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


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

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Comoros

The Union of the Comoros (Comoros) consists of three islands: Ngazidja (Grande Comore), Anjouan and Moheli, and claims a fourth (Mayotte), which France governs. Although Comoros lacks homegrown narcotics, the islands are used to transit drugs, mainly from Madagascar and continental Africa. Comoros is not a financial center for the region. The fact the Comoran financial system is relatively underdeveloped minimizes the risk of some ML activities. Neither Union nor island government authorities have the means to estimate the income gained from predicate offenses committed within the country. Nevertheless, due to the low level of development in Comoros, illicit income seems to have been limited compared to the sums generated in other countries. The main income-producing predicate offenses seem to be narcotics trafficking, migrant smuggling, and corruption.

Comoros has introduced a number of measures to establish an anti-money laundering/combating the financing of terrorism (AML/CFT) regime. However, the legal framework has many shortcomings and is generally not effectively implemented. Generally, Comoros is not in compliance with international standards. A grossly inadequate budget, dysfunctional ministries, and a nonfunctioning judiciary limit effectiveness of Comoran AML/CFT efforts, despite apparent high-level political support.

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 and designated non-financial businesses and professions (DNFBP)

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and DNFBPs

Number of STRs received and time frame: None

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Comoros is not a member of a FATF-style regional body but is an observer of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). No mutual evaluation has been done of Comoros.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

A financial intelligence unit (FIU) was authorized in 2008, and a March 2009 ordinance expanded the scope of the AML/CFT preventive measures and covered the financing of terrorism. However, there have been no investigations or convictions for money laundering or terrorist financing.

The recent enactment of a law on economic citizenship might be attractive to criminals. The authorities have indicated they have implemented strict control measures intended to prevent abuses, but concerns regarding the possible misuse of this arrangement for criminal purposes do remain.

Thus far, most institutions subject to the law have not yet put AML/CFT policies and procedures in place. Although the Central Bank has begun to monitor implementation of the AML/CFT preventive measures, limited resources hamper the government’s ability to enforce the AML regulations, and local institutions and personnel lack the training and capacity to fully enforce the law. Comoran government security forces have limited resources and training in money laundering, counter-terrorist financing and maritime security.

Congo, Democratic Republic of

The Democratic Republic of Congo (DRC) is not considered a regional financial center. The DRC’s economy remains highly dollarized, and its parallel foreign exchange market is large and tolerated by the government. There is a preponderance of fiduciary/paper currency in all financial transactions. The DRC does not have any areas designated as free trade zones or have any free ports.

Due to its large geographic size, lack of a functional judicial system and dominant informal sector, the DRC is particularly vulnerable to money laundering. The DRC covers an area of almost 1 million square kilometers (400,000 sq. mi), and has 7,000 km of porous borders with nine countries. Administration of the country is weak because of its vast geographic territory and dilapidated infrastructure, among other challenges. Most economic activity in the DRC takes place in the informal sector, estimated to be up to ten times the size of the formal sector, with most transactions, even those of legitimate businesses, carried out in cash. The accurate reporting of revenues is thus very difficult. Major sources of money laundering in the DRC include illegal import/export activities, customs and tax fraud, tax evasion, misappropriation of public funds, exploitation of minerals and other valuable materials, casinos, the sale of prohibited products and services, and chronically low wages which force people to resort to bribery. Money laundering in the DRC is neither primarily nor significantly related to narcotics proceeds.

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: Congolese Central Bank (BCC), banks, credit institutions, money transfer institutions, financial companies, microfinance institutions, money exchangers, insurance companies, leasing companies, financial intermediaries, postal checking systems, transferable securities and stock exchange market operations, gaming companies, notaries, members of independent legal professions, real estate agencies, funds conveyors, travel agencies, auditors, certified public accountants, external auditors, tax consultants, sellers of art, antiques and precious stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Congolese Central Bank (BCC), banks, credit institutions, money transfer institutions, financial companies, microfinance institutions, money exchangers, insurance companies, leasing companies, financial intermediaries, postal checking systems, transferable securities and stock exchange market operations, gaming companies, notaries, members of independent legal professions, real estate agencies, funds conveyors, travel agencies, auditors, certified public accountants, external auditors, tax consultants, sellers of art, antiques and precious stones

Number of STRs received and time frame: 0

Number of CTRs received and time frame: 0

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: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS

The Government of the Democratic Republic of the Congo (GDRC) passed legislation in July 2004 criminalizing money laundering and terrorist financing. Banks and non-banking financial institutions are required to report all transactions over $10,000. Banks find this requirement burdensome, since 90 percent of transactions using the banking system meet this threshold. New computerized communications and accounting networks have been installed in banks, which will make it easier to trace formal financial transactions. In September 2008, the GDRC established a Financial Intelligence Unit (CENAREF) to combat money laundering and misappropriation of public funds. CENAREF is responsible for collecting and analyzing information on money laundering and terrorist financing cases. CENAREF also investigates persons accused of money laundering and terrorist financing, conducts periodic studies on these subjects and advises the GDRC on how to combat money laundering related crimes. However, limited resources hamper the government’s ability to implement and enforce anti-money laundering regulations, and local institutions and personnel lack training and capacity to fully enforce the law and its attendant regulations. Lack of funding continues to prevent CENAREF from fully carrying out its responsibilities. Inefficient and burdensome customs and tax policies, a weak judicial system and widespread corruption also negatively impact enforcement. The DRC is ranked 164 out of 178 countries surveyed in Transparency International’s 2010 International Corruption Perception Index.

The DRC should become a party to the UN Convention against Corruption and the UN Convention against Transnational Organized Crime.

Congo, Republic of

The Republic of the Congo (ROC) is not a regional financial center. The Bank of Central African States (BEAC) -- the regional Central Bank of the Economic and Monetary Community of Central African States (CEMAC) to which the ROC belongs -- supervises the Congo’s banks. The state of the country’s financial institutions remains weak following the Congo’s period of civil unrest in the 1990s and early 2000s, resulting in limited bank loans and infrequent issuances of new bank licenses.

The ROC strengthened its laws against money laundering in 2007. As a member of the CEMAC, the country adopted the regional community’s April 2007 regional anti-money laundering/counter-terrorist financing (AML/CFT) regulations. These rules establish penalties of both fines and imprisonment for money laundering and terrorist financing, and also regulate the operations of banks, money changers, and 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.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

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, money exchangers, accountants, notaries, thrifts and money remitters

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, money exchangers, accountants, notaries, thrifts and money remitters

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.: YES

With other governments/jurisdictions: YES

The Republic of the Congo is not a member of a Financial Action Task Force (FATF)-style regional body.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

A 2008 Presidential decree called for the creation of a National Financial Investigation Agency (ANIF). Due to delays the agency was not created until mid-2010. ANIF’s operations are not yet fully functional. Similar offices to ANIF were created in Cameroon and Gabon. The Central African Republic, Chad and Equatorial Guinea are also expected to create equivalent agencies. In partnership with the Congo and within the regional framework of GABAC, each of the national agencies is expected to coordinate anti-money laundering and counter-terrorist financing activities. Pursuant to the decree that established the agency, ANIF is financially independent and its budget is derived from three sources: the ROC national budget, CEMAC institutions, and development partners. Although the agency is financially autonomous, ANIF is under the supervision of the Minister of Finance. Consequently, the objectiveness and independence of the new agency could be hampered. Efforts should be made to strengthen the expertise of law enforcement, customs, prosecutorial and judicial authorities in financial crimes. The Republic of the Congo should continue to work with the CEMAC and regional partners to strengthen its AML/CFT efforts.

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 FATF-style regional body 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 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 that the banks are implementing and enforcing due diligence procedures, as outlined in the international standards.

Cook Islands

The Cook Islands is not a regional financial center and has no free trade zones. The Cook Islands substantial offshore financial sector is an important part of the country’s economy, but also represents its most significant vulnerability to money laundering and terrorist financing activities. The Government of the Cook Islands (GOCI) has taken steps to reduce the risks presented by both the offshore sector and its small domestic financial sector. The GOCI has significantly enhanced supervision of both sectors in the past three years, including the performance of annual on-site examinations of all domestic and offshore financial institutions.

The large offshore financial sector developed from legislation enacted in the early 1980s, which allowed the operation of international companies and trusts, including offshore banks and insurance companies. All offshore business conducted from the Cook Islands must be channeled through registered trustee companies. Currently there are six registered trustee companies and four international banks. One of the domestic banks also has an international license. The industry provides a wide range of trustee and corporate services to offshore investors with a tax rate for all offshore entities of zero, guaranteeing tax neutrality.

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: banks (domestic and offshore), offshore insurers and trustee companies

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: banks (domestic and offshore), offshore insurers and trustee companies

Number of STRs received and time frame: 58

Number of CTRs received and time frame: 1,845

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

The Cook Islands 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/Cook%20Islands%20MER-%20final%20140809.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Cook Islands has a generally well-supervised financial industry. Large cash transactions involving locally generated funds are immediately apparent, and suspicious transactions are reported to the CIFIU for further review. The proceeds of domestic crime are generally small. There is evidence of concealment stemming from drug and misappropriation cases, with total proceeds that are significant relative to the size of the economy.

The Cook Islands tightened its legislation and regulations to more closely reflect international standards. GOCI officials note that the remaining money laundering and terrorist financing risks stem from the lower Know Your Customer (KYC) standards and the provision of false information to Cook Islands financial institutions by businesses and customers in other jurisdictions, particularly in Asia.

The Cook Islands should become party to the UN Convention against Corruption, and ensure that the UN lists of designated terrorists or terrorist entities are distributed to financial institutions regularly.

Costa Rica

While Costa Rica is not a major regional financial center, it remains vulnerable to money laundering and other financial crimes. Illicit proceeds from fraud, trafficking in persons, arms, narcotics trafficking (mainly cocaine), and corruption are laundered in Costa Rica. To a limited extent, money laundering/terrorist financing occurs across the formal financial sector, within the free trade zones (FTZs), and in the non-bank financial system. Costa Rica has 33 FTZs, used by approximately 270 companies. In addition, Costa Rica has a sizeable internet gaming industry which in practice is almost unregulated. While local criminals are active, the majority of laundered criminal proceeds derive from foreign criminal activity. Costa Rica does not have a significant market for smuggled goods, however, criminal organizations involved in fraud, trafficking in persons, arms, narcotics trafficking, and corruption are known to utilize the international trade system to move and launder their criminal proceeds.

The Government of Costa Rica (GOCR) reports that Costa Rica is primarily used as a bridge to send funds to and from other jurisdictions using, in many cases, companies or banks established in offshore financial centers. Nicaraguans residing in Costa Rica send approximately $200 million in remittances annually to family members in their home country, much of which is sent via unlicensed money remitters. These unregulated businesses are a significant risk for money laundering and a potential mechanism for terrorist financing.

Costa Rica has demonstrated a genuine commitment to strengthening its anti-money laundering/counter-terrorist financing (AML/CFT) regime. As a result of a law passed in 2009, in 2010 Costa Rica continued implementing new regulations directed at combating money laundering, terrorist financing, and organized crime. Costa Rica also created a new National Anti-Drug Commissioner position that is responsible for monitoring and evaluating the GOCR’s policies and plans to combat 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: 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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and savings and loan cooperatives; pension funds; money exchangers or remitters; investment fund and safekeeping companies; credit institutions; issuers, sellers or redeemers of travelers checks and postal money orders; and securities dealers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and savings and loan cooperatives; pension funds; money exchangers or remitters; fiduciary trust, investment fund and safekeeping companies, and asset managers; credit institutions; issuers, sellers or redeemers of travelers checks and postal money orders; securities dealers; and real estate agents

Number of STRs received and time frame: 304 from January to December 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Ten - January through October 2010

Assets forfeited: criminally: $9,693,214.00 in FY2010 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

In December 2010, the Financial Action Task Force of South America (GAFISUD) admitted Costa Rica as a member, formally marking its departure from the Caribbean Financial Action Task Force (CFATF). Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Money laundering cannot be charged as an additional offense to the predicate crime (e.g., a drug dealer who is convicted on drug charges cannot also be prosecuted for laundering the drug proceeds). In addition, criminal liability does not extend to legal persons.

There are over 250 Internet sports book companies registered to operate in Costa Rica. The industry transacts approximately $12 billion annually and employs 10,000 people. This industry in practice is almost unregulated. The FIU reports that Costa Rican attorneys oftentimes conduct cash purchases of real estate on behalf of persons located in the U.S. The FIU has had significant difficulties verifying the identity and source of funds for those purchases.

The FIU does not directly receive cash transaction reports (CTRs). Each supervisory entity that receives CTRs holds them unless it determines that further analysis is required or the FIU requests the reports.

Costa Rica fully cooperates with appropriate United States government law enforcement agencies investigating financial crimes related to narcotics and other crimes. Additionally, Costa Rica has a tax information exchange agreement with the U.S.

Law 8719 authorizes the FIU to administratively freeze assets or accounts that are subject to an ongoing money laundering or narcotics investigation by the host government authority without a prior Court order (a judicial order must be obtained within 5 days after the seizure). This provision was used in several money laundering cases involving bulk cash smuggling during 2010. Although the GOCR enacted a provision to allow for civil forfeitures in 2009, no case has been pursued by prosecutors. The prosecutors state they have been reluctant to try cases under this law, because they fear these cases will not hold up in court. Based on the non-use of this provision, it is unclear whether the GOCR will assist other countries in obtaining non-conviction-based forfeiture.

Several pieces of real property were identified and frozen by the U.S. Office of Foreign Asset Control (OFAC) owned by a Colombian National that resides in Costa Rica and uses his farms to launder funds for the FARC. This subject and his property were named as a second tier in the King-Pin Act with money laundering ties to the FARC. Shortly after the OFAC report was publicized in Costa Rica the subject fled Costa Rica and returned to Colombia.

Croatia

Croatia is not considered an off-shore financial center. Croatian authorities consider most money laundering in the country to be of domestic origin, involving the proceeds of illegal domestic narcotics sales and economic crimes, such as fraud and tax evasion. Although Croatia is part of a major transit route for drugs entering Europe, there is little evidence that these networks have utilized Croatia’s financial systems. Public corruption has been linked to money laundering, but no proof of the association exists. Alleged money laundering connected to public corruption has not, however, been linked to terrorist financing. Money laundering in Croatia occurs primarily through non-resident accounts, transfers to off-shore banks using counterfeit documents, and deposits on foreign currency accounts, and has often been linked to the real estate market and the purchase of high-end automobiles.

Croatia does not represent a sizeable market for smuggled goods, but is used as a transit route for goods destined for other countries in the region. There is not a significant black market in Croatia. There is no indication that trade-based money laundering exists in Croatia.

Croatia has 15 free trade zones, 13 of which are presently in operation. Companies operating in the zones benefit from lower taxes and customs and value-added free import of input materials. Companies operating in free trade zones are subject to the same regulation and supervision as all other businesses 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: 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, finance companies, and financial leasing entities; savings banks; credit unions; companies performing payment option services; the Croatian Post Office; investment fund managers, guarantors, and asset managers; pension companies; insurance companies and intermediaries; companies dealing with the issuance of electronic money; authorized exchange offices; gaming-related providers; pawnshops, auctioneers, and traders of precious metals and gems, fine arts, and antiquities; lawyers, notaries public, auditors, accountants and tax advisors

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, finance companies, and financial leasing entities; savings banks; credit unions; companies performing payment option services; the Croatian Post Office; investment fund managers, guarantors, and asset managers; pension companies; insurance companies and intermediaries; companies dealing with the issuance of electronic money; authorized exchange offices; gaming-related providers; pawnshops, auctioneers, and traders of precious metals and gems, fine arts, and antiquities; lawyers, notaries public, auditors, accountants and tax advisors

Number of STRs received and time frame: 404 in 2010

Number of CTRs received and time frame: 57,648 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 11 – January - June 2010

Convictions: Five – January - June 2010

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Croatia is a member of the Council of Europe’s Select Committee of Experts (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/Croatia_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Croatia is a signatory to bilateral agreements with 32 FIU counterparts and is also party to a number of bilateral agreements on law enforcement cooperation with its neighbors. The country actively cooperates with its Balkan neighbors in the law enforcement arena, especially in the fight against money laundering. Croatia worked to establish a regional working group to address money laundering.

The FIU has the authority to freeze assets and can do so with relatively little difficulty for an initial 72-hour period. Obtaining an extension is slightly more complicated, with the Prosecutor’s Office requiring either an international instrument or a formal legal request for an extended asset freeze. Therefore, if assets identified by authorities do not relate to an individual or entity cited by the UN, it is more difficult for the Prosecutor’s Office to obtain a long-term freeze. According to a FIU representative, every request to extend an asset freeze has been granted by court order and remained in effect through the end of the proceedings. Croatia should ensure it has all the legal and regulatory measures in place to meet the international standards on national asset freezing mechanisms.

The Government of Croatia has sufficient mechanisms in place and tools at its disposal to effectively combat money laundering and financial crimes, and incidences of these activities remain rare. A lack of expertise in financial crimes matters among the police and judiciary stands in the way of an even more efficient system, but attempts at education in this area have proved helpful. As a candidate for EU accession, Croatia’s ability to successfully combat money laundering and financial crimes is under scrutiny, which has and should continue to lead to further efforts to better develop its capacities in this area.

Cuba

The Cuban Assets Control Regulations, 31 CFR Part 515, were issued by the U.S. Government on July 8, 1963, under the Trading With the Enemy Act. The regulations impose restrictions on travel and remittances to Cuba and prohibit import of products of Cuban origin or, with some exceptions, export of goods from the U.S. to Cuba. Additionally, all assets of the Cuban government or Cuban nationals in the U.S. are frozen. In 2009, some of the restrictions related to family travel and remittances were relaxed, however, the broad trade embargo enforced by the regulations remains in place.

Cuba is not considered a regional financial center. Cuban financial practices and U.S. sanctions prevent Cuba’s banking system from fully operating in the international financial system. The government-controlled banking sector, low internet and cell phone usage rates, and threat of seizures related to the U.S. embargo all render Cuba an unattractive location for money laundering. There is a significant black market in Cuba that operates as a supply and demand market parallel to the heavily subsidized and rationed formal market controlled by the state. The black market, including mostly goods obtained locally but also some smuggled goods, is primarily funded by the nearly $1 billion in remittances sent to Cuba every year. These funds, mostly in US dollars or euros, are traded for Cuban pesos at government foreign exchange houses. Most of these remittances come from Cuban-Americans and are delivered to family members. Cuba continues to have one of the most secretive and non-transparent national banking systems in the world.

During 2010 there were no significant changes in the Government of Cuba’s (GOC) policies or regulations concerning anti-money laundering/combating the financing of terrorism (AML/CFT). There were no reports of new arrests, seizures, or prosecutions. Cuba's non-transparent national banking system hampers efforts to monitor the effectiveness and progress of Cuba's AML/CFT regime. The GOC claims to be in full compliance with international counter-terrorism conventions and to have taken into account the international standards.

Cuba’s significant black market and geographic location between drug-supplying and drug-consuming countries present challenges for authorities. Cuba has few international businesses, no offshore casinos or internet gambling sites, 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: Not available

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, money exchangers, remitters, financial management firms

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, money exchangers, remitters, financial management 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: Not available

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There have been no known instances of investigations or prosecutions related specifically to money laundering. As of 2001, Cuba has bilateral agreements with a number of countries related to combating drug trafficking. It is unclear whether any of these agreements include mechanisms to share information related to financial crimes or money laundering.

On December 20, 2010, a prominent U.S. money remitting company in Cuba began disbursing to customers “Cuban Convertible Pesos” (CUC) instead of U.S. dollars. Therefore, Cuban customers of the company no longer have to pay the 10% fee for cash exchanges into CUC from dollars. This may encourage an increase from the approximately $1 billion in current annual remittances from the U.S. to Cuba, as well as shift from couriers carrying hard currency toward more electronic fund transfers.

Cuba should increase the transparency of its financial sector and increase its engagement with the anti-money laundering/counter-terrorist financing community in order to increase its capacity to fight these illegal activities.

Curacao

In October 2010 Curacao became a new autonomous entity within the Kingdom of the Netherlands. Curacao has inherited much of the financial and business operations of the former Netherland Antilles. Curacao is a regional financial center and a transshipment point for drugs from South America bound for the United States and Europe. Money laundering is primarily related to proceeds from illegal narcotics. Money laundering organizations can take advantage of banking secrecy and use offshore banking and incorporation systems, economic zone areas, and resort/casino complexes to place, layer and launder drug proceeds. Bulk cash smuggling is a continuing problem due to the close proximity of Curacao to South America.

Curacao has two free economic zones. It is not known to what extent “contrabanding” (using bulk cash to buy actual products which are shipped to South America and sold, thus legitimizing the profits) occurs but it was a problem in an economic zone in the Netherlands Antilles. There have been limited seizures of bulk cash of several thousand dollar increments throughout the past year which intelligence reflects were en route to South America or inbound to one of the e-zone facilities. Structuring was a relatively common occurrence in the Netherlands Antilles and may continue. Another possible area of money laundering activity may be through wire transfers between the island and the Netherlands.

The extent of Curacao’s offshore financial sector, which previously consisted of trust service companies providing financial and administrative services to an international clientele, including offshore companies, mutual funds, and international finance companies, is not clear; but it has declined significantly in recent years. Previous regulations on bank supervision required that international banks must have a physical presence and maintain records on the island. Bearer shares of international companies must be kept in custody and onshore companies are not allowed to have bearer shares. At least seven Internet gaming companies operate in Curacao.

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

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: Onshore and offshore banks, saving banks, money remitters, credit card companies, credit unions, life insurance companies and brokers, trust companies and other service providers, casinos, customs, lawyers, notaries, accountants, tax advisors, jewelers, car dealers, real estate agents, administration offices, tax advisors, lawyers, and accountants

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Onshore and offshore banks, saving banks, money remitters, credit card companies, credit unions, life insurance companies, trust companies and other service providers, casinos, customs, lawyers, notaries, accountants, tax advisors, jewelers, car dealers, real estate agents, administration offices

Number of STRs received and time frame: 20,042 Unusual Transactions in 2009

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

Curacao has become a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. It will undergo its first mutual evaluation sometime after signing a memorandum of understanding in May 2011.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Until a mutual evaluation is completed, it is difficult to evaluate the effectiveness of Curacao’s anti-money laundering/counter-terrorist financing regime. When part of the Netherland Antilles, Curacao had no previous evaluation of its financial system. On September 28, 2010, the government implemented UNSCRs 1267, 1333, 1363, 1368, 1373, 1390 and 1526. The supervisory authority refers all financial institutions to the UN list and other relevant lists such as the U.S. Department of the Treasury Office of Foreign Assets Control list.

In cooperation with Antillean authorities, Dutch officials from the Netherlands established the Hit and Run Money Laundering (HARM) Team in 2003. Since its inception, the team has concentrated on identification of the most prominent launderers, their means of laundering money, and law enforcement cooperation. The HARM team is incorporated into the Financial Investigation Department BFO (Bureau Financieel Onderzoek) and is now called “BFO-HARM”.

Most money laundering cases involve international cooperation among law enforcement authorities in affected countries. The Curacao Kings Cross investigation has been used as a case study example of trade-based money laundering/Black Market Peso Exchange. The Kings Cross investigation demonstrates a connection between organized crime and transactions involving a company based in the Free Zone in Curacao. The investigators discovered a variant on the Black Market Peso Exchange in which the Curacao-based business operated as a currency exchanger for narcotics traffickers.

The Mutual Legal Assistance Treaty between the Kingdom of the Netherlands (KON) and the U.S. applies to Curacao; however, the treaty is not applicable to requests for assistance relating to fiscal offenses addressed to the Netherlands Antilles. A tax information exchange agreement between the KON and the U.S. with regard to Curacao entered into force in March 2007.

Curacao is part of the Kingdom of the Netherlands and cannot sign or ratify international conventions in its own right. Rather, the Netherlands may arrange for the ratification of any convention to be extended to Curacao. The 1988 Drug Convention was extended to Curacao in 1999. The International Convention for the Suppression of the Financing of Terrorism was extended to the Netherlands Antilles, and as successor, to Curacao on March 22, 2010. The UN Convention against Transnational Organized Crime and the UN Convention against Corruption have not yet been extended to Curacao.

The previous Government of the Netherlands Antilles had demonstrated a commitment to combating money laundering. Curacao should ensure that it continues its regulation and supervision of the offshore sector and free trade zones, as well as pursuing money laundering investigations and prosecutions. Curacao should work to fully develop its capacity to investigate and prosecute money laundering and terrorist financing cases.

Cyprus

Cyprus has been divided since 1974. Since then, the Republic of Cyprus (ROC) has controlled the southern two-thirds of the country, while a Turkish Cypriot administration calling itself the “Turkish Republic of Northern Cyprus (TRNC)” controls the northern part. Only Turkey recognizes the “TRNC.” The U.S. Government recognizes only the Republic of Cyprus. This section of the report discusses the area controlled by the ROC. A separate section on the area administered by Turkish Cypriots follows at the end.

Cyprus is a major regional financial center with a robust financial services industry and a significant amount of nonresident businesses. A number of factors have contributed to the development of Cyprus as a financial center: a preferential tax regime; double tax treaties with 44 countries (including the United States, several European Union (EU) nations, and former Soviet Union nations); a sophisticated telecommunications infrastructure; and EU membership. In 2003, Cyprus introduced tax and legislative changes effectively abolishing all legal and substantive distinctions between domestic and offshore companies. Cyprus has also lifted the prohibition from doing business domestically and companies formerly classified as offshore are now free to engage in business locally. International business companies are allowed to be registered in Cyprus but their ultimate beneficial ownership must be disclosed to the authorities. There are over 220,000 companies registered in Cyprus, many of which are non-resident. The same disclosure, reporting, tax and other laws and regulations apply equally to all registered companies.

Like any financial center, Cyprus remains vulnerable to money laundering and illicit finance activities. Simple financial crime constitutes the biggest threat for domestic money laundering and tax evasion internationally. There is no significant black market for smuggled goods in Cyprus. What little black market trade exists is usually related to small scale transactions, typically involving fake clothing, pirated CDs/DVDs and cigarettes moved across the UN-patrolled buffer zone separating the ROC from the “TRNC”.

Cyprus has three free trade zones (FTZs). Two, located in the main seaports of Limassol and Larnaca, are used only for transit trade, while the third, located near the international airport in Larnaca, can also be used for repacking and reprocessing. These areas are treated as being outside normal EU customs territory. Consequently, non-EU goods placed in FTZs are not subject to any import duties, VAT or excise tax. FTZs are governed under the provisions of relevant EU and Cypriot legislation. The Department of Customs has jurisdiction over all three areas and can impose restrictions or prohibitions on certain activities, depending on the nature of the goods.

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, credit institutions, securities and insurance firms, money transfer services, international financial services and trust companies, auditors, tax advisors, accountants, real estate agents, dealers in precious stones and gems, and in certain cases, attorneys

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; credit institutions; issuers or servicers of credit or payment cards, and traveler’s checks; financial leasing companies; securities and insurance brokers and firms; money transfer or brokerage services; financial advisors, international financial service providers, and trust and safekeeping companies; auditors, tax advisors, and accountants; real estate agents; dealers in precious stones and gems; and in certain cases, attorneys

Number of STRs received and time frame: 428 in2009

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 30 in 2009

Convictions: Five in 2009

Assets forfeited: criminally: Euros 5.5 million (approximately $7.1 million in 2009

civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Cyprus is a member of the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here:

http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Cyprus_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There are no legal issues hampering Cyprus’ ability to assist foreign governments in mutual legal assistance requests. Cypriot law allows MOKAS, the Cypriot financial intelligence unit (FIU) to share information with other FIUs without benefit of a memorandum of understanding (MOU).

Cyprus has enacted comprehensive legislation and established systems for identifying, tracing, freezing, seizing, and forfeiting narcotics-related assets and assets derived from other serious crimes. Like most EU countries, though, Cyprus has no provisions allowing civil forfeiture of assets without a criminal case. The police and the FIU are responsible for tracing, seizing and freezing assets and they fully enforce existing legislation. Cyprus has an independent national system and mechanism for freezing terrorist assets, and has also engaged in bilateral and multilateral negotiations with other governments to enhance its asset tracking and seizure system.

Amending legislation that came into force in June 2010 strengthened the 2007 Law for the Prevention and Suppression of Money Laundering Activities (LPSMLA), e.g., by requiring a timely response to FIU enquiries, and criminalizing the provision of false or misleading information.

Area Administered by Turkish Cypriots

The Turkish Cypriot community continues to lack the legal and institutional framework necessary to provide effective protection against the risks of money laundering, although significant progress has been made in recent years with the passage of “laws” better regulating the onshore and offshore banking sectors and casinos. There are currently 22 domestic banks in the area administered by Turkish Cypriots and Internet banking is available. The offshore sector consists of 13 banks and 34 companies. The offshore banking sector remains a concern. The offshore banks may not conduct business with residents of the area administered by Turkish Cypriots and may not deal in cash. Under revised “laws” passed in 2008, the “Central Bank” took over the regulation and licensing of offshore banks from the “Ministry of Finance” thereby improving oversight. The “Central Bank” audits the offshore entities, which must submit an annual report on their activities. The new “law” permits only banks previously licensed by Organization for Economic Co-operation and Development (OECD)-member nations or Turkey to operate an offshore branch in northern Cyprus. Despite the 2009 promulgation of more strict “laws,” the 23 operating casinos remain essentially unregulated due to the lack of an enforcement or investigative mechanism by the casino regulatory body and efforts to de-criminalize any failure by casinos to follow KYC regulations.

The Turkish Cypriot community is not part of any FSRB and thus is not subject to normal peer evaluations. Turkish Cypriot authorities have taken steps to address the risk of financial crime, including enacting an "anti-money laundering law (AMLL)" for the area and formally establishing an FIU equivalent. The “law” aims to reduce the number of cash transactions in the area administered by Turkish Cypriots as well as improve the tracking of any transactions above 10,000 Euros (approximately $13,000). Under the "AMLL," banks must report to the “Central Bank” and the “Money and Exchange Bureau” any electronic transfers of funds in excess of $100,000. Such reports must include information identifying the person transferring the money, the source of the money, and its destination. Under the “law,” banks, nonbank financial institutions, and foreign exchange dealers must report all currency transactions over 10,000 Euros (approximately $13,000) and suspicious transactions in any amount to the “Money and Exchange Bureau”. Banks must follow a KYC policy and require customer identification. Banks and other designated entities also must submit STRs to a five-member “Anti-Money Laundering Committee” which decides whether to refer suspicious cases to the "police" and the “attorney general’s office” for further investigation. The five-member committee is composed of representatives of the “police,” “customs,” the “Central Bank,” and the “Ministry of Economy”. According to the Turkish Cypriot authorities, 102 STRs were received by the “FIU” in 2009.

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, cooperative credit societies, finance companies, leasing/factoring companies, portfolio management firms, investment firms, jewelers, foreign exchange bureaus, real estate agents, retailers of games of chance, lottery authority, accountants, insurance firms, cargo firms, antique dealers, auto dealers, lawyers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, cooperative credit societies, finance companies, leasing/factoring companies, portfolio management firms, investment firms, jewelers, foreign exchange bureaus, real estate agents, retailers of games of chance, lottery authority, accountants, insurance firms, cargo firms, antique dealers, auto dealers, lawyers

Number of STRs received and time frame: 106 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

Assets forfeited: criminally: Nil civilly: Nil

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES, with Turkey

The area administered by Turkish Cypriots is not a member of any Financial Action Task Force (FATF)-style regional body.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Turkish Cypriot "AMLL" provides better banking regulations than were in force previously, but without ongoing enforcement its objectives cannot be met. A major weakness continues to be the many casinos, where a lack of resources and expertise leave the area essentially unregulated, and therefore, especially vulnerable to money laundering abuse. Amendments that would essentially decriminalize failure to implement KYC rules are currently being considered to a “law” to regulate potential AML activity in casinos. The largely unregulated consumer finance institutions and currency exchange houses are also of concern. The Turkish Cypriot authorities should continue efforts to enhance the “FIU,” and adopt and implement a strong licensing and regulatory environment for all obligated institutions, in particular casinos and money exchange houses. Turkish Cypriot authorities should stringently enforce the cross-border currency declaration requirements. Turkish Cypriot authorities should continue steps to enhance the expertise of members of the enforcement, regulatory, and financial communities with an objective of better regulatory guidance, more efficient STR reporting, better analysis of reports, and enhanced use of legal tools available for prosecutions.

Czech Republic

The Czech Republic is a small, open, export-oriented economy. However, the Czech Republic’s central location in Europe and its status as a market economy leave it vulnerable to money laundering. The economy is still heavily cash-based despite the development of modern payment techniques, and cash transactions in some sectors enable the mixing of criminal proceeds with legitimate profits. Various forms of organized crime (narcotics trafficking, trafficking in persons, fraud, counterfeit goods, embezzlement, and smuggling) are the primary sources of laundered assets in the country. Other sources of criminal proceeds include criminal offenses against property, insurance fraud, and credit fraud.

Domestic and foreign organized crime groups target Czech financial institutions for laundering activity, most commonly by means of financial transfers through the Czech Republic. Links between organized crime and money laundering are present mainly in the activities of foreign groups, in particular from the former Soviet republics, the Balkan region, and Asia.

The Czech Republic is home to a significant black market for smuggled cigarettes and other tobacco products, as well as pirated products from Asia, including CDs, DVDs, and counterfeit designer goods. The Czech Customs Administration has found that Asian criminal groups use a portion of the illegal funds from contraband smuggling for the purchase of real properties, which they then use for business activities. There are ten free trade zones operating in the Czech Republic, but Czech authorities do not consider them a money laundering vulnerability.

Banks, investment companies, real estate agencies, currency exchange offices, casinos, and other gaming establishments have all been used to launder criminal proceeds. Aspects of the gambling industry and the way it is regulated have been highlighted in the past as vulnerable to money laundering, as has the widespread use of freely transferable bearer shares among Czech companies. Bearer shares pose an obstacle to law enforcement during financial investigations and obscure true ownership.

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/entities 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, currency exchanges, insurance companies, the Czech Consolidation Agency, the holder of a postal license, securities dealers and exchanges, gaming enterprises, attorneys, trusts and company service providers, realtors, notaries, accountants, tax advisors, auditors, pawnshops and dealers of secondhand goods, including vehicles, and of precious metals and stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, currency exchanges, insurance companies, the Czech Consolidation Agency, the holder of a postal license, securities dealers and exchanges, gaming enterprises, attorneys, trusts and company service providers, realtors, notaries, accountants, tax advisors, auditors, pawnshops and dealers of secondhand goods, including vehicles, and of precious metals and stones

Number of STRs received and time frame: 1,711 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 44 in 2010

Convictions: 16 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Despite an environment of fiscal austerity in which most government ministries are facing significant budget cuts, the Financial Intelligence Unit (FIU) and the Police Unit for Combating Corruption and Financial Crimes, two of the Czech Republic’s key bodies for combating money laundering, are seeing their budgets and staff increased, signaling the importance the current government places on combating financial crimes. With the additional staff they will gain, the police plan to focus on increasing the volume of seized assets, which have remained steady on an annual basis. While the additional resources should contribute to the quality of the unit’s investigative work, the unit faces instability in terms of leadership. Since 1991 the Unit for Combating Corruption and Financial Crimes has had eight directors, four of them within the past four years. Maintaining the unit’s stability at the director level would improve operations and should be a goal of Czech authorities.

The new Criminal Code, which came into force on January 1, 2010, simplifies the definition of money laundering and decreases evidence requirements. The new definition removes the previous clause addressing the perpetrator’s intent; consequently, it is no longer necessary to prove the intention of the perpetrator, which should assist prosecutors in obtaining convictions. The new criminal code also imposes tougher sentences for money laundering and criminalizes the legalization of criminal proceeds by negligence. As of December 2010, the Czech Government is considering a measure that would introduce the criminal liability of legal entities.

CZK 1.31 billion (approximately $69 million) was forfeited in 2009; however, stand-alone statistics exclusive to assets forfeited in money laundering cases are not available.

The Czech Republic permits bearer shares, which are widely used by Czech companies; thus there is not an adequate level of reliability of registered information and of ownership transparency. Although know your customer rules require companies to provide financial institutions with evidence of the identities of beneficial owners holding more than a 25% stake in the company, the reliability of company-provided data is in some cases questionable. Law enforcement personnel acknowledge that bearer shares are obstacles in their financial investigations because they obscure true ownership. Czech government officials suggest that until the EU abolishes them throughout its territory, individual countries, including the Czech Republic, are unlikely to ban them. About 51% of Czech companies reportedly issue bearer shares.

The gambling industry in the Czech Republic is also potentially vulnerable to money laundering. The Czech gaming industry is represented by a powerful lobby and has succeeded in blocking most new regulation of the sector during the past twenty years. Casinos file a relatively small number of STRs. Other gaming entities, including bars and restaurants with electronic games and slot machines, are not considered obliged entities and consequently are not subject to the Anti-Money Laundering Act (AMLA) requirements. Without robust oversight and the applicability of the AMLA to all gaming establishments, the potential exists for money laundering to become more significant in the gaming sector.

The Government of the Czech Republic should ratify the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

Denmark

Denmark is not a major financial center, and although authorities do not believe Denmark is often viewed as a particularly attractive place for money laundering, there have been some instances of placement of criminal proceeds in banks in situations where neither the victim nor the perpetrator resided in Denmark. Major sources for proceeds are drug trafficking and economic crimes, particularly VAT and investment frauds, smuggling of goods, and violations of intellectual property rights. Outlaw motorcycle gangs have been involved in a range of offenses, including narcotics-related offenses, smuggling of goods, and various financial crimes. Denmark is geographically vulnerable to serving as a transit country for smuggling into Sweden and Norway. The proceeds of crime are typically transferred out of Denmark soon after offenses occur.

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

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 electronic money institutions, and currency exchanges; insurance brokers and intermediaries; pension and mutual funds; securities brokers and dealers; safekeeping, portfolio, asset and capital managers; financial leasing and factoring entities; issuers and processors of credit cards, traveler’s checks, and money orders; accountants and auditors; real estate agents; trust and company service providers; attorneys; real estate agents; and casinos

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and electronic money institutions, and currency exchanges; insurance brokers and intermediaries; pension and mutual funds; securities brokers and dealers; safekeeping, portfolio, asset and capital managers; financial leasing and factoring entities; issuers and processors of credit cards, traveler’s checks, and money orders; accountants and auditors; real estate agents; trust and company service providers; attorneys; real estate agents; and casinos

Number of STRs received and time frame: 2,095 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 306 in 2009

Convictions: 158 in 2009

Assets forfeited: criminally: approximately $41 million in 2009 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Denmark is a member of the Financial Action Task Force (FATF). Its most recent Mutual Evaluation Report can be found here: http://www.fatf-gafi.org/dataoecd/1/26/37588381.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Denmark has a comprehensive anti-money laundering/counter-terrorist financing (AML/CFT) regime and should continue to enhance its laws and regulations as necessary to adhere to international standards. Denmark should extend its AML/CFT requirements to cover gaming establishments and Internet gaming providers.

Djibouti

Djibouti is one of the most stable countries in the Horn of Africa. It is a minor financial hub in the sub-region, thanks to its U.S. dollar-pegged currency and its unrestricted foreign exchange. Over the past five years, Djibouti’s economy has undergone a substantial transformation due to a surge in foreign direct investment inflows – primarily from the countries of the Gulf Cooperation Council (GCC) – in the port, construction, and tourism sectors. The Djibouti Free Zone, managed by Dubai’s Jebel Ali Free Zone and inaugurated in 2004, has now almost reached capacity. A new larger free zone and separate heavy equipment and automobile free zone are under construction. Officials from the Central Bank have not reported any instances of money laundering. Informal and black markets for goods remain important. Smuggled goods consist primarily of highly taxed cigarettes and alcohol. Due to Djibouti’s strategic location in the Horn of Africa and its cultural and historical trading ties, Djibouti-based traders and brokers are active in the region. Djibouti currently hosts no offshore banks; however, its banking laws explicitly permit offshore institutions. The number of locally operating banks has increased from two to ten in the past 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: 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: 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 establishments, financial institutions and intermediaries, and any individual or entity that carries out, controls or gives advice on transactions involving deposits, exchanges, investments, conversion or any other movements of capital

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Credit establishments, financial institutions and intermediaries, and any individual or legal entity that carries out, controls or gives advice on transactions involving deposits, exchanges, investments, conversion or any other movements of capital

Number of STRs received and time frame: 12

Number of CTRs received and time frame: Two

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: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Expertise in investigating and prosecuting financial crimes is minimal. Although Djibouti enacted its anti-money laundering (AML) law in 2002 and later established a financial intelligence unit (FIU), enforcement of the law continues to be a major challenge. Though Djibouti makes an effort to control all formal transaction points, greater resources and independence would improve the oversight capabilities of the Central Bank and the FIU. With an increasing number of banks operating in Djibouti, and the introduction of bank-free cash transfers via mobile phones, additional training and resources for the FIU continue to be critical needs.

Corruption is also a concern. While customs transparency has greatly improved under Dubai Ports World management of the customs service, the Government of Djibouti should continue to focus on improving customs controls on cross-border currency movements, especially at land borders. Finally, Djibouti must also ensure its AML regime is effectively applied in all current and planned free zones, and to all professionals involved in financial matters.

The AML law stipulates that Djibouti will cooperate with other countries by exchanging information, assisting in investigations, providing mutual technical assistance and facilitating the extradition process in money laundering cases. At the regional level, the Fraud Investigation Unit, Djibouti’s FIU, works in collaboration with FIUs from member states of the Intergovernmental Authority on Development (IGAD). Although the UN lists of designated terrorists and terrorist entities are not distributed by the Central Bank, banks and financial institutions are encouraged to retrieve the updated list regularly from the internet.

Dominica

Dominica is a major offshore center with a large international business company (IBC) presence and internet gaming. Dominican officials believe most of the money laundering cases under investigation involve external proceeds from fraudulent investment schemes. There has also been evidence of advance fee fraud schemes. Domestically driven money laundering primarily has a nexus to drug-related activities. Money remitters have been used to transfer funds to questionable locations, and there has been a surge in the placement of euros in the banking system related to questionable activities in Guadeloupe and Martinique

Dominica’s financial sector includes two offshore banks, 15,321 IBCs, twenty insurance companies, nine money services businesses, four internet gaming companies and one building and loan society. There are no free zones in Dominica. Shell companies are not permitted. Bearer shares are permitted; however, these shares are immobilized by the requirement that the beneficial owners of the bearer shares must be disclosed.

Under Dominica’s Economic Citizenship Program, individuals can obtain citizenship for approximately $75,000 for an individual and $100,000 for a family of up to four persons. There is no residency requirement and passport holders may travel to most Commonwealth countries without a visa. An application for economic citizenship must be made through a government approved local agent and requires a fee for due diligence or background check purposes. An in-person interview is also required.

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, money exchangers, accountants, notaries, gaming centers, auto dealers and securities dealers

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

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: 63 from January to September 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Dominica 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/Dominica_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In the past, subjects of United States criminal investigations have been identified as exploiting Dominica’s Economic Citizenship Program. However, Dominica has made a concerted effort to improve the regulation of this program.

The Government of the Commonwealth of Dominica (GOCD) should fully implement and enforce the provisions of its legislation and provide additional resources for regulating offshore entities and stringently regulating internet gaming entities. Additional awareness training for on-financial businesses and professions, to ensure their understanding and compliance of STR reporting requirements, would significantly strengthen the GOCD's regulatory framework. The GOCD should also move expeditiously to become a party to the UN Convention against Transnational Organized Crime.

Dominican Republic

In spite of having the largest economy in the Caribbean, the Dominican Republic (DR) is not a major regional financial center. The DR continues to be a major transit point for the transshipment of illicit narcotics destined for the United States and Europe. The existence of six international airports, six major seaports, and a poorly controlled frontier with Haiti present the authorities with serious challenges. The existence of corruption within the government and the private sector, an organized crime presence (primarily illicit trafficking in narcotics and persons), a fragile economy and a large informal economy make the DR vulnerable to money laundering and terrorist financing threats. The major sources of laundered proceeds stem from illicit trafficking activities, tax evasion and fraudulent financial activity, particularly transactions with forged credit cards.

The DR is a major bulk cash smuggling hub. The smuggling of bulk cash by couriers and the use of wire transfer remittances are the primary methods for moving illicit funds from the United States into the DR. Once in the DR, currency exchange houses, money remittance companies, real estate and construction companies, and casinos are commonly used to facilitate the laundering of illicit funds. The lack of a single recognized financial intelligence unit exacerbates the problem, and the proposed creation of an offshore financial center may worsen the DR’s vulnerability to money laundering.

There is a significant market for illicit or smuggled goods in the Dominican Republic; the funding sources are unclear, as is the destination of the proceeds. Authorities say the under-invoicing of imports and exports by Dominican Republic businessmen is still a relatively common practice. The primary goal for businessmen who engage in such activity is reportedly to avoid taxes and customs fees. Customs fraud and invoice manipulation are also found in regional value transfer schemes.

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: 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, currency exchange houses, stockbrokers, securities brokers, cashers of checks or other types of negotiable instruments, issuers/sellers/cashers of travelers checks or money orders, credit and debit card companies, remittance companies, offshore financial service providers, casinos, real estate agents, automobile dealerships, insurance companies, and certain commercial entities such as those dealing in firearms and precious metals

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

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: 45 from January to August 2010

Number of CTRs received and time frame: 138 in 2009

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 4 from January 2009 to October 2010

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Dominican Republic 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/

ENFORCEMENT AND IMPLEMENTATION ISUES AND COMMENTS:

Limited resources hamper the Government of the Dominican Republic’s (GODR) ability to enforce the anti-money laundering (AML) regulations. Institutions and personnel lack the training and capacity to fully enforce the law and its attendant regulations. Earlier resistance in the judiciary and among prosecutors to applying AML has evaporated, and authorities effectively apply the AML and regulations when able to gather proper evidence. The lack of data and systematic study make it difficult for the Federal Police to identify trends in money laundering. The system of asset forfeiture is largely ineffective.

The AML law excludes from the list of covered entities dealers of art, antiques, and other high-valued consumer goods; entities dealing with jewelry and precious metals; and attorneys, financial management firms and travel agencies. These entities are not required to maintain customer information or report suspicious activity. Additionally, accountants and auto dealers are excluded from the STR requirement. PEPs are addressed in a circular issued by the Superintendency of Banks and in force since September 7, 2010; while this is a step forward, the circular does not address all elements in the international standards and does not apply to all pertinent entities. Covered non-bank businesses and professions are to be inspected by the Tax Authority. However, in practice, such inspections rarely occur.

The decision to replace the UIF financial intelligence unit (FIU), which became a member of the Egmont Group in 2000, with the Financial Analysis Unit (UAF) caused the Dominican Republic to lose its Egmont membership. Although the UAF is now recognized as the GODR’s financial intelligence unit, it appears there is still confusion among obligated entities regarding their reporting requirements. Further confounding the duality of FIU functions in the Dominican Republic is the proposed creation of an offshore financial center with its own agency equivalent to an FIU.

In December 2008, the GODR passed law 480/08 allowing the creation of “International Financial Zones” (IFZs) where the full range of financial services can be conducted separately from traditional monetary, banking and financial regulatory oversight. Sections of Law 480/08 would allow the IFZs to have their own regulatory and supervisory authority, independent from that of the domestic financial system. This Law creates a new entity called the Financial Investigations Department (DIF) created within the NCIFZ. The creation of the DIF within the NCIFZ, with specified roles, gives such a unit the same functions as the UAF. This situation is unacceptable, because two FIUs cannot coexist within a jurisdiction. Law 480/08 has not been implemented nor have any IFZs been established. Members of the Dominican Congress are trying to amend Law 480/08 to correct this risk. The Dominican Republic has approximately 50 free trade zone parks, focused on textiles, tobacco, small electric devices, and medical and pharmaceutical products.

The GODR should bolster the operational capacity of the UAF, which is the single, unified FIU. The UAF should have budgetary independence. There should be enhanced supervision of money service businesses. Authorities should identify, investigate and prosecute organized criminal groups involved with bulk cash smuggling and trade-based money laundering. The GODR should not establish International Financial Zones, which will greatly increase the risk of all-source money laundering. Specific steps should be taken to combat corruption within both government and industry.

Ecuador

Ecuador is a major drug transit country. With a dollarized economy and geographic location between two major drug producing countries, Ecuador is highly vulnerable to money laundering. Corruption is a significant problem in Ecuador and facilitates money laundering. Because only major banks have active money laundering controls in place, and because a large number of transactions take place through unregulated money exchange and remittance companies, there is no reliable way to judge the magnitude of such activity in the country. There is evidence that money laundering is taking place through trade and commercial activity, as well as through cash couriers. Large amounts of unexplained currency entering and leaving Ecuador indicate that transit of illicit cash is a significant activity. Weakly regulated casinos and deficient financial supervision serve as additional vulnerabilities for money laundering.

On February 18, 2010, the Financial Action Task Force (FATF) issued a Public Statement identifying Ecuador as having strategic Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) deficiencies and as not having delivered a clear high-level political commitment to address these deficiencies. In June 2010, after the Ecuadorian government provided a written high-level political commitment to address the identified deficiencies, including by tabling a revised AML/CFT law, FATF upgraded Ecuador to a list of countries that have strategic AML/CFT deficiencies for which they have developed a corrective action plan.

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: 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: Unknown

(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: Financial institutions, insurance providers (including private insurance), cooperatives, trust and fund managers, money transfer companies and parallel couriers, brokerages, casinos and gaming halls

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, savings and credit institutions; investment companies, stock exchanges, and mutual funds; exchange houses; credit card administrators; money transmitters; mortgage companies; insurance and reinsurance companies trusts; fund managers; sellers of vehicles, aircraft, and watercraft; brokerages; couriers; real estate agents; casinos and other gambling enterprises; dealers of precious metals and stones

Number of STRs received and time frame: 36 in 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

Ecuador is a member of the Financial Action Task Force (FATF) for 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:

On December 30, 2010, Law 2010-352, reforming existing anti-money laundering legislation and the Penal Code, entered into force. The law contains a number of provisions aimed at strengthening the criminalization of money laundering and terrorist financing, and also strengthening Ecuador's financial intelligence unit (FIU) (renamed the Financial Analysis Unit). In addition to strengthening border controls on cash movements at air and seaports, the new legislation expands penalties, removes the $5,000 minimum threshold for money laundering, and includes crimes committed outside of Ecuador. The law also appears to strengthen the mandate of Ecuador's FIU and expands the role of the National Anti-Money Laundering Council, which oversees the FIU. Although, on balance, the legal reform strengthens Ecuador's legislation with regard to financial crimes, the law includes new language that could potentially complicate seizures of illicit funds, either as part of money laundering investigations or bulk cash transfers. For example, the new language states the Attorney General is responsible for demonstrating the illicit origin of seized funds. Explicitly placing the burden of proof on the Government of Ecuador (GOE) could make it easier for plaintiffs in money laundering or smuggled cash cases to avoid conviction.

Law 2010-352 also includes provisions that seek to criminalize terrorist financing, by creating an autonomous offense of the financing of crimes (including terrorism, acts of terrorism, and organized terrorism) listed in the Penal Code. The new law adds a new article to the Penal Code to criminalize the financing of any of the acts listed in the Penal Code's section under "Crimes of Sabotage and Terrorism." The new law does not contain an explicit reference to "terrorist financing," does not define “funds” or “assets,” does not appear to cover attempts to commit the offense, and appears to require a connection to an act of terrorism. As such, Ecuador's strengthened AML/CFT legal regime does not yet fully meet international standards.

The GOE should continue to work to ensure its AML/CFT legislation, and especially the criminalization of the financing of terrorism, adheres to international standards. The GOE should harmonize its legislation to eliminate conflicts that hinder successful money laundering investigations and prosecutions. The GOE should ensure the FIU becomes fully functional and meets international standards, and should also ensure that reporting requirements – covering an expanded group of obligated parties -- are enforced. The GOE should make a dedicated effort to train judges, prosecutors and investigators so they understand the country's applicable AML/CFT legislation and regulations. It is important for the GOE to take all necessary steps to comply fully with international AML/CFT standards to which it has formally committed through its membership in the UN, the OAS, and GAFISUD.

Egypt

Egypt is not considered a regional financial center or a major hub for money laundering. Egypt still has a large informal cash economy, and many financial transactions are undocumented or do not enter the banking system. Cash remains by far the preferred means of payment in Egypt and, despite efforts by the Egyptian authorities, modern means of payment remain underdeveloped. Reportedly, there is evidence that arms are being smuggled across Egypt’s border with Gaza. The funding source is unclear, as is the destination of the proceeds. Authorities report the under-invoicing of imports and exports, or trade-based money laundering, is common, reportedly to avoid taxes and customs fees. Tax evasion is common. Customs fraud and invoice manipulation are also found in regional value transfer schemes.

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: Unknown

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, foreign exchange companies, money transfer companies, the post office, insurance companies, security firms, leasing companies, factoring companies, and mortgage financing companies

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, foreign exchange companies, money transfer companies, the post office, insurance companies, security firms, leasing companies, factoring companies, and mortgage financing companies

Number of STRs received and time frame: 275 - January - June 2008

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2007

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Egypt 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 can be found here:

http://www.menafatf.org/images/UploadFiles/MER_Egypt_ForPublication.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Egypt (GOE) should address asset identification, seizure and forfeiture. The GOE also should improve its ability to pursue suspicious financial activities and transactions throughout the entire investigative and judicial process. Egypt should work to increase the number of successful money laundering investigations and prosecutions and improve its enforcement of cross-border currency controls.

El Salvador

El Salvador has an unusually rapidly growing banking system with little, other than its dollarized economy and remittance flow, to support such growth. The country is part of the transshipment route for South American cocaine and heroin destined for the United States and returning cash to South America. Money laundering is primarily related to proceeds from illegal narcotics and organized crime. There is no indication that money laundering is being used to fund terrorist activities. The U.S. dollar is the main currency in El Salvador. The country’s dollarized economy and geographic location make it an ideal haven for transnational organized crime groups, including human and drug trafficking organizations. The Central America Four Agreement between El Salvador, Guatemala, Honduras, and Nicaragua allows for the free movement of citizens of these countries across their respective borders without passing through immigration or customs inspection. As such, the agreement represents a vulnerability to each country for the cross-border movement of contraband and illicit proceeds of crime.

There are 16 free trade zones operating in the country. There are no reported hawala or other similar alternative remittance systems operating in El Salvador. A significant number of remittances are transferred through banks and appear to pose little risk 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.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO 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, agricultural credit institutions, money exchanges, accountants, notaries, gaming centers, auto dealers, and securities dealers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

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

Number of STRs received and time frame: 1,152 in 2010

Number of CTRs received and time frame: 2,562 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 29 in 2010

Convictions: Three in 2010

Assets forfeited: criminally: $14,655,926 in 2010 (one seizure totaled $14,000,000)

civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

El Salvador is a member of the Caribbean Financial Action Task Force, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/El_Salvador_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The number of prosecutions relative to the number of crimes which generate illicit funds is low. In addition, there are relatively few asset seizures incident to AML investigations. Funds seized in drugs cases are returned to law enforcement. In 2010, the government passed asset forfeiture legislation that allows the government to sell property seized in conjunction with narcotics arrests and to use the profits for counter-narcotics efforts. The regulatory institutions with regard to money laundering are weak and lack both human resources and sufficient regulatory powers.

There are no indications that the government or its officials facilitate or launder funds from illicit drug transactions. Salvadoran law severely penalizes abuse of an official position in relation to the commission of a drug offense, including accepting or receiving money or other benefits in exchange for an act of commission or omission relating to official duties.

El Salvador needs to provide a clear prohibition against “tipping off” in its legislation and regulations, and clarify and enforce its provisions regarding criminal liability for legal persons.

Equatorial Guinea

Equatorial Guinea (EG) is not a regional financial center. Implementation of its anti-money laundering laws is not complete, and EG is vulnerable to money laundering and terrorist financing. EG’s greatest concern in terms of money laundering and terrorist financing is cross-border currency transactions and the illegal international transfer of money by companies or by corrupt individuals. Corruption at all levels of government and commerce is a severe problem in EG. The Government of Equatorial Guinea is a member of the Economic and Monetary Community of Central Africa States (CEMAC) and shares a regional Central Bank (BEAC) with other CEMAC members.

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: Not available

Legal persons covered: criminally: Not available civilly: Not available

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Not applicable

Number of STRs: Not applicable

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: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Equatorial Guinea should work with the CEMAC and BEAC to establish a viable anti-money laundering/counter-terrorist financing (AML/CFT) regime. 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. If established, 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.

The EG should become a party to the 1988 UN Drug Convention and the UN Convention against Corruption.

Eritrea

Eritrea is not a regional financial center. The Government of Eritrea (GOE) is highly autarchic and has created a strict command economy with nearly every significant economic entity controlled by the government/military. Exports are miniscule, generating little hard currency (although they are expected to grow with development of the mining sector). Eritrea has spurned assistance from traditional donors. Aid from its largest benefactors, Qatar and China, is not transparent. The level of cross border trafficking of narcotics is not known, but, given the government’s tight control of its borders, Eritrea is not believed to be a significant market or transit route for narcotics. However, due to its informal cash economy, limited regulatory structure, lack of enforcement and proximity to regions where terrorist and criminal organizations operate, Eritrea is vulnerable to money laundering, trade-based value transfer, underground finance, terrorist financing and related activities.

The Eritrean legal and regulatory systems are undeveloped and non-transparent. The constitution, ratified in 1997, has yet to be implemented. Currently, all laws are issued by proclamation from the GOE. Regulations and procedures seem to be haphazardly created and irregularly enforced. Obtaining information about financial regulations is difficult; Eritrea is one of a few countries that do not publish their national accounts, budget, and trade statistics. Eritrean officials will not discuss the country’s anti-money laundering/counter-terrorist financing (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: Not available

Legal persons covered: criminally: Not available civilly: Not available

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: Not available

UN lists of designated terrorists or terrorist entities distributed to financial institutions: Not available

(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: Not available Domestic: Not available

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Not available

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: NO

Eritrea is not a member of a Financial Action Task Force-style regional body.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Eritrea (GOE) should seek international assistance to help structure an AML/CFT regime that adheres to international standards.

Estonia

Estonia has one of the most transparent, developed banking systems of the new European Union (EU) members. Estonia has adopted the universal banking model, which enables credit institutions to participate in a variety of activities such as leasing, insurance, and securities. Transnational and organized crime groups are attracted to the territory due to its location between Eastern and Western Europe. Analysis of suspicious transaction reports (STRs) discloses some incidents of transferring the proceeds of Internet crime to Estonia. There have been no reports of terrorist financing in Estonia.

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: Credit and financial institutions, lottery/gambling institutions, real estate firms, traders who receive payments in cash that exceed 200,000 kroons (approximately $20,000), pawnbrokers, auditors and accountants, tax advisors, service providers for trust funds and business associations, notaries, attorneys and legal advisors, bailiffs, and trustees in bankruptcy

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Credit and financial institutions, lottery/gambling institutions, real estate firms, traders who receive payments in cash that exceed 200,000 kroons (approximately $20,000), pawnbrokers, auditors and accountants, tax advisors, service providers for trust funds and business associations, notaries, attorneys and legal advisors, bailiffs, and trustees in bankruptcy

Number of STRs received and time frame: 3,475 from January to September 2010 (714 related to terrorist financing)

Number of CTRs received and time frame: 6,777 from January to September 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 29 persons from January to November 2010

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Estonia 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/Evaluations/round3/MONEYVAL%282008%2932Rep-EST3_en.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Estonia is member of the EU, and on January 1, 2011, joined the euro zone. On March 8, 2010, the Auditors Activities Act came into effect, and on October 5, 2010, the International Sanctions Act took effect. On April 12, 2010, Estonia became a party to the UN Convention against Corruption. Estonia should continue to enhance its AML/CFT regime, as necessary.

Ethiopia

Due primarily to its unsophisticated financial systems and pervasive government controls, Ethiopia is not considered to be a regional financial center. Ethiopia’s location within the Horn of Africa region makes it vulnerable to money laundering-related activities perpetrated by transnational criminal organizations, terrorists, and narcotics trafficking organizations. Sources of illegal proceeds include corruption, smuggling and trafficking in narcotics, persons, arms, and animal products. As the economy grows and becomes more liberalized, law enforcement sources believe bank fraud, electronic/computer crimes and money laundering activities will continue to rise. The financial services sector remains closed to foreign investment.

Since strict foreign exchange controls limit possession of foreign currency, most of the proceeds of contraband smuggling and other crimes are not laundered through the official banking system. High tariffs also encourage customs fraud and trade-related money laundering. Law enforcement sources indicate that alternative remittance systems, particularly hawala, are widely used. The Ethiopian Government has closed a number of illegal hawala operations and attempts to monitor hawala networks within 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: 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: Financial institutions, money transfer agents, foreign exchange bureaus, financial leasing companies, Ethiopian Revenue and Customs Authority, notary offices, licensing authorities, Ethiopian Investment Agency, non-governmental organizations, auditors, accountants, persons engaged in real estate business, precious metal dealers, and broker/investment advisors

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial institutions, money transfer agents, foreign exchange bureaus, financial leasing companies, Ethiopian Revenue and Customs Authority, notary offices, licensing authorities, Ethiopian Investment Agency, non-governmental organizations, auditors, accountants, persons engaged in real estate business, precious metal dealers, and broker/investment advisors

Number of STRs received and time frame: None

Number of CTRs received and time frame: None

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One pending

Convictions: Unknown

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

Ethiopia is not a member of a Financial Action Task Force (FATF)-style regional body (FSRB). Ethiopia has applied to be an observer of the Eastern and Southern Africa Anti-Money Laundering Group.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The lack of data and systematic study make it difficult for the federal police to identify trends in money laundering. Further, inadequate police training and lack of resources significantly diminish its investigative abilities.

In February 2010, the FATF International Cooperation Review Group (ICRG) publicly listed Ethiopia as a country deficient in its AML/CFT regime. In June 2010, Ethiopia’s Finance Minister confirmed his government’s commitment to an action plan to improve the country’s anti-money laundering/counter-terrorist financing (AML/CFT) regime. The action plan includes: (1) implementing UN Security Council Resolutions 1267 and 1373 through law to ensure there are appropriate procedures to freeze, seize, and confiscate terrorist funds; (2) introducing implementing regulations/directives for the new AML law; (3) establishing a fully operational and effectively functioning financial intelligence unit (FIU); (4) seeking technical assistance to conduct a review of AML/CFT laws; (5) raising awareness of AML/CFT issues within the law enforcement community; (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements; and (6) obtaining full membership in a FSRB and submitting to a mutual evaluation.

Ethiopia has made progress in improving its AML/CFT regime, but has yet to make its FIU operational or implement various specific directives in accordance with its November 2009 Prevention and Suppression of Money Laundering and Financing of Terrorism law. In March 2010, the Central Bank issued the only relevant directive to date, mandating customer due diligence requirements for banks only. Ethiopia established its nascent FIU--the Financial Intelligence Center (FIC)--in early 2010 with the appointment of a Director General, but the FIC has not hired additional staff to date. The FIC reports directly to the Prime Minister, but the Finance Minister chairs an inter-ministerial committee formed to address Ethiopia’s AML/CFT deficiencies. The FIC has sought donor technical assistance.

Fiji

Fiji is a small country with a population of less than 1 million. It is not a regional financial center but suffers from a relatively high level of crime. The country’s geographical location makes it a convenient potential staging post for Australia and New Zealand. This has been demonstrated by some significant drug related cases and a noted increase in the number of human smuggling cases. Cross-border crime gangs involving individuals from neighboring Asian countries are operating within Fiji.

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, foreign exchange dealers, money remittance service providers, law firms, real estate agencies, accountants

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, foreign exchange dealers, money remittance service providers, law firms, real estate agencies, accountants

Number of STRs received and time frame: 629 in 2010

Number of CTRs received and time frame: 133,487 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

Fiji is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here: http://www.apgml.org/documents/docs/17/Fiji%20DAR%20Final.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The financial intelligence unit does not have budgetary independence. Fiji should continue to implement anti-money laundering and counter-terrorist financing measures that adhere to international standards.

Finland

Finland is not a regional financial center. Over the past decade, Finland repeatedly has placed first or second on Transparency International’s Corruption Perceptions Index (CPI); in 2010, Finland ranked fourth on the list. The major sources of illegal proceeds in Finland relate to financial crimes and the majority of suspicious financial activities investigated have an international dimension. These funds are normally laundered through currency exchanges and gambling establishments. The number of organized crime groups has grown slightly in the past few years, as has the number of their members. Terrorism related fund-raising, to the extent it exists, appears to be less of a problem than in other European countries.

Finland has free zones in Hanko, Hamina, Lappeenranta and Turku, and free warehouse areas in Kemi and Oulu. Goods may be stored for an unlimited time in these zones without customs clearance, but they may not be consumed or sold on a retail basis. The same tax and labor laws apply to free zones/free warehouses as to other workplaces in Finland.

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 financing institutions and financial holding companies; investment firms; fund management companies and custodians; the central securities depository; book entry registrars; real estate agents and apartment rental agencies; gaming entities; insurance companies and intermediaries, and local mutual insurance associations; pawnshops, auctioneers, and dealers in vehicles and high value goods; auditors, accountants, and lawyers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, credit and financial institutions, investment and fund management companies; insurance brokers and insurance companies; real estate agents and apartment rental agencies; betting services and casinos; management companies; custodians of mutual funds; auditors, lawyers, tax advisors, and accountants, auctioneers, pawn shops, and dealers in vehicles and high value goods; businesses and professions that perform other payment transfers, such as hawala; repossession agents and bankruptcy ombudsmen

Number of STRs received and time frame: 12,375 January - June 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 18 in 2008

Convictions: None

Assets forfeited: criminally: Not available civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Finland is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/document/58/0,3343,en_32250379_32236963_39535482_1_1_1_1,00.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Finland has a comprehensive anti-money laundering/counter-terrorist financing regime and should continue to enhance its laws and regulations as necessary to adhere to international standards.

Finland has, in conjunction with the other Nordic Countries, prepared and concluded treaties with certain offshore financial centers concerning the exchange of information on tax related matters. The treaties are part of the tax haven project, set out by The Nordic Council of Ministers. Finland has signed bilateral treaties on information exchange and taxation with Montserrat and Liberia (November 2010), Vanuatu (October 2010), Marshall Islands (September 2010), Belize (September 2010), Monaco (June 2010), Antigua and Barbuda, Dominica , Grenada, Saint Lucia (May 2010), St. Vincent and the Grenadines , St Kitts and Nevis, Bahamas (March 2010), Andorra (February 2010), San Marino (January 2010), Cook Islands, Samoa, Turks & Caicos, Anguilla (December 2009), Gibraltar (October 2009), Aruba and Netherlands Antilles (September 2009), British Virgin Islands (May 2009), Bermuda and Cayman Islands (April 2009), Jersey and Guernsey (October 2008) and Isle of Man (October 2007).

In June 2010 the Financial Supervision Authority (FSA) issued updated customer due diligence standards effective September 1, 2010, applicable to all entities regulated by the FSA.

France

France remains an attractive venue for money laundering because of its sizable economy, political stability, and sophisticated financial system. Narcotics trafficking, human trafficking, smuggling, and other crimes associated with organized crime are among its vulnerabilities.

France can designate portions of its customs territory as free trade zones and free warehouses in return for commitments in favor of employment. France has taken advantage of these regulations in several specific instances. The French Customs Service administers these 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 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, credit institutions, money-issuing institutions, investment firms, money exchangers, investment management companies, mutual insurers and benefit institutions, insurance intermediaries, insurance dealers, notaries, receivers and trustees in bankruptcy, financial investment advisors, real estate brokers, chartered accountants, auditors, dealers in high-value goods, auctioneers and auction houses, bailiffs, lawyers, participants in stock exchange settlement and delivery, commercial registered office providers, gaming centers, companies involved in sports bets and horse-racing tips, and casinos

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, credit institutions, money-issuing institutions, investment firms, money exchangers, investment management companies, mutual insurers and benefit institutions, insurance brokers and intermediaries, notaries, receivers and trustees in bankruptcy, financial investment advisors, real estate brokers, chartered accountants, auditors, dealers in high-value goods, auctioneers and auction houses, bailiffs, lawyers, participants to stock exchange settlement and delivery and commercial registered office providers, gaming centers, companies involved in sports bets and horse-racing tips, and casinos

Number of STRs received and time frame: 17,310 in 2009

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 225 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

France is a member of the Financial Action Task Force (FATF), and is a Cooperating and Supporting Nation to the Caribbean Financial Action Task Force (CFATF) and an Observer to the Financial Action Task Force of South America (GAFISUD), two FATF-style regional bodies. The International Monetary Fund (IMF) prepared a Report on the Observance of Standards and Codes. This report can be found here: http://www.imf.org/external/np/fsap/fsap.asp# . France was evaluated by the FATF in 2010; once finalized the evaluation report may be found here: http://www.fatf-gafi.org/infobycountry/0,3380,en_32250379_32236963_1_1_1_1_1,00.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

France applies the 2006/70/CE European Union (EU) directive by which politically exposed persons from the EU states may benefit from simplified vigilance procedures, but only in a limited number of cases.

France and the United States have exchanged large amounts of data in connection with money laundering and terrorist financing.

France does not have the capacity to share forfeited assets with other jurisdictions.

The Government of France (GOF) has established a comprehensive anti-money laundering/counter-terrorist financing (AML/CFT) regime and is an active partner in international efforts to control money laundering and the financing of terrorism. France should continue its active participation in international organizations and its outreach to lower-capacity recipient countries to combat the domestic and global threats of money laundering and terrorist financing.

Gabon

Gabon is not a regional financial center. Despite the abundance of natural resources, poor fiscal management and widespread corruption hobble the economy. Embezzlement of state funds, including by politically exposed persons, frequently gives rise to money laundering. Gabon also suffers from porous borders. General smuggling is widespread and is facilitated by organized criminal groups.

The Bank of Central African States (BEAC), a regional central bank that serves six countries of Central Africa, supervises Gabon’s banking system. The actual monitoring of financial transactions is conducted by the Economic Intervention Service that harmonizes the regulation of currency exchanges in the member States of the Central African Economic and Monetary Community (CEMAC).

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: Not available

Legal persons covered: criminally: Not available civilly: Not available

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: Not available

UN lists of designated terrorists or terrorist entities distributed to financial institutions: Not available

(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, stock brokerages, casinos, insurance companies, lawyers, and accountants

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, exchange houses, stock brokerages, casinos, insurance companies, lawyers, and accountants

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: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In September 2005, the Government of Gabon (GOG) created the National Financial Investigations Agency (ANIF), a body designed to lead the fight against money laundering and terrorist financing. Though ANIF is now functional, it lacks the necessary resources (both human and financial) to be effective in its mission.

The gendarme and police have an anti-narcotics unit, the Central Anti-Drug Office dedicated to investigation and arrests. The unit is under-equipped and under-funded and lacks necessary training to operate at a high level of functionality.

The judiciary remains inefficient and susceptible to inappropriate influence. Police inefficiency, corruption, and impunity remain serious problems. Additionally, official corruption is widespread. Oversight efforts to reign in corruption are weak, making it possible for public officials to exploit their positions for personal enrichment. The National Commission of the Fight Against Illicit Enrichment, a government anti-corruption organization, enjoys a high profile but has not prosecuted many alleged criminals identified as taking bribes or committing other malfeasance.

There is a large Lebanese expatriate community in Gabon engaged in the timber industry, construction, and general trade. In order avoid tight fiscal controls for the repatriation of profits, many Lebanese families have obtained Gabonese nationality. Hawala and trade are also used to transfer funds and value from Gabon to Lebanon.

The GOG should work with the CEMAC, BEAC, and international organizations to establish a viable anti-money laundering/counter-terrorist financing regime. 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 the banks are implementing and enforcing due diligence procedures, as outlined in the international standards.

Gambia

The Gambia is not a regional financial center, although it is a regional re-export center. Goods and capital are freely and legally traded in the Gambia, and, as is the case in other re-export centers, smuggling of goods occurs. Customs officials cooperate with counterparts in Senegal to combat smuggling along their common border, although The Gambia has limited capacity to fully monitor its porous borders. The lack of resources hinders law enforcement’s ability to combat possible smuggling despite political will. The Gambia is not a known money laundering hub in the region. It is unknown to what extent laundering is related to narcotics, but the seizure of more than two tons of cocaine in May and June 2010 has heightened concerns that some drug-related money may be getting into the country. The rapid growth of commercial banks entering the local market in the past few years, currently 14, also raises possible money laundering concerns.

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 insurance companies

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, insurance companies, money exchanges, money transfer agencies, real estate agencies, credit unions, casinos, and lotteries

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 12 in 2010

Convictions: Three - May to December 2010

Assets forfeited: criminally: $24,358 in 2010 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

The Gambia 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 here: http://www.giaba.org/index.php?type=c&id=42&mod=2&men=2

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of The Gambia (GOTG) should examine its re-export sector to determine whether it is being used to launder criminal proceeds. The 2003 Money Laundering Act, currently under review, should be expanded to include a comprehensive range of predicate offenses and designated non-financial businesses and professions. The GOTG should provide adequate resources and capacity to its law enforcement, supervisory and customs personnel so they are able to effectively fulfill their responsibilities. Its fledgling financial intelligence unit should be given autonomy and should be strengthened both in terms of personnel and training to help it operate effectively. The GOTG should become a party to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.

Georgia

Illegal income in Georgia originates from corruption, auto theft, narcotics trafficking, smuggling and counterfeiting. According to the Georgian Financial Monitoring Service (FMS), the bulk of criminal proceeds laundered in Georgia are derived from domestic criminal activity, in most cases related to tax evasion. South Ossetia and Abkhazia fall outside the control of Government of Georgia authorities and are not subject to Georgian monitoring or law enforcement.

There is a small black market for smuggled goods in Georgia. There is little evidence to suggest it is significantly funded from narcotics proceeds. Goods are brought in illicitly and sold in black or gray markets to avoid tax and customs duties. The extent of black market trading in the breakaway territories of Abkhazia and South Ossetia is unknown.

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: Commercial banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; entities performing money remittance services; broker companies and securities' registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; dealers of precious metals, precious stones and products thereof, as well as antiquities; customs authorities; entities engaged in extension of grants and charity assistance; notaries; and National Agency of the Public Registry

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Commercial banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; entities performing money remittance services; broker companies and securities' registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; dealers of precious metals, precious stones and products thereof, as well as antiquities; customs authorities; entities engaged in extension of grants and charity assistance; notaries; and National Agency of the Public Registry

Number of STRs received and time frame: 7,701 from January through August 2010

Number of CTRs received and time frame: 69,043 from January through August 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 28 from January to November 2010

Convictions: 19 from January to November 2010

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Georgia 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/Georgia_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

As per information supplied by the Financial Monitoring Service (FMS) money laundering investigations and prosecutions increased in 2010. Most of the money laundering prosecutions are autonomous, with no conviction for a predicate crime. Most of these autonomous money laundering cases derive from various forms of corruption and fraud. Investigations into narcotics, extortion, weapons of mass destruction, and smuggling rarely have a financial component as law enforcement agencies in Georgia do not routinely link traditional investigations into criminal enterprises with money laundering. This is particularly alarming in light of the large number of casinos in Georgia. While casinos are required to report cash transactions over 30,000 GEL (approximately $17,000), there were only eight reports in 2010 and two reports in 2009. There were no suspicious transaction reports (STRs) for casinos in either year.

Banks, notaries, broker companies and micro finance organizations do file a relatively high number of currency transaction reports (CTRs) and STRs with FMS. Yet there are very few investigations by law enforcement based on these reports. The data compiled by FMS is an untapped tool for discovering predicate money laundering crimes.

There has also been a lack of coordination between various Georgian enforcement agencies, including customs. There have been virtually no seizures of bulk currency leaving Georgia.

Germany

Germany is one of the largest financial centers in Europe. Although not a major drug producing country, Germany continues to be a consumer and a major transit hub for narcotics. Organized criminal groups involved in drug trafficking and other illegal activities are a significant source of money laundering in Germany. Trends in money laundering in Germany cited in 2009 include trade in CO2 emission certificates, cash and gold transactions, and commercial websites that did not ship goods after receiving payment. Germany is not an offshore financial center. Free Trade Zones of control type I exist in Bremerhaven, Cuxhaven, and Hamburg. Deggendorf and Duisburg are control type II Free Trade Zones (unfenced inland ports).

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: 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: Credit institutions, financial services institutions, financial enterprises, insurance companies, insurance intermediaries, investment companies, lawyers, legal advisers, auditors, chartered accountants, tax advisers and tax agents, trust or company service providers, real estate agents, casinos, persons trading in goods

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Credit institutions, financial services institutions, financial enterprises, insurance companies, insurance intermediaries, investment companies, lawyers, legal advisers, auditors, chartered accountants, tax advisers and tax agents, trust or company service providers, real estate agents, casinos, persons trading in goods

Number of STRs received and time frame: 9,046 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 518 in 2009

Convictions: 416 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Germany is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/44/19/44886008.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2009, suspicious transaction reports increased 23% compared to 2008. The increase mostly comes from an increased number of "financial agents," i.e., persons who are solicited to make their private accounts available for money laundering transactions. Authorities confirmed the suspicion of a criminal act in about half of the reports (46%). While Germany has no automatic CTR requirement, large currency transactions frequently trigger a report.

Tipping off is a criminal offense only if it is committed with the intent to support money laundering or obstruct justice and applies only to previously-filed reports. Otherwise, it is an administrative offense that carries a fine of up to € 50,000 (approximately $64,900) under the Money Laundering Act. Legal persons are only covered by the Administrative Offenses Act, and are not criminally liable under the Criminal Code.

In July 2010, Germany banned the Frankfurt-based Foundation for Human Rights and Freedoms and Humanitarian Relief (IHH) because it “knowingly and deliberately supports organizations that either are under Hamas control or support Hamas themselves”. According to the German Interior Ministry, the German-based IHH, which ostensibly split from the Turkish IHH, funneled money to Hamas.

The numbers of prosecutions and convictions included in this report only reflect cases in which the money laundering violation carried the highest penalty of all the crimes of which the offender was convicted. A trial continued in 2010 against seven persons accused of laundering money from cocaine sales throughout Europe by transporting it to Lebanon. According to the press, in May 2008 customs officers found € 8.7 million (approximately $11.3 million) hidden in luggage at Frankfurt Airport. A police search of the subject men's apartment unearthed an additional € 500,000 (approximately $649,300). Additional arrests were made in October 2009.

Germany has no statistics on assets forfeited in criminal money laundering cases, as money laundering is usually only one of the charges leading to conviction. Assets can be forfeited as part of a criminal trial or through administrative procedures such as claiming back taxes.

Germany has signed, but not yet ratified, the UN Convention against Corruption.

Ghana

Ghana is not a regional financial center, but as it develops economically its financial sector is becoming more important regionally. Most of the money laundering in Ghana involves narcotics or public corruption. Ghana is a significant transshipment point for cocaine and heroin transiting from South America, Iran and Afghanistan to Europe and the United States. Public corruption is a major source of money laundering in Ghana, occurring mainly through public procurements and the award of licenses. Criminals also launder illicit proceeds through investment in banking, insurance, real estate, automotive import, and general import businesses, and reportedly, donations to religious institutions. Financial crimes such as advance fee fraud, known as Sakawa in Ghana, stolen credit and ATM cards originating in Ghana, and check cloning continue to increase.

Informal financial activity accounts for about 45 percent of the total Ghanaian economy. Some traders import counterfeit goods or smuggle goods to evade taxes. In most cases the smugglers bring the goods into the country in small quantities, and Ghanaian authorities have no indication these smugglers have links to criminals who want to launder proceeds from narcotics or corruption. Trade-based money laundering is sometimes used to repatriate “profit” and also for payment of lower customs duties and other taxes.

In September 2007, following amendments to the Banking Act, Barclays Bank set up the first offshore banking facility in Ghana. Regulations governing domestic and offshore banks are largely similar. Both are required to perform customer due diligence and file suspicious transaction reports (STRs). Ghana has designated four free trade zone (FTZ) areas, but the Tema Export Processing Zone is currently the only active FTZ. Ghana also licenses factories outside the FTZ area as free zone companies. Free zone companies must export at least 70 percent of their output. Most of these companies produce garments and processed foods. The Ghana Free Zone Board and the immigration and customs authorities monitor these companies. There are identification requirements for companies, individuals, and their vehicles in the free zone; however, monitoring and due diligence procedures are lax.

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: Banks, insurance and securities firms, casinos, auctioneers, notaries, lawyers, non-governmental organizations, accountants, religious bodies, real estate developers, operators of games of chance, trust and company service providers, businesses engaged in providing financial services that involve the remittance or exchange of funds, dealers in motor vehicles, dealers in precious minerals and stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, insurance and securities firms, casinos, auctioneers, notaries, lawyers, non-governmental organizations, accountants, religious bodies, real estate developers, operators of games of chance, trust and company service providers, businesses engaged in providing financial services that involve the remittance or exchange of funds, dealers in motor vehicles, dealers in precious minerals and stones

Number of STRs received and time frame: 50 from January 2010 to November 2010

Number of CTRs received and time frame: 0 from January 2010 to November 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: 0 civilly: 0

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Ghana is a member of the Intergovernmental 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: www.giaba.org

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There are six law enforcement agencies involved in investigating money laundering and financial crimes.

In 2010, the Government of Ghana (GOG) took significant steps to establish its Financial Intelligence Center, and passed an Economic and Organized Crime Office Act and Mutual Legal Assistance Act. To remedy deficiencies, the GOG is working to pass subsidiary legislation, which should improve capacity among the agencies impacted. The GOG should make every effort to pass asset seizure and forfeiture legislation that comports with international standards as soon as possible. Once the laws are in place, Ghana should take the necessary steps to promote public awareness and understanding of financial crime, money laundering and terrorist financing activities. Additionally, the GOG should fully implement its customer due diligence and reporting requirements across all covered sectors and institute a beneficial ownership identification requirement, requiring the true names of all onshore and offshore entities and their beneficial owners to be held in a registry accessible to law enforcement. The GOG should increase cooperation and information sharing with other governments. Ghana should also become a party to the UN Convention against Transnational Organized Crime.

Gibraltar

Gibraltar is an overseas territory of the United Kingdom (UK) and has been part of the European Union since 1973. A November 2006 referendum resulted in constitutional reforms transferring powers exercised by the UK government to Gibraltar. Gibraltar has an international financial center which is small internationally, but large in comparison to its domestic economy. The financial services sector has strong ties to London, the Crown Dependencies, Israel and other financial centers. Located at the southern tip of the Iberian Peninsula, bordering Spain and near the north coast of Africa, Gibraltar is adjacent to known drug trafficking and human smuggling routes and is heavily policed on land and at sea because of the risk of these activities occurring within its borders or territorial waters.

Gibraltar is exposed to money launderers located in drug producing centers in Morocco and drug consumption and distribution networks in Spain. With the establishment of organized criminal activities from Eastern Europe into southern Spain, there is potential for launderers to use Gibraltar as a base for money laundering. These risks are mitigated by the small coastline and effective policing. Border controls between Gibraltar and Spain also help deter potential money launderers wishing to use Gibraltar for their 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: Not available

Legal persons covered: criminally: Not available 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, mutual savings companies, insurance companies, financial consultants, investment business, postal services, exchange bureaus, attorneys, accountants, financial regulatory agencies, unions, casinos, lotteries, charities, car dealerships, yacht brokers, company formation agents, political parties, real estate agents, notaries, and dealers in gold bullion and high value goods

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Any person, whether or not they conduct financial services business

Number of STRs received and time frame: 339 in 2009

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2010

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Gibraltar has a comprehensive range of anti-money laundering/countering the financing of terrorism (AML/CFT) laws. The criminal laws on money laundering have been consolidated in draft form, and powers presently available only in drug-related money laundering cases are being extended to money laundering cases involving the proceeds of other crimes. The Financial Services Commission (FSC), a unified regulatory and supervisory authority for financial services, notes the increasing sophistication of money launderers and should continue to review regulatory and supervisory practices to keep pace with new developments.

Gibraltar, as a UK overseas territory, cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for Gibraltar’s international affairs and may arrange for the ratification of any convention to be extended to Gibraltar. The UN Convention against Transnational Organized Crime was extended to Gibraltar in 2007. The 1988 Drug Convention, the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption have not yet been extended to Gibraltar.

Greece

Greece is considered to be a regional financial center in the developing Balkans, as well as a bridge between Europe and the Middle East. Official corruption, the presence of organized crime, and a large shadow economy make the country vulnerable to money laundering and terrorist financing. Greek law enforcement proceedings indicate that Greece is vulnerable to narcotics trafficking, trafficking in persons and illegal immigration, prostitution, smuggling of cigarettes and other contraband, serious fraud or theft, illicit gaming activities, and large scale tax evasion. Anecdotal evidence of illicit transactions suggests an increase in financial crimes in the past few years and that criminal organizations (some with links to terrorist groups) increasingly are trying to use the Greek banking system to launder illicit proceeds. Criminally-derived proceeds historically are most commonly invested in real estate, the lottery, and the stock market. Criminal organizations from southeastern Europe and the Balkan region are responsible for a large percentage of the crime that generates illicit funds. The widespread use of cash facilitates a gray economy as well as tax evasion, though as part of Greece’s three-year €110 billion (approximately $143 billion) European Union (EU)-IMF program, the government is trying to crack down on both trends. Due to the large informal economy – estimated by the Organization for Economic Co-operation and Development and others to be between 25 and 37 percent of GDP – it is difficult to determine the value of goods smuggled into the country, including whether any of the smuggled goods are funded by narcotic or other illicit proceeds. There is increasing evidence that domestic terrorist groups are involved with drug trafficking.

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: Combination list and threshold 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, savings banks, and cooperative banks; credit companies, money remitters, financial leasing and factoring companies, bureaux de change, and postal companies; stock brokers, investment services firms, and collective and mutual funds; life insurance companies and insurance intermediaries; accountants, auditors, and audit firms; tax consultants, tax experts and related firms; real estate agents and companies; casinos (including internet casinos) and entities engaging in gaming activities; auction houses; and dealers in high value goods and auctioneers, whenever the transaction value exceeds EUR 15,000 (approximately $19,500); notaries and lawyers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, savings banks, and cooperative banks; credit companies, money remitters, financial leasing and factoring companies, bureaux de change, and postal companies; stock brokers, investment services firms, and collective and mutual funds; life insurance companies and insurance intermediaries; accountants, auditors, and audit firms; tax consultants, tax experts and related firms; real estate agents and companies; casinos (including internet casinos) and entities engaging in gaming activities; auction houses; and dealers in high value goods and auctioneers, whenever the transaction value exceeds EUR 15,000 (approximately $19,500); notaries and lawyers

Number of STRs received and time frame: 2,304 in 2009; 2,392 through December 28, 2010.

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 42 in 2008; more recent data not available

Convictions: 34 in 2008; 20 through June 2009

Assets forfeited: criminally: Not available civilly: Not Applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Greece is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/document/23/0,3343,en_32250379_32236963_38916695_1_1_1_1,00.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Greece ratified the United Nations Convention against Transnational Organized Crime in August 2010, and amended its anti-money laundering/countering the financing of terrorism (AML/CFT) law to adequately criminalize and widen the scope of the terrorist financing offense. The Government of Greece (GOG) also improved the supervisory capacity of its key supervisors.

Despite continued improvements in Greece’s AML/CFT regime, a number of deficiencies remain, and Greece continues to be subject to enhanced follow-up by the FATF.

The GOG has been working to improve the effectiveness of the Greek financial intelligence unit; however, deficiencies pertaining to staffing and information technology remain. While the Greek authorities have hired more staff and ensured that STR analysis is carried out only by full-time FIU staff, the total number of employees still appears insufficient to carry out the extensive functions with which the FIU is tasked. The GOG should make available adequate human and financial resources to ensure the FIU is able to fulfill its responsibilities, ensure its powers are in-line with the international standards related to a financial intelligence unit, and ensure its technical and data management systems and capacities support its functions.

Greece should ensure that its confiscation regime is more effectively implemented and used. While the 2008 AML/CFT law contains provisions allowing civil asset forfeiture, Greek authorities advise it is not practical to launch civil procedures and currently do not do so. The government also should develop an arrangement for the sharing of seized assets with third party jurisdictions that assist in the conduct of investigations.

Although the law provides for the freezing, seizure, and confiscation of terrorist assets, Greece has a limited ability to freeze funds in accordance with UNSCR listings of designated terrorists outside of the EU listing system. In the absence of a comprehensive listing and freezing regime, Greece uses an administrative procedure for freezing assets of suspected terrorists designated as such domestically or upon request from a foreign authority. While the GOG advises it is not necessary to open a criminal investigation to use this procedure, it is not clear how quickly it works, and whether all supervised entities are complying. The GOG does not provide guidance to financial institutions and designated non-financial businesses and professions on freezing assets without delay, and does not monitor for compliance. In July 2010 the Bank of Greece introduced sanctions for credit and financial institutions for failure to promptly apply freezing requests or respond without delay to such requests. The GOG advises it is in the process of drafting legislation that would introduce a comprehensive system for suspected terrorists’ designation and listing, and asset freezing in accordance with UNSCRs 1267 and 1373.

While Greece has made positive strides in the supervision area, particularly with its recent move to transfer supervisory powers over the insurance sector to the Bank of Greece, a shortage of personnel at the Hellenic Capital Markets Commission (which supervises securities firms, brokers, other financial intermediaries, and clearing houses) remains and continues to challenge its effectiveness. In addition, it is not clear whether the Ministry of Justice has enough resources available to deal with ML or TF related cases.

The GOG should adopt regulations to report large currency transactions and explicitly abolish company-issued bearer shares. It should also ensure uniform enforcement of its cross-border currency reporting requirements and take further steps to deter the smuggling of currency across its borders. Greece also should ensure that companies operating within its free trade zones are subject to the same AML/CFT requirements and customer due diligence provisions as other sectors and work steadfastly to bring charitable and nonprofit organizations under the AML/CFT regime.

Grenada

Grenada is not a regional financial center. As a transit location, money laundering in Grenada is primarily related to smuggling and drug trafficking. Illicit proceeds are typically laundered through a wide variety of businesses, as well as through the purchase of real estate, boats, jewelry, and cars.

Grenada uses the East Caribbean dollar and its monetary authority is the Eastern Caribbean Central Bank (ECCB). The ECCB has supervision responsibility for Grenada’s commercial banks. Seven other island economies are also members of the ECCB: Anguilla, Antigua and Barbuda, Dominica, St. Lucia, Montserrat, St Kitts and Nevis, 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.

Grenada’s domestic financial sector is comprised of 26 registered domestic insurance companies, 12 credit unions, and five money remitters. Grenada has one trust company and, as of November 2008, there were 1,580 international business companies (IBCs); however, in 2010 the GOG reported only 73 IBCs. There is one International Betting Company licensed to conduct business in Grenada, but no casinos or Internet gaming sites in operation. There are no free trade zones in Grenada.

Bearer shares are not permitted for offshore banks. Registered agents are required by law to verify the identity of the beneficial owners of all shares. In addition, the International Companies Act requires registered agents to maintain records of the names and addresses of company directors and beneficial owners of all 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: 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 and remitters; casinos and gaming centers; securities dealers; the stock exchange; insurance; precious gem dealers; real estate intermediaries; and lawyers, notaries, and accountants

Number of STRs received and time frame: 100 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four in 2008, two still pending in 2010

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Grenada 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/Grenada_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Grenada should become a party to the UN Convention against Corruption.

The anti-money laundering guidelines, such as STR reporting requirements, beneficial ownership identification, and record keeping, should become mandatory rules.

The Government of Grenada should establish an asset forfeiture and confiscation regime and establish mechanisms to identify and regulate alternative remittance systems. It should also increase due diligence requirements and require banks to gather information about their correspondent banks; establish large currency transaction reporting requirements and a cross-border currency declaration system; and explicitly prohibit shell banks. Dealers in precious metals and jewelry should become subject to AML reporting requirements. To improve the conduct of money laundering investigations, the FIU should improve coordination with other law enforcement bodies.

To strengthen its legal framework against money laundering, Grenada should move expeditiously to become a party to the UN Convention against Corruption and should be very cautious if it decides to redevelop its offshore financial sector.

Guatemala

Guatemala is not considered a regional financial center. It continues to be a transshipment route for South American cocaine and heroin destined for the United States and for returning cash to South America. Open source reports suggest that the narcotics trade is increasingly linked to arms trafficking.

Historically weak law enforcement and judiciary systems coupled with endemic corruption and increasing organized crime activity contribute to a favorable climate for significant money laundering in Guatemala. According to law enforcement agencies, narcotics trafficking and corruption are the primary sources of money laundered in Guatemala; however, the laundering of proceeds from other illicit activities, such as human trafficking, contraband, kidnapping, tax evasion, and vehicle theft, is substantial. There is no indication of terrorist financing activities.

Guatemala’s geographic location makes it an ideal haven for transnational organized crime groups, including human and drug trafficking organizations. The Central America Four Agreement between El Salvador, Guatemala, Honduras, and Nicaragua allows for free movement of the citizens of these countries across their respective borders without passing through immigration or customs inspection. As such, the agreement represents a vulnerability to each country for the cross-border movement of contraband and illicit proceeds of crime.

There are free trade zones operating in the country. There are no reported hawala or other similar alternative remittance systems operating in Guatemala. A significant number of remittances are transferred through banks and appear to pose little risk 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.: YES

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; finance and leasing companies; credit card cooperatives, issuers, or payment agents; stock brokers; insurance companies; money remitters and exchanges; pawnbrokers; notaries and accountants; tax advisors and lawyers; casinos, raffles and games of chance; dealers in motor vehicles, precious metals and stones, and art and antiquities; and real estate agents

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; finance and leasing companies; credit card cooperatives, issuers, or payment agents; stock brokers; insurance companies; money remitters and exchanges; pawnbrokers; notaries and accountants; tax advisors and lawyers; casinos, raffles and games of chance; dealers in motor vehicles, precious metals and stones, and art and antiquities; and real estate agents

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 13 in 2009

Convictions: 11 in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Guatemala 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/Guatemala_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There are relatively few convictions for money laundering, most of which are for the illegal transport of cash. The number of staff at the FIU and the capacity of law enforcement officials may hamper the ability of the authorities to prosecute more cases.

Former President Alfonso Portillo was indicted in the United States in December 2009 with one count of conspiracy to commit money laundering. Both a Guatemalan trial and appellate court have approved his extradition to the United States and the case is currently on appeal before the Guatemalan Supreme Court.

Law enforcement agencies report that money laundering has increased during the year, especially by groups of air travelers heading to countries such as Panama with slightly less than the amount of the Guatemalan reporting requirement ($10,000), and a large number of small deposits in banks along the Guatemalan border with Mexico. A new law regarding asset seizures, passed by Congress in December 2010, will take effect in June 2011 and allows Guatemalan authorities to seize cash in structuring transactions and transfer it to the state without first having to obtain a criminal conviction against the courier. The same law will also prevent new businesses from issuing bearer shares of stock. The law requires any existing business with bearer shares to convert the shares to nominative by June 2013, but it is not clear what the consequences will be for failure to do so.

In October, Guatemalan monetary authorities approved a regulation to establish limits for cash transactions in foreign currency to reduce money laundering and terrorism financing risks. The law states that deposits totaling over $3,000 in any given month will be subject to additional requirements.

Casinos are not legal in Guatemala, however, a number of casinos, games of chance and video lotteries operate, both onshore and offshore. There is no regulatory oversight or legal framework for casino operation, although they are listed as covered entities under the AML law. Attempts by the government to enforce requirements are not successful. Lotteries and raffles are subject to local jurisdiction licensing but are not subject to AML/CFT supervision. Unsupervised gaming activity represents a significant money laundering risk.

Guernsey

The Bailiwick of Guernsey (the Bailiwick) encompasses a number of the Channel Islands (Guernsey, Alderney, Sark, and Herm). As a Crown Dependency of the United Kingdom, it relies on the United Kingdom (UK) for its defense and international relations. Alderney and Sark have their own separate parliaments and civil law systems. Guernsey’s parliament legislates in matters of criminal justice for all of the islands in the Bailiwick. The Bailiwick is a sophisticated financial center and, as such, it continues to be vulnerable to 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: All serious 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: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: All financial services businesses; lawyers, accountants and estate agents; and eGambling services.

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: All businesses

Number of STRs received and time frame: 673 in 2010

Number of CTRs received and time frame: 105 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two

Convictions: Two in 2010

Assets forfeited: criminally: $1,567,265 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

The IMF’s December 2010 “Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism” for the Bailiwick of Guernsey can be found at: http://www.imf.org/external/pubs/ft/scr/2011/cr1112.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Bailiwick has been actively involved in the provision of formal mutual legal assistance for many years. The authorities consider themselves able to provide assistance without the need to enter into mutual legal assistance treaties, and this has enabled compliance with requests from a wide range of jurisdictions, including the US, using the full range of investigatory powers in the law.

Guernsey’s comprehensive AML/CFT legal framework provides a sound basis for an effective AML/CFT regime, and most shortcomings are technical in nature. Money laundering and the financing of terrorism are criminalized fully in line with the FATF standard and the legal framework provides an ability to freeze and confiscate assets in appropriate circumstances. While no shortcomings have been identified in the legal framework, concerns remain with respect to the implementation of the money laundering provisions. Given the size of the Bailiwick’s financial sector and its status as an international financial center, the modest number of cases involving money laundering by financial sector participants and the small number of money laundering cases resulting in convictions raises questions concerning the effective application of money laundering provisions.

Guernsey is a Crown Dependency and cannot sign or ratify international conventions in its own right unless entrusted to do so. Rather, the UK is responsible for the Bailiwick’s international affairs and, at Guernsey’s request, may arrange for the ratification of any Convention to be extended to the Bailiwick. The UK’s ratification of the 1988 UN Drug Convention was extended to include the Bailiwick on April 3, 2002; its ratification of the UN Convention against Corruption was extended to include Guernsey on November 9, 2009; and its ratification of the International Convention for the Suppression of the Financing of Terrorism was extended to Guernsey on September 25, 2008. The UK has not extended the UN Convention against Transnational Organized Crime to the Bailiwick.

Guinea

Guinea is not a regional financial center. In the past three years, Guinea has undergone profound political change, which has seen it go from a country heavily focused on narcotics control and anti-money laundering, to a country where these issues take a back seat to more pertinent issues such as democratization and macroeconomic reform. Guinea’s economy is weak and largely cash-dependant and its fragile banking sector is an unlikely conduit for large-scale money laundering activities. However, due to its history of political instability, high corruption, and neighbors such as Guinea-Bissau, Guinea has been an historical hub of drug trafficking. The scale of trafficking and level of funding that trafficking funnels into other spheres, such as international terrorism, is unknown. Reliable figures and estimates are unavailable, as Guinea’s security forces are ill-equipped and disorganized, relying upon international institutions to carry out large-scale investigations into trafficking activities.

Because of the weak banking institutions and reliance on hard-currency, the Guinean black market is a thriving and vital part of the economy. Contraband is common, with estimates that up to 70-80% of all pharmaceutical goods sold in Guinean markets are counterfeit. Foreign currency exchange is a popular activity in the black market, as the official state sanctioned exchange rate for the local Guinean Franc (GnF) to the US dollar or euro does not come close to the actual exchange rate. Almost all major commercial activities are completed in foreign currency. The mining sector accounts for more than 70% of exports. Long-run improvements in government fiscal arrangements, literacy, and the legal framework are needed if the country is to move out of poverty.

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Public Treasury, Central Bank, financial institutions, real estate and travel agencies, auditors, service companies, cash couriers, casinos, NGOs, lawyers, accountants, brokers, dealers, notaries

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Public Treasury, Central Bank, financial Institutions, real estate and travel agencies, auditors, service companies, cash couriers, casinos, NGOs, lawyers, accountants, brokers, dealers, notaries

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.: YES

With other governments/jurisdictions: YES

Guinea is a member of the Intergovernmental Action Group against Money Laundering and the Financing of Terrorist in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Guinea has not yet undergone a mutual evaluation.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Effective enforcement of the existing laws continues to be the largest issue in Guinea. During 2009, Guinea was run by a military junta which frequently created charges of drug trafficking to arrest, intimidate, and steal from political enemies and wealthy citizens and businesses. In the few instances where individuals did go to trial, the proceedings amounted to little more than a show-trial, and final rulings were rarely announced.

In February 2010, the junta government was replaced by a Transition Government, which governed Guinea until democratic elections in June and November, 2010. The Transition Government suffered from a severe lack of funds and an overwhelming concentration on organizing presidential elections, leaving money laundering and trafficking issues to become relegated to non-priority topics.

Although there are institutions in place to investigate money laundering and financial irregularities, they are severely limited in authority and scope. For example, the financial intelligence unit, headquartered in the Central Bank, is hampered by a lack of resources, corruption, and political instability.

The Guinean security forces are also ill-equipped and under-trained. For the last several years, they have been reliant upon outside assistance and training in matters of money laundering and prosecution. In cases where legal means do take their proper course, the proceedings are usually derailed at the judicial level – or within higher government ranks. Transparency International’s 2010 Corruption Perceptions Index ranks Guinea as the 164 of 178 countries worldwide.

Guinea-Bissau

The Government of Guinea-Bissau is not in full compliance with international conventions against money laundering and terrorist financing because of inadequate resources, weak border controls, and competing national priorities. Of all West African countries, none has been so thoroughly penetrated and corrupted by Latin American drug cartels as Guinea-Bissau. Drug barons from Latin America and their collaborators from the region and other parts of the world have taken advantage of the extreme poverty, unemployment, political instability, lack of effective customs and law enforcement, and general insecurity to make the country a major transit point for cocaine destined to consumer markets, mainly in Europe. One of the poorest countries in the world, the value of the illicit narcotics trade in Guinea-Bissau is much greater than its national income. Using threats and bribes, drug traffickers infiltrate state structures and operate with impunity.

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: YES

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Financial institutions, microfinance institutions, exchange houses, securities firms, insurance companies, casinos, brokerages, charities, nongovernmental organizations (NGOs), and intermediaries such as lawyers, accountants, notaries and broker/dealers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial institutions, microfinance institutions, exchange houses, securities firms, insurance companies, casinos, brokerages, charities, nongovernmental organizations (NGOs), and intermediaries such as lawyers, accountants, notaries and broker/dealers

Number of STRs received and time frame: 0 in 2009

Number of CTRs received and time frame: 0 in 2009

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: NO

Guinea Bissau is a member of the Intergovernmental 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/

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In April, 2010, the United States Treasury froze the assets of two top Guinea-Bissau military officers and designated them as major drug kingpins.

Reportedly, banks are reluctant to file STRs because of the fear of “tipping off” by an allegedly indiscrete judiciary. Article 26 of National Assembly Resolution No. 4 of 2004 stipulates that if a bank suspects money laundering it must obtain a declaration of all properties and assets from the subject and notify the Attorney General, who must then appoint a judge to investigate. The bank’s solicitation of an asset list from its client could also amount to “tipping off” the subject.

Although the law establishes asset forfeiture authorities and provides for the sharing of confiscated assets, a lack of coordination mechanisms to seize assets and facilitate requests for cooperation in freezing and confiscation from other countries hampers cooperation.

The Government of Guinea-Bissau (GOGB) should continue to work with its partners in GIABA, the Economic Community of West African States (ECOWAS) and others to establish and implement an effective anti-money laundering/counter-terrorist financing (AML/CFT) regime. The government needs urgent help to restore sovereignty, administer justice and regain control of its borders. The GOGB should ensure the sectors covered by its AML law have implementing regulations and competent authorities to ensure compliance with the law’s requirements. It should also amend its terrorist financing law to comport with international standards. The GOGB should establish, staff and train its FIU, and ensure that resources are available to sustain its capacity. It should work to improve the training and capacity of its police and judiciary to combat financial crimes. Guinea-Bissau should undertake efforts to eradicate systemic corruption. The GOGB should become a party to the UN Convention for the Suppression of the Financing of Terrorism, and the UN Conventions against Corruption and Transnational Organized Crime.

Guyana

Guyana is neither an important regional nor an offshore financial center, nor does it have any free trade zones. Money laundering is perceived as an increasingly serious problem and has been linked to narcotics (principally cocaine), and possibly firearms transshipments between Latin America, Europe, and North America. Guyanese media routinely link high-level public officials to trafficking and money laundering operations. Corruption and fraud are also problems. Guyana’s informal cash-based economy appears to involve significant amounts of contraband goods and narcotics. Proceeds from contraband are laundered primarily through non-bank money-transfer operations. Additionally, large sums of cash are being taken out of the country. Not only does this cash out-flow come from illegal activity, but also from legitimate businesses seeking to avoid taxes and the restrictions and costs of banks. The Government of Guyana made one arrest and prosecution for money laundering in 2010, compared to none in 2009.

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: Depository institutions; lending institutions; financial leasing entities; money transfer services; money exchangers; pawn brokers; credit issuers; guarantors; traders of foreign exchange, futures, options and securities; underwriters; financial advisers; money brokers; credit unions; portfolio managers; administrators of securities; gaming centers and lotteries; insurance entities; venture risk capital; trusts or company service providers; legal professionals; real estate agents; dealers in precious metal and stones; and registered charities

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Depository institutions; lending institutions; financial leasing entities; money transfer services; money exchangers; pawn brokers; credit issuers; guarantors; traders of foreign exchange, futures, options and securities; underwriters; financial advisers; money brokers; credit unions; portfolio managers; administrators of securities; gaming centers and lotteries; insurance entities; venture risk capital; trusts or company service providers; legal professionals; real estate agents; dealers in precious metal and stones; and registered charities

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2010

Convictions: One in 2010

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

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Guyana 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/reports-a-documents/cat_view/22-english/23-annual-reports.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Implementation of the 2007 Anti-Money Laundering and Countering the Financing of Terrorism legislation (enacted in 2009) continues at a slow and steady pace. The legislation and accompanying regulations (issued in September 2010) provide for an expanded financial intelligence unit (FIU) and law enforcement authority in order to fight money laundering and terrorist financing.

The Government of Guyana (GOG) is highly centralized and hierarchical; most significant decisions require presidential approval. This discourages individual initiative and the exercise of individual discretion. Consequently, the progress of projects can be frustratingly slow. Thus awareness and understanding of the anti-money laundering regime and the anti-money laundering/counter-terrorist financing (AML/CFT) law are limited. Agencies with capacity to investigate money laundering cases tend to pass such matters on to the FIU for handling. These agencies do not understand the FIU’s role, or how to investigate AML/CFT crimes. Further, there is an overall lack of awareness of the provisions of the law – and the importance of combating money laundering, in general. The judicial system is insufficiently prepared for money laundering enforcement; the United Kingdom provided assistance in the only AML/CFT prosecution. GOG officials have expressed a desire to increase the capacity and effectiveness of their anti-money laundering regime.

Haiti

International donors reacted to the Haitian earthquake, tropical storms and cholera epidemic of 2010 by pumping much-needed currency and investments for disaster relief and reconstruction into the country. The earthquake impacted all aspects of Haitian life including ripple effects in the banking, commercial and criminal justice institutions. Despite improving financial intelligence and enforcement capacity, the weakness of the Haitian judicial system and prosecutorial mechanism continues to leave the country vulnerable to corruption and money laundering. Haitian organized crime groups are engaged in drug trafficking and other criminal and fraudulent activity, but do not appear to be involved in terrorist financing. Haiti is the poorest country in the Western Hemisphere and relies heavily on remittances from the large expatriate Haitian community.

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: 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 and non-bank financial institutions including casinos and money remitters

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks

Number of STRs received and time frame: Nine in an unknown time frame

Number of CTRs received and time frame: 146,627 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: 14 houses confiscated and slated for sale; five houses confiscated and donated to GOH law enforcement agencies; $2,000,000 currency seized civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Haiti is a member of the Caribbean Financial Action Task Force, a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/index.php

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Haiti suffered a devastating earthquake on January 12, 2010 which destroyed 28 of 29 Haitian ministry buildings and the Presidential Palace. In addition, an outbreak of cholera, floods and a contested Presidential election were all contributing factors slowing, but not stopping, the activities of the key institutions involved in financial intelligence, anti-money laundering enforcement, and asset forfeiture and seizure.

The Government of Haiti (GOH) remains hampered by ineffectual and outdated criminal and criminal procedural codes, and by the inability of judges and courts to address cases referred for prosecution. A Presidential commission has drafted new criminal and criminal procedural codes that require parliamentary approval. The anti-terrorist legislation drafted and submitted to Parliament is also awaiting Parliamentary approval.

Following the January 2010 earthquake, banks, with the exception of the Central Bank, could not transmit reports to UCREF. The UCREF also lost office space as a result of the earthquake and, together with a few other law enforcement agencies, has relocated to a building confiscated from a Colombian drug dealer. The UCREF is making plans to review casino operations in Haiti and ensure that casinos are properly licensed and are made aware of their responsibilities as defined in the GOH anti-money laundering legislation.

BAFE, a unit within the Haitian National Police continues to work closely with the DEA to seize and confiscate properties owned by convicted drug traffickers serving prison sentences in the United States.

Haiti is not a party to the International Convention for the Suppression of the Financing of Terrorism or the UN Convention against Transnational Organized Crime.

Honduras

Honduras is not an important regional or offshore financial center. Money laundering in Honduras stems primarily from significant narcotics trafficking, particularly cocaine, throughout the region. Human smuggling of illegal immigrants into the United States also constitutes a growing source of laundered funds.

Honduras’s geographic location makes it an ideal haven for transnational organized crime groups, including human and drug trafficking organizations. The Central America Four Agreement between El Salvador, Guatemala, Honduras, and Nicaragua allows for free movement of the citizens of these countries across their respective borders without passing through immigration or customs inspection. As such, the agreement represents a vulnerability to each country for the cross-border movement of contraband and illicit proceeds of crime.

Money laundering in Honduras derives both from domestic and foreign criminal activity, and the majority of proceeds are suspected to be controlled by local drug trafficking organizations and organized crime syndicates. Laundered proceeds typically pass directly through the formal banking system, but laundering funds through remittance companies, currency exchange houses, the construction sector, and automobile and real estate front companies may be increasing. These factors, combined with the country’s lack of resources for investigations and analysis, and corruption within the law enforcement and judicial sectors, contribute to a favorable climate for significant money laundering in Honduras. There is not a significant black market for smuggled goods; however, there is some smuggling of items such as firearms, gasoline, illegally caught lobster and cigarettes.

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: 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, lending companies, and financial service companies; checks cashers; issuers or processors of financial instruments, traveler’s checks, or money orders; money transfer businesses; and casinos and gaming establishments

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; insurance companies; money exchange or remittance services; cooperative institutions and financial societies; credit card issuers; securities firms; private pension funds; notaries; real estate intermediaries; car dealers; dealers in precious metals, jewels, art and antiquities; and lotteries and casinos

Number of STRs received and time frame: 320 from January to November 2010

Number of CTRs received and time frame: 46 from January to November 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 42 in 2010

Convictions: Ten in 2010

Assets Forfeited: criminally: Approximately $2,890,000 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Honduras 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/Honduras_3rd_Round_MER_%28Final%29_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Lack of data and systematic analysis make it difficult for the Honduran government to identify trends in money laundering. Inadequate training coupled with insufficient funding significantly diminishes the Honduran government’s ability to investigate and bring to successful prosecution money laundering offenses. Furthermore, limited resources hamper the government’s ability to enforce the law and its attendant regulations.

While mechanisms are in place to freeze terrorist assets, systematic issues and lack of capacity hinder timely action.

In July 2010, Honduras passed a new Asset Forfeiture Law. Since the law went into force, Honduran police seized three properties, collectively worth over $15 million. Nevertheless, Honduras does not yet have the infrastructure necessary for fully effective implementation of the new law. In November, the Emergency Seized Assets Availability Law authorized the immediate disbursement of seized assets.

In May 2010, the National Banking and Insurance Commission imposed enhanced due diligence requirements for PEPs.

The legality of bearer shares presents a significant money laundering vulnerability. Insurance brokers, lawyers and accountants are exempted from reporting requirements, posing an additional money laundering vulnerability.

Hong Kong

Hong Kong, a Special Administrative Region of the People’s Republic of China, is a major international financial and trading center. As of December 2010, Hong Kong’s stock market was the world’s seventh largest and Asia’s third largest with total market capitalization of $2.71 trillion. Already the world’s 15th largest banking center and sixth largest foreign exchange trading center, Hong Kong continued its expansion as an offshore Renminbi (RMB) financing center, accumulating in 2010 over $48 billion in RMB-denominated deposits at authorized institutions. Hong Kong does not differentiate between offshore and onshore entities for licensing and supervisory purposes.

Hong Kong’s low and simplified tax regime, coupled with its sophisticated banking system, shell company formation agents, free port status, and the absence of currency and exchange controls, present vulnerabilities for money laundering, including trade-based money laundering. The primary sources of laundered funds in Hong Kong are corruption, tax evasion, fraud, illegal gambling and bookmaking, prostitution, loan sharking, commercial crimes, and intellectual property rights infringement. Criminal proceeds laundered in Hong Kong are derived from local and overseas criminal activities, but Hong Kong law enforcement authorities attribute only a small percentage of these laundered funds to drug-trafficking organizations.

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: 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, securities and insurance entities, and money exchangers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: All persons, irrespective of entity or amount of transaction

Number of STRs received and time frame: 19,690 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 332 in 2010

Convictions: 279 in 2010

Assets forfeited: Criminally: As of December 2010, $9.33 million was under a court confiscation order but not yet paid to the government Civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Hong Kong is a member of the Financial Action Task Force (FATF) and 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/19/38/41032809.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

U.S. government agencies enjoy excellent working relationships with Hong Kong’s law enforcement personnel and financial regulators. Cooperation includes joint investigative efforts, information exchange, training, and extraditions.

In October 2010, the Government of Hong Kong introduced to the legislature a draft bill that, if passed, would provide statutory backing to existing financial regulatory guidelines, provide for administrative and criminal sanctions authority, and establish a regulatory regime for money changers.

In April 2010, the Government of Hong Kong initiated a study to evaluate the implementation of a cross-border currency reporting system. The government’s work plan calls for an evaluation of the feasibility of tracking and monitoring currency movements in/out of its borders, including necessary legislative and resource requirements.

Hong Kong still needs to institute mandatory oversight for designated non-financial businesses and professions, and implement mandatory cross-border currency reporting requirements, both potential loopholes for money launderers and terrorist financiers. Hong Kong should also establish threshold reporting requirements for currency transactions and put in place “structuring” provisions to counter evasion efforts. As a major trading hub, Hong Kong should also closely examine trade-based money laundering.

Hungary

Hungary is not considered a major financial center and is not generally viewed as a high-risk country for money laundering; however, its pivotal location in Central Europe - as a European Union (EU) member, but also a link between the former Soviet Union and Western Europe - as well as its cash-based economy and well-developed financial services industry make it attractive to foreign criminal organizations. The preponderance of money laundering cases appears to stem from financial and economic crimes, such as fraud, embezzlement, tax evasion, and tax and social security fraud, although narcotics trafficking, prostitution, trafficking in persons, and organized crime also contribute. Other prevalent economic and financial crimes include real estate fraud and the copying/theft of bankcards. There have been several cases involving foreign organized crime groups from Russia, Ukraine, Lithuania, China and Vietnam. There is a sizeable black market for smuggled goods in Hungary, primarily related to customs, excise, and value-added tax evasion. Illegal products are currently estimated to account for ten percent of the market. No international terrorist groups are known to operate in Hungary. Funding sources for the extreme right-wing Hungarian Arrows are currently unknown but under investigation.

There are numerous indicators that trade-based money laundering occurs in Hungary. Several Hungarian-based companies engaged in trading commodities such as natural gas, metals, and fertilizer, as well as a large pharmaceutical firm, are owned by offshore entities where beneficial ownership information is unclear, or whose owners have reported ties to individuals associated with Russian and Ukrainian-based organized crime groups, reportedly entrenched in Hungary, and/or with high-ranking politicians in Russia, Ukraine, and/or Hungary. Several of these companies employ transfer pricing and/or intercompany loan schemes involving networks of similarly shadowy international companies to obscure the sources of funds and the true beneficiaries of their profits. Several such companies also maintain relationships with banks in Hungary.

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, investment services, insurance services, insurance intermediary services or employer pension services, commodity exchange services, domestic and international postal money orders, mutual insurance fund services, real estate or brokering services, auditing services, accountancy, bookkeeping, tax consultant services, casinos, precious metals, trading of high-value goods, lawyers or notaries

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, investment services, insurance services, insurance intermediary services or employer pension services, commodity exchange services, domestic and international postal money orders, mutual insurance fund services, real estate or brokering services, auditing services, accountancy, bookkeeping, tax consultant services, casinos, precious metals, trading of high-value goods, lawyers or notaries

Number of STRs received and time frame: 6518 (January 1, 2010 - November 30, 2010)

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Nine

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Hungary is a member of the Council of Europe’s Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (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/Hungary_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Hungary has worked continuously to improve its money laundering enforcement regime, in particular to strengthen its legal and institutional framework. The Government of Hungary (GOH) is also committed to international cooperation in the fight against the financing of terrorism, and opened a new Counter Terrorism Center on September 1, 2010. Despite these areas of progress, there is more room to improve cooperation and coordination among law enforcement entities and the prosecution service to more effectively investigate and prosecute money laundering cases. There are still very low numbers of prosecutions for money laundering and of orders to confiscate assets after 16 years of criminalization. The GOH should insure that the physical elements of money laundering are in line with international standards.

Of particular concern is the continued existence of anonymous savings accounts, although their issuance was stopped in 2001. Hungary should immediately convert these anonymous accounts, given the risk they pose to the overall AML/CFT regime.

The Hungarian Financial Intelligence Unit (HFIU) lacks independence and autonomy and its legislation does not allow for the HFIU to have direct or indirect access, on a timely basis, to information to properly undertake its functions other than suspicious transaction report (STR) analysis. However, as of January 2011, due to a new law on national tax and customs authorities, there will be a separate law enforcement authority within the Hungarian Finance and Customs Guard (under the authority of which the HFIU operates), that will have its own legal jurisdiction. While the HFIU will not have a separate budget, it will have a larger influence on budgetary decisions. The GOH should strengthen Hungary’s FIU by insuring that the head of the HFIU has control over the budget allocated for the FIU, the power to challenge decisions concerning information dissemination, and the authority to sign memoranda of understanding with other FIUs. The HFIU also should conduct outreach to obligated entities to ensure that STRs are provided for both money laundering and terrorist financing purposes, not just for tax-related reasons.

Hungary should increase training for prosecutors, judges, and law enforcement personnel who require enhanced knowledge to promote the successful prosecution of money laundering cases. Improved supervision, outreach and guidance by Hungary’s supervisory bodies, particularly with regard to designated non-financial business and professions, would help ensure that STR reporting obligations are fulfilled. Increased AML/CFT training for employees of financial institutions and other obligated entities is also necessary to further improve the quality of filed STRs, in particular, those related to terrorist financing.

Iceland

Iceland is not considered a regional financial center. Money laundering in Iceland is related primarily to narcotics smuggling and trading and is not considered a major problem. Criminal proceeds tend to derive from domestic organizations with some linkages to foreign groups. As of late 2010, investigators continued to look into the 2008 collapse of Iceland’s financial system and to re-examine allegations that its banks may have been involved in money laundering. Documents relating to such allegations have circulated among officials in Iceland, Denmark, Luxembourg and the Serious Fraud Office in London.

A wide-ranging inquiry into the collapse of Iceland’s banks has started to unravel a complicated network of unconventional loan agreements between the banks and high-level business people. A Special Investigation Commission (SIC) delivered a report to the Icelandic parliament in April 2010 concluding that former ministers, the former executive board of the Central Bank, and the former chairman of the Financial Supervisory Authority had made mistakes and showed negligence in their positions. The report states also that the three major banks bear legal responsibility for the crash; they were too large, grew too fast, granted bank owners easy access to loans, and loaned bank employees capital to buy shares of the banks themselves.

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; currency exchanges; attorneys; auditors; real estate dealers; trust, safekeeping, and company service providers; life insurance companies and pension funds; insurance brokers and intermediaries; securities brokers; and dealers in vessels or any high-value items

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; currency exchanges; attorneys; auditors; real estate dealers; trust, safekeeping, and company service providers; life insurance companies and pension funds; insurance brokers and intermediaries; securities brokers; and dealers in vessels or any high-value items

Number of STRs received and time frame: 494 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2009

Convictions: None in 2009

Assets forfeited: criminally: 725,308,744 ISK (approximately $4 million) in 2009 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Iceland is a member of the Financial Action Task Force. Its latest mutual evaluation report can be found here: http://www.fatf-gafi.org/dataoecd/54/38/37706239.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Iceland (GOI) has improved its anti-money laundering/counter-terrorist financing (AML/CFT) system through the enforcement of existing laws, and review and implementation of international standards. A domestic mechanism should be implemented to allow designation of terrorists at a national level as well as to give effect to designations and asset freeze requests from other countries. The GOI should continue to enhance its AML/CFT program, as appropriate. Iceland should become a party to the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

India

India’s economic and demographic expansion makes it both a regional financial center and an increasingly significant target for money launderers and terrorist groups. India’s extensive informal economy and remittance systems, porous borders, strategic location, persistent corruption, and historically onerous tax administration contribute to its vulnerability to financial and terrorist-related crimes.

Tax avoidance and the proceeds of economic crimes (including fraud, cyber crime and identity theft) are still the mainstay of money launderers in India, but laundered funds are also derived from human and narcotics trafficking, transnational organized crime, illegal trade, particularly in endangered wildlife and illegal gems (principally diamonds), and corruption. India also faces an increasing inflow of high-quality counterfeit currency, which is produced primarily in Pakistan but smuggled to India through multiple international routes. Criminal networks exchange counterfeit currency for genuine notes, which not only facilitates money laundering, but also represents a threat to the Indian economy.

India’s location between heroin producing countries in the Golden Triangle and Golden Crescent, along with its porous borders, make it a frequent transit point for drug trafficking. Additionally, India is a major producer of licit acetic anhydride, the precursor chemical required to convert morphine base into heroin, making producers susceptible to abuse by illicit networks. India is also a significant target for terrorist groups, both external and domestic. Most terrorist activities are conducted by international terrorist groups and entities linked to the global jihad, with the support of both state and non-state external actors. In addition, several domestic separatist and insurgent groups are active. Terrorist groups often use counterfeit currency and hawaladars, as well as physical cross-border currency smuggling, to move funds from external sources to finance their activities in India.

India licenses seven offshore banking units (OBUs) to operate in the Special Economic Zones (SEZ). The OBUs are prohibited from engaging in cash transactions and are restricted to lending to the SEZ wholesale commercial sector. Although located in India, OBUs essentially function like foreign branches of Indian banks, but with defined physical boundaries and functional limits. As such, they are subject to the same anti-money laundering/counter-terrorist financing (AML/CFT) provisions as the domestic sector. SEZs were established to promote export-oriented commercial businesses, including manufacturing, trading and services (mostly information technology), and access is controlled by Customs officers. As of December 2010, about 122 SEZs were operating and more than 575 SEZs had been formally approved throughout India.

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

(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 merchant banks; insurance companies; housing and non-banking finance companies; casinos; payment system operators; authorized money changers and remitters; chit fund companies; charitable trusts that include temples, churches and non-profit organizations; intermediaries; stock brokers; sub-brokers; share transfer agents; trustees, underwriters, portfolio managers and custodians; investment advisors; depositories and depository participants; foreign institutional investors; credit rating agencies; venture capital funds; collective schemes including mutual funds; and the post office

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and merchant banks; insurance companies; housing and non-banking finance companies; casinos; payment system operators; authorized money changers and remitters; chit fund companies; charitable trusts that include temples, churches and non-profit organizations; intermediaries; stock brokers; sub-brokers; share transfer agents; trustees, underwriters, portfolio managers and custodians; investment advisors; depositories and depository participants; foreign institutional investors; credit rating agencies; venture capital funds; collective schemes including mutual funds; and the post office

Number of STRs received & time frame: 10,067 (April 2009 - March 2010)

Number of CTRs received & time frame: 6,690,000 (April 2009 - March 2010)

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Six (April 2006 - December 2009)

Convictions: Zero

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

India is a member of the Financial Action Task Force (FATF) and two FATF-style regional bodies: the Asia/Pacific Group on Money Laundering (APG) and the Eurasian Group on Combating Money Laundering and Terrorist Financing (EAG). Its most recent mutual evaluation is available here:

http://www.fatf-gafi.org/dataoecd/60/56/45746143.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

India’s low number of money laundering convictions and the financial sector’s low number of terrorism-related suspicious transaction reports (STRs) are not commensurate with the size of India’s economy or its threat profile. Additionally, the lack of severe penalties imposed by regulators against banks and financial institutions, coupled with the low statistics, may indicate a lack of appropriate due diligence procedures and/or weaknesses in the transaction monitoring systems. The Government of India (GOI) should ensure reporting entities fully implement appropriate due diligence procedures, to include both computerized tracking systems and active engagement by trained frontline personnel. The GOI should also emphasize the importance of human intervention and analysis in terrorist financing cases, as the varied profiles of these cases may not trigger an automated report.

The GOI issued circulars requiring financial institutions to examine more closely transactions involving higher risk jurisdictions. The circular requires that written reports be available to competent authorities and auditors. As of December 31, 2010, the AML/CFT Regulatory Framework Assessment Committee finished its evaluation of the institutional framework and began drafting a report on appropriate countermeasures for countries that do not conform to the FATF Recommendations.

The GOI has taken action against certain hawala activities, but its successes generally stem from prosecuting legitimate businesses that conduct hawala transactions on the side. Hawaladars operating entirely outside of the formal economy are difficult to trace, and provide money launderers and terrorist organizations ready access to an extensive but unmonitored network in India. The GOI’s liberalization of the foreign exchange regime has helped otherwise legitimate actors move out of hawala and into the formal sector. However, the GOI no longer criminalizes operating a money transfer business without a license. The remaining administrative penalties do not serve as a sufficient deterrent to those engaged in criminal activity. The GOI should re-criminalize operating without a license.

The GOI should also facilitate the development of alternative money transfer services, including mobile banking. This expansion of legitimate, accessible services would allow broader financial inclusion of legitimate individuals and entities, and reduce AML/CFT vulnerabilities by shrinking the informal network.

The GOI should press for presidential approval to implement the Foreign Contribution (Regulation) Act 1976, which would extend foreign contribution reporting requirements to any non-profit organization that has a political, cultural, economic, educational or social focus and automate notification of suspicious transactions to the FIU. The GOI should also extend the Prevention of Money Laundering Act to include gem and precious-metals dealers, real estate agents, lawyers, notaries, other independent legal professionals, accountants, and commodity futures brokers and to clearly add a safe harbor provision for those filing STRs in good faith.



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