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2011 International Narcotics Control Strategy Report (INCSR)--Volume II: Money Laundering and Financial Crimes Country Database--Afghanistan through Colombia


Report
Bureau of International Narcotics and Law Enforcement Affairs
May 20, 2011

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Afghanistan

Afghanistan’s formal financial system is no longer rapidly expanding while traditional informal financial systems, particularly regional hawala networks, remain significant in reach and scale. Afghanistan currently is experiencing large gross outflows of currency. Annually, hundreds of millions of dollars are transported out of the country through a variety of means. Terrorist and insurgent financing, money laundering, cash smuggling, informal value transfer systems 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. The illicit narcotics trade, corruption and contract fraud are major sources of laundered funds. Despite ongoing efforts by the international community to build the capacity of Afghan police and customs forces, Afghanistan is unable to consistently uncover and disrupt financial crimes because of limited resources, little expertise, and corruption and insufficient political will. Proposed reforms often conflict with legal, historical, and cultural factors.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

All serious crimes approach or list approach to predicate crimes: All crimes

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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:

Covered entities: Central Bank of Afghanistan (DAB), banks, money service providers, insurance companies, dealers in precious metals and stones, lawyers, accountants, securities dealers, and real estate agents

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial institutions and money service businesses including informal funds transfer providers such as hawaladars.

Number of STRs received and time frame: 598 from June 2006 to October 2010

Number of CTRs received and time frame: 1,744,169, from June 2006 to October 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Afghanistan is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. It is scheduled to undergo its first mutual evaluation late in 2010.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2010 Afghanistan became a member of the Egmont Group of Financial Intelligence Units. Money laundering and terrorist financing investigations in Afghanistan have been hampered by a lack of capacity, awareness, and political commitment, particularly involving prosecutors and the courts. Corruption permeates all levels of Afghan government and society and has a direct impact on the lack of financial crimes enforcement. Afghanistan ranked 176 out of 178 countries surveyed in Transparency International’s 2010 Corruption Perception Index.

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 particularly 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 borders. Customs authorities, with the help of outside assistance, have made improvements, but much work remains to be done.

It is estimated that five percent or less of the Afghan population uses banks. 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 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 such as the UAE, Iran and Pakistan 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 to settle their balances with other hawaladars abroad, while banks will occasionally use hawaladars to transmit funds to hard-to-reach areas within Afghanistan. There are approximately 250 known hawala dealers in Kabul, and approximately 1,500 dealers that vary in size and reach spread throughout Afghanistan’s 34 provinces. Given how widely used the hawala system is in Afghanistan, it undoubtedly is involved, intentionally or inadvertently, in financial crimes; however, only a few STRs have been submitted by money service providers (MSPs), including licensed hawaladars. This needs to be addressed immediately, while continuing to license the remaining 50 percent - 60 percent of MSPs still operating outside the formal sector.

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.

Albania

Albania is not considered an important regional financial or offshore center. 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 various illegal activities contribute to overall crime proceeds and money laundering is unknown.

Criminals frequently invest tainted money in real estate and business development projects. Albania has a significant black market for certain smuggled goods, mainly tobacco, jewelry, and mobile phones because of its high level of consumer imports and weak customs controls. 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. The proceeds from these activities are easily laundered in Albania because it is still fundamentally a cash economy and money flows from abroad in the form of remittances are common.

The Albanian cash-based economy is particularly vulnerable to money laundering activity. According to the Bank of Albania, the Central Bank, about 20 percent of the money in circulation is outside of the banking system. However, the use of cash cards and Point of Sales Terminals (POS) is growing. In October 2009 there were 670,000 cash and debit cards and 4,800 POS. The monthly transaction totals of these cards have reached $100 million, or about 1.4% of the retail bank deposits. Despite the expansion of the banking sector, a significant portion of remittances enters the country through unofficial channels. It is estimated that only half of total remittances enter Albania through banks or money transfer companies. The Bank of Albania estimated that in 2009 remittances comprised nearly nine percent of Albania’s annual gross domestic product (GDP). Similarly, the Government of Albania (GOA) estimated that proceeds from the informal sector account for approximately 30-60 percent of Albania’s GDP.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, agricultural credit institutions, life insurance companies, money exchangers, accountants, notaries, lawyers, gaming centers, casinos, auto dealers, postal services, securities dealers, real estate agents and travel agencies

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: commercial banks; non-banking financial institutions; foreign exchange offices; savings and credit companies and their unions; postal services that perform payment services; every person who issues or manages debit and credit cards, checks, traveller’s checks, payment orders, electronic money or other similar instruments; stock markets, agents, and brokers; life insurance or re-insurance companies, their agents or intermediaries; pension funds; the State Authority Responsible for the Administration and Sale of Public Property; games of chance, casinos and hippodromes of any form; lawyers, notaries and other legal representatives; real estate agents and appraisers; accountants, and financial consultants; and the Agency of Legalisation, Urbanisation and the Integration of Informal Constructions/Zones

Number of STRs received and time frame: 146 January - November 2010

Number of CTRs received and time frame: 821,696 January - November2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 15 from January to October 2010

Convictions: 0

Assets forfeited: criminally: $0 in 2010 civilly: $160,000 January to December 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Albania is a member of 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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Some Albanian courts require a conviction for the predicate offense before issuing an indictment for money laundering. Currently, no law criminalizes negligence by financial institutions in money laundering cases.

Albania places suspicious transaction reporting (STR) requirements on both financial institutions and individuals. Individuals and entities reporting transactions are protected by law if they cooperate with and provide financial information to the financial intelligence unit (FIU) and law enforcement agencies. Reportedly, however, leaks of financial disclosure information from other agencies compromise the entities’ client confidentiality.

It is the responsibility of the licensing authority to supervise intermediaries for compliance. Although regulations also cover nonbank financial institutions, enforcement remains poor in practice. The Bank of Albania has established a task force to confirm banks’ compliance with customer verification rules. While the Albanians have established a registry, there is no legislation providing for supervision of the non-profit sector.

Individuals must report to customs authorities all cross-border transactions that exceed approximately U.S. $10,000. Albania provides declaration forms at border crossing points, and the law does not distinguish between an Albanian and a foreign visitor. However, customs controls on cross-border transactions lack effectiveness due to a lack of resources, poor training and, reportedly, corruption of customs officials.

In an effort to increase corruption and money laundering prosecutions, in May 2007, Albania established the Joint Investigative Unit to Fight Economic Crime and Corruption (JIU) in the Tirana District Prosecution Office. This unit focuses efforts and builds expertise in the investigation and prosecution of financial crimes and corruption cases by bringing together members of the General Prosecutors Office, the Albanian State Police Financial Crimes Sector, the Ministry of Finance’s Customs Service and Tax Police, and the National Intelligence Service. The JIU also has liaisons for cooperation from the FIU, High State Audit, and the High Inspectorate for the Declaration and Audit of Assets. The JIU prosecutes money laundering cases within the District of Tirana. Six additional regional JIUs were established and began operation in the fall of 2009. These units have jurisdiction over corruption, money laundering, and other types of economic crime.

In 2010, Albania had its first conviction in a terror finance case against the administrator of designated terrorist financier Yassin Al-Kadi on charges of hiding funds used to finance terrorism.

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 the deficiencies in the programs continue to hamper progress. Albania should ensure that those charged with pursuing financial crime increase their technical knowledge to include modern financial investigation techniques. Albania should provide its police force with a central database. Investigators and prosecutors should implement case management techniques, and prosecutors and judges need to become more conversant with the nuances of money laundering. Albania should clarify the law to make clear that conviction for the predicate offense is not a prerequisite for a conviction for money laundering. The Government of Albania should also improve the enforcement and enlarge the scope of its asset seizure and forfeiture regime, including fully funding and supporting the Agency for the Administration of the Sequestration and Confiscation of Assets. Albania should also incorporate into anti-money laundering legislation specific provisions regarding negligent money laundering, comprehensive customer identification procedures, and the adequate oversight of money remitters and charities. Albania should enact the draft laws on terrorist financing and money-laundering.

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; trafficking in stolen 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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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:

Covered entities: Banks, financial leasing institutions, investment and shareholding companies

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, financial leasing institutions, investment and shareholding companies, the post office, insurance companies, gaming establishments, investment houses, exchange offices, attorneys and notaries, accountants, real estate agents, customs agents, public officers (translators, judicial officers, auctioneers, receivers) and dealers of gems, precious metals, antiques and artwork

Number of STRs received and time frame: 260 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2009

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Algeria is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation is not yet available online, but will be posted here: http://www.menafatf.org/

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

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. However, deficiencies remain that must be addressed, particularly in the coverage of know-your-customer and compliance programs. The Algerian authorities should promote interagency cooperation between all stake holders. The Algerian Financial Intelligence Processing Cell, (CTRF) - the financial intelligence unit - should be the focal point for receiving and analyzing reports, and information exchange of suspicious transactions related to anti-money laundering/counter-terrorist financing activity (AML/CFT). This 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 anti-money laundering/counter-terrorist finance (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 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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and non-bank credit institutions; fund and asset management firms; money exchanges and remitters; life insurance companies; financial intermediaries and advisors; trust and company service providers; dealers in precious metals and stones and high-value goods; bingo establishments; real estate agents; lawyers, accountants, notaries and auditors

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and non-bank credit institutions; fund and asset management firms; money exchanges and remitters; life insurance companies; financial intermediaries and advisors; trust and company service providers; dealers in precious metals and stones and high-value goods; bingo establishments; real estate agents; lawyers, accountants, notaries and auditors

Number of STRs received and time frame: 84 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 12 in 2010

Convictions: Six in 2010

Assets forfeited: criminally: $40,340,983 in 2010 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Andorra is a member of 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/Andorra_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Andorra’s legal and financial systems are increasingly transparent. The INAF (Institut Nacional Andorrà de Finances) is an independent monitoring body, responsible for overseeing and supervising the financial system, management of public debt, carrying out field inspections, and taking disciplinary action.

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

Angola

Angola is not a regional financial center and has not prosecuted any cases of money laundering. It does not produce significant quantities of drugs although it continues to be a transit point for drug trafficking, particularly from drugs brought in from Brazil and South America destined for Europe. Angola's borders are porous and vulnerable to movements of small arms, diamonds, human trafficking and general smuggling. Angola has a high rate of U.S. dollar cash flow. The laundering of funds derived from widespread corruption is a concern. A law criminalizing money laundering was passed in 2010, and is still being implemented. Angola’s capacity to investigate financial crimes is limited.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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:

Covered entities: Credit institutions, financial groups, insurers, pension fund management groups, stock markets, casinos, currency exchange agencies, services for the issuance and management of paychecks, individual and collective estate management groups, accountants, auditors, notaries, registrars, attorneys, solicitors and other independent professionals

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Credit institutions, financial groups, insurers, pension fund management groups, stock markets, casinos, currency exchange agencies, services for the issuance and management of paychecks, individual and collective estate management groups headquartered in Angola, accountants, auditors, notaries, registrars, attorneys, solicitors and other independent professionals

Number of STRs received and time frame: None

Number of CTRs received and time frame: None

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

Angola is not a member of a Financial Action Task Force-style regional body (FSRB). Angola is an observer of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FSRB.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In February 2010, the Financial Action Task Force (FATF) International Cooperation Review Group (ICRG) publicly identified Angola as a country which had significant deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime. Angola put together an Action Plan and made a high-level political commitment to address these deficiencies.

Since that time, Angola has made significant progress in improving its AML/CFT regime. In June, it enacted Law 12/10 which criminalizes money laundering and terrorist financing. Angola also ratified the UN Convention on Transnational Organized Crime and the UN Convention for the Suppression of the Financing of Terrorism, though the latter is still awaiting publication in the official register. The Angolan Central Bank, which has primary responsibility for money laundering issues, has prepared an implementation plan for the new law.

In January 2011, the Council of Ministers is expected to approve a Presidential Decree establishing Angola's financial intelligence unit (FIU) and clarifying and expanding on matters addressed in the June AML/CFT law. The Decree is expected to bring Angola's regime further into line with international AML/CFT standards. While recognizing the challenges posed in recruiting and training staff and creating and integrating the necessary software systems for the FIU, the Central Bank aims to have it fully operational by mid-2012.

Corruption permeates Angolan business, government, and most sectors of society. Angola is rated 168 out of 178 countries surveyed in Transparency International’s International Corruption Perception Index. The Angolan definition of politically exposed persons (PEPs) covers only domestic PEPs residing outside the country.

Anguilla

Anguilla is a United Kingdom (UK) overseas territory with a population of approximately 12,900. There are very few offenses committed on the island by the local populace that generate substantial monies or profits from crime. The economy depends greatly on its growing offshore financial sector and tourism. The financial sector is small in comparison to other jurisdictions in the Caribbean, but the ability to register companies online and the use of bearer shares make Anguilla vulnerable to money laundering. The biggest perceived money laundering threat in the coming years will continue to come from abuses of the offshore industry in relation to mutual funds, trusts, and international business companies (IBCs). The Proceeds of Crime Act 2009 along with its attendant Code and Regulations make company service providers and others more accountable.

Anguilla uses the East Caribbean dollar and its monetary authority is the Eastern Caribbean Central Bank (ECCB). Seven other island economies are also members of the ECCB: Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St. Lucia, and St Vincent and the Grenadines. The existence of this common currency may raise the risk of money laundering, but there is little evidence that the EC dollar is a primary vehicle for money laundering.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: Combined approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Domestic and offshore banks, money transfer agents, insurance companies, mutual funds and fund intermediaries, company managers and service providers, trusts, securities brokers and dealers, dealers in precious metals and stones and high-value goods, lawyers, accountants, notaries, and real estate agents

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Domestic and offshore banks, money transfer agents, insurance companies, mutual funds and fund intermediaries, company managers and service providers, trusts, securities brokers and dealers, dealers in precious metals and stones and high-value goods, lawyers, accountants, notaries, and real estate agents

Number of STRs received and time frame: 26 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 14 in 2010

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Anguilla is a member of the Caribbean Financial Action Task Force (CFATF), a FATF style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Anguilla_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Anguilla continues to make progress in enforcement and implementation. The 2009 Proceeds of Crime Act included extending the prohibition of anonymous accounts to include numbered accounts. However, Anguilla continues to target the world of offshore financial business, offering favorable business and tax structures and company formation. The same things that make the country attractive to legitimate and high value international customers with legitimate requirements for offshore structures also make it attractive to money launderers attempting to layer monies through systems that allow some degree of anonymity. IBCs can be incorporated by company service providers in Anguilla without the requirement to publicly register shareholders or directors. Once incorporated, an IBC is capable of holding assets and operating bank accounts, both on Anguilla and in other jurisdictions. There have been cases where IBCs were used as “flow through” accounts, facilitating the mingling of monies, confusing money trails and generally assisting the layering process in money laundering; there has only been one instance where the money from suspected IBC abuse has remained in Anguilla. IBC abuse is responsible for 33% of all suspicious activity reports (17 of 51) since 2008. Analysis shows the majority of IBC abuse is related to fraud in one form or another.

While Anguilla’s present currency declaration system went into place in 2009, it has remaining deficiencies and ambiguities that need to be clarified and/or corrected.

The Criminal Justice (International Co-operation) (Anguilla) Act, 2000 enables Anguilla to directly cooperate with other jurisdictions through mutual legal assistance. The US/UK mutual legal assistance treaty concerning the Cayman Islands was extended to Anguilla in November 1990. Anguilla is also subject to the U.S. /UK Extradition Treaty.

Anguilla is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for Anguilla’s international affairs and may arrange for the ratification of any convention to be extended to Anguilla. The 1988 Drug Convention was extended to Anguilla in 1995. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime (UNTOC) have not yet been extended to Anguilla.

Antigua and Barbuda

Antigua and Barbuda is a significant offshore center that despite recent improvements remains susceptible to money laundering due to its offshore financial sector and Internet gaming industry. Illicit proceeds from the transshipment of narcotics and from financial crimes occurring in the U.S. also are laundered in Antigua and Barbuda.

Antigua and Barbuda uses the East Caribbean (EC) dollar and its monetary authority is the Eastern Caribbean Central Bank (ECCB). Seven other island economies are also members of the ECCB: Anguilla, Dominica, Grenada, Montserrat, St Kitts and Nevis, St. Lucia, and St Vincent and the Grenadines. The existence of this common currency may raise the risk of money laundering, but there is little evidence that the EC dollar is a primary vehicle for money laundering.

As of 2010, Antigua and Barbuda has 15 international banks, one international trust, three offshore insurance companies, 3,497 international business corporations (IBCs), ten interactive gaming companies, six interactive wagering companies, eight money services businesses, and 25 corporate management and trust services providers. In addition, there are five casinos. Bearer shares are permitted for international companies but the names and addresses of directors (who must be naturalized persons), the activities the corporation intends to conduct, the names of shareholders, and the numbers of shares they will hold are required to be disclosed. Registered agents or service providers are required by law to know the names of beneficial owners. 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. Internet gaming companies are required to incorporate as IBCs, to report all payouts over $25,000 to Antigua and Barbuda’s Office of National Drug and Money Laundering Control Policy (ONDCP), and to have a physical presence, meaning the primary servers and the key person are resident in Antigua and Barbuda.

A nominal free trade zone in the country seeks to attract investment in areas deemed as priority by the government. Casinos and sports book-wagering operations in Antigua and Barbuda’s free trade zone are supervised by the ONDCP, and the Directorate of Offshore Gaming. Internet gaming companies are required to submit quarterly and annual audited financial statements and maintain records relating to all gaming and financial transactions of each customer for six years.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, agricultural credit institutions, and money exchangers; notaries; domestic and Internet gaming centers; real estate and travel agents; company service providers; lawyers; accountants; dealers in autos, precious metals and stones, and other high-value goods; insurance brokers; and securities dealers

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, agricultural credit institutions, and money exchangers; notaries; domestic and Internet gaming centers; real estate and travel agents; company service providers; lawyers; accountants; dealers in autos, precious metals and stones, and other high-value goods; insurance brokers; and securities dealers

Number of STRs received and time frame: 145, January to December 2010

Number of CTRs received and time frame: No information available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2009

Convictions: None

Assets forfeited: criminally: $23,000 (In addition, $1, 379,120 was confiscated on behalf of US authorities.) civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Antigua and Barbuda is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Antigua_and_Barbuda_3rd_Round_MER_Final(Eng).pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

During the year, the Prevention of Terrorism (Amendment) Act was passed, making further explicit provisions for the de-listing of specified entities; however, deficiencies remain.

The Government of Antigua and Barbuda (GOAB) does not have a unified regulatory structure or uniform supervisory practices for its domestic and offshore banking sectors. Currently, the ECCB supervises Antigua and Barbuda’s domestic banking sector. The Registrar of Insurance supervises and examines domestic insurance agencies. The Financial Services Regulatory Commission is responsible for the regulation and supervision of all IBCs, including offshore banks and all aspects of offshore gaming; this includes conducting examinations and reviews of offshore financial institutions as well as some domestic financial entities, such as insurance companies and trusts. The director of the ONDCP supervises all financial institutions for compliance with suspicious transaction reporting requirements. Only gaming institutions are required to file large currency transaction reports.

The GOAB has taken steps to combat money laundering by passing relevant legislation that applies to both domestic and offshore financial institutions, and establishing a thorough regulatory regime. The GOAB should implement and enforce all provisions of its AML/CFT legislation. The ONDCP should be given direct access to financial institution records in order to effectively assess their AML/CFT compliance. Antigua and Barbuda has yet to prosecute a money laundering case and there are few arrests or prosecutions. More comprehensive investigations could lead to higher numbers of arrests, prosecutions, and convictions. 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. 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 not a significant regional financial center. Money laundering related to narcotics trafficking, corruption, contraband, and tax evasion is believed to occur throughout the financial system. It is believed that most money laundering operations in Argentina are conducted through transactions involving specific offshore centers. The most common money laundering operations in the non-financial sector involve transactions made through attorneys, accountants, and corporate structures. The widespread use of cash may also leave Argentina vulnerable to money laundering. Tax evasion is the predicate crime in the majority of 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. There is also a risk of terrorist financing;

Argentina was subject to two major terrorist attacks in the early 1990’s. Despite these money laundering/terrorist financing (ML/TF) risks, there were only four ongoing prosecutions and no convictions for ML.

Although Argentina has traditionally been a transit country for drugs from Bolivia, Peru, and Colombia to Europe and the United States, it is also a source country for precursor chemicals. Domestic drug consumption and production have increased, especially of a cheap substance known locally as PACO (made from the by-products of cocaine). Argentine officials have also identified smuggling, corruption and different types of fraud as major sources of illegal proceeds. The number of corruption investigations has been increasing steadily since 2002, with 7,033 in the first half of 2009, although only 12 cases were presented for public prosecution during that time.

In addition to tax evasion and drugs, a substantial portion of illicit revenue comes from black market peso exchanges or informal value transfers. Unregistered importers, for example, may use entities that move US currency in bulk to neighboring countries where it is deposited and wired to US accounts or wired from Argentina to offshore destinations. Products from the US are often smuggled into Argentina or the manifests are changed to disguise the importer and merchandise. The tri-border area (Argentina, Paraguay and Brazil) is considered a major source of smuggling, especially of pirated products. Through the Three Plus One Initiative Argentine authorities cooperate with Brazil and Paraguay as well as with the United States to address security issues in this region.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, financial companies, credit unions, tax authority, customs, currency exchange houses, casinos, securities dealers and intermediaries, insurance companies and brokers, postal money transmitters, accountants, notaries public, and dealers in art, antiques and other high-value goods

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, financial companies, credit unions, tax authority, customs, currency exchange houses, casinos, securities dealers and intermediaries, insurance companies, postal money transmitters, accountants, notaries public, and dealers in art, antiques and other high-value goods

Number of STRs received and time frame: 879 from January to June 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four (ongoing)

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Argentina is a member of the Financial Action Task Force (FATF) and the FATF on Money Laundering in South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/3/60/46695047.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The basis of Argentina’s anti-money laundering/countering the financing of terrorism (AML/CFT) system is Law 25 246 which criminalizes money laundering. There are a number of deficiencies in the legislation, including an insufficient asset forfeiture regime and the lack of coverage of self laundering and legal persons. Additionally, although tipping off is criminalized, the provision is weak and does not effectively prevent the practice. Challenges remain in closing legal and regulatory loopholes and improving interagency cooperation. The Financial Information Unit, Azerbaijan’s financial intelligence unit (FIU), is legally limited to processing cases involving a limited number of predicate offenses pertaining to only certain money laundering activities.

The legal financial preventive measures in Argentina are basic and limited to general provisions relating to customer identification, record keeping and suspicious transaction reporting (STR) requirements. There are a number of important deficiencies that apply to all sectors, such as the lack of adequate requirements for beneficial ownership, politically exposed persons, correspondent banking, and reliance on third parties. Secrecy provisions also inhibit effective compliance with international standards. Furthermore, cooperatives, mutual associations, stock exchange market, lawyers, real estate agents and dealers in precious stones and metals are not satisfactorily included in the AML/CFT Law. Argentina’s STR reporting obligations only cover a small range of predicate offenses, the TF-related transaction reporting obligation is only implicit, and the low quality of STRs does not allow the FIU to conduct adequate analyses to generate successful prosecutions.

In 2009, FinCEN, the United States’ FIU, suspended information sharing with the Argentine FIU after information given to the FIU was leaked to the local press. The Argentine FIU and government are working to reestablish the exchange of data.

Because of Argentina’s poor compliance with international standards in its most recent mutual evaluation, the FATF gave the Government of Argentina (GOA) 100 days to devise a credible action plan to reform its AML/CFT system or face heightened scrutiny and potentially be the subject of public warnings about the potential risk of conducting transactions with the country’s financial institutions.

In December 2010, the Argentine government passed Decree 1936 which assigns to Argentina’s FIU a national AML/CFT coordination role. The decree also appoints the FIU as the only entity within the GOA with legal authority to issue regulations implementing Argentina’s AML/CFT law.

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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; exchange houses; real estate agents; notaries, lawyers, accountants, and auditors; dealers in precious metals and stones, and artworks organizers of auctions casinos, prize games, and lotteries; trust and company service providers; State Cadaster, and the State Registry

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; exchange houses; real estate agents; notaries, lawyers, accountants, and auditors; dealers in precious metals and stones, and artworks organizers of auctions casinos, prize games, and lotteries; trust and company service providers; State Cadaster, and the State Registry

Number of STRs received and time frame: 420 in 2010

Number of CTRs received and time frame: 132,249 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Nine in 2010

Convictions: Two in 2010

Assets forfeited: criminally: $1,433,194 in 2010 civilly: 0 in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: 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 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/Moldova_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2009, Armenia achieved its first successful money laundering prosecutions, as courts convicted four defendants in three cases. Money laundering prosecutions have continued in 2010. There have been no known cases of terrorist financing in Armenia. Armenia should prohibit bearer bank books, certificates of deposit and other bearer securities, and should criminalize tipping off. Armenia has prepared a package of legislative amendments to 17 laws to correct several deficiencies regarding its money laundering and terrorist financing offenses and customer due diligence procedures.

Aruba

Aruba is not considered a regional financial center but has sought to diversify its economy by developing offshore activities through the limited licensing of offshore banks and companies. These offshore vehicles pose risks for misuse by money launderers and tax evaders. Because of its location, Aruba is a transshipment point for drugs from South America bound for the United States and Europe and the transshipment of currency in the reverse direction. Money laundering is primarily related to proceeds from illegal narcotics. Other sources of illicit proceeds include revenue from tax offenses, public corruption and the offshore financial sector. Bulk cash smuggling is a continuing problem due to the close proximity of Aruba to South America.

Aruba has three free economic zones. It is believed “contrabanding” (using smuggled bulk cash to buy products which are shipped to South America and sold) could be a problem. There are at least eleven casinos, and online gaming is allowed. Bearer shares are permitted, but legislation is being considered to both ban future issuance and phase out existing shares.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: Not available

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: 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

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: 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

Number of STRs received and time frame: 4,931 from January – November 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Aruba 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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Aruba continues to work on the improvement of its AML/CFT framework. It should be noted that Aruba’s efforts are coordinated by the AML/CFT Strategy Group, chaired by the Prime Minister, which has met regularly and ensures a high level political commitment. Various important legislative changes have been introduced, such as the independent criminalization of terrorist financing, the introduction of an asset freezing regime, and the designation of the Central Bank of Aruba (CBA) as the sole supervisory authority for AML/CFT matters. On March 5, 2010, Aruba modified the Criminal Code of Aruba to include an article criminalizing terrorist financing as a separate and independent offense. Also, based on the Sanctions State Decree to Combat Terrorism and Terrorist Financing, which entered into force on June 25, 2010, Aruba is able to freeze terrorist assets in a timely manner. In addition, authorities are working on a new and comprehensive state ordinance on the application of customer due diligence and the reporting of unusual transactions by financial institutions and designated non-financial businesses and professions. The CBA has created a separate Integrity Unit with additional staff that will focus specifically on AML/CFT-related issues, while the financial intelligence unit (FIU) has hired additional staff. Furthermore, the Public Prosecutor’s Office now has more prosecutors available to properly carry out its tasks.

Banks or other financial institutions regulated by the CBA, 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. Legislation has been drafted to ban the issuance of new bearer shares while phasing out existing bearer shares over a fixed period of time. This new legislation is expected to be enacted in 2011.

With regard to the non-profit sector, a quick scan of this sector was performed in 2010 to determine the sector’s size, the type of non-profit organizations present, and the scope of their activities, in order to assess the measures necessary to properly regulate the sector.

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, or fraud. Aruba does not have a suspicious transactions reporting system, but a broader unusual transactions reporting (UTR) system.

Pursuant to a change in the relevant legislation, as of July 1, 2010, travelers carrying checks, gift cards, and other goods worth more than $11,000, that could be converted easily to cash, are obliged to declare their possession at Customs. Credit and debit cards are exempted from the new legislation.

The Kingdom of the Netherlands, of which Aruba is an autonomous constituent part, extended the application to Aruba of the 1988 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.

Australia

Australia is one of the major centers for capital markets in the Asia-Pacific region. While narcotics offenses provide a substantial source of proceeds of crime, the majority of illegal proceeds are derived from fraud-related offenses. The Government of Australia (GOA) maintains a comprehensive system to detect, prevent, and prosecute money laundering. The last few years have seen a noticeable increase in activities investigated by Australian law enforcement agencies that relate directly to offenses committed overseas. Australia’s system has evolved over time to address new money laundering and terrorist financing risks identified through continuous consultation between government agencies and the private sector.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; gaming and bookmaking establishments and casinos; bullion and cash dealers and money exchanges and remitters, including electronic funds transferors; insurers and insurance intermediaries; securities or derivatives dealers; registrars and trustees; issuers, sellers or redeemers of travelers checks, money orders or similar instruments; preparers of payroll in whole or in part from currency on behalf of other persons; currency couriers

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, gaming and bookmaking establishments and casinos; bullion and cash dealers and money exchanges and remitters, including electronic funds transferors; insurers and insurance intermediaries; securities or derivatives dealers; registrars and trustees; issuers, sellers or redeemers of travelers checks, money orders or similar instruments; preparers of payroll in whole or in part from currency on behalf of other persons; currency couriers

Number of STRs received and time frame: 47,386 - 2009-2010

Number of CTRs received and time frame: 3,375,447 - 2009-2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 88 indictments - July 2009 - June 2010

Convictions: 50 in 2009 – 2010

Assets forfeited: criminally: $7,691,800 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: 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. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/60/33/35528955.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The formal and informal money remittance sector is vulnerable to the risk of being exploited for criminal purposes. Additionally, the majority of designated non-financial businesses and professions (DNFBPs), such as real estate agents, dealers in precious stones and metals, and specified legal, accounting, trust, and company service providers are not yet covered by reporting and record keeping requirements of Australia’s AML/CFT laws, nor are politically exposed persons subject to enhanced due diligence procedures. This lack of coverage leads to increased vulnerabilities in these entities. Australia should amend its legislation, as necessary, to cover all DNFBPs.

In comparison to the size of the Australian economy and the comprehensive anti-money laundering countermeasures in place, the number of convictions for money laundering remains very low.

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. Money laundering occurs within the Austrian banking system as well as in non-bank financial institutions and businesses. 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 not an offshore jurisdiction and has no free trade zones.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: Combination

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and credit institutions, financial institutions, leasing and exchange businesses, safe custody services, portfolio advisers, brokers, securities firms, money transmitters, insurance companies and intermediaries, casinos, all dealers including those in high value goods, auctioneers, real estate agents, lawyers, notaries, certified public accountants, and auditors

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and credit institutions, financial institutions, leasing and exchange businesses, safe custody services, portfolio advisers, brokers, securities firms, money transmitters, insurance companies and intermediaries, casinos, all dealers including those in high value goods, auctioneers, real estate agents, lawyers, notaries, certified public accountants, auditors, and customs officials

Number of STRs received and time frame: 1,385 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 289 in 2009

Convictions: Five in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Numerous legal amendments to bring Austria's AML/CFT regime more in line with FATF standards were adopted by Parliament on May 20, 2010, and entered into force July 1, 2010. Those amendments strengthen regulatory standards, give more power and responsibility to bank compliance officers and regulators (in particular Austria's FIU), and make asset seizure easier in AML/CFT cases. New paragraph 165 of the Austrian Penal Code extends the scope of money laundering offenses to "self-laundering" of illicit proceeds. Austria has a combination of both an “all serious crimes” approach plus a list of predicate offenses which do not fall under the domestic definition of serious crimes, but which Austria includes to comply with international legal obligations and FATF standards.

Since July 1, 2010, asset freezes pursuant to UN and European Union (EU) sanctions are based on Austria’s new Sanctions Law (previously, the Foreign Exchange Act). The new Sanctions Law significantly expands and improves implementation of UNSCR and European financial sanctions on terrorists, including measures set forth in directly applicable EU Regulations. Asset freezes now apply not just to financial funds but to all economic resources including real estate, companies, and vehicles. The law provides for bans on travel and bans on rendering services to designated entities; it also establishes administrative and criminal penalties.

The Government of Austria has committed to sharply restrict the issuance and use of bearer shares. Draft legislation eliminating bearer shares for all companies except those listed on the stock exchange has been circulated for comment.

Even absent a specific suspicion, new regulations require tax authorities to inform the FIU of all cases where private foundations do not disclose the founding deed including all appendices and supplementary documentation, as well as beneficial owners of hidden trusteeships.

In June 2010, the United States and Austria signed a bilateral asset sharing agreement to share assets seized from convicted criminals.

Azerbaijan

Azerbaijan is a rapidly growing economy, at the crossroads of Europe and central Asia, with extensive hydrocarbon resources. The majority of international trade and foreign investment takes place in the energy sector. All other sectors lag energy in growth and sophistication, including the financial sector. This gap, coupled with Azerbaijan’s shared history, long-standing trade relationships, and common border with Iran, makes Azerbaijan’s financial institutions vulnerable to being used by foreign entities looking to conduct money laundering/terrorist financing transactions involving Iran. Over the past year, Azerbaijan has made visible progress in addressing this vulnerability by creating a Financial Monitoring Service (FMS), and implementing regulations in line with international standards.

The major source of criminal proceeds in Azerbaijan is endemic corruption which cuts across all sectors of the economy and all layers of society. International reports also identify Azerbaijan as a transit country for the Afghan drug trade; Azerbaijani authorities suspect this illicit drug trade 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, alternative remittance systems, and the construction industry. There is a significant black market for smuggled goods in Azerbaijan, which serves as a transit country for illicit goods.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S. CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S. OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; insurance and reinsurance companies and intermediaries; notaries, lawyers and auditors; company formation agents and asset managers; real estate brokers and agents; pawnshops; securities brokers and investment funds; lotteries; the National Post; non-governmental organizations

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, money remitters; insurance and reinsurance companies and intermediaries; securities brokers and investment funds; leasing companies; company formation agents and asset managers; lawyers and auditors; company formation agents and asset managers; real estate brokers and agents; lotteries; dealers of precious metals and stones; pawnshops; non-governmental organizations

Number of STRs received and time frame: 6,607 January 1 through December 14, 2010

Number of CTRs received and time frame: 35,872 January 1 through December 14, 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Six in 2010

Convictions: One in October 2009

Assets forfeited: criminally: 58,000 EUR (approximately $75,400) in October 2009 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: 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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The AML law excludes from the list of covered entities travel agencies; auto dealers; and dealers of art, antiques, and other high-value consumer goods. These entities are not required to maintain customer information or report suspicious activity.

The FMS is a dynamic but very young organization. It is in the process of building a database and the expertise with which to systematically study and identify trends in money laundering. Currently, inadequate interagency cooperation and training significantly diminish its investigative abilities. The FMS has concluded information exchange agreements with a number of regional financial intelligence units.

Recently, intergovernmental discussions of draft amendments to the Criminal Code and Code of Criminal Procedure were finalized. In particular, the draft amendments include corporate criminal liability in relation to money laundering and terrorist financing offenses, and special confiscation procedures with an all crimes approach which will make it possible to confiscate proceeds for all forms of offenses.

Bahamas

The Commonwealth of The Bahamas is an important regional and offshore financial center. The economy of the country is heavily reliant upon tourism, tourist-driven construction and the offshore sector. 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. Drug traffickers and other criminal organizations take advantage of the large number of international business companies and offshore banks registered in The Bahamas to launder significant sums of money despite strict KYC and transaction reporting requirements.

The country has one large free trade zone, Freeport Harbor. This zone is managed by a private entity called the Freeport Harbor Company, which is owned and operated through a joint venture between Hutchison Port Holdings (HPH) and The Port Group (The Grand Bahama Port Authority). Businesses at the harbor include private boat, ferry and cruise ship visits, roll-on/roll-off facilities for containerized and LTL cargo, and car transshipment. Freeport Harbor has the closest offshore port to the United States and the entire country is relatively accessible by medium sized boats. This makes smuggling and bulk cash money laundering relatively easy. While it is illegal for citizens of the Bahamas to gamble, gambling is legal for tourists and there are three main casinos.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and trust companies, insurance companies, securities firms and investment fund administrators, financial and corporate service providers, cooperatives, societies, casinos, lawyers, accountants, real estate agents, and company service providers

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and trust companies, insurance companies, securities firms and investment fund administrators, financial and corporate service providers, cooperatives, societies, casinos, lawyers, accountants, real estate agents, and company service providers

Number of STRs received and time frame: 138 STRs in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0 in 2010

Convictions: 0 in 2010

Assets forfeited: criminally: $0 in 2010 civilly: $0 in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: 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/downloadables/mer/The_Bahamas_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

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; by ensuring full compliance with UNSCRs 1267 and 1373; and by implementing a system to collect and analyze information on the cross border transportation of currency. It should also ensure there is a public registry of the beneficial owners of all entities licensed in its offshore financial center.

Additional gaps in the country’s legislation include a failure to criminalize participation in an organized criminal group and to tighten the currency transaction reporting system to track people arriving and leaving to all destinations.

Bahrain

Bahrain is a leading financial center in the Gulf region. In contrast with its Gulf Cooperation Council (GCC) neighbors, Bahrain has a primarily service-based economy, with the financial sector providing more than 20 percent of GDP. It hosts a diverse group of financial institutions, including 189 banks, 22 moneychangers and money brokers, and several other investment institutions, including 89 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.

Khalifa bin Salman Port, 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. These free-zones are not a significant source for money laundering/terrorist financing. The informal and non-bank financial sector are regulated and investigated similarly to the formal sector.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and all other financial institutions, investment houses, insurance firms, money exchangers, brokers/dealers, real estate brokers, gold dealers, financial intermediaries, and attorneys

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and all other financial institutions, investment houses, insurance firms, money exchangers, brokers/dealers, real estate brokers, gold dealers, auto dealers, jewelers, and attorneys

Number of STRs received and time frame: 319 from January to September 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 0 in 2010

Assets forfeited: criminally: Not available civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Ministry of Social Development increased supervision over non-profit organizations and charities in 2010. In September 2010, the Ministry forced all charities to transfer their legal status to that of "society;" this classification allows the Ministry to oversee all financial transactions. The Ministry circulated an order to freeze twenty charities until they amended their status to that of a society.

There is an over-reliance on suspicious transaction reporting to initiate money laundering investigations. Awareness within the capital markets and designated non-financial businesses and professions regarding STR reporting obligations is inconsistent. Cash transaction reporting is not separated from suspicious transaction reporting requirements. Tipping off is not prohibited.

Bahrain uses a controversial definition of terrorism. One 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.

Bahrain does not have a mutual legal assistance agreement with the United States. Information is exchanged on a case-by-case basis.

Bangladesh

Bangladesh is not a regional financial center. Pervasive corruption, drug trafficking, and human trafficking are the principal sources of criminal proceeds; securities fraud; embezzlement; and extortion are also notable sources of illicit proceeds. Bangladesh’s geographic location, including its seaports and long porous borders with India and Burma, makes it a key transshipment point for drugs produced in both the ‘golden triangle’ and ‘golden crescent’ regions, with drugs ultimately bound for markets in Europe, the United States and Canada. Bangladesh has a relatively low terrorist financing profile. However, Bangladesh-based terrorist organization Jamaat ul-Mujahideen Bangladesh (JMB) has publicly claimed to receive funding from Saudi Arabia.

The Bangladeshi economy is cash based, and relies heavily on remittances from expatriate Bangladeshi workers. Money transfers outside of the formal banking sector, the post office, and licensed foreign exchange houses are illegal. Nevertheless, the majority of remittances are done through the underground “hawala” or “hundi” system. Informal systems are used to avoid taxes, customs duties, and currency controls, and criminals and criminal organizations exploit these systems as a low-risk avenue to conceal the proceeds of crime and to send illicit funds abroad.

Bangladesh is not an offshore banking center and has no international free trade zones. The Central Bank reports a considerable increase in remittances sent through official channels, reaching approximately $10.99 billion between January and December 2010. 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 and black market money exchanges remain popular due to the non-convertibility of the local currency and the intense scrutiny on foreign currency transactions in formal financial institutions.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, financial institutions, insurance companies, money changers and remitters; institutions conducting business under approval of Bangladesh Bank; stock dealers and brokers, portfolio managers, merchant banks, securities custodians, asset managers; and non-profit and non-governmental organizations

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, financial institutions, insurance companies, money changers and remitters; institutions conducting business under approval of Bangladesh Bank; stock dealers and brokers, portfolio managers, merchant banks, securities custodians, asset managers; and non-profit and non-governmental organizations

Number of STRs received and time frame: 44 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Five in 2010

Convictions: One in 2010

Assets forfeited: criminally: 2.32 crore Taka (approximately $336,200) civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Bangladesh is a member of 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://www.apgml.org/documents/docs/17/Bangladesh%20ME2%20-%20final120809.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Bangladesh (GOB) has demonstrated a strong policy level commitment to cooperate with international partners and strengthen its AML/CFT regime, but effective implementation remains a significant issue. In late 2010, the GOB worked with the U.S. Department of Justice to draft stronger AML/CFT legislation. Also in 2010, the GOB assisted a U.S. federal court with an asset forfeiture case with ties to Bangladesh and Singapore. The GOB should continue its work on the amendments to the Money Laundering Prevention Act (MLPA) and the Anti-Terrorism Act (ATA), including implementing mechanisms, and should continue to improve investigation, prosecution, supervision, and enforcement capacity.

The GOB acknowledges corruption is pervasive in Bangladesh, and that it undermines effective implementation of AML/CFT measures. Investigations are compromised by corruption in many law enforcement organizations, including police and customs. The GOB has made combating corruption a national priority and has had success in investigating and prosecuting straightforward corruption cases. However, the GOB does not yet have sufficient training or experience to comprehensively pursue complex cases involving both corruption and money laundering through foreign jurisdictions or multi-layered investment schemes. The GOB should continue its aggressive investigations into corruption and enhance training of investigators so they better understand its relationship to money laundering and related crimes.

The GOB should amend its legislation, as necessary, to prohibit “tipping off” and to provide a safe harbor for financial institutions and their employees who report suspicious activity to the GOB in good faith. Additionally, Bangladesh should become a party to the UN Convention against Transnational Organized Crime.

Barbados

Barbados is a major offshore center with a large international business company (IBC) presence. The country is vulnerable to money laundering, which primarily occurs 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.

As of November 2010, there are six commercial banks in Barbados. The offshore sector includes 2,643 IBCs, 161 exempt insurance companies and 76 qualified exempt insurance companies, ten mutual fund companies and one exempt mutual fund company, nine trust companies, five finance companies and 53 offshore banks. There are no free trade zones and no domestic or offshore casinos. Offshore banks are subject to the same supervision as domestic banks. Additionally, permission must be obtained from the Central Bank to move currency abroad. IBCs are subject to enhanced due diligence requirements for IBC license applications and renewals. Bearer shares are not permitted, and financial statements of IBCs are audited if total assets exceed $500,000.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, agricultural credit institutions, money exchangers, accountants, notaries, gaming centers, auto dealers and securities dealers

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, agricultural credit institutions, money exchangers, notaries, gaming centers, and securities dealers

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Barbados is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Barbados_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The GOB should be more aggressive in conducting examinations of the financial sector and maintaining strict control over vetting and licensing of offshore entities. 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 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 terrorism or terrorist financing. Barbados should consider the adoption of civil forfeiture and asset sharing legislation. Supervision of nonprofit organizations, charities, DNFBPs, 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

There is a general lack of transparency and accountability throughout the Belarusian financial sector. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. Due to excessively high taxes, an intricate taxation system, underground markets, and the “dollarization” and “eurozation” of the economy, a significant volume of foreign-currency cash transactions eludes the banking system. Illicit proceeds and assets are sometimes laundered in Belarus through the sale of stolen cars using forged paperwork; depositing illicit funds into operating accounts of businesses in the form of contributions increasing authorized capital; the sale of illicitly acquired assets through retail networks; and the transfer of assets to balance sheets of front companies. The concentration of power in the hands of the Presidency and the lack of a system of checks and balances between the various branches of government are the greatest hindrances to the rule of law and transparency of governance. Economic decision-making in Belarus is highly concentrated within the top levels of government and financial institutions have little autonomy.

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. Banks in the zones are currently subject to all regulations that apply to banks outside the zones.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All crimes approach

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: NO

KNOW-YOUR-CUSTOMER RULES:

Covered entities: 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 property leasing firms

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: 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 property leasing firms

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: 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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In April, 2006, the United States issued an advisory to U.S. financial institutions, which remains in effect, alerting them to guard against a potential money laundering threat involving Belarusian government senior regime elements (including senior executives in state-owned enterprises), acting individually or through government agencies and associated front companies, seeking to move misappropriated Belarusian state assets as well as proceeds from illicit arms sales to or through the U.S. financial system. In June 2006, the United States imposed targeted financial sanctions on these Belarusian government senior regime elements. In addition, in April 2004, Infobank, Minsk (renamed PJSC Trustbank) was designated under section 311 of the USA PATRIOT Act as of primary money laundering concern. 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 2008, the U.S. suspended the sanctions on two Belneftekhim subsidiaries, but as of yearend 2010, continued sanctions against all other Belneftekhim entities.

The Government of Belarus (GOB) has taken steps to construct a legal and regulatory framework to fight money laundering and terrorist financing, including amending its AML law in 2010, strengthening basic customer due diligence (CDD) requirements, introducing special CDD procedures for politically exposed persons, and criminalizing insider trading. Despite these efforts, serious deficiencies remain, and in many instances, implementation falls below international standards. The GOB should focus on the full implementation of existing legislation and enact amendments to its laws, where necessary, to accomplish the following: implement strict regulation of industries operating within the FEZ areas; reinstate the identification requirement for foreign currency exchange transactions; extend anti-money laundering/counter-terrorist financing (AML/CFT) laws and regulations to governmental transactions that are currently exempted under the law; and hone its guidance on and enforcement of suspicious transaction reporting. The GOB should ensure the regulations and guidance provided by the National Bank and other regulators are legally binding.

Insufficient resources are allocated for supervision and enforcement, and regulatory authorities lack sufficient independence. 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. The GOB should provide adequate staff, tools, training and financial resources to the Financial Monitoring Department at the State Control Committee – the financial intelligence unit (FIU) – so that it can operate effectively. The GOB must work to further improve the coordination among agencies responsible for enforcing AML/CFT measures.

International cooperation is poor. Belarus does not have an adequate system in place to freeze terrorist assets without delay. Belarus’s cross-border currency declaration system does not cover bearer negotiable instruments and is not structured and implemented with the goal of combating money laundering. 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 2010. Illicit funds, formerly consisting mostly of narcotics trafficking proceeds, now derive mainly from serious forms of financial crime, including tax crime. 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. In 2010, the Belgian financial intelligence unit also noted an increase in money laundering via “money mules” and internet scams as well as an increase in the number of cases involving fraud through the European carbon market. The Belgian diamond industry also has been used to launder money.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, estate agents, private security firms, funds transporters, diamond merchants, notaries, bailiffs, auditors, chartered accountants, tax advisors, certified accountants, surveyors, lawyers and casinos

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, estate agents, private security firms, funds transporters, diamond merchants, notaries, bailiffs, auditors, chartered accountants, tax advisors, certified accountants, surveyors, lawyers and casinos

Number of STRs received and time frame: 17,170 for 2009

Number of CTRs received and time frame: 9,973 for 2009

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 60 in 2009

Convictions: 39 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Belgium permits bearer shares for individuals as well as for banks and companies.

Belgian authorities are working to address implementation issues in two sectors, phone shops and the diamond industry. Phone shops allow customers to make inexpensive phone calls and access the internet. Only a quarter of approximately 3,000 phone shops are formally licensed, and raids on these shops have uncovered evidence of money laundering operations. Authorities report challenges for officials trying to collect tax revenues and police money laundering operations, because phone shops often declare bankruptcy and later reopen under new management. Belgian authorities recognize the particular importance and special challenges for law enforcement of the diamond industry, as well as the potential vulnerabilities it presents to the financial sector, as 80 percent of the world’s rough diamonds and 50 percent of polished diamonds pass through Belgium. Authorities have transmitted a number of cases relating to diamonds to the public prosecutor.

Belize

Belize is not a major regional financial center but is an offshore 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, including offshore banks, insurance companies, trust service providers, mutual fund companies, and international business companies. Belize has pegged the Belizean dollar to the U.S. dollar and continues to offer financial and corporate services to nonresidents in its offshore financial sector, which represents a potential vulnerability for money laundering.

Most money laundering is largely thought to be related to proceeds from U.S. residents participating in unlawful internet gaming. Belize is a transshipment point for marijuana and cocaine. There is a growing indication that money laundering proceeds are related to proceeds from the trafficking of illegal narcotics, psychotropic substances, and chemical precursors, and that they are controlled by local drug trafficking organizations and organized criminals.

Belizean officials suspect that money laundering occurs primarily within the free trade zones. Belizean officials believe the large Corozal Commercial Free Zone (CFZ) that operates at the border with Mexico is involved in trade-based money laundering.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: Both

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Domestic and offshore banks; venture risk capital; money broker, exchange and transmission services; moneylenders and pawnshops; insurance; real estate; credit unions and building societies; trust and safekeeping services

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Domestic and offshore banks; venture risk capital; money broker, exchange and transmission services; moneylenders and pawnshops; insurance; real estate; credit unions and building societies; trust and safekeeping services

Number of STRs received and time frame: 67, January 1 through December 13, 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Six, January 1 through December 13, 2010

Convictions: Five, January 1 through December 13, 2010

Assets forfeited: criminally: None civilly: $510,000

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Belize is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation cannot be found on the CFATF website. A Report on the Observance of Standards and Codes prepared by the IMF can be found at: http://www.imf.org/external/pubs/ft/scr/2004/cr04373.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Belize lacks the resources to effectively enforce anti-money laundering rules. Belize’s Financial Intelligence Unit (FIU) has a broad mandate and is severely understaffed. The FIU staff does not have sufficient training or experience in identifying, investigating, reviewing, and analyzing evidence in money laundering cases. Prosecutors and judges also need additional training on financial crimes, including money laundering. Prosecutors assigned to the FIU could also assist with cases going to court, as the FIU is currently forced to contract outside attorneys to prosecute its cases. If implemented, an arrangement for asset sharing may provide additional resources to the FIU.

While it is widely believed that abuse occurs within the offshore sector and in the free trade zones, no one from these organizations has been charged with a financial crime. Belize should require the Commercial Free Zones (CFZ) to be reporting entities. The GOB should become a party to the UN Convention against Corruption.

Benin

Benin is not a financial center. It is a regional re-export hub, particularly for trafficked vehicles. A large percentage of motor fuels sold in Benin is informally imported from Nigeria. There is also significant informal trade in consumer goods with Nigeria, including medicines and vegetable oil. Internet and other fraud schemes are common. Benin is a transit point for cocaine and heroin moving from Latin America to Europe. Human trafficking and corruption are also concerns. There is no indication the informal markets are funded through narcotics proceeds. While some money laundering may occur through Benin's banking system, Government of Benin (GOB) officials believe money laundering is undertaken primarily through the purchase of assets such as real estate, shipment of used vehicles for resale, and front companies.

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate offenses: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, cash couriers, casinos, insurance companies, post office, real estate agents, lawyers, notaries, non-governmental organizations, travel agents, and dealers of precious metals, stones and artifacts

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, cash couriers, casinos, insurance companies, post office, real estate agents, lawyers, notaries, non-governmental organizations, travel agents, and dealers of precious metals, stones and artifacts

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Twelve over the last three years

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Benin is a member of the Inter Governmental Action Group Against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=38&mod=2&men=2

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Although the GOB has taken specific steps to construct an anti-money laundering/counter-terrorist financing (AML/CFT) regime, its level of compliance and implementation measured against international standards is low. There is a lack of overall AML/CFT countermeasures by both industry and responsible government agencies. AML measures suffer from lapses of information sharing and cooperation between government agencies and departments. Benin law enforcement is hindered by a lack of financial crimes expertise. There is little data to reliably measure progress in combating money laundering.

Know your customer and suspicious transaction reporting requirements are not routinely implemented. With the exception of cash couriers, who must declare the transfer of funds equal to or exceeding 2,000,000 FCFA (approximately $4,000) across borders, AML/CFT controls are not applied to non-bank financial institutions (NBFI), despite their coverage under the law. Benin customs authorities do not evaluate cross-border currency declarations for money laundering purposes and do not share the data with the financial intelligence unit. The GOB should work with regional partners and international donors and provide AML training and awareness to those with responsibilities under the law.

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.

There are no free trade zones, hawalas or other informal financial sector entities in Bermuda in which money laundering/ terrorist financing occurs. However, there are cases where domestic criminals utilize the formal financial sector for money laundering purposes. Bermuda does not permit offshore banks; a foreign bank may establish a subsidiary as a Bermuda company with its own board of directors, but may not establish a branch. Bermuda does not permit bearer shares, nor does it permit shell companies.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: Both

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, trustees, investment businesses (including securities brokers and financial management firms), long-term insurance companies, money service businesses, insurance managers and brokers, fund administrators, and investment fund operators

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: All persons have a duty to report any suspicion of money laundering that comes to their attention in the course of their ‘trade, profession, business or employment’

Number of STRs received and time frame: 166 from January through September 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Nine in 2010

Convictions: Three in 2010

Assets forfeited: criminally: Over $ 350,000 in 2010 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Bermuda is a member of Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Bermuda_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Minister of Justice issued an Order in August 2010 that expands the sanctions regime relating to Iran and allows for the implementation of both UN and EU sanctions on designated persons and entities.

Legislative amendments in 2010 create new regulations for wire transfers and make it easier for law enforcement authorities to track funds transferred electronically. The law also establishes the statutory framework for supervising designated non-financial businesses and professions (DNFBPs). The change includes lawyers and accountants, corporate service providers, real estate dealers, high value goods dealers, and dealers in precious metals and stones. DNFBPs will be subject to coverage in the first half of 2011. In addition, the Act requires accountants who are members of the Institute of Chartered Accountants of Bermuda and lawyers who are members of the Bermuda Bar Association, as well as other ‘regulated non-financial businesses and professions’ to be subject to know your customer rules in 2011.

The Government of Bermuda should ensure its offshore sector and exempt companies are subject to 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.

Bermuda is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the Bermuda’s international affairs and may arrange for the ratification of any convention to be extended to Bermuda. The 1988 Drug Convention was extended to Bermuda in 1995. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime have not yet been extended to Bermuda.

Bolivia

Bolivia is not a regional financial center, but money laundering activities continue to take place. These illicit financial activities are related primarily to narcotics trafficking, corruption, tax evasion, and smuggling and trafficking of persons. Hotels, currency exchange houses, casinos, cash transporters, informal exchange houses, and wire transfer businesses are not subject to anti-money laundering controls. The Bolivian financial system is highly dollarized, with approximately 50% of deposits and loans distributed in U.S. dollars rather than Bolivianos, the local currency (down from 90% in 2004). Bolivia has 13 free trade zones, located in El Alto, Cochabamba, Santa Cruz, Oruro, Puerto Aguirre, and Desaguadero, for commercial and industrial use.

Bolivia was suspended from the Egmont Group of Financial Intelligence Units (the Egmont Group) in July 2007 because Bolivia has not criminalized terrorist financing. In December of 2008, the Egmont Group expelled Bolivia’s FIU from its membership, due to a lack of terrorism financing legislation in Bolivian law. To regain Egmont membership, Bolivia must reapply and provide written evidence of its FIU’s compliance with Egmont FIU definitions and requirements.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach.

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/2009/140888.htm

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, insurance companies, securities brokers and financial intermediaries

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, insurance companies, securities brokers and financial intermediaries

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: Not available

Bolivia is a member of the Financial Action Task Force of South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/pdf/InformeBolivia.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The expulsion of the U.S. Drug Enforcement Administration from Bolivia in November 2008 has diminished the effectiveness of several financial investigative groups operating in the country, including Bolivia’s Financial Investigative Team, the Bolivian Special Counternarcotics Police, and the Bolivian Special Operations Force. Most money laundering investigations continue to be in the Department of Santa Cruz and are associated with narcotics trafficking organizations.

Bolivia’s expulsion from the Egmont Group bars the UIF from participating in Egmont Group meetings or using the Egmont Secure Web (the primary means of information exchange among Egmont Group member FIUs).

New legislation introduced in March of 2010 provides for money laundering to be treated as an autonomous offense. The law also expands the list of predicate offenses for money laundering but still does not include all offenses recommended in the international standards. The predicate offenses for money laundering should cover all serious offenses, and Bolivia should seek to extend its laws to the widest range of predicate offenses.

In September 2010, a draft law to criminalize terrorist financing was provided to the Council of Ministers for approval. This draft law also includes provisions addressing the freezing, seizure and confiscation of terrorist-related assets; and gives authority to the FIU to freeze for 48 hours the execution of a transaction suspected of being related terrorist financing. It appears the proposed criminalization of TF requires “intent”. This may pose difficulties in the application and interpretation of the provision. The provision seems to require that the funds are actually used to carry out or attempt a terrorist act. Separately, obligated entities should be required by law or regulation to report to the FIU information related to terrorist financing.

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, although the UIF does maintain a database of suspect persons that financial entities must check before conducting business with clients.

Bosnia and Herzegovina

Bosnia and Herzegovina (BiH) is 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 such as trafficking, drugs, and corruption. 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. The cash-based economy and weak border controls on bulk cash couriers also contribute to making BiH an attractive venue for organized criminal elements and potential terrorist financiers. There is no indication 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.

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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and currency exchange offices; financial leasing firms; insurance companies; post offices; investment and mutual pension companies; stock exchanges and stock exchange agencies; casinos and gaming enterprises; dealers in vehicles, art, precious metals and stones; lawyers, notaries, auditors, and accountants; real estate brokers; company formation agents, trust and asset managers; pawnshops; travel agents; auctioneers; and charities

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and currency exchange offices; financial leasing firms; individuals; post offices, investment and mutual pension companies, stock exchanges and stock exchange agencies, insurance companies, casinos and gaming enterprises; dealers in vehicles, art, precious metals and stones; lawyers, notaries, auditors, and accountants; real estate brokers; company formation agents, trust and asset managers; pawnshops; travel agents; auctioneers; and charities

Number of STRs received and time frame: None in 2010

Number of CTRs received and time frame: 227,077 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three against seven persons and four legal entities in 2010

Convictions: 13 - 2009 – 2010; one was overturned on appeal

Assets forfeited: criminally: approximately $225,000 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

BiH is a member of Moneyval, a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: www.coe.int/t/dghl/monitoring/moneyval/Countries/BH_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

BiH’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 BiH -- the State, the two entities (the Federation of Bosnia and Herzegovina and the Republika Srpska), and Brcko District – is improving. The jurisdictions maintain separate financial supervision and enforcement bodies. The State, the two entities, and Brcko District should move quickly to prepare and adopt a national action plan or strategy to address the AML/CFT deficiencies. 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.

BiH law enforcement and customs authorities should take additional steps to control the integrity of the borders and limit smuggling. BiH law requires customs officials and the Indirect Tax Administration (ITA) to report to the financial intelligence unit (FIU) all cross-border transportation of cash and securities in excess of KM 10,000 (approximately $6,800). 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.

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. Neither the securities sector nor the insurance sector has submitted any STRs recently. Officially, the FIU has access to other Government entities’ records, and formal mechanisms for interagency information-sharing are in place. In practice, however, the FIU 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. Since June 2010, following the installation of a new department head, the level of cooperation with the agencies has improved and information has been shared in both directions.

The Government of BiH 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 Government of BiH should amend its Law on Money Laundering and Terrorist Financing to clarify the FIU’s obligation to disseminate information outside the organization and increase independence of the organization. Although prosecutors, financial investigators, and tax administrators have received training on tax evasion, money laundering, and other financial crimes, BiH should enhance the 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.

BiH should take specific steps to completely implement its anti-corruption strategy and to combat corruption at all levels of commerce and government. The government should enact implementing legislation for the international conventions to which it is a party.

BiH and all entities have laws which address asset forfeiture. However, the Republika Srpska is the only entity with specific legislation addressing the management of property obtained through asset forfeiture. BiH authorities rarely use these forfeiture provisions and their interpretation is subject to great debate. BiH should adopt a comprehensive asset forfeiture law that provides a formal mechanism for the administration of seized assets.

Botswana

The majority of crime in Botswana does not generate significant proceeds. Money laundering in Botswana, to the extent that it occurs, is not primarily related to proceeds from drugs. However, there is some indication of an increase in drug trafficking in recent years and observers have noted an increase in the sophistication and level of organization of cross-border crime. There has been an increase in the amount and frequency of major fraud committed against large organizations, e.g., banks or government departments, typically with the collusion of an employee. It is not known whether the laundering of the proceeds of these crimes takes place in-country or involves transport of proceeds across borders. The Government of Botswana (GOB) has established the fundamentals of an anti-money laundering (AML) regime through various legislative and regulatory instruments.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, building societies, collective investment undertakings, the Botswana Savings Bank, post offices, registered stockbrokers, long-term insurance business, a licensed person who transacts foreign exchange, and an international financial services center certification committee

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, building societies, collective investment undertakings, the Botswana Savings Bank, post offices, registered stockbrokers, long-term insurance business, a licensed person who transacts foreign exchange, and an international financial services center certification committee

Number of STRs received and time frame: 99 in 2006 - no additional data available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two

Convictions: Two

Assets forfeited: criminally: The only criminal forfeiture is under appeal civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Although the key components of the institutional framework for anti-money laundering are in place, only the Central Bank enforces AML requirements. Implementation of the AML regime has been slow. Botswana has yet to undertake an in-depth review of money laundering and terrorism financing risks and vulnerabilities. The country’s Financial Intelligence Agency, though legally established, is not yet operational. Domestic coordination between agencies needs improvement. Enforcement agencies need to be sensitized to financial crimes and trained in investigation techniques.

Terrorist financing is not criminalized as a specific offense in Botswana. However, 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.

Botswana enjoys a relatively low level of corruption compared to other African states, and the Directorate on Corruption and Economic Crime is actively investigating an increasing number of cases. The Department of Public Prosecution regularly prosecutes corruption offenses committed by politically important persons.

Brazil

Brazil is the world’s fifth largest country in size and population, and as of 2010, the eighth largest economy in the world. Brazil is considered a regional financial center for Latin America. It is a major drug-transit country, as well as one of the world’s largest consumer countries. 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, and trade in various types of contraband. 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.

Sao Paulo and the Tri-Border Area (TBA) of Brazil, Argentina, and Paraguay are particular areas that possess high risk factors for money laundering. 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 Sao Paulo and 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 Brazil’s western border states.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: NO civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Commercial and savings banks and credit unions; insurance companies and brokers; securities, foreign exchange, and commodities brokers/traders; real estate brokers; credit card companies; money remittance businesses; factoring companies; gaming and lottery operators and bingo parlors; dealers in jewelry, precious metals, art and antiques

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Commercial and savings banks and credit unions; insurance companies and brokers; securities, foreign exchange, and commodities brokers/traders; real estate brokers; credit card companies; money remittance businesses; factoring companies; gaming and lottery operators and bingo parlors; dealers in jewelry, precious metals, art and antiques

Number of STRs received and time frame: 56,371 in 2009

Number of CTRs received and time frame: 1,746, 494 in 2009

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Brazil is a member of the Financial Action Task Force (FATF) and the FATF of South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found here: www.fatf-gafi.org

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The GOB achieved visible results from investments in border and law enforcement infrastructure that were executed with a view to gradually control the flow of goods, both legal and illegal across Brazil’s land borders. 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.

Legal persons are not subject to direct civil or administrative liability for committing money laundering (ML) offenses. Corporate criminal liability is not possible due to fundamental principles of domestic law. Natural and legal persons are not subject to effective sanctions for ML because systemic problems in the court system seriously hamper the ability to obtain final convictions and sentences, and legal persons are not subject to direct civil/administrative sanctions for committing a ML offense. Very few final convictions for ML and convictions in the first instance are low given the level of ML risk and size of the financial sector. The GOB should take legislative action to establish direct civil or administrative corporate liability for ML and ensure that effective, proportionate and dissuasive sanctions may be applied to legal persons. Brazil also should continue to support the Specialized Federal Courts and other measures to ameliorate the negative impact of some of the systemic problems in the court system which are undermining the ability to effectively apply final sanctions for ML. The GOB should continue taking measures to ensure that the overlapping jurisdiction among federal and state law enforcement authorities does not impede the effectiveness of their ability to investigate ML. Brazil should also continue the PNLD training program and extend it as widely as possible to ensure that police, prosecutors and judges at both the state and federal levels have sufficient training in the investigation and prosecution of ML cases.

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.

In February 2006, U.S. Immigration and Customs Enforcement established a Brazil-based partner Trade Transparency Unit (TTU) to aggressively analyze, identify, and investigate companies and individuals involved in trade-based money laundering activities between Brazil and the United States. As a result of the TTU, Brazil has identified millions of dollars of lost revenue.

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 has frequently insisted that there is no evidence of terrorist financing within Brazil. However, in December 2010, the U.S. Treasury Department designated Bilal Mohsen Wehbe, Hizballah’s chief representative in South America, as a Specially Designated Global Terrorist (SDGT) under Executive Order 13224. Wehbe has been involved in transferring funds collected in Brazil to Hizballah in Lebanon. 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.

Although Brazil is a party to the United Nations International Convention for the Suppression of the Financing of Terrorism, it has not criminalized terrorist financing in a manner that is consistent with international standards. Terrorist financing is a predicate offense for money laundering but is not an autonomous offense in Brazil; however, a bill awaiting legislative action contains language that could resolve this gap.

British Virgin Islands

The British Virgin Islands (BVI) is a United Kingdom (UK) overseas territory with a population of approximately 22,000. The economy depends greatly on tourism and its offshore financial sector. As of September 2010, there were 456,547 active companies, seven licensed banks, 230 fiduciary services, and 2,951 mutual funds registered with the BVI Financial Services Commission (FSC). BVI’s unique share structure that does not require a statement of authorized capital as well as the lack of mandatory filing of ownership, pose significant money laundering risks. Tourism accounts for 45 percent of the economy and employs the majority of the workforce. Financial services are very important, however, contributing over half of government revenues. BVI remains vulnerable to money laundering practices through its drug trafficking trade and the exploitation of its offshore financial services. BVI’s proximity to the U.S. Virgin Islands and the use of the U.S. dollar for its currency pose risk factors for money laundering. The BVI are a major target for drug traffickers, who use the area as a gateway to the United States. Drug trafficking in general is a serious problem.

BVI is a well established center offering accounting, banking and legal services; captive insurance; company incorporations; mutual funds administration; trust formation; and shipping registration. The FSC is the sole supervisory authority responsible for the licensing and supervision of financial institutions under the relevant statutes.

While gaming is prohibited in the BVI, casinos have been incorporated in the definition of relevant business under the AML/CFT regime.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All crimes approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: NO

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; currency exchanges; charities and nonprofit associations; dealers in autos, yachts, and heavy machinery; dealers in precious metals and stones; and leasing companies

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; currency exchanges; charities and nonprofit associations; dealers in autos, yachts, and heavy machinery; dealers in precious metals and stones; and leasing companies

Number of STRs received and time frame: 191 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0 in 2010

Convictions: 0 in 2010

Assets forfeited: criminally: 0 civilly: 0

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

BVI 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/downloadables/mer/Virgin_Islands_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Reporting institutions are advised to monitor relevant websites for names of suspected terrorists and related organizations. No specific guidance has been issued to outline reporting institutions’ obligations to freeze funds of designated terrorists and terrorist organizations.

The U.S. and the British Virgin Islands established a Tax Information Exchange Agreement (TIEA) in 2006. Application of the US - UK mutual legal assistance treaty (MLAT) concerning the Cayman Islands was extended to the BVI in 1990. The FSC cooperates with foreign counterparts and law enforcement agencies. In 2000, the Information Assistance (Financial Services) Act (IAFSA) was enacted to increase the scope of cooperation between the BVI’s regulators and regulators from other countries.

While BVI legislation has strengthened due diligence requirements where a representative is acting on another person’s behalf or when the customer is resident in another country which does not fully comply with FATF rules, and has extended regulation to money value transfer service operators these laws are too new to be evaluated. The FSC should increase its staffing in order to meet the recommended inspection and reporting requirements, especially in light of the new entities covered under the law. The lack of prosecutions for money laundering and a reported decline in number of inspections suggests that the FSC should work closely with law enforcement and other authorities. In addition, while real estate agents, lawyers, other independent legal advisers, accountants, dealers in precious metals and stones are covered by the AML/CFT regulations, there appears to be no effective mechanism to ensure compliance with AML/CFT requirements.

The British Virgin Islands is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the BVI’s international affairs and may arrange for the ratification of any convention to be extended to the BVI. The 1988 Drug Convention was extended to the BVI in 1995. The UN Convention against Corruption was extended to the BVI in 2006. The International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime have not yet been extended to the BVI.

Brunei

Brunei is not a regional financial center. Brunei’s proximity to high crime regions, along with its large foreign worker population and limited AML/CFT controls, make it vulnerable to cross-border criminal activity. Domestically, Brunei is a generally low threat country for money laundering and terrorist financing, and proceeds of crime generally originate in fraud, gambling, the drug trade, and fuel smuggling. Brunei has experienced an increase in cyber crime and financial fraud such as pyramid schemes and e-mail scams.

While Brunei criminalized money laundering and terrorist financing, law enforcement and prosecutors are hampered by a lack of capacity and gaps in the legal framework. Brunei lacks an effective method to monitor cross-border currency and bearer instruments, and both domestic and cross-border wire transfers are not comprehensively monitored. Brunei has a small offshore center, with weak AML/CFT controls, and no free trade zones.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Domestic and offshore banks, insurance companies, finance companies, money exchanges and remitters, and securities broker/dealers

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Domestic and offshore banks, insurance companies, finance companies, money exchanges and remitters, and securities broker/dealers

Number of STRs received and time frame: 24 in 2010

Number of CTRs received and time frame: 3,068 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: Not applicable civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Brunei is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Brunei’s most recent mutual evaluation can be found here:

http://www.apgml.org/documents/docs/17/Brunei%20Darussalam%20MER2_FINAL.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Brunei’s weak AML/CFT controls and lack of institutional capacity to enforce AML/CFT compliance have been of particular concern given its proximity to countries with high money laundering and terrorist financing profiles. The Government of Brunei (GOB) committed to strengthening its AML/CFT regime by approving an order in July 2010, which includes stronger KYC rules. The order is to be implemented on January 1, 2011. The GOB should make implementation of the KYC rules a priority. As this order does not address designated non-financial businesses and professions (DNFBPs), the GOB should draft notices to cover DNFBPs as well.

Only money changer and remittance companies are obliged to report cash transactions above B$5,000 (approximately $3,850). New reporting procedures for banks have been proposed.

The GOB issued a notice to banks to conduct enhanced due diligence on politically exposed persons (PEPs); however, the official GOB order instituting enhanced due diligence for PEPs is not yet in force. The GOB should ensure the order covering PEPs is gazetted as soon as possible in 2011.

Brunei should establish cross-border currency requirements and strengthen its actions against investment fraud and illegal deposit taking. Intellectual property theft generates significant proceeds but is not a priority for authorities. The GOB should ensure intellectual property crimes are fully criminalized, and effective controls are in place to prevent theft and prosecute offenders.

Bulgaria

Bulgaria is not considered an important regional financial center. However, it has a well-developed financial sector in comparison to other Balkan countries and relatively lax regulatory controls. The country’s large gray economy and the prevalence of cash transactions make it especially vulnerable to money laundering. 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 2010 were from both domestic and foreign criminals engaging in drug trafficking, smuggling, human trafficking, tax fraud, credit card fraud, and internet fraud. Public corruption is a pervasive problem in Bulgaria, and many suspect that some public tenders were used to conceal money laundering. The government has made significant efforts to curb corruption and prosecuted several high-level public officials, including former ministers.

Numerous high-profile anti-smuggling operations have generally had a deterrent effect on contraband. However, smuggling, particularly of cigarettes, alcohol, and fuel, remains a serious problem, reportedly sustained by corrupt Bulgarian businessmen and politicians trying to avoid paying value added taxes and excise duties. Despite law enforcement efforts, cigarette smuggling remains rampant due to the crisis-driven fall in disposable income and the government’s increase of excise duties. Contraband, including stolen cars, and clothes, also generates funds laundered through the financial system.

As organized crime groups move into legitimate business operations, money laundering is becoming more sophisticated and difficult to trace. Criminals invest laundered money in casinos, night clubs, and dealerships selling expensive cars, boats, and other luxury goods imported from the United States and Europe. Despite a dramatic slowdown in construction due to the economic crisis, the tourism sector continues to be one of the favorite money laundering routes for organized criminal groups.

There are six free trade zones in Bulgaria that are 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. Although this is becoming a less common scheme due to Bulgaria's European Union (EU) membership, some still believe that free trade zones are used to avoid paying customs fees, especially on gas derivatives and cigarettes.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S. CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All crimes

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; money exchangers; insurance companies, brokers and agents; investment brokers, dealers, funds and managers; trust and company service providers; notaries, lawyers, auditors, and accountants; gaming businesses; real estate brokers; dealers in precious metals and stones; the postal service; political parties; and sport clubs

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; money exchangers; insurance companies, brokers and agents; investment brokers, dealers, funds and managers; trust and company service providers; notaries, lawyers, auditors, and accountants; gaming businesses; real estate brokers; dealers in precious metals and stones; the postal service; political parties; and sport clubs

Number of STRs received and time frame: 1,380 (January – November 2010)

Number of CTRs received and time frame: 182,332 (January – November 2010)

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 83 (2009); 75 (January – October 2010)

Convictions: 18 against 37 people (2009); 15 against 28 people (January – October 2010)

Assets forfeited: criminally: $10,360,000 (January – October 2010) civilly: $500,000 (January – November 2010)

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Bulgaria is a member of the Council of Europe’s Committee 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/dgh/moneyval/Countrie/Bulgaria_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Bulgaria has undertaken steps to deter financial crimes and continues to maintain the numbers of money laundering prosecutions. In May 2010 the Bulgarian government closed a loophole in reporting requirements by issuing new guidance requiring banks to track previously unreported cash withdrawals. This new guidance came into force in December 2010. The government is also seeking to amend its asset forfeiture law to allow civil asset forfeiture independent of a criminal conviction. The amendments would also expand the scope of the law to allow forfeiture proceedings against third persons and legal entities possessing property acquired through criminal activity. If passed, these changes would greatly speed up the process and make it more difficult for criminals to hide and launder illegal assets.

In March 2010, a trial court convicted six members of a high-profile criminal group for laundering EU assistance funds. The court sentenced the group to a total of 42 years of imprisonment and confiscated property worth approximately $8.2 million. The money was laundered through a U.S.-registered offshore company and then reinvested in resorts on the Bulgarian sea coast. This is the first case in Bulgaria in which the defendants were convicted of money laundering prior to obtaining a conviction for the predicate crime.

Due to a 2007 restructuring, the Financial Intelligence Directorate (FID), Bulgaria’s FIU, is now a directorate within the State Agency for National Security (DANS); it is no longer an individual legal entity with its own budget. The FID has 32 memoranda of understanding with Financial Intelligence Units (FIU)’s from Europe, the Americas, and Australia. Since moving to DANS, the FID has not been authorized to sign any additional or updated memoranda of understanding to exchange financial intelligence with its counterpart FIUs in other countries. Due to DANS’ legal requirements, FID's yearend statistics are also no longer released to the public.

Given the size of Bulgaria's financial system and the sophistication of money laundering schemes, staffing in the FID is not commensurate with Bulgaria's money laundering problems. As part of DANS, the FID is not able to fill temporary vacancies and currently Bulgaria only has five individuals conducting onsite inspections. Also, in part due to its staffing shortages, the FID has been criticized for not effectively analyzing the information it receives from reporting entities.

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 United States pursuant to Executive Order 13224, and those designated by the relevant EU authorities. At the end of 2010, the FID was examining two reports of potentially terrorist-related assets.

Reporting compliance by non-bank financial institutions, especially by exchange bureaus, casinos and notaries, continues to be very low. This 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 government should systematically track non-bank transactions as well as cross-border electronic currency transactions to prevent Bulgaria from being an entry point to funnel illicit money into the European financial system.

Burkina Faso

Burkina Faso is not a regional financial center. Its 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 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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S. CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: The Public Treasury, Central Bank of West African States (BCEAO), financial organizations, independent legal professionals involved in financial transactions, auditors, real estate agents, fund transporters, owners of casinos and lotteries, travel agencies, NGOs

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: The Public Treasury, BCEAO, financial organizations, independent legal professionals involved in financial transactions, auditors, real estate agents, fund transporters, owners of casinos and lotteries, travel agencies, NGOs

Number of STRs received and time frame: 40 from January 2009 to November 2010

Number of CTRs received and time frame: 0

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: 0 civilly: 0

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Burkina Faso is a member of the Inter Governmental Action Group Against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=39&mod=2&men=2

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Central Bank of West African States (BCEAO) is working at the regional level to draft revised anti-money laundering (AML) regulations. Limited resources hamper the Government of Burkina Faso’s (GOBF) ability to enforce current AML laws and regulations. The newly created financial intelligence unit (CENTIF) is not yet fully operational and is still working to establish itself as an institution. All six staff members of the CENTIF have been nominated and have started work but lack the training and capacity to fully enforce the law and its attendant regulations.

There is little enforcement and no formal method for tracking the movement of goods and money into and out of the country at border checkpoints or at either of the country's two commercial airports. CENTIF, law enforcement agencies and customs do not have the means and expertise to control the widespread informal monetary and commercial sectors. Informal money exchange and transfers are common and not currently monitored.

Records exchange with countries outside of the WAEMU region is possible via bilateral agreement. The GOBF continued its cooperation with the United States on counterterrorism efforts and also participated in numerous regional efforts to combat terrorism.

Burma

Burma is not a regional or offshore financial center. Its strategic geographic location, prolific drug production, and lack of transparency make it an attractive transit country for money laundering. While its underdeveloped economy is not adequate as a destination to harbor funds, the low risk of enforcement and prosecution make it appealing to the criminal underground. Drug trafficking, human trafficking, and public corruption are major sources of illicit proceeds. Money launderers also exploit the illegal trade in wildlife, gems, and timber, and trade-based money laundering is of increasing concern.

Burma is second only to Afghanistan in opium production, and is increasingly a source of methamphetamine and amphetamine type substances. Its long, porous borders are 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, political arrangements between traffickers and Burma’s ruling military government allow organized crime groups to function with minimal risk of interdiction.

The Government of Burma (GOB) dominates the economy. State-owned enterprises and military holding companies control a substantial portion of Burma’s resources. A move toward privatization in 2010 transferred significant assets to private parties; however, most new owners appear to be business associates of the ruling generals, and some are allegedly connected to drug trafficking.

Corruption is endemic in both business and government. Transparency International’s 2010 Corruption Perception Index ranked Burma 176 out of 178 countries. This extensive corruption and overall lack of governmental transparency has stymied the GOB’s gestures toward financial reforms. The GOB enacted several reforms in the past several years to reduce vulnerability to drug money laundering in the banking sector. However, connections to powerful patrons still outweigh rule of law, and Burma continues to face significant risk of drug money being funneled into commercial ventures.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: None

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, customs officials, state-owned insurance company and small loans enterprise, securities exchange, the Andaman Club Resort Hotel (the only licensed money changer) accountants, the legal and real estate sectors and dealers of precious metals and stones

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Burma is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. Its most recent evaluation can be found at:

http://www.apgml.org/documents/docs/17/Myanmar%202008.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Burma's financial sector is extremely underdeveloped and most currency is held outside the formal banking system. The informal economy generates few reliable records, and the GOB makes no meaningful efforts to ascertain the amount or source of income or value transfers. The GOB’s lack of engagement extends to its financial institutions. Some Burmese financial institutions may engage in currency transactions related to international narcotics trafficking that include significant amounts of U.S. currency. However, the absence of publicly available GOB information on this issue precludes confirmation of such conduct. Burmese law does not contain any customer due diligence requirements, although some entities follow such procedures under other, non-AML related legal provisions.

Corruption is pervasive in every level of government. Senior military officials are essentially above the law and free to engage in a range of activities designed to enrich themselves and maintain their hold on power. Government workers do not receive a living wage and may seek bribes as additional “compensation.” Officials who resist the rampant corruption are impeded by the military’s control over all civilian authority, including the police. The GOB should end all policies that facilitate corrupt practices, including strengthening its oversight of the formal financial sector and implementing a transparent transaction reporting regime. The FIU should become a fully funded independent agency that functions without interference, and the GOB should supply adequate resources to administrative and judicial authorities for their enforcement of government regulations. The GOB should become a party to the UN Convention against Corruption.

The GOB has the power to freeze accounts without having a basis in law, as all institutions in the country are subordinate to the military. However, Burma’s AML measures do not address funds derived from legitimate sources that may be used to finance acts of terrorism. The GOB should enact legislation that specifically criminalizes terrorist financing, designates it as one of the predicate offenses to money laundering, and makes it an extraditable offense. The GOB should also require designated entities to report suspected terrorist financing.

The GOB should strengthen its customs procedures, and authorities should monitor more carefully trade-based money laundering and its use as a counter-valuation for informal economic networks. The GOB should also take serious steps to combat the smuggling of contraband and its link to pervasive governmental corruption.

Burma signed the ASEAN Treaty on Mutual Legal Assistance in Criminal Matters in 2006. However, records exchange, as with most information sharing arrangements involving the GOB, appears to be conducted on an ad hoc basis. The GOB should formalize information sharing arrangements as part of its efforts to integrate into the international community.

Burundi

Burundi is not considered a significant center for money laundering and terrorist financing. The Government of Burundi (GOB) has created anti-money laundering/ counter-terrorist financing (AML/CFT) laws and signed conventions but has yet to commit funding, provide training, implement policies, or demonstrate the political will to counter money laundering. Enforcement of laws in general is hindered by a dysfunctional and corrupt administration and a severe lack of capacity in supervisory, investigative and enforcement bodies. Neither the Financial Crime Unit (FCU) of the Burundian National Police nor the Financial Intelligence Unit (FIU) of the Ministry of Finance has conducted any investigations. Corruption is a significant problem in Burundi and corrupt Burundian politicians are adept at devising methods of laundering Burundian assets abroad, enjoying near impunity of their thefts of public funds.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach to predicate crimes: Not available

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Not available

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Not available

Number of STRs received and time frame: None

Number of CTRs received and time frame: None

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Central Bank supervises and examines financial institutions for compliance with AML/CFT laws and regulations. A law requiring banks to report large deposits or transactions to the police is under consideration, but banks and financial institutions are currently not required to report individuals engaging in significant transactions.

There are significant problems that deter effective AML/CFT efforts. Although laws exist, there appears to be little political will to prosecute or commit the resources to investigate crimes, particularly those that could implicate high-level government officials. Burundi is listed 170 out of 178 countries surveyed in Transparency International’s International Corruption Perception Index. Furthermore, Burundian law enforcement officials lack training and expertise in investigating financial crimes. The GOB should develop an oversight capability and provide sufficient resources, funding, and training to the new Financial Intelligence Unit and the Financial Crime 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

Cambodia is neither a regional nor an offshore financial center. Cambodia’s fledgling anti-money laundering regime; cash-based, dollarized economy with an active informal banking system; porous borders; loose oversight of casinos; and limited capacity of the National Bank of Cambodia to oversee the fast growing financial and banking industries contribute to a significant money laundering risk.

Cambodia has a significant black market for smuggled goods, including drugs and imported substances for local production of the methamphetamine ATS. Both licit and illicit transactions, regardless of size, are frequently done outside of formal financial institutions, and are difficult to monitor. Proceeds from crime are readily channeled into land, housing, luxury goods or other forms of property. The majority of real estate transactions are done without a registered real estate agent, and buyers and sellers determine the price of the property without reference to an independent valuation system.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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:

Covered entities: Banks; micro-finance institutions; credit cooperatives; security brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals, stones and gems; post office operating payment transactions; lawyers, notaries, accountants, auditors, investment advisors and asset managers; casinos and gambling institutions; non-governmental organizations (NGOs) and foundations doing business and raising funds

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; micro-finance institutions; credit cooperatives; security brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals, stones and gems; post office operating payment transactions; lawyers, notaries, accountants, auditors, investment advisors and asset managers; casinos and gambling institutions; NGOs and foundations doing business and raising funds

Number of STRs received and time frame: 96 (January through October 2010)

Number of CTRs received and time frame: 359,599 (January through October 2010)

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Cambodia is a member of 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://www.apgml.org/documents/docs/17/Cambodia%20World%20Bank%20DAR%20July%2007.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Cambodia (GOC) has not fully implemented its current AML/CFT legislation, and its list of covered entities is incomplete. The GOC should issue additional decrees, mandating compliance of designated non-financial businesses and professions with the reporting requirements established by the AML/CFT law, and provide training to commercial bankers. Given the high level of corruption in Cambodia, the GOC should also require special due diligence for domestic politically exposed persons (PEPs). Cambodia does not have, and has not offered, a safe harbor provision. The government should propose such a provision in the short term.

By regulation, banks are individually responsible for maintaining and monitoring the list of designated terrorists or terrorist entities; however, the GOC does not distribute the UN lists.

The GOC should also expand the authorities of the Cambodian Financial Intelligence Unit (CAFIU). At present, the CAFIU lacks the power to enforce AML/CFT laws. As a result, few covered entities follow STR reporting guidelines.

While Article 30 of the AML/CFT law provides for the confiscation of property in cases where someone is found guilty of money laundering as stipulated in the penal code, the law is vague, and does not describe a system of asset forfeiture. Cambodia should clearly define the system of asset forfeiture, and establish a regulation to implement the system.

Law enforcement capacity remains quite limited, and is hindered by corruption and a weak investigative and prosecutorial infrastructure. There have been no money laundering prosecutions or convictions since 2007, when two suspects were arrested but not convicted. Elements of the Ministry of Finance, the new Anti-Corruption unit, and the Cambodian National Police are receiving training on complex financial crimes. While the law enforcement training plan is long term and progressive, until the GOC fully implements AML/CFT legislation and addresses corruption, Cambodia will remain a high-risk environment for money laundering operations.

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 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. Cameroon’s economy is heavily cash dependent and trade-based money laundering is widespread. Cameroon has porous borders and customs enforcement is weak. Cameroon is particularly vulnerable to cross-border bulk currency transactions and to companies transferring money internationally. Laundering money through investment in real estate is a growing problem.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Financial institutions; money changers; casinos and gaming institutions; notaries; real estate agents; money transfer companies; travel agencies; auditors and accountants; dealers in precious metals and stones, works of art, and automobiles

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial institutions; money changers; casinos and gaming institutions; notaries; real estate agents; money transfer companies; travel agencies; auditors and accountants; dealers in precious metals and stones, works of art, and automobiles

Number of STRs received and time frame: 124 in 2010

Number of CTRs received and time frame: More than 2 million in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2010, the National Financial Investigations Agency (ANIF), Cameroon’s financial intelligence unit (FIU), became a member of the Egmont Group.

As a member of the Economic and Monetary Community of Central African States (CEMAC), Cameroon shares a regional central bank (Bank of the States of Central Africa – BEAC) with other member countries. Within CEMAC, there is the Banking Commission of Central Africa (COBAC) and the Action Group against Money Laundering in Central Africa (GABAC). Although there is no recognized FSRB in the region, GABAC is working with banks and member states to ensure implementation of international FATF recommendations through two formalized relationships. GABAC works directly with the ANIF in each member state. GABAC also engages with all banking institutions to urge them to become members of COBAC and then ensures that the banks are implementing and enforcing due diligence procedures, as outlined in the international standards.

The Government of Cameroon (GRC) should work with BEAC, 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, including tracking law enforcement statistics. 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. The Ministry of Justice should begin tracking cases more closely and providing closer cooperation with ANIF to improve STR information gathering. There is a lack of money laundering prosecutions and convictions. The Ministry of Justice should explore training needs for prosecutors and magistrates.

Canada

Money laundering in Canada is primarily associated with drug trafficking and financial crimes, particularly those related to fraud. With roughly $1.4 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 are involved in drug trafficking, contraband smuggling, illegal arms sales, migrant smuggling and white-collar crimes. The Criminal Intelligence Service Canada estimates that over 900 organized crime groups operate in Canada, with the vast majority involved in the illicit drug trade.

There are no free trade zones or offshore financial institutions. Money laundering generally occurs through the following methods: smuggling; money service businesses and currency exchanges; casinos; purchase of real estate; wire transfers; establishment of offshore corporations; credit cards, stored value cards and new payment methods. Criminals have also used internet payments or gold bullion to move funds.

Casinos now are required to report large disbursements and suspicious transactions. In 2010, the first year of reporting, 43,752 casino disbursement reports were filed. Alternative remittance systems, such as hawala, hundi, and chitti are also required to report.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: 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

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: 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

Number of STRs received and time frame: 64,240 April 2009 through March 2010

Number of CTRs received and time frame: 6,868,506 April 2009 through March 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 211 April 2005 through March 2006

Convictions: Ten April 2005 through March 2006

Assets forfeited: criminally: $17.5 million civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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 published mutual evaluation can be found here:

http://www.fatf-gafi.org/document/58/0,3343,en_32250379_32236963_40199098_1_1_1_1,00.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Lawyers in several provinces have successfully challenged the applicability of the AML law to them based upon common law attorney-client privileges, therefore, lawyers are not completely covered by the AML provisions.

The United States and Canada signed a memorandum of understanding (MOU) in November 2010 to track the movement of illicit currency by sharing data on currency seized at the border. The MOU will significantly enhance the ability of law enforcement officers in both countries to investigate and track illicit cash movements and disrupt the flow of funds that support the activities of criminals and terrorists.

Money laundering offenses have a higher threshold for prosecution and conviction than the offense of benefiting from the proceeds of crime. Criminals appear willing to forfeit assets and plead guilty to lesser charges to avoid prosecution under AML and proceeds of crime statutes.

While the law provides sufficient powers to Canadian law enforcement to pursue money launderers, the budget for relevant law enforcement authorities has not increased; additional resources could increase the effectiveness of existing laws. Provincial and federal statistics should be tracked jointly. Appropriately tracking these cases could reveal a more robust rate of money laundering related convictions.

Canada should continue oversight and increase follow-up of the relatively new AML/CFT measures within the casino industry; reduce the length of time needed for FINTRAC to prepare reports used by law enforcement authorities (average number of days for a report dropped from 82 to 68 from 2009-2010); and maintain the monitoring of the money services business registry. Canada also should continue to ensure its privacy laws do not excessively prohibit provision of information to domestic and foreign law enforcement that might lead to prosecutions and convictions.

Cape Verde

As a small archipelago nation off the west coast of Africa, Cape Verde is a not known as a regional financial center. Nevertheless, given its location between Latin America and Africa, its significant coastline, and a large shadow economy, Cape Verde remains vulnerable to money laundering operations and terrorist financing. At present, the vast majority of laundered proceeds come from narcotics trafficking.

While the government of Cape Verde has demonstrated a strong political commitment to combat both money laundering and terrorist financing, more needs to be done to investigate and prosecute cases in a timely, consistent manner. The main government entities searching for money laundering and terrorist financing are understaffed and could respond if Cape Verde were to become a true destination for laundered or terrorist-related funds.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; money exchangers; accountants and fiscal consultants; notaries; insurance companies; lawyers; real estate or property brokers; dealers in precious metals, stones and vehicles; gaming centers; and securities dealers

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; money exchangers; accountants and fiscal consultants; notaries; insurance companies; lawyers; real estate or property brokers; dealers in precious metals, stones and vehicles; gaming centers; and securities dealers

Number of STRs received and time frame: 52 in an unknown timeframe

Number of CTRs received and time frame: 0

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: 0 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Cape Verde 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 can be found at: www.giaba.org

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Limited resources hamper the government’s ability to enforce AML regulations. The Financial Information Unit (FIU) lacks both financial and human resources to support basic functioning. In particular, the FIU has a restrictive budget, shared facilities, and a part-time staff. Law enforcement and customs have little experience with financial crimes enforcement. These constraints limit Cape Verde's ability to respond to existing cases of money laundering and to deter future use of local entities for laundering purposes.

Cayman Islands

The Cayman Islands, a United Kingdom (UK) Caribbean overseas territory is an offshore financial center. 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 is also considered attractive to those seeking to evade taxes in their home jurisdiction.

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 2010, the banking sector had $1.73 trillion in assets. There were approximately 245 banks, 150 active trust licenses, 738 captive insurance companies, eight money service businesses, and more than 85,000 companies licensed or registered in the Cayman Islands. According to the Cayman Islands Monetary Authority (CIMA), at year end 2010, there were approximately 9,400 mutual 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. There are no free trade zones and the authorities do not see risks from bulk cash smuggling related to the large number of cruise ships that dock at the island.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, trust companies, investment funds, fund administrators, insurance companies and managers, money service businesses, corporate and trust service providers, money transmitters, dealers of precious metals and stones, and the real estate industry

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, trust companies, investment funds, fund administrators, insurance companies and managers, money service businesses, corporate and trust service providers, money transmitters, dealers of precious metals and stones, and the real estate industry

Number of STRs received and time frame: 308 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Eight 2003 - 2010

Convictions: Six 2003 - 2010; only one since 2006

Assets forfeited: criminally: Approximately $6 million civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

The Cayman Islands is a member of the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body. Its most recent mutual evaluation can be found here:

http://www.cfatf-gafic.org/downloadables/mer/Cayman_Islands_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

While the country has increased both its regulatory and law enforcement staffing, the number of prosecutions and convictions is extremely low given the vast scale of the country’s financial sector; only six successful prosecutions for money laundering, and only one in the last four years.

Private trust companies and individuals who carry on trust businesses or act as trustees are exempt from licensing requirements and the AML requirements. In addition, the lack of penalties for failing to report ownership and identity information undermines the effectiveness of these obligations. This is a problem in particular for an estimated 3,000 unregulated mutual funds resident in the Cayman Islands. In addition, there appear to be no requirements for companies, trusts and partnerships to retain records for at least five years.

The Cayman Islands should continue to computerize various registrations, such as those for mutual funds. There is a need to pay greater attention to the risks and proper supervision of non-profit organizations.

In January 2010, an anti-corruption law took effect which criminalizes bribery and formalizes international cooperation. Amendments to the Criminal Justice (International Co-operation) Act were passed in February 2010. These laws provided measures for investigation, prosecution and confiscation of the proceeds of all serious crimes and broadened international assistance to include not only drug trafficking but all serious crimes, including official corruption and other types of transnational crime.

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 Cayman Islands is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the Cayman Islands’ international affairs and may arrange for the ratification of any Convention to be extended to the Cayman Islands. The 1988 Drug Convention was extended to the Cayman Islands in 1995 and is implemented through several laws. The UN Convention against Corruption and the UN Convention against Transnational Organized Crime have not yet been extended to the Cayman Islands. However, the full implementation platform for the anti-corruption convention exists under current Cayman law. A 2002 request for extension of the International Convention for the Suppression of the Financing of Terrorism to the Cayman Islands has not yet been finalized by the UK, although the provisions of the Convention also are implemented by domestic laws.

Chad

Chad is a not a regional financial center. It is largely a cash economy with minimal transactions passing through financial institutions. The lack of sophisticated financial products makes the country relatively unattractive to money launderers and terrorist financiers. There is little indication of money laundering or terrorist financing within Chad although government officials are aware of the threat and desire stronger legal tools to address it. Corruption is a significant problem in Chad.

Chad has several different types of smuggling. Along the borders that surround the lower two-thirds of the country, the smuggled goods market consists largely of basic foodstuffs, cigarettes, fuel, and household items smuggled to avoid import duties. Across the country's northern third, which is sparsely populated and transected by historic Sahelian trade routes, smuggled items are generally more illicit, including drugs and weapons. These items generally transit Chad and are not destined for domestic use.

Since the smuggled household goods are for domestic use in a cash economy and the country does not have a significant domestic illegal drug problem, there is no indication that this market is financed by proceeds from narcotics or other illicit activities. Similarly, end users for smuggled drugs and weapons are not domestic, and proceeds of these activities do not enter Chad's financial system.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: NO

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Commercial banks

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Commercial banks

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Chad is a member of the six-country Central African Economic and Monetary Union (CEMAC). Within CEMAC, there is the Banking Commission of Central Africa (COBAC) and the Action Group against Money Laundering in Central Africa (GABAC). Although a FATF-style regional body does not cover the region, GABAC is working with banks and member states to ensure implementation of international standards through two formalized relationships. GABAC works directly with the National Financial Investigative Agency (ANIF) in each member state. GABAC also engages with all banking institutions to urge them to become members of COBAC and then ensures the banks are implementing and enforcing due diligence procedures, as outlined in the international standards.

Chad ranks 171 out of 178 countries surveyed in Transparency International’s 2010 Corruption Perception Index. Law enforcement and customs need training in financial crimes enforcement. Chad should become a party to the UN Convention against Corruption.

Chile

Chile has a large and well-developed banking and financial sector with an established anti-money laundering/counter-terrorism financing (AML/CFT) regime. Systematic vulnerabilities in Chile’s regime include stringent bank secrecy laws and relatively new regulatory institutions in which oversight gaps remain. The Government of Chile (GOC) is actively seeking to turn Chile into a global financial center, but not an offshore financial center. Chile has free trade agreements with more than 50 countries. Increased trade and currency flows, combined with an expanding economy, could attract illicit financial activity and money laundering.

Chile’s largely unregulated free trade zones present an additional vulnerability, given the country’s extensive trading partnerships and long, difficult to monitor borders. Illicit proceeds from limited drug trafficking and domestic consumption are laundered in the country.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks (checking but not savings accounts) and other financial institutions, credit unions, pension funds, mutual fund administrators, brokers and dealers, leasing and factoring companies, credit card issuers and operators, insurance companies, insurance brokers

Enhanced due diligence procedures for PEPs: Foreign: NO Domestic: NO

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; savings and loan associations; financial leasing companies; general, mutual funds and investment funds managers; pension fund administration companies; the Foreign Investment Committee; money exchange firms and other entities authorized to receive foreign currencies; factoring firms; credit card issuers and operators; money transfer and transportation companies; stock exchanges; stock exchange brokers; securities companies and agents; insurance companies; forwards and options markets operators; tax-free zones’ legal representatives; casinos; gambling houses and horse tracks; customs general agents; auction houses; realtors and land developers; notaries and registrars; and sports clubs

Number of STRs received and time frame: 617 (January through September 2010)

Number of CTRs received and time frame: 1,027 (January through June 2010)

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 34 (January through September 2010)

Convictions: Seven (January through September 2010)

Assets forfeited: criminally: $184,773.87 (January through September 2010) civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Chile is a member of the Financial Action Task Force of South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/microsite/index.htm

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Chile’s “list” approach only includes some of the recommended predicate offenses for money laundering. Chile has yet to widen the scope of the money laundering offense to apply it to crimes such as trafficking in persons, intellectual property rights violations, and extortion.

It is not common for all sectors of the financial system to be obliged to retain customer information for five years after the account was closed or the commercial relationship ended. Separately, there is no clear definition of politically exposed person (PEP). Existing laws do not clearly establish that STRs need to be submitted for the financing of terrorism or for the attempt to conduct a suspicious transaction even though the actual transaction is not realized/finalized. In addition the current legislation does not expressly specify that the UAF (Chilean financial intelligence unit) has competency to receive STRs related to the financing of terrorism.

The most significant obstacle to money laundering investigations is bank secrecy. The General Banking Law places all types of bank deposits and obligations under banking secrecy, and only allows banking institutions to share information about such transactions with the depositor or creditor (or an authorized legal representative). Law 707 states banks may not share information about the movement and balances in a current account with a third party. Due to these legal restrictions, banks do not share information with prosecutors without a judicial order. Some banks and their compliance officers aggressively apply rigorous, international AML/CFT standards, but they are restricted to simply reporting suspicious activity and then waiting for the appropriate court authorization to release any private information. Other banks are slow to reply to court orders to provide prosecutors with additional information. Judges can detain the bank’s general manager until all information is disclosed, but this tool is rarely used. In December, 2009, a legislative reform allowed tax authorities access to bank information without a judicial order under certain circumstances.

Chile’s anti-money laundering efforts continue to mature. At the same time, the GOC can still do more to investigate complex money laundering schemes, such as trade-based money laundering. Law No. 20,393, which entered into force in December 2009, makes it a crime for corporations to engage in money laundering, as well as bribe public officials and finance terrorism.

The GOC can improve its AML/CFT regime by: expanding the list of predicate crimes for money laundering to include all serious crimes; establishing regulatory control over non-bank institutions such as money exchange houses and charities; expanding customer due diligence requirements to cover all recommended entities and mandating enhanced due diligence procedures for politically exposed persons; and passing the draft law currently pending in the Senate to allow for the lifting of bank secrecy and the freezing of assets to bring Chile closer to compliance with its UNSCR 1267 obligations and international standards.

China, People’s Republic of

China is a major global financial center, with a rapidly growing economy and increased integration in the international market. The primary sources of criminal proceeds are corruption, narcotics and human trafficking, smuggling, economic crimes, intellectual property theft, counterfeit goods, crimes against property, and tax evasion. Money is generally laundered through bulk cash smuggling, trade-based fraud (over/under pricing of goods, falsified bills of lading and customs declarations, counterfeit import/export contracts), and both the formal and underground banking systems. The use of cash-intensive, non-financial sectors such as real estate has increased, as has the use of e-currency, online exchanges, and the exploitation of investment vehicles such as forward exchange rate contracts and financial derivatives.

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.

Chinese authorities have observed that the increase in AML efforts by banks has been accompanied by increased laundering through the underground banking system and trade fraud. 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.

China has multiple Special Economic Zones (SEZs) and other designated development zones at the national, regional, and local levels. SEZs include Shenzhen, Shantou, Zhuhai, Xiamen, and Hainan, along with 14 coastal cities and over 100 designated development zones. It is not a major offshore financial center.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, securities dealers, insurance companies

Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, securities dealers, and insurance companies

Number of STRs received and time frame: 42,933,226 in 2009

Number of CTRs received and time frame: China does not separate STRs and CTRs

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 10,674 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

China is a member of the Financial Action Task Force (FATF), as well as the Asia/Pacific Group on Money Laundering (APG) and the Eurasian Group on Combating Money Laundering and Terrorist Financing (EAG), both of which are FATF-style regional bodies (FSRB). Its most recent mutual evaluation can be found here:

http://www.fatf-gafi.org/dataoecd/33/11/39148196.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of China (GOC) has strengthened the legal framework for its overall AML/CFT regime, notably by clarifying the suspicious transaction reporting obligations of Chinese banks and by increasing the number of money laundering investigations, prosecutions, and convictions. However, even though it is mandatory, the courts do not systematically pursue the confiscation of criminal proceeds, which undermines any disincentive to commit the crime. The GOC should ensure that all courts are aware of the mandatory confiscation laws, and ensure uniform implementation.

China’s terrorist financing legislation has significant gaps, including the inability to freeze terrorist assets without delay. China should enact comprehensive terrorism and terrorist financing legislation and create a mechanism to freeze terrorist assets without delay. China should also enhance coordination between its financial regulators and law enforcement bodies to better investigate and prosecute offenders.

Chinese financial regulators have made progress in recent years in applying AML/CFT controls to China’s developing financial system; however, enforcement efforts need strengthening to keep pace with the sophistication and reach of criminal and terrorist networks.

The GOC has become more open to working across borders on money laundering and terrorist financing investigations. However, U.S. law enforcement agencies note that the GOC has not cooperated sufficiently on financial investigations and does not provide adequate responses to requests for financial investigation information. The GOC should expand cooperation with counterparts in the United States and other countries and pursue international linkages in AML/CFT efforts more aggressively. U.S. agencies have continued to seek to expand cooperation with Chinese counterparts on AML/CFT matters and to strengthen both policy- and operational-level cooperation in this critical area.

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, trade based value transfer, bulk cash smuggling, reintegro (wire transfers), remittances, smuggled merchandize (contraband) and more recently, 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, free trade zones and the postal money order market 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.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: List approach

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: 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

Enhanced due diligence procedures for PEPs: Foreign: Not available Domestic: Not available

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: 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

Number of STRs received and time frame: 9,600 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 408 investigations and/or prosecutions in 2009

Convictions: 54 in 2009

Assets forfeited: criminally: Approximately $1.3 million in 2009 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Colombia is a member of the Financial Action Task Force (FATF) of South America (GAFISUD) a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/home.htm

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. Reportedly, evasion of the normal customs charges is frequently facilitated by the drug and money laundering groups corrupting Colombian oversight authorities.

To help combat BMPE and other financial crimes, in 2005, a Colombian-based trade transparency unit (TTU) was created by U.S. Immigration and Customs Enforcement to analyze, identify and investigate companies and individuals involved in trade-based money laundering activities between Colombia and the United States. In the past year, the Colombian TTU has worked to enhance the quality and quantity of trade data shared, expanding its investigative capacity.

While the Colombian financial system has banking controls and governmental regulatory processes in place, it is reported that drug and money laundering groups have influenced high level bank officials in order to circumvent both established anti-money laundering controls and government 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 GOC cooperates extensively with U.S. law enforcement agencies to identify, target and prosecute groups and individuals engaged in financial and drug crimes. Colombia is working with other member countries of GAFISUD to develop a common PEP standard and to share its PEP list with other financial intelligence units.

The Colombian government regularly carries out asset seizure operations against a myriad of drug trafficking and other criminal organizations throughout Colombia. Freezing assets is very quick and efficient under Colombian law, while forfeiture can take between 1-3 years. The biggest difficulty in Colombia is administering seized assets. The National Drug Directorate (DNE) – as a legal institution – lacks the technical expertise to administer seized assets. The proceeds from asset seizures or forfeitures are by law used to fund various projects, such as the construction of new high-security prisons, low-income government housing, or specific educational initiatives. However, many assets have lost their value over time due to poor administration, and the National Drug Directorate (DNE) has been unable to conduct studies to evaluate and monitor the impact of its efforts.

Colombian law is unclear on the government’s authority to block assets of individuals and entities on the UN 1267 Sanctions Committee consolidated list. In addition to the UN lists, banks also monitor the Office of Foreign Assets Control’s publication of Specially Designated Narcotics Traffickers, pursuant to Executive Order (EO) 12978, and the Foreign Narcotics Kingpin Designation Act, and Specially Designated Global Terrorists, pursuant to E.O. 13224.



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