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


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

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Swaziland

Swaziland is not considered a regional financial center. An in-country crime syndicate controls the sale or trade in dagga (marijuana), the proceeds of which may be laundered in Swaziland. There is a general belief that trade-based money laundering exists in Swaziland. There is suspicion that some retail shops are used for laundering money because there is no cash declaration between Swaziland and South Africa. There is also suspicion that cash gained from the sale of marijuana or hard drugs is used to buy goods for retail outlets and to build houses on non-titled land. The country is experiencing an increase in financial crimes related to fraud, as well as pyramid schemes. There is a significant black market for smuggled goods such as cigarettes, liquor, and pirated radio cassettes, videocassettes, and DVDs between Mozambique, South Africa and Swaziland. The smuggling of illegal goods is not funded by narcotics proceeds or other illicit proceeds.

Swaziland has not successfully prosecuted money laundering or terrorist financing cases; however, laws have been put in place to regulate anti-money laundering procedures.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, securities, real estate brokers, cooperatives, provident fund managers, insurance brokers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, insurance companies and pension funds

Number of STRs received and time frame: 0

Number of CTRs received and time frame: Three in the last three years

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Swaziland is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force-style regional body. Swaziland has not yet been subject to a mutual evaluation.

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Swaziland has taken several important steps to establish an anti-money laundering/counter-terrorist financing (AML/CFT) regime. However, the slow process of the law and lack of training hamper the government’s ability to enforce the Money Laundering Act. The Financial Services Regulation Act became law in June 2010, but regulations have not yet been produced for the implementation of this law.

The Common Monetary Area (CMA) provides a free flow of funds among the four member countries with no exchange controls. Countries signatory to the CMA are South Africa, Swaziland, Lesotho and Namibia. Cash smuggling reports are shared between host government agencies on an informal basis. There are no laws making the sharing mandatory.

The Anti-Corruption Unit and the police’s Surveillance and Commercial Fraud Section deal with money laundering crimes. The section is not adequately staffed. The Government of the Kingdom of Swaziland (GOKS) should take steps to improve the capacity and coordination between the police and the Anti-Corruption Commission. The GOKS should establish a financial intelligence unit (FIU).

Sweden

Although Sweden is not considered a major money laundering country, money laundering in Sweden is a growing concern. According to statistics from the Swedish financial intelligence unit (FIU), the amount of suspected money laundering transactions totaled $882.8 million in 2009.

Money laundering in Sweden occurs primarily through criminal proceeds being integrated and turned over in the financial system or with the help of corporations that use financial system services. Money laundering is further facilitated by criminals having contacts, influence or control over corporations within the financial system. Laundered money emanates from narcotics, tax fraud, economic crimes, robbery, and organized crime and is concentrated primarily in Sweden’s large urban regions. Public corruption is not a serious issue in Sweden.

There is not a significant market for smuggled goods in Sweden. Sweden is not an offshore financial center. The police estimate that between 10-15 percent of the payment transfers that take place in the approximately one hundred underground banking outlets and through the hawala system are reported as suspicious transfers. Operators of informal remittance systems are expected to apply Swedish bookkeeping regulations and can be prosecuted if they do not. According to the FIU, suspicious transaction reports (STRs) reveal money leaving Sweden is most often destined for Nigeria, Ghana, Iran, China, the United Kingdom, Thailand, Turkey and the Philippines. Money entering Sweden, cited in STRs, comes from Estonia, Italy, United Arab Emirates, United Kingdom, U.S.A, Turkey, China, and Congo.

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, insurance companies, securities firms, currency exchange houses, providers of electronic money, money transfer companies, accounting firms, law firms, tax counselors, casinos, gambling enterprises and lottery ticket sale outlets, real estate brokers, and dealers of vehicles, art, antiques and jewelry

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, non-bank financial institutions, independent and certified public accountants, tax advisors, real estate agents, casinos, life insurance and securities companies, insurance brokers, fund companies, companies that issue electronic money, and dealers in antiques, art, precious stones, metals and transport equipment

Number of STRs received and time frame: 9,137 in 2009

Number of CTRs received and time frame: Not applicable

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

Sweden is a member of Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/58/30/46253171.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Most often money laundering is prosecuted as tax evasion, if no other direct connection to crime is found. Less than one percent of the businesses subject to reporting requirements filed charges of money laundering with the FIU in 2009.

In 2010 the Swedish Justice Department ordered a review of the criminalization of money laundering. This inquiry will consider whether the criminalization of money laundering needs to be simplified and clarified, and whether the criminal scope of money laundering should be extended. There is limited co-operation, co-ordination and information sharing among the appropriate authorities and organizations before the stage of preliminary investigation of a suspected crime. This weakness should be remedied through the establishment of a network, working group or similar body involving the relevant authorities and organizations.

Financial institutions are aware of the legal obligation to freeze terrorist assets. However, Sweden has issued insufficient guidance to financial institutions on how to deal with funds of targeted assets and persons. In addition, there is a lack of a national mechanism to consider requests for freezing from other countries (outside the EU mechanism) or to freeze the funds of EU citizens/residents. Additionally, as the scope of the terrorist financing offense does not specifically include funds to be used by a terrorist organization or an individual terrorist for any purpose, the scope of the law may not be compliant with international standards.

Switzerland

Switzerland is a major international financial center. Reporting indicates that criminals attempt to launder illegal proceeds in Switzerland from a wide range of criminal activities conducted worldwide. These illegal activities include, but are not limited to, financial crimes, narcotics trafficking, arms trafficking, organized crime, terrorist financing and corruption. Although both Swiss and foreign individuals or entities launder money in Switzerland, foreign narcotics trafficking organizations, often based in Russia, the Balkans, Eastern Europe, South America and West Africa, dominate the narcotics-related money laundering operations in Switzerland. The country’s central geographic location, relative political, social, and monetary stability, the range and sophistication of financial services it provides, and its long tradition of bank secrecy not only contribute to Switzerland’s success as a major international financial center, but also expose Switzerland to potential money laundering abuse.

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, securities and insurance brokers, money exchangers or remitters, financial management firms, investment companies, insurance companies, casinos, or individuals acting as intermediaries in bank lending, money transactions, trading of currencies or dealing in matters of wealth management and investment advice

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, securities and insurance brokers, money exchangers or remitters, financial management firms, casinos, or individuals acting as intermediaries in bank lending, money transactions, trading of currencies or dealing in matters of wealth management and investment advice

Number of STRs received and time frame: 896 in 2009

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 269 individuals in 2009

Convictions: 172 individuals in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Switzerland is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: (http://www.fatf-gafi.org/dataoecd/53/52/43959966.pdf)

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Swiss money laundering regime is generally perceived to conform to international standards and Swiss authorities are regularly updating their legislation. For instance, on October 1, 2010, a new law on PEPs was issued and will reportedly be put into force on January 20, 2011. Additionally, on January 1, 2011, the 26 cantonal codes of criminal procedure were replaced with regulations in the Swiss Penal Code (“Strafgesetzbuch”), designed to unify procedural rules and facilitate international cooperation.

The anti-money laundering (AML) law does not explicitly cover real estate brokers and dealers of arts, antiquities and other high-value goods. Also, for terrorist financing reporting, Swiss authorities distinguish the obligation to communicate (reasonable suspicion) and the right to communicate (simple suspicion) given the degree of suspicion that prevails.

Under the law, measures for insurance companies and other financial intermediaries (excluding banks) are not sufficiently elaborated. Additionally, several measures have been implemented for anonymous companies, but some deficiencies remain as the competent authorities do not have access to the register of the shareholders. Furthermore, a lack of transparency exists in relation to foundations run by non professionals. The Swiss Financial Market Supervisory Authority (FINMA) is not authorized to impose pecuniary sanctions; it can only issue administrative ones. Furthermore, the breadth of the sanctions may not always take into account the gravity of the crime.

In 2009, approximately 65% of filed suspicious activity reports (SARs) came from the banking sector and seven SARs were linked to suspected terrorist financing. The number of SARs hit an all-time high in 2009. Fraud (37%), embezzlement (10%), organized crime (9%), and money laundering (9%) were the most common predicate/suspected criminal offenses, and nearly two-thirds of all SARs were generated by media reports, third-party information and information from prosecuting authorities. No particular money laundering issues about non-profit organizations, alternative remittance systems, offshore sectors, free trade zones or bearer shares have occurred.

Switzerland has returned more money to the countries of origin than any other financial centre, amounting to a total of $1.8 billion. Furthermore, Switzerland is involved in many multilateral fora related to asset recovery, corruption and development.

Syria

Syria is not an important regional or offshore financial center, due primarily to its still underdeveloped private banking sector and the fact that the Syrian pound is not a fully convertible currency. Despite rapid growth in the banking sector, industry experts estimate only 20 percent of Syria’s population of nearly 22 million people actually uses banking services. Consequently, some 60 percent of all business transactions are still conducted in cash. Estimates of the volume of business conducted in the black market by Syrian moneychangers range between $15 and $70 million per day. Additionally, there continue to be significant money laundering and terrorist financing vulnerabilities in Syria’s banking and non-bank financial sectors due to either a lack of necessary legislation or poor government enforcement of existing laws. Syria’s black market moneychangers are not adequately regulated, and the country’s borders remain porous. Regional hawala networks, intertwined with smuggling and trade-based money laundering, raise significant concerns, including involvement in the financing of terrorism. The most obvious indigenous money laundering threat involves Syria’s political and business elite, whose corruption and extra-legal activities continue unabated.

There are eight public free trade zones (FTZs) in Syria and five additional free zones are planned in Damascus, Homs, Dayr ez-Zawr, Idleb, and the port of Tartous. In recent years, both China and Iran announced plans to build FTZs in Syria, although Iran later dropped this idea in favor of pursuing a free trade agreement with Syria. China’s free zone in Adra was officially inaugurated in July 2008; thirteen businesses have been established in Adra to-date. The volume of goods entering the FTZs is estimated to be in the billions of dollars and is growing, especially with increasing demand for automobiles and automotive parts, which enter the zones free of customs tariffs before being imported into Syria. While all industries and financial institutions in the FTZs must be registered with the General Organization for Free Zones, part of the Ministry of Economy and Trade, the Syrian General Directorate of Customs continues to lack strong procedures to check country of origin certification or the resources to adequately monitor goods that enter Syria through the zones. There are also continuing reports of Syrians using the FTZs to import arms and other goods into Syria in violation of USG sanctions under the Syrian Accountability Act, and a number of United Nations Security Council Resolutions.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks; money exchanges and remitters; issuers of payment instruments such as credit cards, payment cards, travelers checks, and ATM cards; investment funds and their managers; financial brokerages and financial leasing corporations; insurance companies; real-estate brokers and agents; dealers of high-value goods, such as jewelry, precious stones, gold, and antiquities; lawyers; and accountants

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:\

Covered entities: Banks; money exchanges and remitters; issuers of payment instruments such as credit cards, payment cards, travelers checks, and ATM cards; investment funds and their managers; financial brokerages and financial leasing corporations; insurance companies; real-estate brokers and agents; dealers of high-value goods, such as jewelry, precious stones, gold, and antiquities; lawyers; and accountants

Number of STRs received and time frame: 144 from January to November 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 0

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Syria is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Syria’s most recent mutual evaluation can be found at: http://www.menafatf.org/images/UploadFiles/MutualEvaluationReportofSyria.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The United States has designated Syria as a State Sponsor of Terrorism.

In May 2004, the U.S. Department of Treasury found the Commercial Bank of Syria (CBS), along with its subsidiary, the Syrian Lebanese Commercial Bank, to be a financial institution of “primary money laundering concern,” pursuant to Section 311 of the USA PATRIOT Act. This finding resulted from information that CBS had been used by terrorists or persons associated with terrorist organizations as a conduit for the laundering of proceeds generated from the illicit sale of Iraqi oil, and because of continued concerns that CBS was vulnerable to exploitation by criminal and/or terrorist enterprises. In April 2006, Treasury promulgated a final rule, based on the 2004 finding and proposed rule-making, prohibiting U.S. financial institutions from maintaining or opening correspondent or payable-through accounts with CBS or its Syrian Lebanese Commercial Bank subsidiary.

Most Syrian judges are not yet familiar with the evidentiary requirements of the anti-money laundering law. Furthermore, the slow pace of the Syrian legal system and political sensitivities delay quick adjudication of these issues. The lack of expertise, further undermined by a lack of political will, continues to impede effective implementations of existing AML/CFT regulations.

Although Decree 33 provides the Central Bank with the legal basis to combat money laundering, most Syrians still do not maintain bank accounts or use checks, credit cards, or ATM machines. The Syrian economy remains primarily cash-based, and Syrians use moneychangers, some of whom also act as hawaladars, for many financial transactions. As a step to enhancing oversight of moneychangers, in 2006 a law was passed to cover moneychangers; however, they remain largely unregulated.

In addition to cash smuggling, there is also a high rate of commodity smuggling out of Syria. It has been reported that some smuggling is occurring with the knowledge of, or perhaps even under the authority of, the Syrian security services. The General Directorate of Customs lacks the necessary staff and financial resources to effectively handle the problem of smuggling. While customs has started to enact some limited reforms, including the computerization of border outposts to interface with other government agencies, problems of information-sharing remain.

While Syria has made modest progress in implementing AML/CFT regulations that governs the formal financial sector, the continuing lack of transparency of the state-owned banks and their vulnerability to political influence reveal the absence of political will to address AML/CFT in the largest part of the banking sector. In addition, non-bank financial institutions and the black market will continue to be vulnerable to money laundering and terrorist financiers. To build confidence in Syria’s intentions, the Central Bank should be granted independence and supervisory authority over the entire sector. Additionally, the Government of Syria (GOS) should enact the draft AML/CFT law to address many of the remaining deficiencies. Upon enactment of the new law, Syria will need to work actively to effectively implement its provisions through appropriate regulation and other related action. The GOS should become a party to the UN Convention against Corruption.

The General Directorate of Customs, the Central Bank, and the judicial system in particular continue to lack the resources and the political will to effectively implement AML/CFT measures. Although the GOS has stated its intention to create the technical foundation through which different government agencies could share information about financial crimes, this system has not been created. In addition, it remains doubtful whether the GOS has the political will to combat terrorist financing by classifying as terrorist organizations what it currently deems legitimate resistance groups, or to address the corruption that exists through all levels of government and business. There is no obligation requiring financial institutions to report suspicious attempted transactions or those related to terrorist financing. Many non-bank financial institutions continue to be unfamiliar with the requirements of the law.

Taiwan

Taiwan’s modern financial sector, strategic location on international shipping lanes, and role as an international trade hub make it vulnerable to transnational crimes, including money laundering, drug trafficking, trade fraud, and smuggling. Though illegal in Taiwan, a significant volume of informal financial activity takes place through unregulated non-bank channels. In recent years Taiwan has taken steps to shift much of this activity into official, regulated financial channels. Taiwan has five free trade zones and a growing offshore banking sector. There is no significant black market for smuggled goods in Taiwan.

Domestic money laundering is generally related to tax evasion, drug trafficking, public corruption, and a range of economic crimes. An emerging trend in money laundering is the use of jewelry stores as a type of underground remittance system. Jewelers convert illicit proceeds into precious metals, stones, and foreign currency, and generally move them using cross-border couriers. The tradition of secrecy in the precious metals and stones trade make it difficult for law enforcement to detect and deter money laundering in this sector.

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

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: 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, credit co-operative associations, credit departments of Farmers’ Associations and Fishermen’s Associations, Department of Savings & Remittances of Chunghwa Post Co., securities firms, life insurance companies, and dealers in precious metals and stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, credit co-operative associations, credit departments of Farmers’ Associations and Fishermen’s Associations, Department of Savings & Remittances of Chunghwa Post Co., securities firms, life insurance companies, jewelry stores, and members of the National Real Estate Broking Agencies Association

Number of STRs received and time frame: 1,845 (January - December 2009)

Number of CTRs received and time frame: 2,963, 282 (January - December 2009)

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 39 persons (January - December 2010)

Convictions 11 persons (January - December 2010)

Assets forfeited: criminally: NT$593.8 million (approximately $20.1 million) - January - December 2010 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Taiwan 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/Chinese%20Taipei%20MER2_FINAL.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Taiwan continues to strengthen its AML/CFT regime. However, the government has not passed legislation that would address weaknesses in terrorist financing prevention measures, despite numerous draft laws over the past several years. While the financing of terrorist activities in Taiwan is a criminal offense, it is not an autonomous offense, and does not specifically cover the financing and support of terrorist activities overseas. Taiwan should pass legislation to criminalize terrorism and terrorist financing as an autonomous crime, and clarify that the law covers such activities overseas.

Many types of designated non-financial businesses and professions are not subject to AML/CFT requirements. The lack of reporting, customer due diligence and recordkeeping requirements makes these entities particularly vulnerable to money laundering/terrorist financing activity. Taiwan should take steps to amend its legislation and regulations, as necessary, to bring all DNFBPs, as listed in the international standards, within the scope of its AML/CFT coverage.

Foreign politically exposed persons (PEPs) are not subject to enhanced due diligence. Taiwan's Financial Supervisory Commission, the top financial regulator in Taiwan, is establishing a databank for "high profile politicians" in an effort to prevent money laundering. Once established, financial institutions will be required to identify, record, and report the identities of high-profile customers engaging in significant or suspicious transactions.

Taiwan is unable to ratify UN conventions because of long-standing political issues. However, it has enacted domestic legislation to implement the standards in the key AML/CFT UN Conventions. Amendment of the money laundering legislation incorporated related laws to fully implement the provisions of the Vienna, Palermo and terrorist financing conventions and resolutions.

Taiwan should raise awareness of the vulnerabilities of non-profit organizations to terrorist financing, and should exert more authority over this sector. The government should abolish all shell companies and prohibit the establishment of new shell companies of any type. Given the increasing threat of alternative remittance centers such as the precious metals and stones sector, Taiwan's law enforcement should enhance investigations of underground financial systems.

Taiwan began to draft new legislation of the Mutual Assistance Act for Criminal Justice in January of 2010. In the draft legislation, mutual legal assistance request doesn’t need to initiate judicial proceedings as precondition in requesting jurisdiction.

Tajikistan

Tajikistan operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. Money laundering schemes are relatively easy to perpetrate due to the absence of strict record keeping laws for financial institutions.

Criminal proceeds laundered in Tajikistan are derived from both foreign and domestic criminal activity related to the large amounts of opium and heroin trafficked from Afghanistan to Russia via Tajikistan. Corruption related to large scale industries, such as aluminum production, also presents serious risks. The money laundering proceeds are controlled by high level drug trafficking networks, with some smaller actors involved. It is suspected high-level corruption facilitates the drug trade and its associated money laundering. Tajik authorities have reported that some unlawfully derived proceeds are handled through offshore accounts in the Middle East. Large scale smuggling of domestic goods occurs in Tajikistan to avoid customs duties and local taxes.

In February 2010, Tajikistan introduced a Voluntary Tax Compliance (VTC) program that is to remain in force until December 2011 and that appears to conflict with international AML/CFT standards. The VTC program applies to undeclared and repatriated funds belonging to citizens and legal persons of Tajikistan that are transferred from foreign banks to banks in Tajikistan. Repatriated funds—including proceeds of certain offenses that are money laundering predicates under the FATF Recommendations--are exempted from criminal responsibility. Moreover, the Tajik authorities are obliged to ensure confidentiality of the funds transferred into banks in Tajikistan under the program, establishing bank secrecy requirements that undermine effective AML regulatory supervision and law enforcement activities.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: 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: 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 money remitters, insurance companies and securities firms

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS: NO

Covered entities: Not applicable

Number of STRs received and time frame: Not applicable

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One since 2008

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Tajikistan is a member of the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here: http://www.eurasiangroup.org/files/MERs%20-%20ENG/tajikistan.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Tajikistan (GOT) has customs information exchange agreements with Uzbekistan, Kyrgyzstan, Afghanistan, Iran, Turkey, China, Russia, and Belarus.

The GOT has not implemented many of its treaty obligations in domestic law. UNSCR 1373 has been partially implemented, but the freezing of terrorist assets is still not codified in the laws of Tajikistan. The authorities can confiscate property belonging to terrorist organizations under the Law on Combating Terrorism. The proceeds from the financing of terrorism offenses can also be confiscated under the Criminal Procedure Code. However, these measures do not permit freezing of terrorist assets without delay, and UNSCR 1267 has not been used for this purpose. Banks and non-banking institutions report the lists of designated persons under UNSCR 1267 have not been distributed. The Criminal Code criminalizes terrorist financing, but it does not apply to individual terrorists.

The absence of legally mandated customer due diligence requirements makes it very difficult for authorities to detect financial crime or money laundering. Article 262 of the Criminal Code criminalizes money laundering, but does not meet international standards. The Criminal Code states confiscation of the offender’s belongings is possible in certain cases but also specifies exceptions. In 2008, the Tajik Parliament adopted the Law on Executive Proceedings that enables asset-seizure mechanisms.

Tanzania

Tanzania is not an important regional financial center. Tanzania’s location at the crossroads of southern, central and eastern Africa leaves it vulnerable to activities that generate illicit revenue, such as smuggling, and the trafficking of narcotics, arms, and humans. The major profit generating crimes in Tanzania include theft, robbery, corruption, smuggling of precious metals and stones, and drug trafficking. With only twelve percent of the population engaged in the formal financial sector, money laundering is more likely to occur in the informal non-bank sectors. Officials indicate the offshore sector and free trade zones are not currently significant areas of concern. Criminals have been known to use front companies, including hawaladars and bureaux de change, to launder funds, though these are not currently significant areas of concern for Tanzanian anti-money laundering officials. The use of front companies to launder money is especially common on the island of Zanzibar, where fewer federal regulations apply. Officials indicate that money laundering schemes in Zanzibar generally take the form of foreign investment in the tourist industry and bulk cash smuggling. Real estate and used car businesses also appear to be sources of money laundering in Tanzania.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

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

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and financial institutions; cash dealers; accountants; art, metal, and precious stone dealers; customs officials; and legal professionals

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and financial institutions; cash dealers; accountants; realtors; art, precious metals and stone dealers; casino and gaming operators; regulators and customs officials; and legal professionals

Number of STRs received and time frame: 20 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: 0 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Tanzania does not have formal records exchange mechanisms, though the Ministry of Foreign Affairs and central Bank of Tanzania do cooperate with other governments via memoranda of understanding.

Tanzania has serious deficiencies in its legislation and AML/CFT regime. Among the key issues are the inadequate criminalization of terrorist financing; deficiencies in the mechanisms to freeze and confiscate terrorist assets, including a lack of implementing regulations to give effect to the freezing mechanism under the Prevention of Terrorism Act for the purposes of UNSCRs 1267 and 1373; a lack of enforceable requirements to ensure customer due diligence (CDD); weaknesses in supervision of the financial sector; a focus mainly on the formal banking sector rather than full coverage of designated non-financial businesses and professions (DNFBPs); ineffective provisions pertaining to recordkeeping, including a threshold approach to recordkeeping requirements; and weaknesses in the structure and function of Tanzania’s financial intelligence unit, including the lack of designated competent authorities responsible for ensuring compliance by financial institutions and inadequate provisions to safeguard the operational independence of the FIU.

Nevertheless, the Government of Tanzania (GOT) has made improvements in its compliance with international AML/CFT standards. In January 2010, legislation mirroring the mainland Anti-Money Laundering Act came into force in Zanzibar. The Zanzibar legislation does not recognize the jurisdiction of the mainland FIU and National AML Committee; however, the GOT has agreed in principle to amend this. The GOT should focus its efforts on practical implementation of the AMLA, including dedicating the resources necessary to build an effective FIU. The FIU should continue its efforts to hire additional staff to ensure financial institutions are adequately supervised, to inform them of their reporting and record keeping responsibilities, and to train the financial sector to identify suspicious transactions. Tanzania should work to increase the level of awareness and understanding of money laundering issues in the financial, law enforcement and judicial areas and should allocate the necessary human, technical, and financial resources to implement its AML/CFT regime. The GOT should ensure the Prevention of Terrorism Act comports with international standards and authorities implement all provisions in the law. The GOT should also improve its cross-border cash declaration regime. The capacity of Tanzanian police and customs officials to recognize money laundering and value transfer methodologies used in the region should be raised.

Thailand

Thailand is a centrally located, middle-income Southeast Asian country surrounded by economically less vibrant neighbors along an extremely porous border. Thailand is vulnerable to money laundering from its own underground economy as well as many categories of cross-border crime, including illicit narcotics and other contraband smuggling. The Thai black market includes a wide range of pirated and smuggled goods, from counterfeit medicines to luxury automobiles. Money launderers and traffickers use banks, as well as non-bank financial institutions and businesses to move the profits of narcotics trafficking and other criminal enterprises. In the informal money changing sector there is an increasing hawala-type money shop presence servicing Middle Eastern travelers in Thailand, most of them arriving to avail themselves of the country’s comparatively inexpensive medical services. The Thai banking regulations cover these institutions adequately, but effective oversight of the least formal operations is difficult to achieve.

Thailand is a source, transit, and destination country for international migrant smuggling and trafficking in persons, a production and distribution center for counterfeit consumer goods and, increasingly, a center for the production and sale of fraudulent travel documents. Illegal gaming, corruption, underground lotteries, and prostitution are all problems. Thailand’s criminal justice system has low capacity to deal with these challenges but is improving.

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 (including state banks), finance companies, securities dealers, insurance companies, money exchanges and remitters, asset management companies, jewelry and gold shops, automotive hire-purchase businesses or car dealers, real-estate agents/brokers, antique shops, personal loan businesses, electronic card and credit-card businesses, electronic payment businesses, and deposit/lending cooperatives

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks (including state banks); finance and factoring companies; securities dealers; insurance companies; money exchanges and remitters; asset management companies; financial management firms; jewelry and gold shops; automotive hire-purchase businesses or car dealers; real-estate agents/brokers; antique shops; personal loan businesses; electronic payment, card and credit-card businesses; deposit/lending cooperatives; and the Ministry of Interior’s Department of Lands

Number of STRs received and time frame: 616,148 from January 1 – October 31, 2010

Number of CTRs received and time frame: 522,318 from January 1 – October 31, 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 15 from October 2007 – March 2008

Convictions: Not available

Assets forfeited: criminal: None civil: $529,000 from October 2007 – March 2008

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Thailand is a member of Asia/Pacific Group against Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: www.apgml.org/documents/docs/17/thailand

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Thai law does not provide for enhanced due diligence for politically exposed persons nor does it adequately prohibit “tipping off,” leaving financial institutions and their employees subject to potential liability for filing STRs. Furthermore, there is no comprehensive cross-border currency reporting or seizure system. The Government of Thailand should amend its legislation as necessary to ensure these deficiencies are corrected.

There have been no prosecutions since 2008. Both the AML Board and Transaction Committee were dissolved several years ago. The Transaction Committee approves seizures for civil forfeiture. Thailand has had no seizures for forfeiture since the Transaction Committee was disbanded. A new AML Board was appointed in November, 2010.

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

During 2010, the FATF identified Thailand as a jurisdiction with significant AML/CFT vulnerabilities. In response, the Thai government expressed high-level political commitment to address deficiencies in its AML/CFT regime, and reported taking steps to address these deficiencies. For example, the Thai government drafted a proposed Counter-Terrorism Financing Act which, in part, would criminalize the collection or provision of funds for the purpose of supporting terrorist acts or organizations. However, important actions are still pending, including passage of key amendments and regulations which will augment the current AML/CFT regime. The Thai FIU lacks clear leadership, with a new Secretary General yet to be appointed. For AMLO to become a sophisticated agency able to take substantial casework, it will need to build extensive institutional capacity and political will.

Timor-Leste

Timor-Leste is not a regional or offshore financial center, and has no free trade zones. The economy is cash based, and the Ministry of Finance estimates only 1.3 percent of Timorese regularly use banking facilities. Private sector growth is hampered by a lack of human capital and regulatory capacity. The national economy depends on petroleum and natural gas revenues and assistance from international donors.

Timor-Leste has experienced relative stability over the past three years but remains in a state of transition. Governmental institutions are still being established, and legal and financial systems are limited. Years of violent conflict devastated Timor-Leste’s physical infrastructure, which has compromised the government’s ability to provide reliable basic services. Continued stability will depend on ongoing efforts to professionalize and bolster the capacity of law enforcement and security institutions.

Weak controls at the land border with Indonesia and even weaker maritime border controls make Timor-Leste vulnerable to smuggling, organized crime, and terrorist activities. Narcotics trafficking is not considered a significant source of illegal proceeds, but the inadequacy of reporting and data systems makes it difficult to track cross-border 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 applicable

Legal persons covered: criminally: NO civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Not applicable

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Not applicable

Number of STRs received and time frame: Not applicable

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Timor-Leste lacks critical AML/CFT controls; and low technical, financial, and human capacity make it difficult to enforce adequately the laws that are in place. The National Parliament is considering a draft AML/CFT law, which is not expected to pass before the end of 2011. The draft law uses an “all serious crimes” approach to the predicate offense, and also covers legal persons. It contains provisions for immediately freezing terrorist assets and allows asset forfeiture. The draft law contains “know your customer rules” that cover financial institutions and non-financial businesses and professions, and specifies suspicious transaction reporting requirements for covered entities. The draft law would also provide a records exchange mechanism between Timor-Leste, the United States and other nations. The Government of Timor-Leste should make passage of this law a priority.

Recently, the Asia/Pacific Group on Money Laundering (APG), an FSRB, dispatched a working group to Timor-Leste to discuss performing a mutual evaluation during 2011. The date of that evaluation has not been determined.

Togo

Togo’s poor financial infrastructure and small size make its financial institutions unlikely venues for money laundering. Its porous borders, however, combined with its susceptibility to corruption, make it a transshipment point in the region and sub-region for the narcotics trade. Most narcotics passing through Togo are believed destined for European markets.

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: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks and financial institutions

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and financial institutions

Number of STRs received and time frame: Three in 2010

Number of CTRs received and time frame: Three in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Six in 2010

Convictions: None

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Togo is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. A mutual evaluation of Togo was scheduled for 2010, and once adopted, will be found here: http://www.giaba.org/#

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Togo’s anti-money laundering laws, including the 2009 law covering terrorism-related financing, are enforced by a national agency called the Cellule Nationale de Traitement des Informations Financieres (CENTIF). It investigates suspicious bank transfers as well as attempts to transport money across borders in excess of the amounts allowed by law.

Both Togo’s laws and the enforcement efforts of the CENTIF are relatively new and still gaining traction, as evidenced by the six prosecutions this year as opposed to none last year. However, the Government of Togo should ensure continued funding and support for the CENTIF, as well as greater efforts to combat corruption.

Tonga

Tonga is an archipelago located in the South Pacific, about two-thirds of the way from Hawaii to New Zealand. Tonga is neither a financial center nor an offshore jurisdiction. It has only three commercial banks. Remittances from Tongans living and working abroad are the largest source of hard currency earnings, followed by tourism. Tonga is deemed by local police authorities to be vulnerable to smuggling and money laundering due to inadequate border controls.

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

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks

Number of STRs received and time frame: 17 in 2009

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0 in 2010

Convictions: None

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: NO

Tonga 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/default.aspx?DocumentCategoryID=17

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Tongan Transaction Reporting Authority (TRA) is generally vested with the powers of a financial intelligence unit (FIU) although there are some serious limitations in its powers. The TRA’s functions under the Money Laundering and Proceeds of Crime Act do not explicitly include analysis of suspicious transaction reports (STRs); and lack of timely access to financial, administrative and law enforcement information severely limits the TRA’s ability to effectively analyze STRs.

Tongan authorities feel a primary reason why there is a lack of investigations into money laundering is that there are insufficient resources and expertise in most of the relevant agencies. Money laundering activities may be occurring outside of the formal banking system by way of alternative remittance systems.

Trinidad and Tobago

Trinidad and Tobago (TT) has a well-developed banking sector, and its importance as a regional financial center has increased in recent years. With few barriers to trade or international commerce, the potential for illegal financial flows continues.

Drug-trafficking, illegal arms sales and fraud continue to be the most likely sources of laundered funds. Illicit drug trafficking is considered the primary motive for money laundering. It is suspected that criminal assets laundered in TT are derived from domestic criminal activity as well as from the activity of nationals involved in crime abroad. According to information from financial institutions and legal analysts, financial crimes in general are increasing, particularly those involving the use of fraudulent checks, wire transfers, and related instruments in the banking sector. There is no significant black market for smuggled goods in TT, but the incidence of drug money supporting illegal arms imports is thought to be growing. Officials in the financial community report that funds generated from the arms and ammunition trade are being laundered through the financial system, mainly through simple bank branch currency trades below the suspicious activity reporting threshold. There are indications trade-based money laundering occurs in Trinidad, though the evidence is speculative, not empirical.

TT does not have a significant traditional offshore business sector. Although its banking system is regarded as one of the strongest and most efficient in the region, costs of banking are higher here than neighboring countries due to limited exploitation of new technology and limited competition. Local banks do offer foreign currency accounts, but there is no interest offered, so customers have no incentive to maintain US cash reserves in the bank for extended periods of time.

There are six free trade zones (FTZs) in Trinidad and Tobago where exporting of manufactured products takes place. There is no evidence the FTZs are involved in money laundering schemes, and companies operating in the FTZs are required to submit tax returns quarterly and audited financial statements yearly. Companies must present proof of legitimacy and are subject to background checks prior to being allowed to operate in the FTZs.

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, finance houses, insurance companies, securities dealers, investment advisors, real estate agents, motor vehicle dealers, gaming enterprises, national lotteries, jewelers, accountants, attorneys or other independent legal professionals, art dealers, trust and company service providers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, finance houses, insurance companies, securities dealers, investment advisors, real estate agents, motor vehicle dealers, gaming enterprises, national lotteries, jewelers, accountants, attorneys or other independent legal professionals, art dealers, trust and company service providers

Number of STRs received and time frame: 199 from February to December 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 0

Convictions: 0

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

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Trinidad and Tobago 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/mutual-evaluation-reports.html

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

During 2010, the FATF identified Trinidad and Tobago as a jurisdiction with significant AML/CFT vulnerabilities. In response, the Government of Trinidad and Tobago (GOTT) has made high-level political commitments to address its deficiencies, including implementing adequate procedures to identify and freeze terrorist assets without delay, implementing procedures for the confiscation of funds related to money laundering, and ensuring Trinidad and Tobago’s financial intelligence unit (FIU), established by law in October 2009, would be fully operational. In November 2010, the Cabinet approved regulations pertaining to the Trinidad and Tobago FIU, although a director was not appointed in 2010.

Tunisia

Tunisia is not considered an important regional financial center. Tunisia has strict currency exchange controls which authorities believe mitigate the risk of international money laundering. There is a low level of crime in Tunisia. The primary domestic criminal activities that generate laundered funds are clandestine immigration, trafficking in stolen vehicles, and narcotics. There also is informal economic activity involving smuggled goods. However, there is no evidence to suggest significant levels of narcotics are involved or that smuggling generates funds that are laundered through the financial system.

As of yearend 2009, Tunisia had eight offshore banks and a considerable number of offshore international business companies. Tunisia also has two free trade zones, in Bizerte and Zarzis, with a limited number of companies manufacturing products for export. There are no offshore financial institutions located in either free trade zone.

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 2009 Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/2009/140886.htm)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: All financial institutions

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: All financial institutions and financial intermediaries

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Tunisia is a member of the Middle East North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/images/UploadFiles/MENAFATF.7.07.E.P5R2%20_with%20response_.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Tunisia (GOT) should continue to implement and enhance its anti-money laundering/counter-terrorist financing (AML/CFT) regime. GOT authorities should disseminate statistics and benchmarks such as prosecutions and convictions that will aid in measuring progress. Since Tunisia has strict currency controls, in all likelihood informal remittance systems such as hawala are prevalent. Authorities should examine underground finance and its possible link to money laundering and extremist finance. Regionally, invoice manipulation and customs fraud is often involved in hawala counter-valuation. As a result, authorities should be aware of trade-based laundering and value transfer.

All offshore financial institutions are held to the same regulatory standards as onshore financial institutions. Offshore financial institutions undergo the same due diligence process as onshore banks and are licensed only after the Central Bank investigates their references and the Ministry of Finance approves their applications. Anonymous directors are not allowed. Offshore international business companies are subject to all regulatory requirements, except for tax requirements and currency convertibility restrictions. Bearer financial instruments or shares are strictly prohibited.

Turkey

Turkey is an important regional financial center, particularly for Central Asia and the Caucasus, as well as for the Middle East and Eastern Europe. While the vast majority of Turkey’s economy is legitimate, money laundering is a problem. Turkey continues to be a major transit route for Southwest Asian opiates moving to Europe. However, narcotics trafficking is only one source of the funds laundered in Turkey. Other significant sources of laundered funds include invoice fraud and tax evasion, and to a lesser extent, smuggling, counterfeit goods, and forgery. Terrorist financing and terrorist organizations with suspected involvement in narcotics trafficking and other illicit activities are also present in Turkey. Money laundering takes place in banks, non-bank financial institutions, and the underground economy. The World Bank estimates as much as 30 percent of the economic activity is derived from unregistered businesses. Money laundering methods in Turkey include: the large-scale cross-border smuggling of currency; bank transfers into and out of the country; trade fraud; and the purchase of high-value items such as real estate, gold, and luxury automobiles. Turkish-based traffickers transfer money and sometimes gold via couriers, the underground banking system, and bank transfers to pay narcotics suppliers in Pakistan or Afghanistan. Funds are transferred to accounts in the United Arab Emirates, Pakistan, and other Middle Eastern countries.

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 regulated financial institutions, including the Central Bank; securities companies; post office banks; Islamic financial houses; and exchange offices

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; card issuers; consumer finance, financial leasing and factoring companies; insurance companies, lotteries, vehicle sales outlets, antique dealers, pension and mutual funds, exchange houses, dealers in art, high-value goods, precious stones and precious metals, and precious metals exchange intermediaries, notaries, sports clubs, real estate companies, capital and portfolio management companies, postal service and cargo companies

Number of STRs received and time frame: 9,823 in 2009; 6,718 through August 24, 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 279 from 1997-2009; 15 in 2009

Convictions: 22 from 1997-2009; three in 2009

Assets forfeited: criminally: Not available civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Turkey is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/14/7/38341173.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Turkish Criminal Court records are closed to the public. According to statistics from Turkey’s financial intelligence unit, Financial Crimes Investigation Board (MASAK), between 2005 and 2009, 342 money laundering cases were referred for further investigation, but only 22 cases resulted in convictions. In 2009, the 15 prosecutions resulted in three convictions. There are still 188 cases pending in the courts. Moreover, all of the convictions are reportedly under appeal. There is a lack of specialization and understanding of anti-money laundering/counter-terrorist financing (AML/CFT) provisions among relevant authorities, which has contributed to the high number of acquittals in money laundering cases.

Turkey and the United States cooperate closely on narcotics and money laundering investigations.

Although legal persons are subject to criminal liability, the sanctions against such entities are limited. There is no mandated enhanced due diligence for PEPs; banks are simply encouraged to give closer scrutiny to such customers.

The Government of Turkey’s (GOT) non-profit sector is likely vulnerable to abuse by terrorist financing. The Turkish government is still developing the investigative skills, law enforcement expertise, financial oversight and outreach necessary to effectively counter this threat. The nonprofit sector is not audited on a regular basis for counter-terrorist finance vulnerabilities and does not receive adequate AML/CFT outreach or guidance from the GOT. The General Director of Foundations issues licenses for charitable foundations and oversees them. However, there are a limited number of auditors to cover more than 70,000 institutions.

Laws related to terrorist financing are limited to acts committed by members of organizations operating against the Turkish Republic, so the collection, donation and movement of funds by terrorist organizations would not be prohibited if the funds could not be linked to a specific domestic terrorist threat. While the GOT has implemented UNSCR 1267, it has not yet established punishment or sanctions for institutions that fail to observe a freezing order, and it has not yet established procedures for delisting entities or unfreezing funds. Additionally, the GOT has not taken steps that would allow it to freeze the assets of entities designated by other jurisdictions, as required under UNSCR 1373.

In February 2010, the FATF identified Turkey as a jurisdiction with significant AML/CFT vulnerabilities, chief among them Turkey’s lack of adequate criminalization of terrorist financing and national asset freezing mechanisms. The GOT adopted an action plan designed to commit to a timeline for implementing new legislation. A draft law on the “Prevention of Terrorism Financing” intended to address the CFT deficiencies is currently within the Prime Ministry where it is being reviewed by experts.

Turkmenistan

Turkmenistan is not a regional financial center. There are only five international banks and a small, underdeveloped domestic financial sector. Foreign companies operate three casinos in Turkmenistan, which under certain conditions could become vulnerable to financial fraud and used for money laundering. Corruption related to natural resource extraction is a problem and transfer of funds remains opaque. Given Turkmenistan’s shared border with Afghanistan, money laundering in the country could involve proceeds from illegal narcotics (primarily opium and heroin) trafficking and trade, derived primarily from domestic criminal activities. Although there is no information on cash smuggling, gasoline and other commodities are smuggled routinely across the national borders.

There are no offshore centers in the country. The current Law on Free Economic Zones (FEZs) in Turkmenistan regulates business in these zones. There are ten FEZs in Turkmenistan that were all created prior to 1998. Businesses operating in a FEZ are exempt from taxes on profits for the first three years of profitable operation.

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 and other credit institutions

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks and other credit institutions, money remitters, foreign currency dealers, and money exchangers; professional participants in the securities market, commodity exchangers, and firms taking cash payments for investments; leasing organizations; insurance organizations; precious metals and stones dealers; accountants, lawyers, notaries, and other legal professionals; real estate agents; lottery prizes or gaming entities; charitable foundations; and, pawnshops

Number of STRs received and time frame: 12,551 in 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2010

Convictions: None in 2010

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

In June 2010, Turkmenistan became a member of Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a Financial Action Task Force (FATF)-style regional body. Turkmenistan had its first mutual evaluation in November 2010. Once adopted, the evaluation report will be available here: http://www.eurasiangroup.org/mers.php

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

On June 25, 2010 the FATF moved Turkmenistan from the Public Statement List, which includes countries with the worst AML/CFT records, to the list of those countries which have demonstrated political will and have adopted action plans to improve their AML/CFT regimes.

In May 2009, the government adopted a law “On Combating the Legalization of Criminal Proceeds and the Financing of Terrorism” (AML/CFT Law). In January 2010, the government established a financial intelligence unit under the Ministry of Finance to strengthen its anti-money laundering efforts. However, the FIU lacks sufficient autonomy, resources and capacity to function effectively and to ensure all covered entities are aware of their responsibilities under the law, including the requirement to report suspicious transactions, ensure proper customer identification and conform to international standards. The government does not provide the necessary training and capacity building to government entities with supervisory, investigative and prosecutorial responsibilities.

Foreign embassies provide terrorist financing information regarding UN and U.S.-designated individuals and organizations subject to asset forfeiture to the Ministry of Foreign Affairs (MFA). The MFA reports that it distributes such information to the Ministry of Finance, the Ministry of National Security, the Ministry of Internal Affairs, and other concerned agencies. It is not clear whether financial institutions receive the information. There have been no reports of arrests, prosecutions or convictions for money laundering or terrorist financing during 2010.

Amendments and addenda put into the Criminal Code on May 14, 2010 include the criminalization of terrorist financing. While laws exist, the government does not have an independent national system or mechanism for freezing terrorist assets. There are no reports that authorities identified, froze, seized, and forfeited assets related to terrorist financing in 2010.

Turks and Caicos

The Turks and Caicos Islands (TCI) is a United Kingdom (UK) overseas territory with a population of approximately 36,000. The economy depends greatly on tourism and its offshore financial sector. Financial services contributed almost 30 percent of GDP. The TCI is vulnerable to money laundering due to its significant offshore financial services sector and notable deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime. The country’s geographic location has made it a transshipment point for narcotics traffickers.

The TCI’s well developed financial sector is comprised, as of October 2010, of nine banks; seven money remitters, 18 professional trustees, six securities firms, and 4,972 insurance companies. As of March 2010, 706 “exempt companies” or International Business Companies (IBCs) were of record with the Companies Registry. Trust legislation allows establishment of asset protection trusts insulating assets from civil adjudication by foreign governments; however, the Superintendent of Trustees has investigative powers and may assist overseas regulators. As such, TCI remains something of a tax haven for foreign criminals seeking to evade domestic tax reporting requirements. The country also has two legal casinos.

The Financial Services Commission (FSC) licenses and supervises banks, money transmitters, mutual funds and funds administrators, investment dealers, trust companies, insurance companies and agents, company service providers and designated non-financial businesses. It also licenses IBCs and acts as the Company Registry for the TCI.

In August 2009, the UK government suspended the authority of the TCI government after serious allegations of corruption, and TCI is now ruled directly by the UK government through the Governor.

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, credit card services, company managers, domestic insurance companies, insurance brokers/agents, investment dealers, money transmitters, mutual funds, professional trustees, dealers in high value goods, dealers in precious metals and stones, estate agents, casinos, accountants, auditors, and lawyers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, credit card services, company managers, domestic insurance companies, insurance brokers/agents, investment dealers, money transmitters, mutual funds, professional trustees, dealers in high value goods, dealers in precious metals and stones, estate agents, casinos, accountants, auditors, and lawyers

Number of STRs received and time frame: 58 in 2010

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three in 2010

Convictions: Two in 2010

Assets forfeited: criminally: 0 civilly: 0

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

TCI is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation cannot be found on the CFATF website. Its most recent mutual evaluation report can be found at: http://www.cfatf-gafic.org/downloadables/mer/Turks_and_Caicos_Islands_3rd_Round_MER_%28Final%29_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

No formal exchange mechanism exists between the U.S. and TCI, although TCI cooperates readily with foreign governments. TCI is subject to the US/UK Extradition Treaty.

The Proceeds of Crime (Amendment) Ordinance, 2010 came into force on May 24, 2010. The Ordinance improves record keeping and STR reporting, and strengthens due diligence requirements. However, deficiencies remain, including weaknesses in: determining beneficial ownership of legal persons or legal arrangements; cross-border currency controls; and effective dissemination of designated terrorists lists. The Counter-Terrorism (Terrorist Financing, Money Laundering and Certain Other Activities: Financial Restrictions) (Turks and Caicos Islands) Order, 2010 came into force on March 18, 2010. This Order was extended to the Turks and Caicos Islands by the United Kingdom and, among other things, improves STR reporting for suspected terrorist financing activity and enhances the regulatory regime. The Financial Services ((Financial Penalties) Regulations, 2010 have been signed and published and took effect on October 29, 2010. A new AML/CFT Code has been drafted and is expected to be enacted shortly.

TCI is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the TCI’s international affairs and may arrange for the ratification of any convention to be extended to the TCI. The 1988 Drug Convention was extended to the TCI in 1995. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime (UNTOC) have not yet been extended to the TCI. The UNTOC has been implemented in the Turks and Caicos Islands by various Orders in Council which were made in the UK and have legislative effect in the Turks and Caicos Islands.

Authorities should issue and implement the draft AML/CFT Code. The responsibilities of

DNFBPs to report and conform to AML/CFT regulations should be more clearly articulated, in particular for casinos. TCI should consider implementing domestic provisions which allow for the enforcement of foreign restraining and confiscation orders, and the sharing of assets confiscated as a result of such cooperation. While this occurs in practice, having a formal system in place would ease such actions.

Uganda

Uganda is not a major hub for narcotics trafficking or terrorist financing, but it is a growing site for money laundering. Ugandan efforts to combat money laundering are hampered by the continued absence of comprehensive anti-money laundering legislation, severe resource constraints, and internal government corruption. Counterfeit U.S. currency is a recurring problem. Uganda’s inability to monitor formal and informal financial transactions, particularly along porous borders with Sudan, Kenya, Tanzania, and the Democratic Republic of Congo render Uganda vulnerable to more advanced money laundering activities and potential terrorist financing. Money laundering in Uganda derives from a wide range of activities, including government corruption, misappropriation of public funds and foreign assistance, abuse of the public procurement process, abuse of religious charities, land speculation, car theft, arms and natural resource smuggling, and exchange control violations. Uganda’s active informal economy also provides a fertile environment for money laundering as Uganda’s black market for smuggled and counterfeit goods takes advantage of porous borders and lack of customs and tax collection enforcement capacity.

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 applicable

Legal persons covered: criminally: NO civilly: NO

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

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

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, finance companies and microfinance institutions, foreign exchange bureaus, insurance companies and the securities sector

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, finance companies and microfinance institutions, foreign exchange bureaus, insurance companies and the securities sector

Number of STRs received and time frame: 80 reports in 2010

Number of CTRs received and time frame: Not applicable

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

Uganda is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here: http://www.esaamlg.org/userfiles/UGANDA_MER1.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Uganda has not criminalized money laundering. The Uganda Anti-Money Laundering Committee (UAMLC), comprised of multiple Ugandan government ministries and chaired by the Bank of Uganda (BOU), has worked with advisors to draft a comprehensive anti-money laundering (AML) bill based on international standards. The UAMLC completed the draft AML bill in 2003, and Cabinet approved the bill in January 2005. The draft legislation was submitted to Parliament in 2009 and has not come up for a vote.

Current efforts to combat money-laundering are piecemeal and based on other legislation such as the Anti-Terrorist Act of 2002 and the Financial Institutions Act of 2004. The Anti-Terrorist Act makes terrorist financing illegal, but does not place it in the overarching framework of money laundering, and there is no evidence that it has been used to effectively prosecute financiers of terrorism. There is no suspicious transaction reporting requirement for terrorist financing under this act.

The Financial Institutions Act provides the BOU with the ability to freeze accounts they believe hold funds which are the proceeds of crime, but does not provide procedures for releasing funds or forfeiture. It also gives the BOU authority to set know-your-customer and suspicious transaction reporting requirements for financial institutions, foreign exchange bureaus, and deposit-taking microfinance institutions. However, reporting procedures remain unclear and insufficient whistleblower protection limit the efficacy of these regulations. The Insurance Commission and Capital Markets Authority also have know-your-customer and suspicious transaction reporting guidelines for their regulated entities, but no firm regulations.

The Criminal Investigations Department (CID) of the Ugandan Police Force is responsible for investigating financial crimes. However, until Parliament approves the AML legislation, the CID maintains only limited authority to investigate and prosecute money laundering violations. The CID is understaffed and lacks adequate training in financial investigation techniques related to AML and terrorist financing. Internal corruption within the CID also hampers police investigative capacity. According to GOU officials, criminals often have access to technology that is more sophisticated than what is available to police investigators. The Inspectorate General of Government has the power to investigate cases brought to it by the public, but in practice has not investigated AML and terrorist financing cases.

Many Ugandans working abroad use an informal cash-based remittance system to send money to their families. Annual remittances are Uganda’s largest single source of foreign currency and totaled $414 million in 2008/2009. Remittances are used primarily for consumption purchases.

Counterfeit U.S. currency is a problem. In one common counterfeit scheme, counterfeiters sell fake U.S. currency marked or “masked” by black ink or a special stamp. The seller offers this currency at a discount because of the markings, and claims the bills can be exchanged or “unmasked” at a U.S. embassy or bank. In mid-2008 in eastern Uganda, police arrested an individual in possession of more than $1 million in counterfeit U.S. currency. Highlighting Uganda’s unwillingness to crack down on counterfeiters in cases involving well-connected individuals, police subsequently released the individual from custody, and he later disappeared.

The Government of Uganda should become a party to the UN Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime.

Ukraine

In Ukraine, high risks of money laundering have been identified in foreign economic activities, credit and finance, the fuel and energy industry, and the metal and mineral resources market. Illicit proceeds are primarily generated through corruption; fictitious entrepreneurship; fraud; trafficking in drugs, arms, and persons; organized crime; prostitution; and tax evasion. Various laundering methodologies are used, including real estate, insurance, bulk cash smuggling, and through financial institutions. There is a significant market for smuggled goods and a large informal financial sector. These activities are linked to the evasion of taxes and customs duties.

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, non-bank financial institutions, insurance companies, gambling institutions, credit unions, depositories, securities traders, registers, pawnshops, mail service operators and other money transfer services, real estate traders, certain traders of precious metals and stones, notaries, auditors, lawyers and leasing providers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, non-bank financial institutions, insurance companies, gambling institutions, credit unions, depositories, securities traders, registers, pawnshops, mail service operators and other money transfer services, real estate traders, certain traders of precious metals and stones, notaries, auditors, lawyers , and leasing providers

Number of STRs received and time frame: See below

Number of CTRs received and time frame: 728,799 in 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 48 from January 1 to April 1, 2010

Assets forfeited: criminally: $94 million in 2009 civilly: Not applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

Ukraine is 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/Evaluation_reports_en.asp

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

On May 18, 2010, Ukraine's Parliament passed amendments to Ukraine’s anti-money laundering/ counter-terrorist financing (AML/CFT) legislation. The amendments are a significant step forward. The new legislation replaces and significantly improves Ukraine’s basic AML/CFT Law, and amends relevant portions of the criminal code to bring them into greater compliance with international standards. Among other improvements, the May 18, 2010 amendments require enhanced due diligence procedures for PEPs. However, the procedure of informing primary financial monitoring agencies about the list of foreign PEPs is yet to be developed.

While it does not appear that significant narcotic proceeds are laundered through Ukraine’s financial institutions, the rise of cybercrime and related transnational organized crime would suggest that significant amounts of U.S. currency are diverted to this region.

Through their regulatory agencies, banks and non-bank financial services receive the U.S. designations of suspected terrorists and terrorist organizations under Executive Order 13224 and other U.S. authorities and are instructed to report any transactions involving designated individuals or entities. According to the new anti-money laundering law, the financial institution or FIU has the power to suspend suspicious transactions for a limited amount of time (up to 14 days). Afterwards, assets may only continue to be held if law enforcement bodies initiate a criminal case or if it can be established that the assets are related to terrorist activity, in which case they can be held indefinitely. The need to initiate criminal cases might provoke serious delays that would allow the assets to be transferred before action could be taken to freeze the accounts. Draft legislation will address additional details of terrorist assets freezing, such as an enhanced definition of terrorist assets, procedures for seizing assets of individuals designated on international terrorist lists; and the procedural prerequisites to seizing terrorist assets.

While Ukraine has signed and ratified the necessary treaties, in many instances they are not applied or are applied poorly. Furthermore, while Ukraine is a party to UNCAC and UNTOC, the provisions of these conventions are not implemented or are not working properly in Ukraine.

Ukraine has remained on the FATF list of countries with “strategic deficiencies” since February 2010. The remaining deficiencies include poor terrorist asset freezing provisions, inadequate criminalization of market manipulation and insider trading, and the absence of corporate criminal liability for terrorist financing. Ukraine also lacks any functional regime for locating or seizing forfeitable assets.

Although, the current legislation does not provide for autonomous prosecution of money laundering, Ukraine continues to take measures to improve it. There were two cases of autonomous investigations and prosecutions of money laundering. Ukraine should place additional emphasis on developing these capabilities.

Most importantly, while Ukraine's legislation has been significantly modernized, Ukraine lacks examples of successful prosecutions of money laundering. This is due to the lack of specialized expertise among prosecutors in handling complex financial cases, corruption within law enforcement and the courts, and poor coordination among prosecutors, investigators, and the FIU. Ukraine has taken steps to improve the technical expertise of the Prosecutor General’s Office through training of its law enforcement and prosecutors. This training should be continually developed, placing an emphasis on the systematic use of financial investigations, the use of existing tools and investigative techniques, analysis and use of computer techniques, and by providing relevant guidance.

United Arab Emirates

The United Arab Emirates (UAE) is an important financial center in the Middle East region. Dubai, in particular, is a major international banking and trading center. The country also has a growing offshore financial center and 38 free trade zones. The UAE’s robust economic development, political stability, and liberal business environment have attracted a massive influx of people, goods, and capital, which may leave the country susceptible to money laundering activities. The UAE also is vulnerable to money laundering due to its geographic location as the primary transportation and trading hub for the Persian Gulf States, East Africa, and South Asia; longstanding trade relations with Iran; its expanding trade ties with the countries of the former Soviet Union; and lagging relative transparency in its corporate environment.

The potential for money laundering is exacerbated by the large number of resident expatriates (roughly 80 - 85 percent of total population) who send remittances to their homelands. Given the country’s proximity to Afghanistan, where most of the world’s opium is produced, narcotics traffickers are increasingly reported to be attracted to the UAE’s financial and trade centers. Other money laundering vulnerabilities in the UAE include cash couriers, hawala, trade based money laundering, smuggling, the real estate sector, and the misuse of the international gold and diamond trade.

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, money exchange houses, finance companies, and any other financial institutions operating in the UAE

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, money exchange houses, finance companies, and any other financial institutions operating in the UAE

Number of STRs received and time frame: 2,711

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 applicable

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

The United Arab Emirates 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/UAEoptimized.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of the UAE has shown some progress in enhancing its AML/CFT program. In August 2009, the Central Bank issued a circular instructing local banks not to handle accounts belonging to politically exposed persons (PEPs). Information sharing between the UAE’s financial intelligence unit (FIU), the Anti-Money Laundering and Suspicious Cases Unit (AMLSCU), and some foreign FIUs has substantially improved.

Several areas requiring further action by the UAE Government (UAEG) remain. The UAE should increase the capacity and resources it devotes to investigation of AML/CFT both federally at the AMLSCU and at emirate-level law enforcement. AMLSCU needs to improve its timely financial information sharing capability to conform to international standards. Law enforcement and customs officials should proactively develop cases based on investigations, rather than wait for STR-based case referrals from the AMLSCU. Law enforcement and customs officials should conduct more thorough inquiries into large declared and undeclared cash imports into the country, as well as require - and enforce - outbound declarations of cash and gold utilizing existing smuggling laws. Currently the law only requires the disclosure of inbound cash above the delineated threshold.

Although UAE legislation includes a provision prohibiting “tipping off,” the provision is very narrow and does not appear to address the disclosure of STR filings to third parties. Additionally, the Central Bank regulations appear to require institutions to notify customers of suspicions regarding their accounts. This would appear to contradict any “tipping off” prohibitions.

All facets of trade-based money laundering should be given greater scrutiny by UAE customs and law enforcement officials, including customs fraud, the trade in gold and precious gems, commodities used as counter-valuation in hawala transactions, and the misuse of trade to launder narcotics proceeds. The UAEG should expand follow-up with financial institutions and the Ministry of Social Affairs regarding regulations on charities to ensure their registration at the federal level. The UAE should also continue its regional efforts to promote sound charitable oversight. The cooperation between the Central Bank and the offshore Dubai Financial Services Authority (DFSA) needs improvement, with lines of authority clarified. Moreover, the absence of meaningful statistics across all sectors is a significant hindrance to the assessment of the effectiveness of the AML/CFT program.

United Kingdom

The United Kingdom (UK) plays a leading role in European and world finance and remains attractive to money launderers because of the size, sophistication, and reputation of its financial markets. Although narcotics are still a major source of illegal proceeds for money laundering, the proceeds of other offenses, such as financial fraud and the smuggling of people and goods, have become increasingly important. The past few years have seen an increase in the movement of cash via the non-bank financial system, as banks and mainstream financial institutions have tightened their controls and increased their vigilance. The use of bureau de change, cash smugglers (into and out of the UK), and traditional gatekeepers (including solicitors and accountants) to move and launder criminal proceeds has been increasing. Also on the rise are credit/debit card fraud, use of the internet for fraud, and the purchasing of high-value assets to disguise illegally obtained money. A July 2009 Home Office report estimates that the total cost of the economic and social harm caused to the UK by serious organized crime is around GPB 68.4 billion (approximately $107.75 billion) per year.

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

(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 and credit institutions, independent legal professionals, auditors, accountants, tax advisors, auditors, insolvency practitioners, estate agents, casinos, high value goods dealers, and trust or company service providers

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial and credit institutions, independent legal professionals, auditors, accountants, tax advisors, auditors, insolvency practitioners, estate agents, casinos, high value goods dealers, and trust or company service providers

Number of STRs received and time frame: 240,582 (October 1, 2009 – September 30, 2010)

Number of CTRs received and time frame: Not applicable

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 United Kingdom is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: www.fatf-gafi.org/dataoecd/44/8/44048060.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The United Kingdom has a comprehensive range of anti-money laundering/countering the financing of terrorism (AML/CFT) laws. It is an active participant in multilateral efforts to meet AML/CFT threats. The UK engages in efforts to freeze the assets of persons who commit terrorist acts, as required by the United Nations. In January 2010, the United Kingdom Supreme Court held that the government had earlier exceeded its authority by imposing asset freezing orders that went beyond the requirements of Security Council Resolution 1373. The Supreme Court reinstated temporary asset freezing regulations as an interim measure following the judgment. In December 2010, the United Kingdom replaced the temporary provisions with a new legislative framework that raises the burden of proof for freezing assets from “reasonable suspicion” to “reasonable belief”.

Uruguay

Uruguay remains vulnerable to the threats of money laundering (ML) and terrorist financing (TF). Uruguay has a highly dollarized economy with about 80 percent of deposits and 70 percent of credits denominated in U.S. dollars. The U.S. dollar is often used as a business currency and many goods and services, including real estate and vehicles, are quoted and sold in dollars. Officials from the Uruguayan police and judiciary assess that there is a growing presence of Mexican and Colombian criminal organizations in the Southern Cone and are concerned they could begin operating in Uruguay. Drug dealers are slowly starting to participate in other illicit activities like car theft and trafficking in persons. The Government of Uruguay (GOU) acknowledges there is a growing risk of money laundering in the real estate sector, in free zones and in bureaus that administer corporations, and in late 2010, passed a decree to improve controls in those areas.

The vast majority of money laundering cases that have become public have been related to drugs. Uruguay has porous borders with Argentina and Brazil, and there is a market for smuggled goods that is greatly determined by price differentials between Uruguay and its neighbors. Trade-based money laundering is likely to occur but specialists do not identify it as a major source of risk.

The six offshore banks operating in Uruguay are subject to the same laws, regulations, and controls as local banks, with the GOU requiring they be licensed through a formal process that includes a background investigation of the principals. Offshore trusts are not allowed. Bearer shares may not be used in banks and institutions under the authority of the Central Bank, and any share transactions must be authorized by the Central Bank.

There are 13 free trade zones (FTZs) located throughout the country. While most are dedicated solely to warehousing, two were created exclusively for the development of the paper and pulp industry, and three accommodate a wide variety of tenants offering a wide range of services, including financial services. Some of the warehouse-style FTZs have been used as transit points for containers of counterfeit goods bound for Brazil and Paraguay. A decree passed in November 2010 discourages shell companies from establishing a presence in FTZs.

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: List approach

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: YES

UN lists of designated terrorists or terrorist entities distributed to financial institutions: 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, currency exchange houses, stockbrokers, pension funds, insurance companies, casinos, art dealers, real estate and fiduciary companies, lawyers, accountants, and other non-banking professionals that carry out financial transactions or manage commercial companies on behalf of third parties

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks; currency exchange houses; stockbrokers and pension funds; insurance companies; businesses that perform safekeeping, courier or asset transfer services; professional trust managers; investment advisory services; casinos; real estate brokers and intermediaries; notaries; auctioneers; dealers in antiques, fine art and precious metals or stones; FTZ operators; and natural or judicial persons who carry out transactions or administer corporations on behalf of third parties

Number of STRs received and time frame: 195 - January 1–December 16, 2010

Number of CTRs received and time frame: One - January 1–December 16, 2010

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four in 2009

Convictions: Five in 2009

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

The GOU is a member of the Organization of American States Inter-American Drug Abuse Control Commission (CICAD) Experts Group to Control Money Laundering. Uruguay is a member of the Financial Action Task Force on Money Laundering in South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/pdf/InformeEMUruguay09.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Uruguay has significantly upgraded its anti-money laundering legislation in recent years and improved its enforcement actions. Law 18.494, passed in 2009, gives national authorities more flexibility to fight money laundering and terrorist financing, and Decree 226/10, passed in December 2010, includes detailed provisions for non-financial sector entities obliged to report suspicious transactions. Decree 226/10 stipulates risk-based customer due diligence (CDD) procedures, sets de minimis procedures, and establishes CDD thresholds in specific activities: casinos (over $3,000), and art dealers and auctioneers (over $15,000). The decree also provides for enhanced due diligence (EDD) for high risk customers, such as those involving non-residents from countries that fail to apply international standards. Real estate brokers must apply EDD procedures in transactions over $15,000 and notaries and auctioneers must apply them in transactions over $200,000 (or over $100,000 in cash). While Decree 226/10 does not distinguish between local and foreign PEPs, it appears to be focused on locals. A list of about 5,000 local PEPs is available on the Central Banks´ website.

Decree 226/010 mandates obligated entities to establish internal procedures that would enable them to detect goods or transactions related to individuals or terrorist organizations included in the UN list. The financial intelligence unit publishes the UN 1267 Sanctions Committee list on its website but does not distribute it to financial institutions. It does not send the USG lists of terrorists to financial institutions but includes them in its database and runs name checks against it. There have been no reported cases or investigations related to terrorist financing.

In 2010 Uruguay joined the Egmont Group of Financial Intelligence Units. Tax evasion is not an offense in Uruguay, which limits cooperation possibilities because the financial intelligence unit cannot share tax-related information with its regional counterparts.

In an ongoing high-profile case, 14 people were indicted in September 2006 for a money laundering charge tied to the largest cocaine seizure in Uruguay at that time; in June 2008 the kingpin was convicted and in November 2009 five individuals, including a well known attorney, were prosecuted. Through 2009 the GOU had frozen assets totaling $20 million, of which $17 million were frozen in 2009 alone. The Anti-Money Laundering Secretariat seeks to create awareness about the importance of seizing assets as well as imprisoning criminals.

Uzbekistan

Uzbekistan is not an important regional financial center and does not have a well-developed financial system. A significant percentage of the country’s GDP comes from remittances abroad, posing a money laundering vulnerability. Corruption, especially in relation to natural resources, narcotics trafficking and smuggling generate the majority of illicit proceeds. Local and regional drug trafficking and organized crime groups control the flow of narcotics and proceeds from other criminal activities, such as smuggling of cash, high-value transferable assets (e.g., gold), property, or automobiles. Uzbekistan has a significant black market for smuggled goods. This black market does not appear to be significantly funded by narcotics proceeds but can be used to launder drug-related money. In April 2009, the government of Uzbekistan passed legislation to reestablish an anti-money laundering regime that had been suspended by Presidential decree in 2007.

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: 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, credit unions, micro-credit institutions, securities brokers, members of the stock exchange, insurance brokers, leasing companies, money transfer companies, postal operators, dealers in precious metals and stones, real estate agents, notaries, lawyers, auditors, pawn shops, lotteries

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, credit unions, micro-credit institutions, securities brokers, members of the stock exchange, insurance brokers, leasing companies, postal operators, dealers in precious metals and stones, real estate agents, notaries, lawyers, auditors

Number of STRs received and time frame: 4,125 - November 2009 to April 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 42 - January to November 2009

Convictions: Eight, covering 97 individuals - January to November 2009

Assets forfeited: criminally: 725 million UZS (approximately $500,000) in 2009 civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Uzbekistan’s legal system is generally susceptible to corruption and political influence. Legislation to reestablish AML measures has been adopted piecemeal since April 2009, leading to confusion from vague requirements, incomplete procedures, and occasional conflicts with banking regulations. The short time period since reimplementation makes it difficult to evaluate the effectiveness and adaptability of the system, and government secrecy surrounding cases and statistics inhibits evaluation. The Prosecutor General’s Office attempts to maintain secrecy by not releasing the criteria for identifying suspicious transactions, even to banks. Fearing the consequences of not reporting criminal activity, banks have adopted excessively cautious policies that lead to significant over-reporting.

Ambiguities in the law make it difficult to determine the division of authority among the Prosecutor General’s Office and other law enforcement bodies in money laundering cases. Aside from the Financial Intelligence Unit (FIU), the Ministry of Internal Affairs and the National Security Service also investigate money laundering and terrorist financing, respectively, and both are making efforts to build financial crime departments.

The ability to freeze assets is limited; financial institutions can hold suspicious transactions for three business days, and the FIU can extend that by two days. After five business days the transaction must be resumed unless the assets can be seized as the result of a criminal case, leaving a very narrow window for investigation. The porous borders also allow for cash to exit Uzbekistan into neighboring countries.

Vanuatu

Vanuatu is not a regional financial center, and there are no free trade zones. Although its overall economy is primarily based in agriculture, Vanuatu’s robust offshore banking sector and history of strict bank secrecy provisions make it vulnerable to money laundering. The offshore banking sector includes eight international banks, 3,600 international business companies, along with offshore trusts and captive insurance companies.

The Reserve Bank of Vanuatu (RBV) regulates the offshore banking sector and in recent years has strengthened domestic and offshore financial regulation in response to international pressure citing higher potential for money laundering. Shell banks are banned.

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, insurance companies, securities companies, foreign exchange instrument dealers, money remittance dealers, casinos, lawyers, accountants, trust and company service providers, auditors, real estate agents, and car dealerships

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, insurance companies, securities companies, foreign exchange instrument dealers, money remittance dealers, casinos, lawyers, accountants, trust and company service providers, auditors, real estate agents, and car dealerships

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

Vanuatu 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 report can be found here:

http://www.apgml.org/documents/docs/17/Vanuatu%20ME2%20_Final_.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

The Government of Vanuatu (GOV) should continue to initiate outreach to all reporting institutions regarding CDD obligations, as well as establish legislative requirements for financial institutions to have policies and procedures to address risks arising from new or developing technologies and non-face-to-face businesses, in particular internet accounts.

Financial institutions are required to immediately freeze the accounts of entities involved in terrorism. However, communication between government agencies about the identity of terrorist entities is uncoordinated. The GOV should ensure the appropriate agencies and offices receive the updated UNSCR 1267 lists in a timely manner.

The Attorney General possesses the authority to grant requests for international assistance in a criminal matter, and may require government agencies to assist in the collection of information pursuant to the request. Money laundering is an extraditable offense, but the GOV does not recognize or enforce foreign non-criminal confiscation orders.

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

Venezuela

Venezuela is one of the principal drug-transit countries in the Western Hemisphere. Cocaine produced in Colombia is trafficked through Venezuela to the Eastern Caribbean, Central America, the United States, Europe, and western Africa. In 2010, Mexican drug trafficking organizations gained an increased presence in Venezuela. Venezuela’s proximity to drug producing countries, weaknesses in its anti-money laundering regime, limited bilateral cooperation, and alleged substantial corruption in law enforcement and other relevant sectors continue to make Venezuela vulnerable to money laundering. The main sources of money laundering are proceeds generated by drug trafficking organizations and illegal transactions that exploit Venezuela’s currency controls and its various exchange rates.

Money laundering occurs through commercial banks, exchange houses, gambling sites, fraudulently invoiced foreign trade transactions, smuggling, real estate (in the tourist industry), agriculture and livestock businesses, securities transactions, and trade in precious metals. Venezuela is not a regional financial center and does not have an offshore financial sector, although many local banks have offshore affiliates in the Caribbean. Trade-based money laundering, such as the black market peso exchange, through which money launderers furnish narcotics-generated dollars in the United States to commercial smugglers, travel agents, investors, and others in exchange for Colombian pesos, remains a prominent method for laundering regional narcotics proceeds. It is reported that many black market traders ship their goods through Margarita Island’s free port.

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: 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: The Fund of Deposit Guaranty and Bank Protection; universal, commercial, mortgage, investment, and development banks; representative offices of foreign banks; leasing financers; money market funds; savings and loan entities; exchange houses; foreign exchange operators; credit card issuers; societies and funds of reciprocal guaranties; municipal institutes or credit businesses; insurance companies; casinos; real estate agents; construction companies; car dealerships; hotels, travel agents, and the tourism industry; and dealers in precious metals and stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: The Fund of Deposit Guaranty and Bank Protection, banks, leasing financers, money market funds, savings and loan entities, exchange houses, financial groups, frontier exchange operators, credit card issuers, societies and funds of reciprocal guaranties, municipal institutes or businesses of credit, funds and societies of capital risk, representative offices of foreign banks, insurance and reinsurance companies, casinos, real estate agents, construction companies, car dealerships, hotels and the tourism industry, travel agents, and dealers in precious metals and stones

Number of STRs received and time frame: 1,086 through October 31, 2010

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Ten 2006-2010

Convictions: Seven 2006-2010

Assets forfeited: criminally: Not available civilly: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Venezuela 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://cfatfgafic.org/downloadables/mer/Venezuela_3rd_Round_MER_%28Final%29_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There is little evidence the Government of Venezuela (GOV) has made enforcement of anti-money laundering laws and regulations a priority. Reportedly, many, if not most, judicial and law enforcement officials remain ignorant of anti-money laundering countermeasures. Additionally, although the law includes many financial institutions and designated non-financial businesses and professions as covered entities, no implementing regulations have been developed and, in practice, the majority of entities are not subject to mandatory reporting and customer due diligence requirements. The insurance and securities sectors and the Venezuelan Association of Currency Exchange Houses, which counts all but one of the country’s money exchange companies among its membership, voluntarily comply with the STR reporting requirements.

In 2010, the FATF identified Venezuela as a country with strategic anti-money laundering and counter-terrorist financing (AML/CFT) deficiencies. The resulting action plan includes adequately criminalizing terrorist financing; establishing and implementing adequate procedures to identify and freeze terrorist assets; ensuring a fully operational and effectively functioning financial intelligence unit; implementing adequate customer due diligence guidelines for all sectors, including the securities sector; and establishing adequate STR reporting obligations for money laundering and terrorist financing.

Corruption is a very serious problem in Venezuela and appears to be worsening. Transparency International’s Corruption Perception Index for 2010 ranks Venezuela at 164 of 178 countries on the index. Venezuela has laws to prevent and prosecute corruption, and accepting a bribe is a criminal act. However, the judicial system has been ineffective historically and is accused of being overtly politicized. The current regime of price and foreign exchange controls also has provided opportunities for corruption. Trade-based money laundering and value transfer is a significant problem in Venezuela. In March 2010, 16 individuals were indicted in Miami on charges of conspiracy to launder narcotics proceeds. The case involved trade-based money laundering focused on Venezuela.

Venezuela and the United States signed a Mutual Legal Assistance Treaty (MLAT) in 1997. The Financial Crimes Enforcement Network (FinCEN) suspended the exchange of information with Venezuela’s National Financial Intelligence Unit (UNIF) in January 2007 due to the unauthorized disclosure of information provided by FinCEN, and the relationship has not resumed to date. In 2009 and 2010, there was no money laundering information exchange between Venezuela and the United States.

Vietnam

Vietnam is not an important regional financial center, but is a site of significant money laundering activities. Vietnam has a largely cash-based economy, with both U.S. dollars and gold widely used as a means of exchange and stored value. The main sources of illicit funds in Vietnam are public corruption, fraud, gambling, prostitution, trafficking and counterfeiting of fake goods, and trafficking in narcotics, women, and children. Remittances from the proceeds of narcotics trafficking in Canada and the United States are also a significant source of money laundering, as are narcotics proceeds from traffickers using Vietnam as a transit country.

Vietnam’s banking sector is in transition from a state-owned to a partially-privatized industry. At present, about 55 percent of the assets of the banking system are held by state-owned commercial banks that allocate much of the available credit to state-owned enterprises, many of which are related through interlocking directorates. Almost all trade and investment receipts and expenditures are processed by the banking system, but transactions are not monitored effectively. As a result, the banking system could be used for money laundering through false declarations, including phony investment transactions and over- or under-invoicing exports and imports.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

CRIMINALIZATION OF TERRORIST FINANCING:

Ability to freeze terrorist assets without delay: NO

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

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

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Banks, non-bank financial institutions, lawyers and legal consultancy companies; games of chance, casinos or lotteries; promoters; real estate trading service companies; and traders in gold, silver and precious stones

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Credit institutions, money changers, remittance agents, insurance, securities dealers, casinos and games of chance

Number of STRs received and time frame: 290 STRs (2009 through first quarter 2010)

Number of CTRs received and time frame: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: None

Assets forfeited: criminally: None civilly: None

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Vietnam 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/Vietnam%20ME1.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In October 2010, the Government of Vietnam made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Vietnam committed to implementing an action plan that will adequately criminalize money laundering and terrorist financing, establish adequate procedures to identify and freeze terrorist assets, improve the AML/CFT supervisory framework, enhance customer due diligence and reporting, and strengthen international cooperation. A comprehensive anti-money laundering law, intended to address significant AML/CFT deficiencies, has been drafted and is to be submitted to the legislature by the end of 2011, with the object of enactment by 2012 in accordance with the action plan. Vietnam should also should complete drafting its anti-terrorism law and adopt it by 2012 and promulgate regulations to fully implement its 2005 Decree on the Prevention and Combating of Money Laundering. It should also become a party to the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

The amended AML provisions of the Penal Code took effect on January 1, 2010. Article 251 now defines “money laundering crime” as an independent offense. Article 250 defines the offense of harboring (acquiring, concealing, etc.) or consuming property obtained from the commission of crimes against others. Covered acts under the article include some forms of money-laundering. Article 251 does not meet current international standards; among other weaknesses, the law requires a very high burden of proof (essentially, a confession) to pursue money laundering allegations, so prosecutions are non-existent and international cooperation is extremely difficult. Additionally, legal persons are not subject to criminal liability under the Penal Code. Vietnam is not considering a change because of perceived conflicts with fundamental principles of domestic law.

AML Decree 74 on Preventing and Combating of Money Laundering (Decree 74) specifies STR obligations, but in practice, the Anti-Money Laundering Department (AMLD) of the State Bank of Vietnam (SBV) receives and processes little of the financial information required by Decree 74. All STRs are received in paper form; the AMLD lacks an electronic information reporting system, limiting its ability to collect, store, and analyze financial transactions. Vietnam should provide the AMLD with such a system, and give its law enforcement authorities the necessary resources to investigate and prosecute money laundering, trade fraud, and financial crimes in Vietnam’s informal economy. Decree 74 regulates customer identification and the collection of customer details and documents. It does not explicitly require verification of a customer’s identity, unless the financial institution becomes “suspicious.” Also, there are no legislative or other enforceable obligations that address politically exposed person (PEP) requirements. The concept of “politically exposed persons” is not well understood and no official document defines it.

There is no known exchange of records pursuant to any inter-governmental exchange mechanism, despite Vietnam’s 28 bilateral mutual legal assistance treaties. The Ministry of Public Security (MPS) signed a nonbinding memorandum of understanding with the U.S. Drug Enforcement Administration (DEA) in 2006 to strengthen law enforcement cooperation in combating transnational drug-related crimes, including money laundering. MPS claims, however, that it cannot provide such information due to constraints within the Vietnamese legal system.

Vietnam does not have a comprehensive system for implementing UNSCR 1267 or 1373 and lacks a system for freezing terrorist assets in accordance with these resolutions. While Vietnam has criminalized terrorist financing, it is not criminalized as an autonomous offense.

Yemen

The financial system in Yemen is not well developed, and Yemen remains relatively isolated from the global financial community. Alternative remittance systems, such as hawala, are not subject to scrutiny and are vulnerable to money laundering and other financial abuses—including possible terrorist financing. Yemen has a large underground economy due, in part, to the profitability of the smuggling of trade goods and contraband. The use of khat, a recreational drug produced from a bush grown in parts of East Africa and Arabia, is common in Yemen, and there have been a number of investigations of khat being smuggled from Yemen and East Africa into the United States with profits laundered and repatriated via hawala networks. Money laundering within Yemen, however, is not primarily related to proceeds from illegal narcotics. Instead, criminal proceeds in Yemen tend to emanate from foreign criminal activity, including smuggling by criminal networks, and, possibly, terrorist groups operating locally, although the extent is unknown. Smuggling and piracy are common along Yemen’s sea border with Oman, across the Red Sea from the Horn of Africa, and along the land border with Saudi Arabia.

Yemen does not have an offshore financial center, but does have one free trade zone (FTZ) in the port city of Aden. Identification requirements within the FTZ are enforced. Truckers must file the necessary paperwork in relevant trucking company offices and must wear ID badges. FTZ employees must undergo background checks by police, the Customs Authority and employers. There is no evidence that the FTZ is being used for trade-based money laundering or terrorist financing 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: YES

CRIMINALIZATION OF TERRORIST FINANCING: YES

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 at: http://www.state.gov/j/ct/rls/crt/)

KNOW-YOUR-CUSTOMER RULES:

Covered entities: Financial institutions that accept deposits, provide credit, engage in financial leasing, provide money transfers, exchange and convert currency, issue payment, finance mortgages, sell and purchase foreign currency, deal in securities, invest, manage securities, provide life insurance, and engage in other financial activities as decided by the Prime Minister

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Financial institutions that accept deposits, provide credit, engage in financial leasing, provide money transfers, exchange and convert currency, issue payment, finance mortgages, sell and purchase foreign currency, deal in securities, invest, manage securities, provide life insurance, and engage in other financial activities as decided by the Prime Minister

Number of STRs received and time frame: 35 in 2010

Number of CTRs received and time frame: None

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two

Convictions: None

Assets forfeited: criminally: $5000 civilly: none

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Yemen is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Its most recent evaluation can be found here: http://www.menafatf.org/images/UploadFiles/YEMEN_EN.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There are approximately 448 registered money exchange businesses in Yemen, which serve primarily as currency exchangers in addition to performing funds transfer services. Money transfer businesses are required to register with the Central Bank of Yemen (CBY) and can open offices at multiple locations. The CBY has not performed examinations of the money exchange businesses for anti-money laundering/counter-terrorist financing (AML/CFT) compliance.

Yemen’s financial intelligence unit (AMLIU) has only a few employees and uses the services of field inspectors from the CBY’s Banking Supervision Department for some of the FIU duties. The AMLIU has no database and is not networked to other government data systems. Only a few STRs have been forwarded from the AMLIU to judicial authorities for investigation and possible prosecution. The U.S. Embassy in Sanaa routinely passes requests for information and assistance to the Government of Yemen concerning terrorist financing and other issues, but seldom receives responses.

On December 29, 2009, Yemen’s Parliament passed an AML/CFT law. On January 17, 2010, the law acquired presidential approval, becoming Law No. 1 of 2010 (Law 1). Pending in parliamentary committee since November 2007, the law represents a major step forward in criminalizing money laundering and terrorist financing, and institutionalizing the ability of the Yemeni government to combat these crimes. Law 1 represents more comprehensive AML/CFT legislation to accommodate international standards. Law 1 expands the types of financial institutions the Yemeni government will monitor, to include hawaladars, jewelry shops, lawyers’ associations, and real estate firms.

While Law 1 is a necessary first step in criminalizing money laundering and terrorist financing, the Yemeni government is now challenged with the implementation and enforcement of the law. The government needs to continue to develop an anti-money laundering regime that adheres to international standards. Banks and non-bank financial institutions should enhance their capacity to detect and report suspicious financial transactions to the FIU, including those related to terrorist financing.

Even with the new law, the AMLIU needs substantial improvement of its operational capacity to effectively fulfill its responsibilities. Among other measures: The Republic of Yemen Government (ROYG) needs to investigate the abuse of alternative remittance systems such as hawala networks with regard to money laundering and terrorist financing. Law enforcement and customs authorities also need to examine trade-based money laundering and customs fraud.

The ROYG has no institutionalized coordination for terrorism matters among the different ministries and has yet to implement steps listed under the UN international terrorism protocols, to which Yemen is a party. The ROYG lacks specific legislation with respect to forfeiture of the assets of those suspected of terrorism. Yemen has not applied UN mandated sanctions or frozen the assets of Sheikh Abdul Majid Zindani, who was added to the UN 1267 Sanctions Committee’s consolidated list in February 2004. There is no information on whether Yemeni authorities have frozen, seized, or demanded forfeiture of other assets related to terrorist financing.

The ROYG should ratify the UN Convention against Transnational Organized Crime.

Yemen is ranked 146 out of 178 countries surveyed in Transparency International’s 2010 Corruption Perception Index.

Zambia

Zambia is not a major financial center. The proceeds of narcotics transactions and money derived from public corruption are the major sources of laundered money. Human trafficking is also a problem. Money laundering takes place in both the formal financial sector and the non-bank financial sector. Money launderers in Zambia have used structuring, currency exchanges, monetary instruments, gambling, under-valuing assets, front businesses, and non-financial institutions to launder their proceeds. Other means include securities, debit/credit cards, bulk cash smuggling, wire transfers, and false currency reporting. Further, some criminals use their proceeds to purchase luxury goods such as vehicles and real estate.

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 money exchanges and remitters

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, money exchanges and remitters, securities dealers and pension funds, insurance companies, leasing companies

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: 0

RECORDS EXCHANGE MECHANISM:

With U.S.: YES

With other governments/jurisdictions: YES

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

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In 2010, the Government of Zambia (GOZ) passed legislation creating a financial intelligence unit (FIU) independent from law enforcement agencies. The FIU has received little government funding and is not yet operational. The FIU has received some assistance from international donors and continues to look for capacity building and financial support. Like much of the Zambian government, authorities tasked with investigating and prosecuting financial crimes are hampered by a lack of resources and capacity.

In 2010, the major shareholder of Zambia’s sixth largest bank was charged with money laundering in connection with an illegal ownership stake in the bank. The Bank of Zambia also intervened in the operations of the bank, removed senior management, and dissolved the equity holders’ shares.

The Zambian government is currently developing a number of multi-facility economic zones that are similar to free trade zones.

The GOZ should become a party to the UN International Convention for the Suppression of the Financing of Terrorism.

Zimbabwe

Zimbabwe is not a regional financial center, but it faces problems related to money laundering and official corruption. Regulation and enforcement in the financial sector are weak, mainly due to a lack of trained regulators and investigators and limited asset seizure authority. These deficiencies expose the country to money laundering abuses, but there are no data on the extent of money laundering in Zimbabwe. The exposure is greatest within the financial sector, which includes both formal and informal institutions. Commercial banks, building societies, moneylenders, insurance brokers, realtors, and lawyers in Zimbabwe are all vulnerable to exploitation by money launderers. Financial crime may also be magnified by opportunities to smuggle diamonds.

Anti-money laundering laws are sometimes abused for political purposes. More broadly, corruption sometimes impedes application of Zimbabwe's anti-money laundering mechanisms.

Nearly all transactions in Zimbabwe are now carried out with either the U.S. dollar or the South African rand. The Government of Zimbabwe's (GOZ) switch to this "multi-currency regime" dramatically reduced opportunities for money laundering and financial crime, thereby eliminating multiple exchange rates and opaque foreign-exchange controls. Of late, the parliamentary committee on mining has held officials to account for GOZ actions in the Marange diamond fields, and the minister of finance has implemented a new law to improve accountability at the Reserve Bank of Zimbabwe (RBZ).

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: Commercial banks, acceptance houses, discount houses, money transfer agencies, bureaux de change, insurance companies, and finance houses

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

Covered entities: Banks, acceptance houses, discount houses, money transfer agencies, bureaux de change and cash dealers, insurance companies, finance houses, lawyers, accountants, pension funds, casinos, moneylenders, estate agents, import/export businesses, and trust management and service providers

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2010

Convictions: None in 2010

Assets forfeited: criminally: None in 2010 civilly: None in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: NO

With other governments/jurisdictions: YES

Zimbabwe is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/userfiles/Zimbabwe_detailed_report.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Zimbabwe’s law provides for freezing and forfeiture of assets, and the banking system can quickly freeze deposits. Law enforcement and regulatory agencies lack the resources to combat money laundering vigorously. For example, financial institutions typically receive information related to designations from private sources, not from government agencies. The capacity for broader freezing or forfeiture of terrorist assets is untested.

Zimbabwe does have broad legislation on mutual legal assistance in both civil and criminal cases, and there are no legal or practical impediments to rendering assistance, provided both Zimbabwe and the requesting country criminalize the activity.

The United States, Canada, Australia, and the European Union have imposed targeted financial sanctions and travel restrictions on political leaders and others believed to have been complicit in human rights abuses.



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