CEMAC member countries formed the Central African Action Group against Money Laundering (GABAC). GABAC’s priority was to draft a common AML law applicable to all CEMAC countries. As a supranational law, it is enforceable in all member states without ratification by a member state parliament. Regional directive No. 01/03-CEMAC-UMAC, criminalizes money laundering and characterizes it as a serious crime.

Criminalizes terrorist financing: No

Know-your-customer rules: Yes

According to Banking Commission of Central African States (COBAC) guidelines, banks and other financial institutions are required to know, record, and report the identity of their customers engaging in “significant” transactions, including the recording of large currency transactions. COBAC has not articulated a definition of significant or large currency transactions.

Bank records retention: Yes

COBAC and CEMAC directives impose recordkeeping requirements on obligated institutions; records of significant transactions and the identities of customers conducting them must be retained for five years after the last transaction has been completed.

Suspicious transaction reporting: Yes

Obligated institutions must submit suspicious transaction reports (STRs) to the financial intelligence unit (FIU) - the National Agencies for Financial Investigation (ANIF). From its creation in 2005 until the end of December 2009, ANIF has received 450 STRs and passed 104 cases to judicial authorities for prosecution. The Ministry of Justice does not have statistics on prosecutions and outcomes.

Large currency transaction reporting:

Transactions in excess of the equivalent of $200,000 relating to foreign trade require an exchange transfer authorization from the Ministry of Finance.

Narcotics asset seizure and forfeiture:

Despite the possibility to have asset seizures and other resource confiscations, none has taken place so far.

Narcotics asset sharing authority:

No information available.

Cross-border currency transportation requirements: No

Cooperation with foreign governments:

ANIF cooperates informally with many other FIUs. ANIF was admitted to the Egmont group as a candidate member in 2009 and hopes to become a full member in 2010.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Because of the non-convertible CFA franc, a large black market for foreign currencies, and the high costs involved in electronic transfers from Africa, holding and traveling with large amounts of cash is quite common in Cameroon, both for legitimate purposes as well as to smuggle or hide illicit funds. Thus, tracking international money transfers is difficult.

Limited resources hamper the government’s ability to enforce the AML regulations, and local institutions and personnel lack the training and capacity to fully enforce the law and its attendant regulations. There is also reportedly some resistance in the judiciary and among prosecutors to applying the CEMAC regulation in the absence of Cameroonian legislation.

The list of individuals and entities included on the UN 1267 Sanctions Committee’s consolidated list is made available to financial institutions by ANIF.

U.S.-related currency transactions:

There are no indications that currency transactions in Cameroon involve international narcotics trafficking proceeds or include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States.

Records exchange mechanism with U.S.:

No information provided.

International agreements:

ANIF has draft cooperation agreements pending with 11 countries.

Cameroon is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Cameroon is not a member of a Financial Action Task Force-style regional body (FSRB).

Recommendations:

The Government of Cameroon (GRC) should work with the Central Bank, COBAC, and the ANIF to fully develop and implement applicable regulations to establish a complete anti-money laundering/counter-terrorist financing regime that adheres to international standards. These same agencies should also provide training and outreach to covered entities regarding their legal requirements and obligations. ANIF should work to improve coordination with law enforcement and judicial authorities, with the objective of enhancing investigations and obtaining convictions. The GRC should work to mitigate its vulnerabilities, including enacting cross-border currency reporting requirements and training its agents at points of entry in the identification and interdiction of cash smuggling. As a member of GABAC, Cameroon should work with other member countries and with the Secretariat to make this regional body a viable FSRB. Cameroon should criminalize terrorist financing and fulfill its obligations under the UN International Convention for the Suppression of the Financing of Terrorism.

Canada

Money laundering in Canada is primarily associated with drug trafficking and financial crimes, particularly those related to fraud. According to the Canadian Security Intelligence Service (CSIS), criminals launder an estimated $5 to $17 billion each year. With roughly $1.5 billion in trade crossing the United States and Canadian borders each day, both governments share concerns about illicit cross-border movements of currency, particularly the proceeds of drug trafficking. Organized criminal groups involved in drug trafficking also remain a challenge. The Criminal Intelligence Service Canada estimates that approximately 750 organized crime groups operate in Canada, with approximately 80 percent involved in the illicit drug trade.

Offshore Center: No

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Section 462.31 of the Canadian Criminal Code criminalizes money laundering. Illicit trafficking in narcotic drugs and psychotropic substances are criminalized in Sections 5 to 7 of the Controlled Drugs and Substances Act.

Criminalizes other money laundering, including terrorism-related: Yes

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), enacted in 2001, expands the list of predicate money laundering offenses to cover all indictable offenses, including terrorism and trafficking in persons. Following subsequent amendments, this legislation applies to banks; credit unions; life insurance companies; trust and loan companies; brokers/dealers of securities; foreign exchange dealers; money services businesses; sellers and redeemers of money orders; accountants; real estate brokers; casinos; lawyers; notaries (in Québec and British Columbia only) and dealers in precious metals and stones. However, lawyers in several provinces have successfully filed legal challenges to the applicability of the PCMLTFA to them based upon common law attorney-client privileges, so lawyers are not completely covered by the AML provisions.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The Anti-Terrorist Act (ATA) of 2001 criminalizes terrorist financing. Section 83 of the Criminal Code includes the corresponding relevant provisions.

The Government of Canada designates suspected terrorists and terrorist organizations on the UN 1267 Sanctions Committee’s consolidated list.

Know-your-customer rules: Yes

Section 53 of the PCMLTF Regulations requires financial institutions to ascertain the identity of any individual for whom they have to keep a large cash transaction record (cash transactions of CAD 10,000 or more). MSBs are required to keep client information records if they have an on-going business relationship with a client, or for occasional transactions over CAD 3,000, including remittances, wire transfers, and the issuance or redemption of money orders, traveler’s checks or other similar negotiable instruments. However, there is no requirement to identify customers where there is a suspicion of money laundering or terrorist financing.

Bank records retention: Yes

Canadian financial institutions are required to maintain business transaction records for a minimum of five years.

Suspicious transaction reporting: Yes

Under Section 7 of the PCMLTFA, all financial institutions covered by the PCMLTFA are required to report suspicious; alternative remittance systems, such as hawala, hundi, and chitti; and Canada Post for money orders are also subject to the report. There is no requirement for financial institutions to submit suspicious transaction reports on attempted transactions. Between April 2008 and the end of March 2009, FINTRAC, Canada’s financial intelligence unit (FIU), received 67,740 STRs (which now includes attempted suspicious transactions, not just completed transactions.

Large currency transaction reporting: Yes

The PCMLTFA creates a mandatory reporting system for cash transactions and international electronic funds transfers over CAD 10,000. FINTRAC received more than 6.2 million large cash transaction reports and nearly 18 million electronic funds transfer reports (which includes funds that enter and exit the country) between April 2008 and the end of March 2009.

Narcotics asset seizure and forfeiture: Yes

The Canadian government has asset seizure and forfeiture ability. Additionally, individual provinces have enacted forfeiture laws.

Narcotics asset sharing authority: Yes

The Canadian Sharing Regulations allow Canada to share with a foreign government that provided information relevant to or participated in an investigation or prosecution that resulted in the forfeiture. There also must be a reciprocal forfeiture agreement with Canada for such sharing to be authorized. Canada has entered into many asset sharing arrangements with foreign states and is negotiating a number of additional agreements. The United States has an asset forfeiture sharing agreement with Canada.

Cross-border currency transportation requirements: Yes

The PCMLTFA requires reporting of all cross-border movement, including through the mail system, of currency and monetary instruments totaling or exceeding CAD $10,000 (approximately $9533), to the Canadian Border Services Agency (CBSA). FINTRAC received 42,768 cross-border reports (which includes seizures), between April 2008 and the end of March 2009.

Cooperation with foreign governments (including refusals): Yes

There are no impediments to cooperation. The Canadian financial intelligence unit (FIU) is able to share intelligence with its foreign counterparts.

Canada has longstanding agreements with the U.S. on law enforcement cooperation. Recent cooperation concerns focus on the inability of U.S. and Canadian law enforcement officers to exchange information promptly concerning suspicious sums of money found in the possession of individuals attempting to cross the United States-Canadian border. A 2005 MOU between the CBSA and the U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE) on exchange of cross-border currency declarations expanded the extremely narrow disclosure policy. However, the scope of the exchange remains restrictive. To remedy this, the CBSA is developing an information-sharing MOU with the United States related to its Cross-Border Currency Reporting Program.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

To bolster monitoring of the MSB sector, in June 2008 a national registry for Money Services Business was also implemented. By March 31, 2009, 803 MSBs registered representing roughly 21,000 branches and agents.

U.S.-related currency transactions:

Canada and the United States are neighbors and major trading partners. Most border commerce between these two nations is legitimate.

Records exchange mechanism with U.S.:

There are numerous treaties and agreements between Canada and the United States. The Mutual Legal Assistance Treaty (MLAT) enables U.S. and Canadian authorities to cooperate on judicial assistance and extradition. The bilateral asset-sharing agreement enables U.S. and Canadian authorities to share assets.

International agreements:

Canada is a party to various information exchange agreements.

Canada is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Canada belongs to the OAS Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering. Canada is a member of the Financial Action Task Force (FATF) as well as the Asia/Pacific Group on Money Laundering (APG), and is a supporting nation of the Caribbean Financial Action Task Force (CFATF); both APG and CFATF are FATF-style regional bodies. Canada’s most recent mutual evaluation can be found here: http://www.fatfgafi.org/document/32/0,3343,en_32250379_32236982_35128416_1_1_1_1,00.html

Recommendations:

The Government of Canada (GOC) has demonstrated a strong commitment to combating money laundering and terrorist financing both domestically and internationally. In 2009, the GOC continued enhancing its AML/CFT regime and reducing its vulnerability to money laundering and terrorist financing. However increased efforts are needed in preventing the production and exportation of drugs; oversight and enforcement of AML/CFT measures within the casino industry; improved communication between FINTRAC and law enforcement authorities; maintenance and monitoring of the money services business registry; and enhancements to existing cross-border reporting with increased efforts to share information with U.S. counterparts. The GOC also should continue to ensure its privacy laws do not excessively prohibit provision of information that might lead to prosecutions and convictions to domestic and foreign law enforcement.

Cape Verde

Cape Verde is not considered an important regional financial center. Due to its strategic location, money laundering in Cape Verde is primarily related to the proceeds from illegal narcotics trafficking, especially cocaine, routed from Latin America via Cape Verde and West Africa to markets in Europe.

Offshore Center: Yes

Cape Verde licenses offshore banks and businesses. Physical presence is required. There are ten offshore banks and two insurance companies. Anonymous nominee directors and/or trustees are not allowed. The offshore financial sector is regulated by the onshore regulator. Regulations governing offshore banks and businesses do not differ in any key respect from regulations governing domestic banks and businesses.

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

Money laundering is a criminal offense in Cape Verde. The law, enacted in 2002, was amended in April 2009. The law applies with equal force regardless of whether the underlying criminal activity was committed in Cape Verde or abroad.

Criminalizes terrorist financing: Yes

The Government of Cape Verde (GOCV) criminalizes terrorist financing through article 25 of Law number 39/VII/2009 of April 2009.

Know-your-customer rules:

Domestic and offshore banks and other financial institutions are required to determine, record, and report the identity of customers engaging in significant financial transactions.

Bank records retention: Yes

Banks and other financial institutions are required to maintain records necessary to reconstruct significant transactions through financial institutions for a five-year period following the relevant transaction.

Suspicious transaction reporting: Yes

Anti-money laundering/counter-terrorist financing (AML/CFT) controls are applied to offshore banks, non-bank financial institutions (NBFIs) and to designated non-financial businesses and professions (DNFBPs). They are required to report suspicious and/or large financial transactions to Cape Verde’s financial intelligence unit (FIU), the administrative body with the function of collecting, centralizing, treating and analyzing information related to money laundering. Nonetheless, to date only banks and exchange houses have reported suspicious transactions. In 2009, 21 suspicious transaction reports were filed with the FIU. Three referrals resulted in investigation.

Large currency transaction reporting:

Significant transactions (undefined) are to be reported to the FIU.

Narcotics asset seizure and forfeiture:

The money laundering law, as amended in 2009, establishes systems for the identification, freezing, and seizure of narcotics-related assets. The 2009 amendments broaden the scope of assets subject to seizure to include all assets that authorities reasonably believe have derived from money laundering activities. Authorities may only seize such assets, however, if they can prove a relationship between the assets and a specific crime. Legitimate businesses can also be seized if they are being used to launder drug money, support terrorist activity, or are otherwise related to criminal activity. The law allows for civil as well as criminal forfeiture.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements:

Under law number 39/VII/2009 of April 2009, cross-border currency reporting requirements for both inbound and outbound currency are limited to amounts exceeding one million CVE (approximately $13,900). There are no mandatory declaration forms used at border crossings. Cash declaration reports are entered into a database and information is shared between customs and the FIU.

Cooperation with foreign governments:

The GOCV has adopted laws and regulations that allow for the exchange of records with other countries on investigations and proceedings related to narcotics, all-source money laundering, and terrorist financing.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

The FIU is operational, but still not adequately staffed. Although the law provides for its budgetary and operational independence, in practice it is dependent on the Central Bank and housed within the Central Bank’s headquarters.

In October 2009, five persons were convicted and sentenced for drug trafficking, organized crime, and money laundering activities. Cape Verdean authorities seized 407.8 million CVE (approximately $5.6 million) worth of assets in connection with these convictions.

Cape Verde has circulated to its financial institutions the list of individuals and entities included on the UN 1267 sanctions committee’s consolidated list. The GOCV also circulated the lists of terrorist organizations/financiers designated by the USG and the European Union (EU) under relevant authorities. No terrorist-financed activities have been identified in Cape Verde.

U.S.-related currency transactions: No

Records exchange mechanism with U.S.:

The GOCV cooperates with requests from appropriate U.S. law enforcement agencies investigating financial crimes, including those related to narcotics. There is no mutual legal assistance treaty between Cape Verde and the United States.

International agreements: The GOCV has entered into bilateral judicial agreements to cover all areas of cooperation in criminal matters with Spain, Portugal, Senegal, and Guinea Bissau.

Cape Verde is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

The GOCV is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body.  Its most recent mutual evaluation report can be found here: http://www.giaba.org/media/M_evalu/Cape%20Verde%20AMLCFT%20Detailed%20MER%20Final%2005%2021%202007.pdf

Recommendations:

The Government of Cape Verde should continue to implement AML/CFT countermeasures that adhere to international standards. The GOCV should ensure the FIU has the necessary autonomy and resources to function effectively.

Cayman Islands

The Cayman Islands, a United Kingdom (UK) Caribbean overseas territory, continues to make strides in strengthening its anti-money laundering/counter-terrorist financing (AML/CFT) regime. However, the islands remain vulnerable to money laundering due to the existence of a significant offshore sector. Most money laundering that occurs in the Cayman Islands is primarily related to fraud and drug trafficking. Due to its status as a zero-tax regime, the Cayman Islands are also considered attractive to those seeking to evade taxes in their home jurisdiction.

Offshore Center: Yes

The Cayman Islands is home to a well-developed offshore financial center that provides a wide range of services, including banking, structured finance, investment funds, various types of trusts, and company formation and management. As of December 2009, there are approximately 278 banks, 159 active trust licenses, 773 captive insurance companies, seven money service businesses, and more than 62,572 exempt companies licensed or registered in the Cayman Islands. According to the Cayman Islands Monetary Authority (CIMA), at year end 2009, there were more than 10,000 registered hedge funds. Shell banks are prohibited, as are anonymous accounts. Bearer shares can only be issued by exempt companies and must be immobilized. Gambling is illegal; and the Cayman Islands do not permit the registration of offshore gaming entities. As an offshore financial center with no direct taxes and a strong reputation for having a stable legal and financial services infrastructure, the Cayman Islands is attractive to businesses based in the United States and elsewhere for legal purposes but also equally attractive to criminal organizations seeking to disguise the proceeds of illicit activity.

Free Trade Zones: No

Criminalizes narcotics money laundering: Yes

The Misuse of Drugs Law and the Proceeds of Crime Law (POCL) criminalize money laundering related to narcotics trafficking and all other serious crimes.

Criminalizes other money laundering, including terrorism-related: Yes

The POCL came into effect in September 2008. The law repeals and replaces the Proceeds of Criminal Conduct Law (2007 revision). The POCL introduces the concept of criminal property (includes terrorist property) that constitutes a person’s direct or indirect benefit from criminal conduct; tax offenses are not included. The term criminal conduct is also amended to cover any offense. Extraterritorial and appropriate ancillary offenses are covered in domestic legislation and criminal liability extends to legal persons. The POCL also consolidates the law relating to the confiscation of the proceeds of crime and the law relating to mutual legal assistance in criminal matters.

Banks, trust companies, investment funds, fund administrators, insurance companies, insurance managers, money service businesses, and corporate service providers as well as most designated non-financial businesses and professions, are subject to the AML/CFT regulations set forth in the Money Laundering (Amendment) Regulations 2008, which came into force on October 24, 2008. Dealers of precious metals and stones and the real estate industry are also subject to AML/CFT regulations.

Criminalizes terrorist financing: Yes

The Cayman Islands is subject to the United Kingdom Terrorism (United Nations Measure) (Overseas Territories) Order 2001. The Cayman Islands criminalizes terrorist financing through the passage of the Terrorism Bill 2003, which extends criminal liability to the use of money or property for the purposes of terrorism. It also contains a specific provision on money laundering related to terrorist financing. While lists promulgated by the UN Sanctions Committee and other competent authorities are legally recognized, there is no legislative basis for independent domestic listing and delisting. There have been no terrorist financing investigations or prosecutions to date in the Cayman Islands.

Know-your-customer rules: Yes

CIMA’s Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing (Guidance Notes), as last amended in December 2008, require know your customer (KYC) identification requirements for financial institutions and certain financial services providers. The regulations require due diligence measures for individuals who establish a new business relationship, engage in one-time transactions over KYD $15,000 (approximately $18,293), or who may be engaging in money laundering. The Guidance Notes also address correspondent banking and enhanced due diligence procedures. Financial institutions are prohibited from correspondent relationships with shell banks. In addition, financial institutions must satisfy that respondent financial institutions in a foreign country do not permit their accounts to be used by shell banks.

Bank records retention: Yes

CIMA’s Guidance Notes require institutions to keep appropriate evidence of client identification, account opening or new business documentation. Adequate records identifying relevant financial transactions should be kept for a period of five years following the closing of an account, the completion of the transaction or the termination of the business relationship.

Suspicious transaction reporting: Yes

The POCL requires mandatory reporting of suspicious transactions and makes failure to report a suspicious transaction a criminal offense. A suspicious activity report (SAR) must be filed once it is known or suspected that a transaction may be related to money laundering or terrorist financing. There is no threshold amount for the reporting of suspicious activity. Obligated entities currently report suspicious activities to the Financial Reporting Authority (FRA), the Cayman Islands’ financial intelligence unit. From 2007 to date the FRA has reviewed over 300 reports.

Large currency transaction reporting: No

There is no system in place in the Cayman Islands requiring the reporting of large currency transactions above a certain threshold.

Narcotics asset seizure and forfeiture: Yes

The Cayman Islands has a comprehensive system in place for the confiscation, freezing, and seizure of criminal assets. In addition to criminal forfeiture, civil forfeiture is allowed in limited circumstances. The POCL provides the Attorney-General with the ability to issue restraint orders once an investigation has begun without the need to bring charges within 21 days. Additionally, the FRA can request a court order to freeze bank accounts if it suspects the account is linked to money laundering or terrorist financing. Confiscation orders also may now be issued by the Attorney General upon conviction in either Summary or Grand Courts. The legislation also permits the Attorney General to bring civil proceedings for the recovery of the proceeds of crime. Over $120 million in assets has been frozen or confiscated since 2003. The confiscation, freezing, and seizure of assets related to terrorist financing are permitted by law.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements: Yes

On August 10, 2007, the Cayman Islands enacted the Customs (Money Declarations and Disclosures) Regulations, 2007. These regulations establish a mandatory declaration system for the inbound cross-border movement of cash and a disclosure system for money that is outbound. All persons transporting money totaling KYD $15,000 (approximately $18,293) or more into the Cayman Islands are required to declare such amount in writing to a Customs officer at the time of entry. Persons carrying money out of the Cayman Islands are required to make a declaration upon verbal or written inquiry by a Customs officer.

Cooperation with foreign governments: Yes

No known impediments to cooperation exist.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In March 2008, the United Kingdom published The Foreign and Commonwealth Office: Managing Risk in the Overseas Territories. The report noted that, of the British Territories, only the Cayman Islands have achieved successful prosecutions of local participants for offshore money laundering offenses. There have been only five money laundering convictions in the Cayman Islands since 2003, which is not a large amount considering the size of its financial sector and the volume of offshore entities holding assets there.

In July 2008, the Financial Crime Unit (FCU) of the Royal Cayman Islands Police Service arrested an individual in connection with the collapse of the Grand Island Fund following serious irregularities in the fund’s trading activities. The collapse of the fund is believed to involve millions of dollars. The FCU investigation is ongoing.

Nonprofit organizations must be licensed and registered, although there is no competent authority responsible for their supervision.

U.S.-related currency transactions:

In July 2008, the U.S. Government Accountability Office (GAO) issued a report entitled: “Cayman Islands: Business and Tax Advantages Attract U.S. Persons and Enforcement Challenges Exist.” The report was prepared in response to a Congressional inquiry. The report found that U.S. persons who conduct financial activity in the Cayman Islands commonly do so to gain business advantages, such as facilitating U.S.-foreign transactions or to minimize or obtain tax advantages; while much of this activity is legal, some is not. In June 2008, two former Bear Stearns hedge fund managers were arrested and indicted in the U.S. on conspiracy and fraud charges related to the collapse of two Cayman Islands funds they oversaw. A companion civil suit to recover over $1.5 billion in losses was filed against four individuals and companies in the Cayman Islands

Records exchange mechanism with U.S.:

In 1986, the United States and the United Kingdom signed a Mutual Legal Assistance in Criminal Matters Treaty (MLAT) concerning the Cayman Islands. By a 1994 exchange of notes, Article 16 of that treaty has been deemed to authorize asset sharing between the United States and the Cayman Islands. The GAO report highlights the cooperation between U.S. agencies and their Cayman counterparts in investigating money laundering, financial crimes, and tax evasion. However, the Cayman Islands does not engage readily in informal mutual legal assistance with U.S. law enforcement agencies, insisting that requests be submitted through formal MLAT channels, which decreases the often necessary expediency of obtaining evidence and restraint of criminal assets. Also, although generally helpful when receiving formal MLAT assistance requests from the U.S., the Cayman Islands has not been proactive with regard to money laundering prosecutions based on its own investigations. The FRA and the Financial Crimes Enforcement Network (FinCEN) have a memorandum of understanding in place.

International agreements:

The FRA has MOUs in place with the FIUs of Australia, Canada, Chile, Guatemala, Indonesia, Mauritius, Nigeria, and Thailand.

Cayman Islands are a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes
  • the UN Convention against Transnational Organized Crime - Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

The Cayman Islands is a member of the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body. It’s most recent mutual evaluation can be found here: http://www.cfatf-gafic.org//mutual-evaluation-reports.html

Recommendations:

The Government of the Cayman Islands bolstered its AML/CFT regime to be in accordance with international standards. However, for a jurisdiction with one of the largest and most developed offshore sectors, the Cayman Islands record of investigations and prosecutions is poor. The Cayman Islands should do more to strengthen its AML/CFT regime, to include ensuring the full implementation of provisions related to dealers in precious metals and stones as well as the disclosure/declaration system for the cross-border movement of currency. The Cayman Islands also should provide for the adequate supervision of nonprofit organizations. In addition, the Cayman Islands should work to fully develop its capacity to proactively investigate money laundering and terrorist financing cases.

China, People’s Republic of

The Government of the People’s Republic of China has continued to take steps to strengthen its anti-money laundering/counter-terrorist financing (AML/CFT) framework during the period of 2008-2009. Money laundering remains a serious concern as China restructures its economy and develops its financial system. Narcotics trafficking, smuggling, trafficking in persons, counterfeiting of trade goods, trade based money laundering, corruption, fraud, tax evasion, and other financial crimes are major sources of laundered funds. Most money laundering cases currently under investigation involve funds obtained from corruption and bribery. Proceeds of tax evasion, recycled through offshore companies, often return to China disguised as foreign investment and, as such, receive tax benefits. Chinese officials have noted that most acts of corruption in China are closely related to economic activities that accompany illegal money transfers. Observers register increasing concern regarding underground banking and trade-based money laundering. Value transfer via trade goods, including barter exchange, is a common component in Chinese underground finance. Many Chinese underground trading networks in Africa, Asia, the Middle East, and the Americas participate in the trade of Chinese-manufactured counterfeit goods. This trade-based mechanism could also present terrorist financing risks. Reportedly, the proceeds of narcotics produced in Latin America are laundered via trade by purchasing Chinese manufactured goods (both licit and counterfeit) in an Asian version of the Black Market Peso Exchange.

Offshore Center:

No information was available on the status of any offshore centers.

Free Trade Zones: Yes

China offers a broad range of investment incentives at the national, regional, and local levels. Foreign investors stand to benefit from reduced fees related to national and local income taxes, land use fees, and import/export duties with the country’s Special Economic Zones (SEZ’s) of Shenzhen, Shantou, Zhuhai, Xiamen, and Hainan, 14 coastal cities, designated development zones (100+) and inland cities.

Criminalizes narcotics money laundering: Yes

China introduced Article 349 of the Penal Code in December 1990 to criminalize the laundering of proceeds generated from drug-related offenses.

Criminalizes other money laundering, including terrorism-related: Yes

Article 191 of the Penal Code, most recently amended in June 2006, criminalizes the laundering of proceeds generated from seven broad categories of offences (drugs, smuggling, organized crime, terrorism, corruption or bribery, disrupting the financial management order and financial fraud). Article 312 criminalizes money laundering on the basis of an all-crimes approach, and criminalizes complicity in concealing the proceeds of criminal activity; an amendment to this article in February 2009 imposes criminal liability for money laundering on corporations.

On November 10, 2009, the Supreme People’s Court released a judicial interpretation on money laundering that further expands the application of the law to non-banking institutions. The judicial announcement, entitled “The Interpretation of Issues Concerning Concrete Applicability of Laws in handling Money Laundering Cases,” addresses money laundering typologies using non-banking/financial activities, including pawning, leasing, lottery, gambling, awards, and cash-intensive commercial operations. The Judicial Interpretation has not yet been codified in law or regulation.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

The Supreme People’s Court Judicial Interpretation issued on November 10, 2009 expands the provisions of Articles 191, 312 and 349 of the Penal Code by defining the sponsorship of terrorism as raising and providing funds or material support for terrorism. The notice addresses two particular Penal Code deficiencies related to the criminalization of terrorist financing. The language “financially support” was previously deemed to be narrow in scope but is now clearly defined as encompassing not only funds, but also property, premises and any other kinds of support. Additionally the sole collection of funds in the context of a terrorist financing scheme is deemed a violation of the Penal Code.

China’s implementation of UNSCRs 1267 and 1373 is deficient and does not include all the elements necessary to satisfactorily fulfill their provisions. China has not established an effective mechanism for dealing with the freezing of assets of UNSCRs 1267 and 1373-designated terrorists. China relies on a normal criminal procedure regime for seizure and confiscation of terrorist assets. There is no preventative mechanism in place for freezing terrorist assets without delay and no monitoring of compliance by financial regulators.

Know-your-customer rules: Yes

In 2007, China adopted a series of regulations to both refine customer due diligence (CDD) requirements and expand the provisions to apply to both the insurance and securities sectors. The current legislative framework for CDD measures in the financial sector consists of the following: “Rules for Anti-Money Laundering by Financial Institutions” (AML Rules); and “Administrative Rules for Financial Institutions on Customer Identification and Record Keeping of Customer Identity and Transaction Information” (CDD Rules). The AML Rules obligate financial institutions to perform CDD, regardless of the type of customer (business or individual), type of transaction, or level of risk. The law explicitly prohibits anonymous accounts or accounts in fictitious names. Banks must identify and verify customers when carrying out occasional transactions over RMB 10,000, or $1,000 equivalent, or when providing cash deposit or withdrawal services over RMB 50,000, or $10,000 equivalent. Similar provisions cover a range of cash and other transactions for the insurance sector.

The CDD Rules extend requirements relating to the identification of legal persons to all covered financial institutions and require all financial institutions to identify and verify their customers, including the beneficial owner. On December 30, 2008, the People’s Bank of China (PBC) issued a Notice further interpreting “beneficial owner” as persons including but not limited to: 1) entities controlling the account; and 2) entities not identified by the customer but who are authorized to handle transactions or eventually enjoy financial benefit. The Notice requires financial institutions to strengthen identification of foreign PEPs.

Bank records retention: Yes

Each financial institution must establish a program to keep required customer identity records and transaction records for at least five years following the termination of the business relationship or the completion of a transaction.

Suspicious transaction reporting: Yes

The Administrative Rules for the Reporting of Large-Value and Suspicious Transactions by Financial Institutions (LVT/STR Rules) as amended on June 21, 2007 require financial institutions and the insurance and securities sector to report transactions that meet specified criteria and/or are deemed suspicious in nature or related to terrorist financing. The LVT/STR Rules were amended on June 21, 2007, to require financial institutions to report suspicious transactions. In 2009, the PBC issued AML/CFT guidance for bankcard, money clearing, and payment and clearing organizations, subjecting each to the above noted STR requirements. In May 2009, the Legislative Affairs Office of the State Council extended similar requirements to the lottery industry.

Large currency transaction reporting: Yes

The current AML and LVT/STR Rules require reporting of cash deposits or withdrawals of over RMB 200,000 (approximately $29,000) or foreign-currency withdrawals of over $10,000 to the financial intelligence unit (FIU) at the PBC. Additionally money transfers between companies exceeding RMB 2 million (approximately $294,000) or between an individual and a company greater than RMB 500,000 (approximately $73,500) in one day must be reported. Financial institutions that fail to meet reporting requirements in a timely manner are subject to a range of administrative penalties and.

Narcotics asset seizure and forfeiture: Yes

China legislatively provides for the tracing, freezing and seizure of criminal assets within the penal code, criminal procedure code and AML law. The penal code imposes mandatory confiscation of (1) illegal proceeds; (2) property or interest derived from the illegal proceeds, (3) laundered assets; and (4) “intended” instrumentalities. The criminal procedure code authorizes law enforcement authorities (including the judiciary) to identify and trace criminal proceeds and instrumentalities and outline the process to use to seize and freeze assets. The AML Rules grant to the AML Bureau of the PBC the use of “temporary freezing measures” when a client under investigation initiates a payment to a foreign country.

Narcotics asset sharing authority: No

Chinese law neither authorizes nor prohibits the sharing of confiscated funds. Because the law is silent on the matter, in some instances, China has chosen to share assets. Reportedly, China has shared funds with the United States; and the Department of Justice is pursuing a bilateral arrangement to lead to future cooperation.

Cross-border currency transportation requirements: Yes

China’s current system of cross-border currency declaration focuses solely on the movement of cash, with no coverage of bearer negotiable instruments. Travelers are required to declare cross-border transportation of cash exceeding RMB 20,000 for local currency or the foreign equivalent (approximately $2,940). In 2008 the PBC, General Administration of Customs and State Administration of Foreign Exchange drafted a new administrative rule to include both cash and negotiable instruments, and to raise the threshold reporting amount. While the document has been circulated for comment, as of December 2009, it had not been approved, and the PBC and the customs authority were still in discussions.

Cooperation with foreign governments (including refusals): Yes

Limitations in China’s ability to enforce foreign forfeiture orders impede its ability to cooperate with foreign governments.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

Although the CDD Rules require all financial institutions to identify beneficial owners, in practice, this requirement may be limited to the natural person who ultimately controls—as opposed to owns—a customer. The December 30, 2008 PBC Notice further interpreting beneficial ownership may constitute “other enforceable means” but is not equivalent to a regulation.

China has implemented several criteria related to the identification of politically exposed persons (PEPs); however, it is unclear whether current legislation requires senior management approval for account opening or sufficient measures to establish the source of funds.

Although China has had some success at combating illegal underground banking, the country’s cash-based economy, combined with robust cross-border trade, contributes to a high volume of difficult-to-track large cash transactions. While China is adept at tracing formal financial transactions, the large size of the informal economy—estimated by the Chinese Government at approximately ten percent of the formal economy, but quite possibly much larger—means that tracing informal financial transactions presents a major obstacle to law enforcement. The prevalence of counterfeit identity documents and underground banks, which in some regions reportedly account for over one-third of lending activities, further hamper AML/CFT efforts.

According to the PBC, in 2007 authorities discovered 89 cases of money laundering involving RMB 28.8 billion (approximately $4.24 billion). In the first half of 2008, the PBC sanctioned 12 financial institutions involved in money laundering, with fines totaling RMB 2.25 million (approximately $331,000). China reports convictions for money laundering offenses in 2008 as follows: under Penal Code Art. 191 - 12 cases finalized, 15 individuals convicted; under Penal Code Art. 312 – 10,318 cases finalized, 17,650 individuals convicted; and under Penal Code Art. 349 – 59 cases finalized, 69 individuals convicted.

Law enforcement agencies have authority to use a wide range of powers, including special investigative techniques, when conducting investigations of money laundering, terrorist financing and predicate offenses. Reportedly, however, law enforcement and prosecutorial authorities focus on pursuing predicate offenses, to the exclusion of AML/CFT.

Authorities do not appear to effectively use captured data on cross-border currency movements for money laundering or terrorist financing investigations.

U.S.-related currency transactions:

The extent of the linkages between underground banking and the large expatriate Chinese community remains unknown but is of potential concern.

Records exchange mechanism with U.S.:

A mutual legal assistance agreement (MLAA) between the United States and China entered into force in March 2001. The MLAA provides a basis for exchanging records in connection with narcotics and other criminal investigations and proceedings. China is not a member of the Egmont Group of cooperating Financial Intelligence Units. Since Egmont membership is the primary basis upon which FinCEN exchanges information with foreign jurisdictions, China’s non-membership impedes information exchange with the U.S. FIU. However, the Chinese FIU reportedly has in place certain infrastructure to securely exchange and safeguard information between units.

The United States and China cooperate and discuss money laundering and enforcement issues under the auspices of the U.S./China Joint Liaison Group’s (JLG) subgroup on law enforcement cooperation. In addition, the United States and China have established a Working Group on Counterterrorism that meets on a regular basis. In July 2009, during the US-China Strategic and Economic Dialogue (S&ED), the United States and China agreed to strengthen their cooperation on AML/CFT, as well as counterfeiting. The U.S. and China are in the process of establishing an AML/CFT working group under the S&ED framework. It is expected the S&ED Illicit Finance Working Group will hold its first meetings in early 2010. Proposed agenda items include anti-corruption/asset recovery, trade based money laundering, and counterfeit currency issues.

International agreements:

China has signed mutual legal assistance treaties with over 24 countries and has entered into some 70 MOUs and cooperation agreements with over 40 countries. China has signed extradition agreements with 30 countries. China also has established working groups with other countries to cooperate and discuss money laundering and enforcement issues as well as counter-terrorism matters.

China is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism - Yes*
  • the UN Convention against Transnational Organized Crime - Yes*
  • the 1988 UN Drug Convention - Yes*
  • the UN Convention against Corruption - Yes*

*China has registered Reservations that preclude it from being bound to certain articles of the above conventions.

China is currently a member of the Financial Action Task Force (FATF) and two FATF-style regional bodies. China became a member in the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) in 2004. China is a founding member of the Asia/Pacific Group on Money Laundering (1997), and reactivated its membership in 2009. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/33/11/39148196.pdf

Recommendations:

The Chinese Government should continue to take steps to develop a viable AML/CFT regime consistent with international standards. China should continue to develop a regulatory and law enforcement environment designed to prevent and deter money laundering, and it should raise awareness within law enforcement and the judiciary of money laundering as a criminal offense. Specifically, China should ensure that law enforcement and prosecutorial authorities pursue money laundering and terrorist financing offenses, and not simply treat them as a subsequent byproduct of investigations into predicate offenses. China’s Anti-Money Laundering Law and related regulations should apply to a broader range of non-financial businesses and professions. Authorities should assess the application of sanctions for noncompliance with identification, due diligence and record-keeping requirements to ensure they have a genuinely dissuasive effect. China should ensure its judicial interpretations that clarify and strengthen its AML/CFT regime—including clarifications of the money laundering and terrorist financing offenses-- become codified in law. China should continue to increase its ability to honor foreign law enforcement forfeiture requests in areas other than narcotics and should ensure that it can enforce both criminal and in rem forfeiture requests. In addition, China should take immediate steps to effectively implement the UNSCRs and strengthen its mechanisms for freezing terrorist assets.

Colombia

The Government of Colombia (GOC) is a regional leader in the fight against money laundering. The GOC has a forceful anti-money laundering/counter-terrorist financing (AML/CFT) regime. However, the laundering of money from Colombia’s illicit cocaine and heroin trade continues to penetrate its economy and affect its financial institutions. Both drug and money laundering organizations use a variety of methods to repatriate their illicit proceeds to Colombia. These methods include the Black Market Peso Exchange (BMPE), bulk cash smuggling, reintegro (wire transfers), and more recent methods, such as using electronic currency and prepaid debit cards. In addition to drug-related money laundering, laundered funds are also derived from commercial smuggling for tax and import duty evasion, kidnapping, arms trafficking, and terrorism connected to violent, illegally-armed groups and guerrilla organizations. Further, money laundering is carried out to a large extent by U.S. Government-designated terrorist organizations. Criminal elements have used the banking sector, including exchange houses, to launder money. Money laundering also has occurred via trade and the non-bank financial system, especially related to transactions that support the informal or underground economy. The trade of counterfeit items in violation of intellectual property rights is an ever increasing method to launder illicit proceeds. Casinos and free trade zones in Colombia present opportunities for criminals to take advantage of inadequate regulation and transparency. Although corruption of government officials remains a problem, its scope has decreased significantly in recent years.

Offshore Center: No

Free Trade Zones: Yes

Currently there are 46 free trade zones and the GOC is planning to authorize more to attract greater investment and create more jobs. In 2005, Colombia’s Congress passed a comprehensive free trade zone (FTZ) modernization law that opens investment to international companies, allows one-company or stand-alone FTZs, and permits the designation of pre-existing plants as FTZs. The Ministry of Commerce administers requests for establishing FTZs, but the government does not participate in their operation. The DIAN (Colombia’s Tax and Customs Authority), regulates activities and materials in FTZs. There are identification requirements for companies and individuals who enter or work in the FTZs.

Companies within FTZs enjoy a series of benefits such as a preferential corporate income tax rate and exemption from customs duties and value-added taxes on imported materials. In return for these and other incentives, every FTZ project must meet specific investment and job creation commitments within three years for new projects and five years for pre-existing investments.

Criminalizes narcotics money laundering: Yes

Criminalizes other money laundering, including terrorism-related: Yes

Colombia has criminalized money laundering broadly. Under legislation passed in 1995, 1997, and 2001, the GOC has established the “legalization and concealment” of criminal assets as a separate criminal offense, and criminalized the laundering of the proceeds of extortion, illicit enrichment, rebellion, narcotics trafficking, arms trafficking, crimes against the financial system or public administration, and criminal conspiracy.

Criminalizes terrorist financing: Yes

(Please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/)

Terrorist financing is an autonomous crime in Colombia. Law 1121 of 2006, which entered into effect in 2007, amends the penal code to define and criminalize direct and indirect financing of terrorism of both national and international terrorist groups.

Know-your-customer rules: Yes

Financial institutions are required by law to know and record the identity of customers. Obligated entities include banks, stock exchanges and brokers, mutual funds, investment funds, export and import intermediaries, credit unions, wire remitters, money exchange houses, public agencies, notaries, casinos, lottery operators, car dealers, and foreign currency traders. Most of these obligated entities are required to establish “know-your-customer” provisions.

Bank records retention: Yes

Financial institutions are required by law to maintain records of account holders and financial transactions for five years.

Suspicious transaction reporting: Yes

Colombian financial institutions are required to report suspicious transactions to the Colombia Financial Intelligence Unit (FIU), or UIAF. Obligated entities include banks, stock exchanges and brokers, mutual funds, investment funds, export and import intermediaries, credit unions, wire remitters, money exchange houses, public agencies, notaries, casinos, lottery operators, car dealers, and foreign currency traders. Colombian financial institutions regularly report suspicious transactions over certain defined limits but also are obligated to report additional transactions which may fall outside defined regulations. The UIAF receives approximately 800 suspicious transaction reports (STRs) monthly and about 80 per month get referred to the Colombian prosecutor’s office for possible criminal investigation.

Large currency transaction reporting: Yes

With the exception of money exchange houses, obligated entities must report to the UIAF cash transactions over 10,000,000 Colombian pesos (approximately $5000). The UIAF requires money exchange houses to provide data on all transactions above $200.

Narcotics asset seizure and forfeiture:

Under Colombian Asset Forfeiture laws, virtually all instruments of crime can be seized. This includes transportation conveyances, properties used for illicit crop cultivation or terrorist activity, and intangibles such as bank and securities accounts. Licit assets can be substituted for illicit assets that cannot be located. Where licit and illicit assets are co-mingled through legitimate businesses, those businesses can be seized and forfeited.

Colombian law provides for both conviction-based and non-conviction based in rem forfeiture. Law 793 of 2002 eliminates interlocutory appeals that prolonged and impeded forfeiture proceedings in the past, imposes strict time limits on proceedings, places obligations on claimants to demonstrate their legitimate interest in property, requires expedited consideration of forfeiture actions by judicial authorities, and establishes a fund for the administration of seized and forfeited assets.

The Colombian government regularly carries out asset seizure operations against a myriad of drug trafficking and other criminal organizations throughout Colombia, to include properties, companies, and other assets such as residences, vehicles, aircraft, etc. Freezing assets is very quick and efficient under Colombian law, while forfeiture can take between 1-3 years. According to the Prosecutor General’s Office, approximately $107,537,932 worth of currency and goods have been seized in 2009 and approximately $1.3 million of physical assets has been permanently forfeited to the GOC. The administration of seized assets has not been effective.

Narcotics asset sharing authority: No

Cross-border currency transportation requirements: Yes

Bulk Cash Smuggling has become a prominent method to repatriate narcotics proceeds. The GOC has criminalized cross-border cash smuggling and defined it as money laundering. It is illegal to transport more than the equivalent of $10,000 in cash across Colombian borders.

Cooperation with foreign governments: Yes

There are no known impediments to cooperation.

U.S. or international sanctions or penalties: No

Enforcement and implementation issues and comments:

In the Black Market Peso Exchange (BMPE), goods from abroad (particularly the United States) are bought with drug dollars. Many of the goods are either smuggled into Colombia or brought directly into Colombia’s customs warehouses, thus avoiding various taxes, tariffs and legal customs duties. In other trade-based money laundering schemes, goods are over-or-under invoiced to transfer value. According to cooperating informants who have worked for years in the BMPE industry, evasion of the normal customs charges is frequently facilitated by the drug and money laundering groups corrupting Colombian oversight authorities.

While the Colombian financial system has banking controls and governmental regulatory processes in place, statements from cooperating sources have revealed that drug and money laundering groups have influenced high level bank officials in order to circumvent both established anti-money laundering controls and governmental regulations. Official corruption has also aided money laundering and terrorist financing in geographic areas controlled by the Revolutionary Armed Forces of Colombia (FARC).

According to the Prosecutor General’s Office, 236 people were arrested in 2009 for money laundering crimes connected to drug trafficking, terrorism, and other felonies. The Colombian Prosecutor General’s office investigated and/or prosecuted 408 money laundering cases in 2009, attaining a total of 54 money laundering convictions and 84 forfeiture judgments.

Colombian law is unclear on the government’s authority to block assets of individuals and entities on the UN 1267 Sanctions Committee consolidated list. The government circulates the list widely among financial sector participants, and banks are able to close accounts, but not to seize assets. Banks also monitor other lists, such as OFAC’s publication of Specially Designated Narcotics Traffickers, pursuant to E.O. 12978, and Specially Designated Global Terrorists, pursuant to E.O. 13224.

U.S.-related currency transactions:

The massive Colombian/U.S. drug trade revolves around the U.S. dollar. The BMPE, designated by the Department of Treasury as the largest money laundering methodology in the Western Hemisphere, launders drug dollars in the United States through their exchange for Colombian pesos in the black market. Purchased goods rather than U.S. dollars cross over to Colombia in the BMPE system. The GOC and U.S. law enforcement agencies closely monitor transactions that could disguise terrorist financing activities.

Records exchange mechanism with U.S.:

The United States and Colombia exchange information and cooperate based on Colombia’s 1994 ratification of the 1988 UN Drug Convention. This convention applies to most money laundering activities resulting from Colombia’s drug trade. The GOC cooperates extensively with U.S. law enforcement agencies to identify, target and prosecute groups and individuals engaged in financial and drug crimes.

International agreements:

UIAF has signed memoranda of understanding with 27 FIUs.

Colombia is a party to:

  • the UN Convention for the Suppression of the Financing of Terrorism -Yes
  • the UN Convention against Transnational Organized Crime -Yes
  • the 1988 UN Drug Convention - Yes
  • the UN Convention against Corruption - Yes

Colombia is a member of the Financial Action Task Force-style regional body GAFISUD. Its most recent mutual evaluation can be found here: www.gafisud.org

Recommendations:

The Government of Colombia continues to make progress in the development of its financial intelligence unit, regulatory framework and interagency cooperation within the government. However, application of this new system is still being learned. Placing greater focus, and priority on money laundering investigations, including increasing resources, is necessary to ensure continued and improved progress. The GOC should take steps to foster better interagency cooperation, including coordination between the UIAF Colombia’s Trade Transparency Unit, and the tax and customs authority in order to combat the growth in contraband trade to launder illicit drug proceeds. Congestion in the court system, procedural impediments and corruption remain problems and must be addressed. The GOC should put in place streamlined procedures for the liquidation and sale of seized assets under state management. Colombian law should be clarified to spell out the government’s authority to block assets of individuals and entities on the UN 1267 Sanctions Committee consolidated list. In addition, the GOC should enact the necessary legislation to allow it to pay its GAFISUD dues and become active in GAFISUD once again.

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