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2012 International Narcotics Control Strategy Report (INCSR)--Volume II: Money Laundering and Financial Crimes Country Database--Comoros through India


Report
Bureau of International Narcotics and Law Enforcement Affairs
May 30, 2012

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Comoros

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

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, mutual savings and loans, microfinance institutions, money remitters, real estate agents, lawyers, notaries, accountants, casinos, and dealers in precious metals and stones

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Six in 2010 and 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, mutual savings and loans, microfinance institutions, money remitters, insurance companies, real estate agents, lawyers, notaries, accountants, company and trust service providers, and casinos

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Comoros is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). Its most recent mutual evaluation can be found here: http://www.esaamlg.org/userfiles/Comoros_Mutual_Evaluation_Detail_Report.pdf

Enforcement and implementation issues and comments:

Comoros remains a significantly underdeveloped country with little financial intermediation or sophistication. Comoros has introduced a number of measures to establish an anti-money laundering/combating the financing of terrorism (AML/CFT) regime. Despite paper progress suggesting compliance with international norms, difficulties brought on by insufficient budgetary discipline, dysfunctional ministries, corruption, and a weak judiciary limit the Comoran AML/CFT efforts. Limited resources and a centralized state that is largely unable to carry out the tasks of a national government hamper the authorities’ ability to enforce the AML/CFT regulations. Government employees are not paid, and local institutions and personnel lack the training and capacity to enforce the law. Comoran government security forces have limited resources and lack training in money laundering, counter-terrorist financing and maritime security. There have been no investigations or convictions for money laundering or terrorist financing.

The financial intelligence unit (FIU) became operational in 2010.

The law on economic citizenship might be attractive to criminals, particularly since the law permits citizenship to those who have been convicted of money laundering or drug trafficking, among other crimes. Authorities state they have implemented strict control measures intended to prevent abuses.

Comoros is ranked 143 out of 183 countries in Transparency International’s 2011 International Corruption Perception Index. Comoros should become a party to the UN Convention against Corruption.

Congo, Democratic Republic of

The Democratic Republic of Congo (DRC) is not considered an important regional financial center. The DRC’s economy remains highly dollarized, and its parallel foreign exchange market is large and tolerated by the government. The largest banknote in circulation is the 500 Congolese franc note (approximately $.50); larger denominations (1,000 Congolese francs and 5,000 Congolese francs) may be put into circulation sometime in the future, but the government is reticent to do so because of inflationary fears. The DRC does not have any free ports or areas designated as free trade zones.

Due to its large geographic size, lack of a functional judicial system, inefficient and burdensome customs and tax policies, chronically low wages, and dominant informal sector, the DRC is particularly vulnerable to money laundering. The DRC has 7,000 km of porous borders with nine countries. State authority and administration is weak because of its vast geographic territory and dilapidated infrastructure, among other challenges. Most economic activity in the DRC takes place in the informal sector, estimated to be up to ten times the size of the formal sector, with most transactions, even those of legitimate businesses, carried out in cash. The accurate reporting of revenues is thus very difficult. Major sources of money laundering in the DRC include illegal import/export activities, customs and tax fraud, tax evasion, misappropriation of public funds, exploitation of minerals and other valuable materials, casinos, the sale of prohibited products and services, and bribery. Money laundering in the DRC is neither primarily nor significantly related to narcotics proceeds. Gold and diamonds are extensively mined in and routinely smuggled out of the DRC, and most of those cash transactions take place in dollars.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Congolese Central Bank (BCC), financial and credit institutions, money and funds transfer firms, financial companies, microfinance institutions, money exchangers, insurance companies, leasing companies, financial intermediaries, postal checking systems, transferable securities and stock exchange market operations, gaming companies, notaries, lawyers, real estate agencies, travel agencies, auditors, certified public accountants, tax consultants, and sellers of works of art, antiques and precious stones

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 170 in 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: BCC, financial and credit institutions, money and funds transfer firms, financial companies, microfinance institutions, money exchangers, insurance companies, leasing companies, financial intermediaries, postal checking systems, transferable securities and stock exchange market operations, gaming companies, notaries, lawyers, real estate agencies, travel agencies, auditors, certified public accountants, tax consultants, and sellers of works of art, antiques and precious stones

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Two in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Banks and non-banking financial institutions are required to report all transactions over $10,000. Banks find this requirement burdensome, since 90% of transactions using the banking system meet this threshold. New computerized communications and accounting networks have been installed in banks, which will make it easier to trace formal financial transactions. In 2008, the Government of the Democratic Republic of the Congo (GDRC) established a financial intelligence unit (CENAREF) to combat money laundering and misappropriation of public funds. CENAREF is responsible for collecting and analyzing information and conducting investigations on money laundering (ML) and terrorist financing (TF) cases, and advises the GDRC on how to combat ML and TF.

Limited resources hamper the government’s ability to enforce AML regulations, and local institutions and personnel lack training and capacity to fully enforce the law and its attendant regulations. Lack of funding continues to prevent CENAREF from fully carrying out its responsibilities. A weak judicial system also impedes enforcement of AML regulations. Corruption is a severe problem. The DRC is ranked 168 out of 183 countries in Transparency International’s 2011 Corruption Perception Index.

Even though the DRC does not have formal exchange mechanisms with the United States, CENAREF does occasionally share information with the U.S. on money laundering and terrorism finance cases. There are no legal restrictions in the DRC prohibiting the sharing of financial account information with foreign entities. In 2011, the DRC signed a mutual assistance agreement with Belgium’s CTIF (Cellule des Traitements des Informations Financières).

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

Congo, Republic of

The Republic of the Congo (ROC) is not a major regional financial center, nor is it a major narcotics destination or source country. The port city of Pointe Noire is frequently utilized as a transit point for narcotics en route to Europe. The ROC, as part of the Euro-CFA Zone Agreement, deposits reserves with the Bank of Central African States (BEAC), a regional Central Bank serving six Central African countries. BEAC operates the Economic Intervention Service that harmonizes the regulation of currency exchanges in the member states of the Central African Economic and Monetary Community (CEMAC). The BEAC supervises the ROC’s banking system, though not particularly closely. The ROC’s economy is cash-dependent, relying very little on electronic transfers and checks. Business executives and government officials frequently travel and carry large quantities of cash in order to settle transactions. Most financial crimes involve domestic corruption and embezzlement. Laundering money through real estate investments is a growing problem.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, money exchangers, accountants, notaries, thrifts and money remitters

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, money exchangers, accountants, notaries, money remitters, jewelry shops, car dealers, casinos and law firms

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

The ROC is a member of the Central African Action Group against Money Laundering (French acronym GABAC), an entity in the process of becoming a Financial Action Task Force (FATF)-style regional body.

Enforcement and implementation issues and comments:

Transparency and corruption remain significant problems. For example, in 2010, the International Monetary Fund (IMF) discovered the ROC had diverted reserves to several Chinese bank accounts, although the reserves should have been deposited in the BEAC. Upon discovery of the illegal fund transfer, the IMF called for a repatriation of these funds to the BEAC. The ROC complied in mid-2011, but evidence suggests that additional diversions have since occurred. Several ROC officials are former well-placed BEAC officials, and there are concerns the embezzlement scandals at the BEAC between 2004 - 2008 involved current ROC officials. The ROC is ranked 154 out of 183 countries in Transparency International’s 2011 Corruption Perception Index.

As a member of the CEMAC, the country adopted the community’s 2007 regional anti-money laundering/counter-terrorist financing (AML/CFT) regulations. These rules establish penalties for money laundering and terrorist financing, and also regulate the operations of banks, money changers, and casinos. In 2008, the Government of the Republic of Congo (GROC) formed a special committee to handle both corruption and money laundering issues called the Agence Nationale d’Investigation Financière (ANIF).

The ROC has most of the necessary legal, regulatory and institutional frameworks to combat international financial crimes. These institutions nonetheless are often staffed with poorly trained employees. There is little initiative or financial crimes enforcement authority. A lack of transparency, reliable statistics and data hamper the assessment of the GROC’s AML/CFT programs.

The GROC should become a party to the UN Convention against Transnational Organized Crime.

Cook Islands

The Cook Islands is not a regional financial center and has no free trade zones. The proceeds of domestic crime are generally small. There is evidence of concealment stemming from drug and misappropriation cases, with total proceeds that are significant relative to the size of the economy. The Cook Islands substantial offshore financial sector is an important part of the country’s economy, but also represents its most significant vulnerability to money laundering and terrorist financing activities. The Government of the Cook Islands (GOCI) has taken steps to reduce the risks presented by both the offshore sector and its small domestic financial sector.

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

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks (domestic and offshore), offshore insurers and trustee companies

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks (domestic and offshore), offshore insurers and trustee companies

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other: YES

With other governments/jurisdictions: YES

The Cook Islands is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Cook%20Islands%20MER-%20final%20140809.pdf

Enforcement and implementation issues and comments:

The Cook Islands has a generally well-supervised financial industry. The GOCI has significantly enhanced supervision of both the domestic and offshore sectors in the past three years, including the performance of annual on-site examinations of all domestic and offshore financial institutions. Large cash transactions involving locally generated funds are immediately apparent, and suspicious transactions are reported to the Cook Islands Financial Intelligence Unit for further review.

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

The Cook Islands should become party to the UN Convention against Corruption.

Costa Rica

While not a major regional financial center, Costa Rica remains vulnerable to money laundering and other financial crimes, including various schemes that target U.S.-based victims. Money laundering activities are primarily related to the foreign proceeds of international trafficking in cocaine. A sizeable internet gaming industry also launders millions of dollars in illicit proceeds through Costa Rica and offshore centers annually. To a lesser extent, proceeds are laundered in Costa Rica from domestic criminal activities, including trafficking narcotics, persons or arms; fraud; corruption; and contraband smuggling. A significant market exists in the smuggling of contraband liquors from bordering countries. The Government of Costa Rica (GOCR) reports that Costa Rica is primarily used as a bridge to send funds to and from other jurisdictions using, in many cases, companies or banks established in offshore financial centers.

Money laundering occurs across the formal financial sector; the non-financial sector, especially via both licensed and unlicensed money remitters; and within the free trade zones (FTZs). Nicaraguan nationals residing in Costa Rica send over $200 million in remittances annually to family members in their home country, much of which is sent via unlicensed money remitters. Both these unlicensed and licensed money services businesses are a significant risk for money laundering and a potential mechanism for terrorist financing. In addition, Costa Rica’s 35 FTZs, used by approximately 284 companies, are susceptible to money laundering. The smuggling of bulk currency across borders with Panama and Nicaragua is also prevalent. Trade-based money laundering, while utilized, has not been detected with the same frequency as the other typologies described above. The GOCR has not reported investigations of terrorism financing in 2011.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 294 from January – September 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Nine from December 2010 to October 2011

Convictions: Two from December 2010 to October 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Costa Rica is a member of the Financial Action Task Force on Money Laundering in South America (GAFISUD), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Enforcement and implementation issues and comments:

In October 2010, the Judicial Branch appointed a new Attorney General. As part of a subsequent restructuring, in December 2010, the Attorney General’s Office (AGO) transferred the prosecution of money laundering cases from the Organized Crime Bureau to the Economic Crimes Bureau. In addition, the Attorney General appointed a new bureau chief to the renamed Economic Crimes, Taxation, and Money Laundering Bureau. Based on these changes, beginning in January 2011, there has been a significant emphasis placed on money laundering investigations, including those involving advanced typologies and transnational crime. Nevertheless, the AGO and the Judicial Police still lack adequate resources to effectively investigate and prosecute many of the complex money laundering cases linked to Costa Rica.

Moreover, the legal doctrine of “self-laundering” prevents prosecutors from charging money laundering in many cases. Under Costa Rican law, a person who commits a predicate crime and who subsequently launders the proceeds of that crime cannot be charged with money laundering as an additional offense (e.g., a drug dealer who is convicted on drug charges cannot also be prosecuted for laundering the drug proceeds). In Costa Rica, money launderers oftentimes use legitimate businesses and shell corporations to launder illegal proceeds. However, criminal liability does not extend to legal persons.

Land-based casinos and internet gaming companies are effectively not regulated in Costa Rica and represent a significant risk for money laundering. The online gaming industry transacts billions of dollars annually and employs thousands of Costa Rican nationals. Most of its proceeds are laundered in offshore centers but millions of dollars still circulate in Costa Rica.

The GOCR reports that Costa Rican attorneys oftentimes conduct large cash purchases of real estate on behalf of persons located in the United States. While many of these transactions appear legal, the GOCR has concerns that some of the international wire transfers ostensibly for legitimate real estate transactions are, in fact, the proceeds of illegal activities in the United States.

In 2011, the GOCR pursued its first case under the 2009 civil forfeiture law. The presiding judge subsequently referred the case to the Costa Rican Supreme Court for an advisory opinion which has yet to be issued. It is still unclear whether the GOCR will assist other countries in obtaining non-conviction-based forfeiture.

While it has demonstrated a genuine commitment to strengthening its anti-money laundering/counter-terrorist financing (AML/CFT) regulatory regime, the GOCR has not fully implemented recently enacted risk-based regulations. The GOCR and its regulators have focused considerable attention on the formal financial sector; however, they have not adequately supervised money service businesses, especially money remitters, and issuers, sellers or redeemers of travelers checks and postal money orders. While the FIU is tasked with oversight authority with respect to these entities, it lacks the resources, personnel, or capacity to comply with this mandate. Additionally, designated non-financial businesses and professions (DNFBPs), such as dealers of precious stones and metals, accountants, real estate agents, lawyers and notaries, are not covered by the AML/CFT provisions.

Cote d’Ivoire

Following a civil war and a nine-year political/military crisis during which the country was split in two, President Ouattara was officially sworn in on May 6, 2011, and has established a new cabinet. Authorities are concerned by the illegal international transfer of funds by the elites of the previous regime. Former President Gbagbo, his wife, and other members of the former regime have been charged with economic crimes including aggravated theft and embezzlement of public funds. Despite this troubled situation, the Government of Cote d’Ivoire (GOCI) has made progress on its AML/CFT regime.

A legacy of poor governance and an abnormal political situation has left rule of law implementation poor. Ivoirians have become increasingly involved in regional criminal activities such as the smuggling of consumer goods and agricultural products, reportedly as part of networks organized by nationals from Nigeria and the Democratic Republic of the Congo, and the subsequent laundering of illicit funds. Smuggling over Cote d’Ivoire’s porous borders, motivated principally by a desire to avoid taxes, generates illicit funds that are primarily laundered via informal money services businesses and exchange houses. In addition, authorities believe criminal enterprises use the formal banking system and the used car and real-estate industries to launder funds. Hizballah is present in Cote d'Ivoire and conducts fundraising activities, mostly among the large Lebanese expatriate community. The extent to which Ivorian territory is involved as a transshipment point for drugs from South America to Europe concerns law enforcement officials. Since 2008, the GOCI has been negotiating to purchase a site to build a free trade zone for information technology and biotechnology in Grand Bassam.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, other financial institutions, casinos and exchange houses

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 19 from January to October 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, other financial institutions, exchange houses, stock brokerage firms, insurance companies, casinos, cash couriers, national lotteries, non-governmental organizations, travel agencies, art dealers, gem dealers, accountants, attorneys, and real estate agents

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 11 from January 2008 to October 2011

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Cote d’Ivoire is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. GIABA has not yet conducted a mutual evaluation of Cote d’Ivoire.

Enforcement and implementation issues and comments:

The banking sector caters largely to commercial enterprises rather than small-account holders. Many Ivoirians use informal money couriers, money transfer organizations, hawaladars and, increasingly, goods transportation companies to transfer funds domestically and within the region. There is no regulation of domestic money and value transfer services.

The economic police, responsible for investigating financial and white-collar crimes, have limited operations as a result of inactivity in the justice system. During the political/military crisis the justice system became highly politicized, and was largely absent in the CNO zones (central, north, west).

Cote d’Ivoire is still under sanctions imposed by the United Nations Security Council stemming from the civil war and political/military crisis. The sanctions include an arms embargo and a ban on the importation of rough diamonds from Cote d’Ivoire.

The AML law provides for the establishment of a financial intelligence unit (FIU) known as CENTIF. CENTIF can share information with other FIUs in the West African Economic and Monetary Union (WAEMU) and with those of non-WAEMU countries on a reciprocal basis and with the permission of the Ministry of Economy and Finance. A lack of resources, weak judicial and law enforcement systems, and weaknesses in the regulatory and legal framework on money laundering and terrorist financing constitute the major challenges for CENTIF.

Cote d’Ivoire should become a party to the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

Croatia

Croatia is not an offshore financial center. Croatian authorities consider most money laundering in the country to be of domestic origin, involving the proceeds of illegal domestic narcotics sales and economic crimes, such as fraud and tax evasion. Although Croatia is part of a major transit route for drugs entering Europe, there is little evidence that these networks have utilized Croatia’s financial systems. Public corruption has been linked to money laundering, and numerous investigations are underway; however, direct links have yet to be proven.

Money laundering in Croatia occurs primarily through non-resident accounts, transfers to offshore banks using counterfeit documents, deposits in foreign currency accounts, and has often been linked to the real estate market and the purchase of high-end automobiles. Authorities have increased their efforts in the investigation of financial crimes. This trend reflects a greater push in the application of related legislation than an actual rise in such crimes. There is no indication that trade-based money laundering exists in Croatia.

There is not a significant black market in Croatia. Croatia does not represent a sizeable market for smuggled goods, but is used as a transit route for goods destined for other countries in the region. Croatian authorities are concerned about the use of Croatia’s ports and borders for the smuggling of black market goods. The Export Border Security Office is working to tighten controls and screening to prevent such smuggling.

Croatia has 13 operating free trade zones (FTZs) designed to attract investment. Companies operating in the zones benefit from lower taxes and customs as well as value-added duty-free import of raw materials. Companies operating in FTZs are subject to the same regulation and supervision as all other businesses in the country.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, loan brokers, and lending companies; savings banks and credit unions; companies that issue payment instruments, rent safe-deposit boxes, or perform payment option services; the Croatian Post Office; investment fund and asset management companies; pension companies; companies authorized to do business with financial instruments; insurance companies and intermediaries; issuers of electronic money; authorized exchange offices; all gaming-related providers; pawnshops; leasing firms; guarantors; dealers in precious metals, gems, artistic or antique items; auctioneers; lawyers, notaries, auditors, accountants and tax advisors

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 113 January – June 2011

Number of CTRs received and time frame: 24,912 January – June 2011

STR covered entities: Banks, loan brokers, and lending companies; savings banks and credit unions; companies that issue payment instruments, rent safe-deposit boxes, or perform payment option services; the Croatian Post Office; investment fund and asset management companies; pension companies; companies authorized to do business with financial instruments; insurance companies and intermediaries; issuers of electronic money; authorized exchange offices; all gaming-related providers; pawnshops; leasing firms; guarantors; dealers in precious metals, gems, artistic or antique items; auctioneers; lawyers, notaries, auditors, accountants and tax advisors

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Five January - June 2011

Convictions: None January - June 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Croatia is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Croatia_en.asp

Enforcement and implementation issues and comments:

In addition to the Law on Prevention of Money Laundering and Terrorist Financing there are nine additional relevant regulations in force. Aside from cash, the laws also require covered entities to report all transactions involving gold, precious metals, and rare stones, as well as other types of monetary instruments and financial paper.

The Croatian National Bank, the Financial Inspectorate and the Croatian Financial Services Supervisory Agency oversee and examine financial institutions for compliance with anti-money laundering legislation. These offices are adequately staffed, and personnel are generally adequately trained.

Through its regulatory authority, the Ministry of Finance requires financial institutions to use specialized software to facilitate compliance with related reporting requirements. The Anti-Money Laundering Department, Croatia’s financial intelligence unit (FIU), oversees all non-bank financial institutions and designated non-financial businesses and professions. Most suspicious activity reports in Croatia are made by banks.

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

The Government of Croatia has sufficient mechanisms in place and tools at its disposal to effectively combat money laundering and financial crimes; incidences of these activities remain rare. However, a lack of expertise in financial crimes matters among the police and judiciary stands in the way of an even more efficient system. Attempts at educating experts in this arena have proven helpful. With Croatia expected to join the EU in July 2013, its ability to successfully combat money laundering and financial crimes is being scrutinized, a process which has already led to increased capacity and expertise in this area.

Cuba

Cuba is not considered a regional financial center. Cuban financial practices and U.S. sanctions prevent Cuba’s banking system from being fully integrated in the international financial system. The government-controlled banking sector, low internet and cell phone usage rates, lack of government and legal transparency, and threat of seizures related to the U.S. embargo all render Cuba an unattractive location for money laundering. There is a significant black market in Cuba that operates as a supply and demand market parallel to the heavily subsidized and rationed formal market controlled by the state.

The U.S. Government issued the Cuban Assets Control Regulations in 1963, under the Trading with the Enemy Act. The regulations impose many restrictions on travel and remittances to Cuba and prohibit import of most products of Cuban origin and, with some exceptions, export of goods from the U.S. to Cuba. Additionally, a number of U.S.-based assets of the Cuban government (GOC) or Cuban nationals are frozen. In 2009 and again in 2011, some of the restrictions related to travel and remittances were adjusted.

Cuba’s geographic location between drug-supplying and drug-consuming countries presents challenges for the authorities. Cuba has little foreign investment and a small presence by international businesses, and no offshore casinos or internet gambling sites. There are no free trade zones, although the government has announced it is developing one as part of the expansion of the Mariel port in northwestern Cuba.

Approximately $1 billion in annual remittances are sent to Cuba from the United States. These funds are traded for Cuban pesos at government foreign exchange houses, as most dollar transactions are forbidden. In late 2010, Western Union was allowed to begin disbursing Cuban Convertible Pesos (CUC) to recipients on the island, saving customers the 10% fee for cash exchanges into CUC from dollars. This development, coupled with new regulations on remittances, has probably driven up remittance flows well above the often-stated figure of $1 billion.

As noted in the October 2011 Financial Action Task Force (FATF) Public Statement, Cuba has not engaged with the anti-money laundering/combating the financing of terrorism (AML/CFT) community and has not committed to compliance with the international standards.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, money exchangers and remitters, financial management firms

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, money exchangers and remitters, financial management firms

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdiction: Not available

Cuba does not belong to a FATF-style regional body.

Enforcement and implementation issues and comments:

During 2011 there were no significant changes in GOC policies or regulations concerning AML/CFT. Cuba’s secretive and opaque national banking system hampers efforts to monitor the effectiveness and progress of Cuba’s AML/CFT regime. The GOC claims to be in full compliance with international counter-terrorism conventions and to have taken into account international standards.

Cuba has bilateral agreements with a number of countries related to combating drug trafficking. It is unclear whether any of these agreements include mechanisms to share information related to financial crimes or money laundering.

The GOC has continued a high profile campaign against corruption, investigating and prosecuting Cuban officials and foreign businesspeople. In August 2011, the government held what it claimed was its first money laundering prosecution, trying and sentencing a resident French businessman to 15 years in prison, with shorter sentences for his Cuban wife and seven other Cubans linked to the case. The charges were related to the 2004 sale of his sailboat in Cuba, which was later interdicted off the coast of Africa with three tons of cocaine aboard. However, evidence introduced at the trial allegedly showed that the suspect had reported the proceeds from the sale and deposited them in a Cuban bank. The French Government reportedly informed the GOC it did not believe the man was involved in trafficking or money laundering. For these reasons, many observers are skeptical that money laundering was involved.

Cuba should increase the transparency of its financial sector and increase its engagement with the AML/CFT community in order to increase its capacity to fight illegal activities. It also should increase the transparency of criminal investigations and prosecutions, and make its trials public.

Curacao

In late 2010, Curacao became a new autonomous country within the Kingdom of the Netherlands. Curacao enjoys a high degree of autonomy on most internal matters but defers to the Kingdom of the Netherlands (KON) in matters of defense, foreign policy, final judicial review, human rights, and good governance. Curacao is a regional financial center and a transshipment point for drugs from South America bound for the United States and Europe. Money laundering is primarily related to proceeds from illegal narcotics. Money laundering organizations can take advantage of banking secrecy and use offshore banking and incorporation systems, economic zone areas, and resort/casino complexes to place, layer and launder drug proceeds. Another possible area of money laundering activity may be through wire transfers between the island and the Netherlands. Bulk cash smuggling is a continuing problem due to the close proximity of Curacao to South America.

Curacao has two free economic zones. It is not known to what extent “contrabanding” (using bulk cash to buy actual products which are shipped to South America and sold, thus legitimizing the profits) occurs. The worldwide financial recession has significantly slowed the economic activities of the zones. Curacao has an active “e-zone” which provides potential e-commerce investors a variety of tax saving opportunities and could be vulnerable to illegal activities.

Curacao’s offshore financial sector consists of trust service companies providing financial and administrative services to an international clientele, including offshore companies, mutual funds, and international finance companies. The extent of this sector is not clear, but it has declined in scale due to the worldwide financial crisis. Banking regulations require international banks to have a physical presence and maintain records on the island. Bearer shares of international companies must be kept in custody and onshore companies are not allowed to have bearer shares. Several casinos and Internet gaming companies operate.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Local and international banks, saving banks, money remitters, credit card companies, credit unions, life insurance companies, insurance brokers, company and other service providers , casinos, customs, lawyers, notaries, accountants, tax advisors, jewelers, car dealers, real estate agents, administration offices, and other tax, legal, and accountancy experts

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 24 - January - May 2010

Convictions: 23 - January - May 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Curacao is a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. The first AML/CFT evaluation of Curacao occurred in August/September of 2011. Once adopted, the mutual evaluation report will be found here: http://www.cfatf-gafic.org/mutual-evaluation-reports.html

Enforcement and implementation issues and comments:

A new penal code was passed by parliament and was to be published on November 15, 2011. Terrorism financing is now specifically criminalized and legal persons are subject to criminal and administrative penalties.

Curacao should ensure that it continues its regulation and supervision of the offshore sector and free trade zones, as well as pursuing money laundering investigations and prosecutions. Curacao should work to fully develop its capacity to investigate and prosecute money laundering and terrorist financing cases.

The Mutual Legal Assistance Treaty between the KON and the U.S. applies to Curacao; however, the treaty is not applicable to requests for assistance relating to fiscal offenses addressed to the Netherlands Antilles.

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

Cyprus

Since 1974, Cyprus has been divided de facto into the government-controlled two-thirds of the island and the Turkish Cypriot-administered one-third. The Government of the Republic of Cyprus (ROC) has continued to be the only internationally recognized authority; in practice, its authority extends only to the government-controlled area. In 1983, the Turkish Cypriots declared an independent “Turkish Republic of Northern Cyprus” (“TRNC”). The United States does not recognize the “TRNC,” nor does any country other than Turkey. This section of the report discusses the area controlled by the ROC. A separate section on the area administered by Turkish Cypriots follows.

Cyprus is a major regional financial center with a robust financial services industry and a significant amount of nonresident businesses. A number of factors have contributed to the development of Cyprus as a financial center: a preferential tax regime; double tax treaties with 44 countries (including the United States, several European Union (EU) nations, and former Soviet Union nations); well developed and modern legal, accounting and banking systems; a sophisticated telecommunications infrastructure; and EU membership. There are no legal or substantive distinctions between domestic and offshore companies. Cyprus has also lifted the prohibition from doing business domestically, and companies formerly classified as offshore are now free to engage in business locally. International business companies are allowed to be registered in Cyprus but their ultimate beneficial ownership must be disclosed to the authorities. There are over 240,000 companies registered in Cyprus, many of which belong to non-residents. The same disclosure, reporting, tax and other laws and regulations apply equally to all registered companies.

Like any financial center, Cyprus faces risks from money laundering and illicit finance activities. The Cypriot authorities are aware of those risks and take legislative and other measures to counter and suppress such activities. The biggest threats for money laundering are primarily from simple financial crime domestically and tax evasion internationally. There is no significant black market for smuggled goods in Cyprus. What little black market trade exists is usually related to small scale transactions, typically involving fake clothing, pirated CDs/DVDs and cigarettes moved across the UN-patrolled buffer zone separating the ROC from the “TRNC”.

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

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, cooperative credit institutions, securities and insurance firms, payment institutions including money transfer businesses, trust and company service providers, auditors, tax advisors, accountants, real estate agents, dealers in precious stones and gems, and in certain cases, attorneys

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 510 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, cooperative credit institutions, securities and insurance firms, payment institutions including money transfer businesses, trust and company service providers, auditors, tax advisors, accountants, real estate agents, dealers in precious stones and gems, and in certain cases, attorneys, plus any person who in the course of his profession, business or employment knows or reasonably suspects that another person is engaged in money laundering or terrorist financing activities

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 41 in 2010

Convictions: 15 in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

Area Administered by Turkish Cypriots

The Turkish Cypriot community continues to lack the legal and institutional framework necessary to provide effective protection against the risks of money laundering, although significant progress has been made in recent years with the passage of “laws” better regulating the onshore and offshore banking sectors and casinos. There are currently 21 domestic banks in the area administered by Turkish Cypriots and Internet banking is available.

The offshore banking sector remains a concern. The offshore sector consists of 11 banks and 90 companies. The offshore banks may not conduct business with residents of the area administered by Turkish Cypriots and may not deal in cash. The “Central Bank” provides the regulation and licensing of offshore banks and audits the offshore entities, which must submit an annual report on their activities. The “law” permits only banks previously licensed by Organization for Economic Co-operation and Development (OECD)-member nations or Turkey to operate an offshore branch in northern Cyprus.

The Turkish Cypriot community is not part of any FSRB and thus is not subject to normal peer evaluations. Turkish Cypriot authorities have taken steps to address the risk of financial crime, including enacting an “anti-money laundering law (“AMLL”)” for the area and formally establishing an FIU equivalent. The “AMLL” aims to reduce the number of cash transactions in the area administered by Turkish Cypriots as well as improve the tracking of any transactions above 10,000 Euros (approximately $13,000).

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 105 in 2011 (as of October 30, 2011)

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: YES – with Turkey only

The area administered by Turkish Cypriots is not a member of any FSRB.

Enforcement and implementation issues and comments:

Despite the 2009 promulgation of more strict “laws,” the 24 operating casinos (four in Nicosia, five in Famagusta and 15 in Kyrenia) remain essentially unregulated due to the lack of an enforcement or investigative mechanism by the casino regulatory body and efforts to de-criminalize any failure by casinos to follow KYC regulations.

Banks and other designated entities must submit STRs to the “FIU”. The “FIU” then will forward any STRs to the five-member “Anti-Money Laundering Committee” which decides whether to further refer suspicious cases to the “attorney general’s office,” and then if necessary, to the “police” for further investigation. The five-member committee is composed of representatives of the “Ministry of Economy,” “Money and Exchange Bureau,” “Central Bank,” “police” and “customs”.

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

Czech Republic

The Czech Republic has a small, export-oriented economy. However, the country’s central location in Europe and openness as a market economy leave it vulnerable to money laundering. Fraud and tax evasion are reportedly the primary sources of laundered assets in the country. Czech officials estimate that organized crime in the country generates approximately $40 billion annually. In 2011, officials seized illegal assets valued at approximately $110 million.

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

The Czech Republic is home to a significant black market for smuggled cigarettes and other tobacco products, as well as pirated products from Asia, including CDs, DVDs, and counterfeit designer goods. The Czech Customs Administration has found that Asian criminal groups use a portion of the illegal funds from contraband smuggling for the purchase of real properties, which they then use for business activities. There are 11 free trade zones operating in the Czech Republic, but Czech authorities do not consider them to be vulnerable to money laundering.

Banks, investment companies, real estate agencies, currency exchange offices, casinos, and other gaming establishments all have been used to launder criminal proceeds. There is weak anti-money laundering regulatory oversight of the gaming industry. A further concern is the widespread use of freely transferable bearer shares among Czech companies that obscures true ownership.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, currency exchanges, insurance companies, and postal license holders; securities dealers and exchanges; gaming enterprises; attorneys, trusts and company service providers; realtors, notaries, accountants, tax advisors, and auditors; pawnshops and dealers of secondhand goods, including vehicles, and of precious metals and stones

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,540 from January to September 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, currency exchanges, insurance companies, and postal license holders; securities dealers and exchanges; gaming enterprises; attorneys, trusts and company service providers; realtors, notaries, accountants, tax advisors, and auditors; pawnshops and dealers of secondhand goods, including vehicles, and of precious metals and stones

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 34 from January to November 20111

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

The Czech Republic is a member of the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Czech_en.asp

Enforcement and implementation issues and comments:

Two aspects of the Czech legal framework continue to constrain efforts to prosecute money laundering. First, prosecutors must prove – without a doubt – that the accused also committed a predicate offense resulting in the laundering of assets. Second, a court can only sentence somebody to prison for one crime, even if several crimes were committed. Convictions for predicate offenses generally result in prison sentences at least as long as those for money laundering, so prosecutors have little motivation to pursue money laundering convictions.

In 2011, despite an environment of fiscal austerity in which most Czech government ministries are facing budget cuts, the Financial Intelligence Unit (FIU) at the Ministry of Finance added ten new staff members. The Unit for Combating Corruption and Financial Crimes also added resources that will focus primarily on asset seizure.

The Czech Republic permits bearer shares, which are widely used by Czech companies. As a result, there is not reliable ownership transparency or adequate reliability of registered information. Although KYC rules require companies to provide financial institutions with evidence of the identities of beneficial owners holding more than a 25% stake in the company, the reliability of company-provided data has sometimes proved questionable. Law enforcement personnel acknowledge that bearer shares are obstacles in their financial investigations because they obscure true ownership. According to a January 2011 report by the Czech research agency ńĆekia, there are roughly 12,000 joint stock companies that issue bearer shares in paper form, accounting for over half of all joint stock companies in the Czech Republic.

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

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

Denmark

Denmark is not a major financial center and does not have a serious problem in the area of financial crimes. Money laundering activity is generally from foreign criminal activity and is primarily related to the sale of illegal narcotics, specifically cocaine, heroin and amphetamines. Furthermore, outlaw motorcycle gangs have been involved in a range of offenses, including narcotics-related offenses, smuggling of goods, and various financial crimes. There are no indications of trade-based money laundering as it relates to drug trafficking in Denmark and public corruption is virtually non-existent. Denmark is geographically vulnerable to serving as a transit country for smuggling into Sweden and Norway.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,316 in 2010

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 306 in 2009

Convictions: 158 in 2009

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Denmark is a member of a Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/1/26/37588381.pdf

Enforcement and implementation issues and comments:

The Government of Denmark has a comprehensive anti-money laundering/counter-terrorist financing (AML/CFT) regime and has been cooperative with the United States in drug money laundering investigations. Denmark and the United States have a Customs Mutual Assistance Agreement which facilitates information sharing between the customs administrations of the two countries. Denmark should continue to enhance its laws and regulations as necessary to adhere to international standards, including extending its AML/CFT requirements to cover gaming establishments and Internet gaming providers.

Djibouti

Djibouti is one of the most stable countries in the Horn of Africa. It is a minor financial hub in the sub-region, thanks to its U.S. dollar-pegged currency and its unrestricted foreign exchange. Djibouti’s economy continues to grow at an annual rate of over 4% of GDP due to a surge in foreign direct investment inflows – primarily from the countries of the Gulf Cooperation Council (GCC) – in the port, construction, and tourism sectors. Officials from the Central Bank have not reported any specific instances of money laundering. The use of hawala is prevalent in the region. Informal and black markets for goods remain important and are sometimes used in counter-valuation. Smuggled goods consist primarily of highly taxed cigarettes, alcohol, and fuel. Due to Djibouti’s strategic location and its cultural and historical trading ties, Djibouti-based traders and brokers are active in the region. Djibouti currently hosts no offshore banks; however, its banking laws explicitly permit offshore institutions. The number of locally operating banks has increased from two to eleven in the past seven years.

The Djibouti Free Zone, inaugurated in 2004 and managed by Dubai’s Jebel Ali Free Zone, has now almost reached capacity. A new larger free zone and separate heavy equipment and automobile free zone are under construction.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Credit establishments, financial institutions and intermediaries, and any individual or entity that carries out, controls or gives advice on transactions involving deposits, exchanges, investments, conversion or any other movements of capital, to include banks, money transfer agents, money changers, casinos, notaries, and attorneys

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Ten

Number of CTRs received and time frame: None

STR covered entities: Credit establishments, financial institutions and intermediaries, and any individual or entity that carries out, controls or gives advice on transactions involving deposits, exchanges, investments, conversion or any other movements of capital, to include banks, money transfer agents, money changers, casinos, notaries, attorneys, and other non-financial entities

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

Although the Government of Djibouti (GOD) enacted its anti-money laundering law in 2002 and established a financial intelligence unit in 2008, enforcement of the law continues to be a major challenge. Though Djibouti makes an effort to control all formal transaction points, greater resources and independence would improve the oversight capabilities of the Central Bank and the Fraud Investigation Unit (FIU). Because of its free zones, an increasing number of banks, and the introduction of bank-free cash transfers via mobile phones, additional training and resources for the FIU continue to be critical needs. The FIU lacks resources in its regulatory function and to collect and analyze financial intelligence. The FIU does not track large currency transactions without an accompanying STR. In 2011, the FIU focused on accompanying the Central Bank on its supervisory bank examinations in order to raise awareness of anti-money laundering/counter-terrorist financing (AML/CFT) obligations in the financial sector. Djibouti will need to work to apply its AML/CFT regime in all current and planned free zones, and to all professionals involved in financial matters. Djibouti’s FIU has yet to forward a case for investigation or prosecution.

The lack of coordination between divergent law enforcement authorities, including security agencies, further impedes investigations. Law enforcement expertise in financial investigations and targeting financial crimes is minimal. Law enforcement agencies should not wait for a money laundering referral from the FIU but rather should investigate financial crimes at the street level and in the ports. The GOD should continue to focus on improving customs controls on cross-border currency movements, especially at land borders.

Djiboutian magistrates and judges also lack both experience and expertise in prosecuting financial crimes. The Ministry of Justice examines each predicate offense and seldom considers links to money laundering unless currency is directly involved.

Dominica

Dominica is a major offshore center with a large international business company (IBC) presence and internet gaming. Past money laundering cases have involved external proceeds from fraudulent investment schemes, advance fee fraud schemes and the placement of euros related to questionable activities in Guadeloupe and Martinique. Domestic money laundering is primarily connected to drug-related activities.

Dominica has three offshore banks, three Internet gaming companies and 16,253 IBCs. Bearer shares are permitted; however, these shares are immobilized by the requirement the beneficial owners of the bearer shares be disclosed.

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

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, cooperative credit unions, securities and insurance brokers, money exchanges or remitters, financial management firms and registered agents, gaming establishments, lawyers, notaries, real estate brokers, jewelers, auto dealers, and accountants

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 89 as of November 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, cooperative credit unions, money exchangers and couriers, financial management firms and registered agents, real estate brokers, notaries, lawyers, accountants, gaming centers, insurance companies, jewelers, auto dealers, and securities dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three involving six persons

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Dominica is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Dominica_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

During the year, Dominica passed an FIU Act, a new Money Laundering (Prevention) Act (MPLA), amendments to the Terrorist Financing Act, and the Financial Services Unit Act. It is too early to tell whether these new laws address the deficiencies that have been identified by international experts.

While Dominica has passed legislation capturing designated non-financial businesses and professions under its AML/CFT regime, there is no supervisory authority that ensures these entities are subject to monitoring and compliance with the requirements of the MPLA or the Guidance Notes issued by the Money Laundering Supervisory Authority. Although non-bank financial entities are required by law to submit STRs, most are submitted by the formal financial sector.

Dominica should become a party to the UN Convention against Transnational Organized Crime.

Dominican Republic

The Dominican Republic (DR) is not a major regional financial center, despite having one of the largest economies in the Caribbean. The DR continues to be a major transit point for the transshipment of illicit narcotics destined for the United States and Europe. The six international airports, 16 seaports and a large porous frontier with Haiti present Dominican authorities with serious challenges.

Corruption within the government and the private sector, the presence of international illicit trafficking cartels, a large informal economy, and a fragile formal economy make the DR vulnerable to money laundering and terrorist financing threats. The large informal economy is a significant market for illicit or smuggled goods. The under-invoicing of imports and exports by DR businesses is a relatively common practice for those seeking to avoid taxes and customs fees. U.S. law enforcement believes there is some evidence that arms smuggling across Dominican borders has reached systemic levels as there are identifiable networks smuggling weapons into the DR from the U.S. The increase in drug related violence throughout the DR is partially attributable to arms trafficking as evidenced by the seizures of illicit weapons at ports of entry over the past year. The major sources of laundered proceeds stem from illicit trafficking activities, tax evasion and fraudulent financial activities, particularly transactions with forged credit cards.

There are no reported hawala or other money or value transfer services operating in the DR. A significant number of remittances are transferred through banks. Casinos are legal in DR and unsupervised gaming activity represents a significant money laundering risk. While the country has a law creating an international financial zone, implementing regulations will not be issued until the law is reformed to avoid perceptions that the zone will be left out of the DR’s AML regulatory regime.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, currency exchange houses, securities brokers, cashers of checks or other types of negotiable instruments, issuers/sellers/cashers of travelers checks or money orders, credit and debit card companies, remittance companies, offshore financial service providers, casinos, real estate agents, automobile dealerships, insurance companies, and dealers in firearms and precious metals

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, agricultural credit institutions, money exchangers, notaries, gaming centers, securities dealers, art or antiquity dealers, jewelers and precious metals vendors, attorneys, financial management firms and travel agencies

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 12 in 2011

Convictions: Seven in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

The Dominican Republic is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Dominican_Republic_3rd_Round_MER_%28Final%29_English.pdf

Enforcement and implementation issues and comments:

The DR has made progress on the functioning of its financial intelligence unit (FIU), but problems remain. Progress includes greater clarity on the areas covered by disclosure and reporting requirements; however, there remains a lack of publicly available information about the numbers of reports submitted by the various reporting sectors.

The DR also strengthened its laws on PEPs and correspondent relationships but international experts have outlined key weaknesses to address. In addition, the DR urgently needs to pass regulations to provide safe harbor protection for STR filers and criminalize tipping off. The government also should work to better regulate casinos and non-bank businesses and professions, in particular real estate companies, and strengthen regulations for financial cooperatives and insurance companies.

The DR’s asset forfeiture regime is improving but has weaknesses because it does not cover confiscation of instrumentalities intended for use in the commission of a money laundering offense; property of corresponding value; and income, profits, or other benefits from the proceeds of crime. The DR should implement legislation to bring its asset forfeiture regime up to international standards.

In July 2011, Dominican authorities announced they had dismantled the core of a narcotics trafficking and money laundering organization based in the DR. The alleged profits from the narcotrafficking operation were laundered using banks and other financial instruments throughout the Western Hemisphere. The group allegedly had branches in Canada, Colombia, Venezuela, Jamaica and elsewhere. The investigation was coordinated by agents from the DR, Central America, South America, North America, and Interpol.

The Egmont Group expelled the FIU in 2006 due to a lack of compliance with the definition of an FIU. To date, the FIU has not been reinstated into that worldwide organization. This seriously hinders U.S. law enforcement in the exchange of information with its Dominican counterparts through the two countries’ FIUs. The Egmont Group has specified the formal steps the DR would need to take to re-apply for Egmont membership, thereby allowing the FIU to efficiently and securely share sensitive financial information with the Financial Crimes Enforcement Network (FinCEN), the U.S. FIU, as well as with the rest of the Egmont membership. However, there are still impediments in the Dominican law keeping the FIU from being considered for membership, such as Law 480/08 which enables the creation of another FIU-like organization to regulate international financial zones. The DR should modify the law to eliminate the possibility of a second FIU, and re-apply for membership in the Egmont Group.

Ecuador

Ecuador is a major drug transit country. With a dollarized economy and geographic location between two major drug producing countries, Ecuador is highly vulnerable to money laundering. Ecuador has emerged as a meeting ground for multiple transnational criminal and terrorist organizations and an important part of a pipeline that moves not only cocaine but humans, weapons, precursor chemicals, and illicit cash. Corruption is a significant problem in Ecuador and facilitates money laundering. Since only major banks have active money laundering controls in place and a substantial percentage of transactions take place through unregulated money exchange and remittance companies, there is no reliable way to judge the magnitude of illicit finance in the country. There is evidence money laundering is also taking place through trade and commercial activity, as well as through cash couriers. Deficient financial supervision and weakly regulated casinos have been additional vulnerabilities for money laundering. The Ecuadorian government has announced its intent to close all gambling outlets in 2012.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 38 in 2010

Number of CTRs received and time frame: 21,208,744 from January to April 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 49 in 2011

Convictions: One in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: YES

Ecuador is a member of the Financial Action Task Force (FATF) on Money Laundering in South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/pdf/InformedeEvaluacinMutuadeEcuador_1.pdf

Enforcement and implementation issues and comments:

The Government of Ecuador (GOE) made progress in December 2010 when it enacted amendments to the country’s anti-money laundering law (Law 2010-352). The law appears to strengthen the mandate of the Financial Analysis Unit (FAU), Ecuador’s financial intelligence unit, and expands the role of the National Anti-Money Laundering Council, which oversees the FAU.

On balance, the legal reforms strengthen Ecuador’s legislation with regard to financial crimes. However, the amended law includes new language that complicates seizures of illicit funds, by explicitly placing the burden of proof on the GOE to prove the illicit origin of funds in money laundering or cash smuggling cases. This provision has brought convictions to a virtual halt. A further impediment to processing bulk cash seizure cases is a lack of regulations defining pertinent authorities and administrative processes.

Law 2010-352 also includes provisions that seek to criminalize terrorist financing by creating an autonomous offense. However, the law does not contain an explicit reference to “terrorist financing;” does not define “funds” or “assets;” does not appear to cover attempts to commit the offense; and appears to require a connection to a specific act of terrorism. Ecuador also lacks adequate procedures for the freezing of assets in accordance with relevant UNSCRs. Ecuador has a lengthy criminal process for confiscating terrorists’ assets.

Oversight in the financial sector has improved. In 2011, Ecuador issued a number of resolutions to clarify reporting requirements, including for the private insurance system, trust and fund managers, money transfer companies, and casinos, which have resulted in the imposition of penalties on a range of entities for noncompliance.

The GOE should continue to work to ensure its AML/CFT legislation and programs adhere to international standards, particularly with regard to the criminalization of terrorist financing, and the ease with which assets linked to illegitimate sources can be confiscated. The GOE should harmonize its legislation to eliminate conflicts that hinder successful money laundering investigations and prosecutions. The GOE should ensure the FAU is fully functional and meets international standards, and should also ensure that reporting requirements -- covering an expanded group of obligated parties -- are enforced. The GOE should make a dedicated effort to train judges, prosecutors and investigators so they understand the country’s applicable AML/CFT legislation and regulations. More effort also should be given to effective border enforcement. It is important for the GOE to take all necessary steps to comply fully with international AML/CFT standards to which it has formally committed through its membership in GAFISUD.

Egypt

Egypt is not considered a regional financial center or a major hub for money laundering. Egypt has a large informal cash economy, and many financial transactions are undocumented or do not enter the banking system. Cash remains by far the preferred means of payment in Egypt and, despite efforts by the Egyptian authorities, the use of the formal financial sector remains underdeveloped. Reportedly, arms are smuggled across Egypt’s border with Gaza; the funding source and the destination of the proceeds are not clear. Authorities report trade-based money laundering is common, reportedly to avoid taxes and customs fees. Tax evasion also is common. Customs fraud and invoice manipulation also are found in regional value transfer schemes. Since the Egyptian revolution, the attention of Egypt’s money laundering investigating agencies has been focused almost exclusively on investigating allegations of illicit gains or corruption under the Mubarak regime. The European Union has taken action to freeze the assets of Mubarak and several members of his regime based on their apparent misappropriation from the Egyptian state.

For more information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,253 from June 2008 - June 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2011

Convictions: Seven from January 2008 - June 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Egypt (GOE) has been hesitant to utilize its money laundering statutes to their full legal extent. Overlapping jurisdiction and poorly defined areas of responsibility have hindered money laundering investigations in Egypt. Egypt’s FIU also suffers from a lack of resources and analysts that is likely slowing enforcement efforts. The GOE should work to improve interagency coordination and information-sharing in investigations of suspicious transactions and financial activities. Egypt would benefit from increased funding and a greater number of investigators and prosecutors dedicated to pursuing money laundering crimes.

Specifically, Egypt should work to increase the number of successful money laundering investigations and prosecutions and improve its enforcement of cross-border currency controls, including by providing training on coordinating and conducting complex financial investigations and by enhancing coordination with regional and MENAFATF partners. The GOE should also work to more effectively manage its asset forfeiture regime, including the identification, seizure and forfeiture of assets.

El Salvador

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

According to authorities, some of the mechanisms used by organized crime to launder money include the use of front companies, parking lots, travel agencies, remittances, the import and export of goods, cargo transportation and smurfing operations.

There are 16 free trade zones operating in the country. There are no reported hawala or other similar alternative remittance systems operating in El Salvador. A significant number of remittances are transferred through banks, and it is possible narcotics trafficking organizations remit illicit proceeds from drug sales in the United States to El Salvador.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,172 in 2011

Number of CTRs received and time frame: 3,050 in 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 11 in 2011

Convictions: Four in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The number of prosecutions relative to the number of crimes which generate illicit funds is low. The regulatory institutions charged with money laundering supervision are weak and lack both human resources and sufficient regulatory powers. In 2010, the government passed asset forfeiture legislation that allows the government to sell property seized in conjunction with narcotics arrests and to use the profits for counter-narcotics efforts. In 2011, assets worth $1,300,000 were criminally forfeited.

El Salvador needs to provide a clear prohibition against tipping off in its legislation and regulations, and clarify and enforce its provisions regarding criminal liability for legal persons. El Salvador should lower its CTR threshold from approximately $57,000 to $10,000 to comport with the international standard.

Equatorial Guinea

Equatorial Guinea (EG) is not a regional financial center. EG is vulnerable to money laundering and terrorist financing. Implementation of its anti-money laundering laws is not complete. EG’s greatest concerns in terms of money laundering and terrorist financing are cross-border currency transactions and the illegal international transfer of money by companies or by corrupt individuals. Smuggling is widespread. Financial crimes enforcement is weak.

Equatorial Guinea is a member of the Economic and Monetary Community of Central Africa States (CEMAC) and shares a regional Central Bank (BEAC) with other CEMAC members. The Government of Equatorial Guinea is also a member of the Banking Commission of Central African State (COBAC) within CEMAC.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Central Bank, banks, banking intermediaries, microfinance institutions, insurance companies, investment services, money changers, casinos, notaries, real estate agents, money transfer companies, travel agencies, auditors, accountants, and high-value goods dealers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Central Bank, banks, banking intermediaries, micro finance institutions, insurance companies, investment services, money changers, casinos, notaries, real estate agents, money transfer companies, travel agencies, auditors, accountants, and high-value goods dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES (through COBAC)

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Equatorial Guinea should work with CEMAC and BEAC to establish a viable anti-money laundering/counter-terrorist financing (AML/CFT) regime and to strengthen the capacity of the National Agency of Finance Investigation (ANIF). Equatorial Guinea’s officers charged with crime prevention, including the police, judicial police and ANIF, need greater training in professionalism and proper investigative techniques. EG is ranked 172 out of 183 countries in Transparency International’s 2011 Corruption Perception Index.

Although the AML regulations require reporting entities to implement compliance programs and report large and suspicious transactions, the system is only functioning to a limited degree in banking institutions. EG does not have cross-border currency reporting requirements.

The EG government cooperates with the European Community in terms of money laundering and terrorism financing through the CEMAC financial agreement with the Treasury of France.

Equatorial Guinea should become a party to the 1988 UN Drug Convention and the UN Convention against Corruption.

Eritrea

Eritrea is not a regional financial center. The Government of Eritrea (GOE) has created a strict command economy with nearly every significant economic entity controlled by the government/military. Although reliable figures are unavailable, Eritrea is highly autarchic. Exports are miniscule, generating little hard currency (although expected to grow with development of the mining sector). Eritrea spurned assistance from traditional donors. Aid from its largest benefactors, Qatar and China, is not transparent. The GOE relies in part on the taxation of nationals living abroad to sustain its economy. The level of cross border trafficking of narcotics is not known, but, given the government’s tight control of its borders, Eritrea is not believed to be a significant market or transit route for narcotics. However, due to its informal cash economy, limited regulatory structure, alternative remittance systems, and its proximity to regions where terrorist and criminal organizations operate, Eritrea is vulnerable to money laundering and related activities.

The constitution, ratified in 1997, has yet to be implemented. Eritrea professes to operate against money laundering, but the mechanisms by which this is achieved are unclear. Eritrea is one of a few countries that do not publish their national accounts, budget, and trade statistics. Eritrean officials will not discuss the country’s anti-money laundering/counter-terrorist financing (AML/CFT) regime.

Eritrea is a haven for organizations affiliated with al-Qaida and al-Shabaab; and Eritrean security forces actively support jihadists in terms of training, supply, and probably finance. Eritrea is a disruptive regional influence and has intervened directly in Somalia.

In December 2011 the UN Security Council toughened existing arms embargo sanctions against Eritrea through Resolution 2011 (2023). The resolution addresses concerns over the potential use of the Eritrean mining sector as a financial source to destabilize the Horn of Africa region.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Not available

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Not available

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

The Eritrean banking, legal and regulatory systems are undeveloped and non-transparent. Currently, all laws are issued by proclamation from the GOE. Regulations and procedures appear haphazardly created and irregularly enforced. Enforcement of financial legislation is lax and difficult due to widespread avoidance of the banking system.

The GOE should seek international assistance to help structure an AML/CFT regime that adheres to international standards. Eritrea ranks 134 of 183 countries in Transparency International’s 2011 Corruption Perception Index. Eritrea should become a party to the UN Convention against Corruption, the UN Convention against Transnational Organized Crime, and the International Convention for the Suppression of the Financing of Terrorism.

Estonia

Estonia has one of the most developed banking systems of the eastern European Union (EU) countries. Estonia has adopted the universal banking model, which enables credit institutions to participate in a variety of activities such as leasing, insurance, and securities. Transnational and organized crime groups are attracted to the territory due to its location between Eastern and Western Europe. The drug situation in Estonia is similar to that in other EU Member States in the region. Analysis of suspicious transaction reports (STRs) disclose some incidents of transferring the proceeds of Internet crime to Estonia.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Credit and financial institutions; lottery/gambling institutions, real estate firms, high value goods traders, pawnbrokers, auditors and accountants, accounting and tax advisors, providers of trust fund and business association services, notaries, attorneys, bailiffs, and trustees and interim trustees in bankruptcy

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 4,317 from January to October 2011

Number of CTRs received and time frame: 5,449 from January to October 2011

STR covered entities: Credit and financial institutions; lottery/gambling institutions, real estate firms, high value goods traders, pawnbrokers, auditors and accountants, accounting and tax advisors, providers of trust fund and business association services, notaries, attorneys, bailiffs, and trustees and interim trustees in bankruptcy

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 59 from January to October 2011

Convictions: Eight cases involving 33 persons from January to October 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Estonia is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) a Financial Action Task Force-style regional body. Estonia’s most recent mutual evaluation report can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL%282008%2932Rep-EST3_en.pdf

Enforcement and implementation issues and comments:

On January 1, 2011, Estonia joined the euro zone. Estonia has worked to bring its anti-money laundering regime into compliance with international standards. In 2010 Estonia addressed domestic payment services by enforcing the Financial Institutions and e-Money Institutions Act.

The Estonian penal code establishes asset seizure and forfeiture, with special provisions for money laundering. Estonia established an Asset Recovery Unit under the FIU to concentrate on organized crime, detecting criminal assets from serious crimes, and identifying criminal assets transferred to foreign countries.

Ethiopia

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

Since strict foreign exchange controls limit possession of foreign currency, most of the proceeds of contraband smuggling and other crimes are not laundered through the official banking system, composed of three public banks and fourteen private banks. High tariffs encourage customs fraud and trade-related money laundering. Law enforcement sources indicate that money and value transfer systems, particularly hawala, are widely used. The Ethiopian Government has closed a number of illegal hawala operations and attempts to monitor hawala networks within the country.

In October 2011, the Financial Action Task Force (FATF) included Ethiopia in its Public Statement for its lack of sufficient progress in addressing longstanding anti-money laundering/combating the financing of terrorism (AML/CFT) deficiencies. The FATF has called upon its members to consider the risks arising from these deficiencies.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: None

Number of CTRs received and time frame: None

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: YES

Ethiopia is not a member of a Financial Action Task Force (FATF)-style regional body (FSRB). Ethiopia was granted observer status with the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), an FSRB, in September 2011.

Enforcement and implementation issues and comments:

An action plan developed by the Ministry of Finance aims to improve Ethiopia’s AML/CFT capabilities through the implementation of a variety of measures. In 2011, Ethiopia implemented various specific directives in accordance with its 2009 AML/CFT law, such as KYC laws and the reporting of suspicious and large cash transactions. Ethiopia should take additional steps to adequately criminalize money laundering and terrorist financing; establish and implement an adequate legal framework and procedures to identify and freeze terrorist assets; ensure a fully operational and effectively functioning financial intelligence unit (FIU); and, implement effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements.

The Financial Intelligence Center (FIC), Ethiopia’s new FIU established in December 2011, lacks sufficient resources and trained personnel, particularly analysts. The FIC is working to develop its investigative and referral capacity. The Ethiopian law enforcement community, from investigators to prosecutors to judges, remains deficient in its awareness of AML/CFT issues and its understanding of how to address them. A lack of data and the lack of a systematic, investigative approach make it difficult for the federal police to identify money laundering. Further, inadequate police training and lack of resources significantly diminish the federal police’s financial investigative abilities.

As of the end of 2011, Ethiopia is not yet a party to the International Convention for the Suppression of the Financing of Terrorism, but the government is taking steps to meet this goal.

Fiji

The Republic of Fiji is a small country with a population of less than one million. It is not a regional financial center, but serves as a regional hub for transportation and shipping for other Pacific island nations. The country’s geographical location makes it a convenient potential staging post for criminal activities in Australia and New Zealand, which is demonstrated by some significant drug related cases and a noted increase in the number of human smuggling cases. Cross-border criminal gangs involving individuals from neighboring Asian countries also operate in Fiji.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 728 in 2011

Number of CTRs received and time frame: 144,191 in 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2011

Convictions: Four in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Fiji’s financial intelligence unit does not have budgetary independence. Fiji should continue to implement anti-money laundering and counter-terrorist financing measures that adhere to international standards. Fiji also should become a party to the UN Convention against Transnational Organized Crime.

Finland

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

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Credit and financial institutions; investment firms, fund management companies and custodians; the central securities depository and book entry registrars; payment institutions and money remitters; insurance companies, local mutual insurance associations, and insurance intermediaries; authorized pension insurance companies; apartment rental agencies and real estate agents; auditors, lawyers, notaries, and accountants; pawn shops and dealers in high value goods; casinos and gaming entities

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 14,213 from January to June 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Credit and financial institutions, investment and fund management companies, insurance brokers and insurance companies, apartment rental agencies and real estate agents, pawn shops, betting services, casinos, non-bank financial institutions, management companies, custodians of mutual funds, auditors, auctioneers, lawyers, notaries, accountants, dealers in high value goods, money remitters, tax advisory and financial management services, repossession agents and bankruptcy ombudsmen

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2010

Convictions: One in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

Amendments to the scope of the money laundering offense entered into force on June 1, 2011, based on the recommendations of an inter-ministerial working group. The amendments add possession of criminal proceeds to the essential elements of money laundering and include negligent money laundering within the scope of criminal liability of a legal person.

The fact self-laundering of funds is not a crime in Finland, and that it is not possible to prosecute for self-laundering, has an impact on the low number of cases. Individuals suspected of laundering money are often convicted for other crimes. A working group was appointed by the Ministry of Justice in December 2010 to consider criminal sanctioning of self-laundering. The group released its report on May 31, proposing criminalization of self-laundering in the most severe cases. The amendment proposal was circulated for comments. With the comments completed, it could take several months or even up to a year before the amendment comes up for a vote.

The financial intelligence unit has the ability to freeze a transaction for up to five business days in order to determine the legitimacy of the funds. Funds can remain frozen for an extended period when linked to a criminal investigation. According to the Coercive Measures Act, all restraining and freezing orders must be presented to the court every four months. A new order can be given for a “reasonable time,” but it is yet unclear how long that time can ultimately be.

France

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

France can designate portions of its customs territory as free trade zones and free warehouses in return for commitments in favor of employment. France has taken advantage of these regulations in several specific instances. The French Customs Service administers these zones.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 20,252 in 2010

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 276 in 2010

Convictions: 35 in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

France is a member of the Financial Action Task Force (FATF). France is also a Cooperating and Supporting Nation to the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/3/18/47221568.pdf

Enforcement and implementation issues and comments:

The French government has a comprehensive anti-money laundering/counter-terrorist financing (AML/CFT) regime and is an active partner in international efforts to control money laundering and terrorist financing. France maintains the ability to designate individuals or entities under French domestic authorities in addition to those designated by European Union (EU) regulations. France and the Unites States have exchanged large amounts of data in connection with money laundering and terrorist financing. France still does not have the capacity to share forfeited assets with other jurisdictions.

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

In September 2011 the Prudential Control Authority (ACP) took several measures to improve its ability to fight money laundering and terrorism financing. The ACP has provided guidelines to help financial institutions define and research “the effective beneficiary” of money laundering or terrorism financing. The ACP also has defined new reporting obligations for money exchangers.

France should continue its active participation in international organizations and its outreach to lower-capacity recipient countries to combat the domestic and global threats of money laundering and terrorist financing.

Gabon

Gabon is not a regional financial center. However, Gabon suffers from porous borders; and smuggling, which is facilitated by organized criminal groups, is widespread. Despite a new administration professing dedication to improving the fiscal management of the country, entrenched corruption still exists. Embezzlement of state funds, including by politically exposed persons (PEPs), reportedly gives rise to money laundering. There is a large Lebanese expatriate community in Gabon engaged in the timber industry, construction, and general trade. In order avoid tight fiscal controls for the repatriation of profits, many Lebanese families have obtained Gabonese nationality. Hawala and trade are also used to transfer funds and value from Gabon to Lebanon.

The Bank of Central African States (BEAC), based in Yaoundé, Cameroon, is a regional Central Bank that serves six Central Africa countries and supervises Gabon’s banking system. BEAC’s Economic Intervention Service harmonizes the regulation of currency exchanges in the member states of the Central African Economic and Monetary Community (CEMAC).

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 80 from 2006 - 2010

Number of CTRs received and time frame: Three from 2006 - 2010

STR covered entities: Banks, exchange houses, stock brokerages, casinos, insurance companies, lawyers and accountants, jewelry shops, car dealers, and casinos

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Eight from January - November 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Gabon is a member of the Central African Action Group against Money Laundering and Terrorist Financing (GABAC), an organization in the process of becoming a FATF-style regional body. To date, there is no mutual evaluation for Gabon.

Enforcement and implementation issues and comments:

In September 2005, the Government of Gabon (GOG) created the National Financial Investigations Agency (ANIF), a body designed to lead the fight against money laundering and terrorist financing. Though ANIF is now functional, it not only is hampered by the law, which merges suspicious activity reporting with currency transaction reporting and only requires reporting of suspicious activity for deposits over 5,000,000cfa (approximately $10,000), but it also lacks the necessary resources (both human and financial) to be effective in its mission. Ten of the 80 ANIF STRs have been sent to the Attorney General; however, the Attorney General has not yet reached a decision on these cases. The Gabonese judicial system has been slow to process money laundering cases because the process is slow and cumbersome despite ongoing reform efforts, and judges are not trained to hear such cases. Moreover, the judiciary remains inefficient and susceptible to inappropriate influence. Police inefficiency, corruption, and impunity remain serious problems; although the government is stepping up its efforts against corrupt officials. Collection of evidence is also difficult.

The Gabonese are willing to cooperate on international law enforcement matters via exchange of diplomatic notes and letters. The GOG should continue working with the CEMAC, BEAC, and international organizations to establish a viable anti-money laundering/counter-terrorist financing regime.

Gambia

The Republic of The Gambia, the smallest African nation with a population of approximately 1.6 million people, is at risk for increased narcotic trafficking and money laundering. The Gambia derives most of its GDP from agriculture, tourism, remittances, and the re-export trade, with most transactions conducted in cash. Although not considered a money laundering hub, the true extent of such activity is unknown. The rapid increase in commercial banks entering the local market in the past few years, currently 13, adds to possible money laundering concerns. The seizure of two tons of cocaine in June 2010 (the biggest ever in West Africa), raised concerns that narcotic trafficking and corresponding money laundering could be bigger problems than initially thought. Since the seizure, the Government of The Gambia (GOTG) has strengthened the National Drug Enforcement Agency and publicly condemned narcotic use and trafficking. Despite these efforts, the country remains under-resourced to combat international traffickers.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks and microfinance entities; money remitters and exchanges; financial instrument and securities brokers/dealers; real estate agents; bullion dealers; casinos; insurance companies and intermediaries; and, trusts

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks and microfinance entities; money remitters and exchanges; financial instrument and securities brokers/dealers; real estate agents; bullion dealers; casinos; insurance companies and intermediaries; and, trusts

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One from July 2008 to December 2011

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

The Gambia is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/media/M_evalu/The%20Gambian%20Detailed%20Mutual%20Evaluation%20%20Report].pdf

Enforcement and implementation issues and comments:

Despite the will to combat trafficking, money laundering, and terrorist financing, the GOTG lacks the necessary resources to fully implement enforcement programs. The amended 2003 Money Laundering Act includes a comprehensive range of predicate offenses and designated non-financial businesses and professions. Although no U.S. or international sanctions are known to exist against the government, several prominent businessmen operating in the country are known to be financial supporters of terrorism and are subject to U.S. sanctions. In addition, the local affiliate of Lebanese Canadian Bank (LCB), known as Prime Bank Ltd, is currently subject to USA PATRIOT Act Section 311 sanctions for money laundering activity.

There are no known issues with non-profit organizations, alternative remittance systems, offshore sectors, free trade zones, bearer shares, or other specific sectors. The Gambia participates regularly in anti-money laundering/counter-terrorist financing (AML/CFT) training and conferences.

The GOTG should provide adequate resources and capacity to its law enforcement, supervisory and customs personnel so they are able to effectively fulfill their responsibilities. Its fledgling financial intelligence unit should be given autonomy and should be strengthened both in terms of personnel and training to help it operate effectively. The GOTG should become a party to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.

Georgia

Illegal income in Georgia derives from tax evasion, falsification of documents, embezzlement, misappropriation of funds, corruption, illegal entrepreneurship, intellectual property rights violations, customs fraud, environmental crimes, and theft. According to the Georgian Ministry of Justice, the bulk of criminal proceeds laundered in Georgia are derived from domestic criminal activity and only a small portion of money laundering is related to narcotics trafficking. Yet there is a market for narcotics based on the number of arrests for drug abuse. South Ossetia and Abkhazia fall outside the control of Government of Georgia authorities and are not subject to monitoring.

According to the Investigation Service of the Ministry of Finance, there is a small black market for smuggled goods in Georgia. There is little evidence to suggest it is significantly funded from narcotics proceeds, or that the funds generated by smuggling are laundered through the formal financial system. Smuggled goods are sold in black or gray markets to avoid tax and customs duties. The extent of black market trading in the breakaway territories of Abkhazia and South Ossetia is unknown.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; money remitters; securities brokers and registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; entities engaged in activities related to antiquities, precious metals, precious stones and products thereof; customs authorities; entities engaged in extension of grants and charity assistance; notaries; and the National Agency of the Public Registry

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 11,616 from January 1 to July 31, 2011

Number of CTRs received and time frame: 65,427 from January 1 to July 31, 2011

STR covered entities: Banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; money remitters; securities brokers and registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; entities engaged in activities related to antiquities, precious metals, precious stones and products thereof; customs authorities; entities engaged in extension of grants and charity assistance; notaries; and the National Agency of the Public Registry

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 63 from January to July, 2011

Convictions: 54 from January to July, 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Georgia is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Georgia_en.asp

Enforcement and implementation issues and comments:

In 2011, Georgia achieved better results in detection, investigation and prosecution of money laundering, and training and awareness improved. There are a large number of autonomous money laundering prosecutions and convictions. Georgian law enforcement authorities should put more emphasis on pursuing the link between organized crime and money laundering. For example, investigations into narcotics, extortion, weapons of mass destruction, and smuggling rarely pursue financial components. Georgia recognizes an existing drug problem, yet narcotics trafficking is rarely recognized as a predicate offense for money laundering. In 2010 - 2011 the seizure of bulk currency on the borders increased significantly compared to previous years. Between October 2006 and July 2008 only one individual was interdicted attempting to smuggle currency from Georgia. In 2010 - 2011 there were 14 cases. The currency smuggling cases are not being investigated for possible money laundering.

In 2011, a large number of STRs and CTRs were filed by casinos in Georgia but there were no resulting investigations. Similarly, the reports filed by financial institutions, notaries, broker companies and micro finance organizations generate few inquiries. The data compiled by the Financial Monitoring Service, the financial intelligence unit, remains an untapped tool for discovering money laundering from a variety of predicate offenses. There is a lack of information sharing between concerned government agencies and departments.

Germany

While not an offshore financial center, Germany is one of the largest financial centers in Europe. Although not a major drug producing country, Germany continues to be a consumer and a major transit hub for narcotics. Organized criminal groups involved in drug trafficking and other illegal activities are an additional source of laundered funds in Germany. Trends in money laundering include electronic payment systems; financial agents, i.e., persons who are solicited to make their private accounts available for money laundering transactions; and trade in CO2 emission certificates. Free Zones of control type I exist in Bremerhaven, Cuxhaven, and Hamburg, i.e., freeports. Deggendorf and Duisburg are control type II Free Zones (unfenced inland ports).

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Credit institutions, financial services institutions, payment institutions and e-money institutions as well as their agents; financial enterprises; insurance companies and intermediaries; investment companies; lawyers, legal advisers, auditors, chartered accountants, tax advisers and tax agents; trust or company service providers; real estate agents; casinos; and persons trading in goods

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 11,042 in 2010

Number of CTRs received and time frame: Not applicable

STR covered entities: Credit institutions, financial services institutions, payment institutions and e-money institutions as well as their agents; financial enterprises; insurance companies and intermediaries; investment companies; lawyers, legal advisers, auditors, chartered accountants, tax advisers and tax agents; trust or company service providers; real estate agents; casinos; and persons trading in goods

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 684 in 2010

Convictions: 606 in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Germany strengthened its AML/CFT regime in 2011, including by: amending AML/CFT provisions governing the financial sector through the Act to Implement the Second E-Money Directive which entered into force at the end of April 2011; extending the list of predicate offenses to include market manipulation, product piracy and insider trading through the Act to Improve the Combating of Money Laundering and Tax Evasion, effective May 3, 2011; clarifying the powers - such as the right to obtain information and enter premises - of the supervisory authorities responsible for non-financial institutions; and submitting the draft Act to Optimize the Prevention of Money Laundering to the German parliament, with adoption envisaged before the end of 2011. While Germany has no automatic CTR requirement, large currency transactions frequently trigger a STR.

Tipping off is a criminal offense only if it is committed with the intent to support money laundering or obstruct justice, and applies only to previously-filed STRs. Otherwise, it is an administrative offense that carries a fine of up to € 50,000 (approximately $68,000) under the Money Laundering Act; draft legislation would increase the fine up to € 100,000 (approximately $133,000). Legal persons are only covered by the Administrative Offenses Act, and are not criminally liable under the Criminal Code.

The numbers of prosecutions and convictions included in this report only reflect cases in which the money laundering violation carried the highest penalty of all the crimes of which the offender was convicted.

Notably, on March 10, 2011, a German-Lebanese criminal group was sentenced for laundering money from narcotics sales throughout Europe by transporting it to Lebanon. Assets amounting to € 9.2 million (approximately $12.271 million) were forfeited. Germany has no federal statistics on the amount of assets forfeited in criminal money laundering cases. Assets can be forfeited as part of a criminal trial or through administrative procedures such as claiming back taxes.

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

Ghana

Ghana is becoming an important regional financial center. Most of the money laundering in Ghana involves narcotics, various forms of fraud, and public corruption. Ghana is a significant transshipment point for cocaine and heroin transiting from South America, Iran, and Afghanistan to Europe and the United States. Criminals also launder illicit proceeds through investment in banking, insurance, real estate, automotive import, and general import businesses, and reportedly, donations to religious institutions. Financial crimes such as advance fee fraud, known as Sakawa in Ghana, stolen credit and ATM cards originating in Ghana, and check cloning continue to increase. Public corruption is a major source of money laundering in Ghana, occurring mainly through public procurements and the award of licenses.

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

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

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 105 from January - November 2011

Number of CTRs received and time frame: Not applicable

Covered entities: Banks, non-bank financial institutions, auctioneers, lawyers, notaries, accountants, religious bodies, NGOs, money remitters, securities, casinos, insurance and real estate companies, dealers in precious metals and stones, car dealers, and trust and company service providers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdiction: YES

Ghana is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=43&mod=2&men=3

Enforcement and implementation issues and comments:

Ghana has developed an action plan to address its identified deficiencies, but in 2011, the Government of Ghana (GOG) did not make significant progress on implementing its action plan. While regulations to implement the AML Act were passed in March, Ghana still lacks implementing regulations for the Anti-Terrorism Act, Economic and Organized Crime Act, and Mutual Legal Assistance Act. Ghana lacks adequate criminalization of terrorism financing, and there are doubts whether the legislation is enforceable. Consequently, Ghana does not have adequate procedures to freeze, seize, and confiscate terrorist assets or confiscate the proceeds of money laundering. Furthermore, the Ghana Financial Intelligence Centre and Bank of Ghana have drafted AML/CFT guidelines, but they merely replicate the FATF Recommendations and guidance from a neighboring jurisdiction, and do not correspond with Ghana’s AML Regulations and other Ghanaian legislation. Additionally, the GOG should institute a beneficial ownership identification requirement and require that the true names of all onshore and offshore entities and their beneficial owners be held in a registry accessible to law enforcement.

Ghana should also take the necessary steps to promote public awareness and understanding of financial crime, money laundering, and terrorist financing activities. There is a general need to strengthen the financial investigation and analytical skills of officers across all law enforcement and intelligence agencies, as well as to increase staffing and training in the prosecutorial and judicial institutions, and in the Financial Intelligence Centre itself.

Ghana has entered into a Customs Mutual Assistance Agreement with the U.S., which facilitates information sharing between the customs administrations of the two countries.

Ghana should ratify the United Nations Convention against Transnational Organized Crime and criminalize other predicate offenses in line with international standards.

Gibraltar

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

Gibraltar is exposed to money launderers located in drug producing centers in Morocco and drug consumption and distribution networks in Spain. With the establishment in southern Spain of organized criminal activities from Eastern Europe, there is potential for launderers to use Gibraltar as a base for money laundering. These risks are mitigated by the small coastline and effective policing. Border controls between Gibraltar and Spain also help deter potential money launderers wishing to use Gibraltar for their activities.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: Not available

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, mutual savings companies, insurance companies, financial consultants, investment businesses, postal services, exchange bureaus, attorneys, accountants, financial regulatory agencies, unions, casinos, lotteries, charities, car dealerships, yacht brokers, company formation agents, political parties, real estate agents, notaries, and dealers in gold bullion and high value goods

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 362 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Any legal person, whether or not they conduct financial services

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

Greece

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

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, savings banks, and cooperative banks; credit companies, money remitters, financial leasing and factoring companies, bureaux de change, and postal companies; stock brokers, investment services firms, and collective and mutual funds; life insurance companies and insurance intermediaries; accountants, auditors, and audit firms; tax consultants, tax experts, and related firms; real estate agents and companies; casinos (including internet casinos) and entities engaging in gaming activities; auction houses, dealers in high value goods, auctioneers, and pawnbrokers; notaries, lawyers, and persons providing services to companies and trusts

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 3,479 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, savings banks, and cooperative banks; credit companies, money remitters, financial leasing and factoring companies, bureaux de change, and postal companies; stock brokers, investment services firms, and collective and mutual funds; life insurance companies and insurance intermediaries; accountants, auditors and audit firms; tax consultants, tax experts and related firms; real estate agents and companies; casinos (including internet casinos) and entities engaging in gaming activities; auction houses, dealers in high value goods, auctioneers, and pawnbrokers; notaries, lawyers, and persons providing services to companies and trusts

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 134 in 2011

Convictions: 58 in the first half of 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Greece (GOG) has been working to improve the effectiveness of the Greek financial intelligence unit (FIU). Greek authorities have hired sufficient staff to carry out the extensive functions with which the FIU is tasked. The GOG has also made available adequate financial resources to ensure the FIU is able to fulfill its responsibilities, ensure its powers are in line with the international standards related to a financial intelligence unit, and ensure its technical and data management systems and capacities support its functions.

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

In March 2011, an amendment to the 2008 AML/CFT law (Law 3932/A49/10-3-2011) established a new entity, the Financial Sanctions Unit (FSU). The FSU is tasked with designating terrorists in accordance with UNSCR 1373, outside the EU listing system, and issuing executive orders to freeze the assets of internationally designated terrorists. It is unclear if the executive order procedure applies to suspected terrorists designated domestically. The GOG has provided guidance to financial institutions and designated non-financial businesses and professions on freezing assets without delay, and has begun to monitor for compliance, though the effectiveness of the monitoring is still undetermined. The GOG is authorized to impose sanctions on entities for noncompliance with freeze orders.

While Greece has made positive strides in the supervision area, particularly with its transfer of supervisory powers over the insurance sector to the Bank of Greece, a shortage of personnel at the Hellenic Capital Markets Commission (which supervises securities firms, brokers, other financial intermediaries, and clearing houses) remains, but is difficult to address in light of a general hiring freeze in the public sector due to Greece’s debt crisis. It also remains unclear whether the Ministry of Justice has enough resources available to deal with money laundering or terrorist finance related cases.

The GOG has instituted regulatory measures requiring that transactions above €3,000 (approximately $3,850) be executed with credit cards, checks or cashiers’ checks and that all business-to-business transactions in excess of €3,000 (approximately $3,850) be carried out through checks or bank account transfers. All credit and financial institutions, including payment institutions, must also report on a monthly basis all transfers of funds abroad executed by credit card, check or wire transfer. Nevertheless, the GOG should adopt a system for reporting large currency transactions across all regulated sectors and explicitly abolish company-issued bearer shares. It should also continue to improve enforcement of its cross-border currency reporting requirements and improve efforts to deter the smuggling of currency across its borders. Greece also should ensure that companies operating within its free trade zones are subject to the same level of enforcement of AML/CFT controls as other sectors and work steadfastly to bring charitable and nonprofit organizations under the AML/CFT regime.

Grenada

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

There are no clear statistics available on Grenada’s offshore financial sector, although offshore banking and trust companies and international business companies are allowed and some are registered. There were reports that one international betting company was licensed to conduct business in Grenada, but no casinos or Internet gaming sites are in operation. There are no free trade zones in Grenada.

Bearer shares are not permitted for offshore banks. The International Companies Act requires registered agents to maintain records of the names and addresses of company directors and beneficial owners of all shares. Grenada’s economic citizenship program remains suspended, removing one possible risk factor for money laundering crimes.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, investment and merchant banks, and building societies; trusts and trust companies; insurance companies; registered agents; exchange bureaus, money and funds remitters, and postal courier services; credit unions; lending, factoring, and forfeiting check cashing services; financial leasing; venture risk capital; issuers and administrators of means of payment; guarantors; investment and funds traders, advisors, and underwriters; bullion dealers; financial intermediaries; custody services; asset management services; company formation and management services; collective investment schemes and mutual funds; real estate agents; casinos, internet gaming, pool betting, and lottery agents; lawyers, accountants, and notaries

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 170 as of November 4, 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, investment and merchant banks, and building societies; trusts and trust companies; insurance companies; registered agents; exchange bureaus, money and funds remitters, and postal courier services; credit unions; lending, factoring, and forfeiting check cashing services; financial leasing; venture risk capital; issuers and administrators of means of payment; guarantors; investment and funds traders, advisors, and underwriters; bullion dealers; financial intermediaries; custody services; asset management services; company formation and management services; collective investment schemes and mutual funds; real estate agents; casinos, internet gaming, pool betting, and lottery agents; lawyers, accountants, and notaries

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

Grenada is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Grenada_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

Grenada should pass pending legislation on its financial intelligence unit as well as draft legislation meant to address the proceeds of crime, money laundering and terrorist financing. It should also issue new anti-money laundering and terrorist financing guidelines in line with international recommendations.

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

Guatemala

Guatemala is not considered a regional financial center. It continues to be a transshipment route for South American cocaine and heroin destined for the United States and for returning cash to South America. Smuggling of the precursors to methamphetamine is also a problem. Reports suggest the narcotics trade is increasingly linked to arms trafficking.

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

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

There is a category of “offshore” banks in Guatemala in which the money of the customers (usually Guatemalans with average deposits of $100,000) is legally considered to be deposited in the foreign country where the bank’s head office is based. In 2010, there were seven “offshore” entities, with head offices in Panama, the Bahamas and Puerto Rico. These “offshore” banks are subject to the same AML/CFT regulations as any local bank. Guatemala has 17 active free trade zones (FTZs) and six more are supposed to start operations soon. They are mainly used to import duty-free goods utilized in the production of products for exportation. There are no known cases or allegations that indicate the FTZs are hubs of money laundering or drug trafficking. There are no reported hawala or other money or value transfer services operating in Guatemala. A significant number of remittances are transferred through banks and appear to pose little risk for money laundering.

Casinos are not legal in Guatemala, however, a number of casinos, games of chance and video lotteries operate, both onshore and offshore. Unsupervised gaming activity represents a significant money laundering risk.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 421 in 2011 (as of October 31, 2011)

Number of CTRs received and time frame: 5,502,434 in 2011 (as of September 30, 2011)

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 59 in 2011

Convictions: Ten people in eight cases in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Guatemala is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Guatemala_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

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

In December 2009, former President Alfonso Portillo was indicted on one count of conspiracy to commit money laundering in the United States. On August 26, 2011, Guatemala’s Constitutional Court unanimously upheld the U.S. request to extradite former President Portillo on that charge. The Public Ministry is still awaiting the outcome of its appeal of Portillo’s May 9 acquittal on embezzlement charges in Guatemala, and the extradition remains pending based on the outcome of that case.

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

In October 2010, Guatemalan monetary authorities approved a regulation to establish limits for cash deposits in foreign currency, notably requiring more information and bank certification for transactions totaling over $3,000 per month. According to law enforcement authorities, purchases of foreign currency declined 34% during the first eight months of 2011, which they attribute to the new regulation.

The government should either enforce the law with regard to casinos or work to regulate them under the AML law, as are lotteries and raffles. Attempts by the government to enforce requirements have not been successful. Lotteries and raffles are subject to local jurisdiction licensing but are not subject to AML/CFT supervision.

Guernsey

The Bailiwick of Guernsey (the Bailiwick) encompasses a number of the Channel Islands (Guernsey, Alderney, Sark, and Herm). As a Crown Dependency of the United Kingdom (UK), it relies on the UK for its defense and international relations. Alderney and Sark have their own separate parliaments and civil law systems. Guernsey’s parliament legislates in matters of criminal justice for all of the islands in the Bailiwick. The Bailiwick is a sophisticated financial center, and authorities undertake efforts to reduce vulnerability to money laundering.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, lending firms, financial instrument issuers and managers, and money service businesses; insurance companies and intermediaries; investment firms and funds, safekeeping and portfolio management services; trust and company service providers; lawyers, accountants, notaries, and estate agents; dealers of precious metals and stones; and eGambling services

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 673 in 2010

Number of CTRs received and time frame: Not applicable

STR covered entities: All businesses

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2010

Convictions: Two in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

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

Guinea

Guinea is not a regional financial center. In the past several years, Guinea has undergone profound political change. In December 2010, Alpha Condé became Guinea’s first democratically elected president following over fifty years of authoritarian and military rule. Due to past political instability, rampant corruption and its proximity to countries such as Guinea-Bissau, Guinea has been an historical hub for drug trafficking. The current focus on the transition to democracy has resulted in the relegation of money laundering and trafficking issues to secondary concerns. Guinea’s economy is still fragile and largely cash-dependent, posing a vulnerability for money laundering, but the weak banking sector is an unlikely conduit for large-scale money laundering activities.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Because money laundering and trafficking issues are not considered priority topics, Guinea has not yet criminalized money laundering or terrorist financing to comport with international standards.

Although institutions are in place to investigate money laundering and financial irregularities, they are hampered by corruption, political tension and serious limitations in authority and scope. Guinea’s fledgling FIU, headquartered in the Central Bank, is affected in this way. Additionally, the Guinean security forces are ill-equipped, disorganized, and under-trained. For the last several years, they have been reliant upon outside assistance and training in matters involving money laundering. An ineffective judicial sector also derails Guinean attempts to enforce its laws.

Guinea should criminalize money laundering and terrorist financing in line with international standards and assign resources to implement a comprehensive legal and regulatory framework. It should also strive to staff and train its law enforcement entities, and empower them with the authorities to undertake their eventual responsibilities once Guinea enacts effective legislation.

Guinea-Bissau

Guinea-Bissau has repeatedly, over the past few years, been called a ‘narco-state’. Although President Sanha has declared the problem a top priority for his administration, the Government of Guinea-Bissau (GOGB) is not in full compliance with international conventions against money laundering and terrorist financing because of inadequate resources, weak border controls, and competing national priorities. The multitude of small offshore islands and a military able to sidestep government with impunity has made it a favorite trans-shipment point for drugs. Drug barons from Latin America and their collaborators from the region and other parts of the world have taken advantage of the extreme poverty, unemployment, political instability, lack of effective customs and law enforcement, and general insecurity to make the country a major transit point for cocaine destined to consumer markets, mainly in Europe. Of all West African countries, none has been so thoroughly penetrated and corrupted by Latin American drug cartels as Guinea-Bissau. One of the poorest countries in the world, the value of the illicit narcotics trade in Guinea-Bissau is much greater than its national income. Using threats and bribes, drug traffickers infiltrate state structures and operate with impunity.

The police have seized a number of major drug shipments in past years, and representatives of the state have been linked to drug trafficking networks. Some of the arrested traffickers and seized drugs later vanished from the state's prisons and coffers, with no explanation forthcoming from the Bissau-Guinean authorities. A major bank operating in Guinea-Bissau reportedly had significant involvement in the laundering of proceeds from drug trafficking between South America and Europe/the Middle East via Guinea-Bissau.

The formal financial sector in Guinea-Bissau is undeveloped and badly supervised. It is also dwarfed by the size of the informal and cash sectors in addition to the underground economy. The cohesion and effectiveness of the state itself is very poor: the police are under-resourced and understaffed; corruption is a major problem; and the judiciary has reportedly demonstrated a lack of integrity on a number of occasions. Many government offices, including the justice ministry, lack basic resources, such as electricity, to function.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: NO

With other governments/jurisdictions: NO

Guinea-Bissau is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=45&mod=2&men=2

Enforcement and implementation issues and comments:

The Anti-Money Laundering Uniform Law, a required law for members of the Economic Community of West African States (ECOWAS), is not implemented effectively. There is still no financial intelligence unit (FIU) in operation, making much of the legislation unable to be implemented.

GOGB authorities expect to establish an FIU soon. The GOGB should ensure resources are available to sustain the FIU’s capacity and should put in place and train its staff. It also should work to improve the training and capacity of its police and judiciary to combat financial crimes. Guinea-Bissau needs assistance to finance, staff, train and equip its justice and police departments. Although the law establishes asset forfeiture authorities and provides for the sharing of confiscated assets, a lack of coordination mechanisms to seize assets and facilitate requests for cooperation in freezing and confiscation from other countries hampers cooperation.

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

Guinea-Bissau needs to improve the coordination of efforts at the national, sub-regional, regional and international levels, reforming the country's institutions. The Government of Guinea-Bissau (GOGB) should continue to work with its partners in GIABA, ECOWAS and other organizations to establish and implement an effective anti-money laundering/counter-terrorist financing (AML/CFT) regime. The government needs urgent help to restore sovereignty, administer justice and regain control of its borders. The GOGB should ensure the sectors covered by its AML law have implementing regulations and competent authorities to ensure compliance with the law‘s requirements. It should also amend its terrorist financing law to comport with international standards. Guinea-Bissau should undertake efforts to eradicate systemic corruption.

The GOGB should become a party to the UN Convention for the Suppression of the Financing of Terrorism, and the UN Conventions against Corruption and Transnational Organized Crime.

Guyana

Guyana is neither an important regional nor offshore financial center. It continues to be a transshipment route for South American cocaine and heroin destined for the United States and for cash returning to South America. Smuggling of the precursors to methamphetamine is also a problem. Reportedly, the narcotics trade may be increasingly linked to arms trafficking involving Europe and the Western Hemisphere.

Historically weak law enforcement and judiciary systems coupled with endemic corruption and increasing organized crime activity contribute to a favorable climate for significant money laundering in Guyana. Narcotics trafficking and corruption are alleged to be the primary sources of laundered funds; however, the laundering of proceeds from other illicit activities, such as human trafficking, contraband, kidnapping, tax evasion, and vehicle theft, is substantial.

Guyana’s geographic location makes it an ideal haven for transnational organized crime groups, including human and drug trafficking organizations. There are free trade zones operating in the country. There are no reported hawala or other money or value transfer services. Casinos are legal in Guyana and may pose a risk for money laundering.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Guyana (GOG) needs to increase the implementation of the 2007 Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) legislation and improve its effectiveness. It also needs to provide additional resources to the expanded financial intelligence unit (FIU). Guyana’s regulations with regard to suspicious activity reporting, wire transfers and customer due diligence need to be strengthened. The GOG should specifically criminalize tipping off.

The GOG is highly centralized and hierarchical, with significant decisions requiring presidential approval. This discourages individual initiative and the exercise of individual discretion, and money laundering investigations are extremely slow. The GOG needs to raise the awareness and understanding of the anti-money laundering regime and the AML/CFT law of the agencies with capacity to investigate money laundering cases and the judicial system.

Haiti

Haiti is the poorest country in the Western Hemisphere and relies heavily on remittances from abroad. Haitian organized crime groups are engaged in drug trafficking and other criminal and fraudulent activity, but do not at this time appear to be involved in terrorist financing. While not a major financial center itself, regional money laundering enterprises utilize Haitian couriers, especially via air hub routes to Central America.

The weakness of the Haitian judicial system and prosecutorial mechanism continues to leave the country vulnerable to corruption and money laundering despite improving financial intelligence and enforcement capacity. A positive development in this regard was the naming of a President of Haiti’s Supreme Court in October.

Haiti has one operational free trade zone in Ouanaminthe and two under development in Port-au-Prince. It is believed “contrabanding” (using smuggled bulk cash to buy products which are shipped to South America and sold) could be a problem. There are at least 62 casinos in Haiti, the majority unlicensed; however, online gaming is illegal.

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: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: All natural and legal persons who, as part of their profession, perform, oversee, or advise operations involving deposits, trading, investments, conversions, or any other movement of capital

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 49 from January 1 to October 19, 2011

Number of CTRs received and time frame: 244,297 from January 1 to October 19, 2011

STR covered entities: All natural and legal persons who, as part of their profession, perform, oversee, or advise operations involving deposits, trading, investments, conversions, or any other movement of capital

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: NO

With other governments/jurisdictions: YES

Haiti is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Haiti_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

In the spring of 2011, concerns were raised on the effectiveness of law enforcement and customs in the wake of a U.S.-Panamanian law enforcement operation which traced over $100 million in cash arriving annually from Haiti to Panama via scheduled commercial airline flights. Neither the Haitian banking sector nor customs officials at Port-au-Prince’s international airport were aware of these transfers that averaged $25,000 per passenger and over $1 million per flight.

The Government of Haiti (GOH) remains hampered by ineffective and outdated criminal and criminal procedural codes, and by the inability of judges and courts to address cases referred for prosecution. The government should move ahead on the proposed new criminal and criminal procedural codes that would address these problems. The GOH should pass the anti-terrorist legislation that has been submitted to Parliament which would criminalize terrorist financing and allow the immediate freezing of terrorist assets without delay.

Haiti’s AML law is written quite broadly and does not explicitly cover the types of entities addressed in the international standards. Implementation of the current law appears to cover only the banking industry. Financial entities not supervised by the Central Bank and designated non-financial businesses and professions are not subject to supervisory oversight and/or have not received appropriate training regarding their AML/CFT responsibilities. Haiti’s AML law should be rewritten or amended to explicitly detail the types of entities subject to the law, as proscribed in the international standards.

The amount of STRs is extremely low and only the banking sector submits reports. The Central Financial Intelligence Unit (UCREF) is ineffective due to its limited budget, lack of staff training and integrity, broad interpretation of the law, lack of autonomy, and limited access to foreign counterparts’ information. The government should fully fund UCREF and other anti-money laundering entities. UCREF should become fully operational and should seek membership in the Egmont Group of FIUs so that it can effectively share sensitive financial information with its foreign counterparts.

The Haitian government’s assistance to the U.S. Government was instrumental in obtaining, among other charges, money laundering and bribery convictions against several U.S. residents in a scheme involving the use of shell companies and false records to attempt to provide over $890,000 in bribes to Haitian officials.

Holy See (Vatican City)

The Holy See is an atypical government, being simultaneously a sovereign entity and the religious leadership of the Roman Catholic Church. The Institute for Works of Religion (IOR) performs functions similar to that of a bank, so it is commonly referred to as the “Vatican Bank.” Unlike a normal bank, the IOR does not loan money, and IOR accounts do not collect interest; nor does the IOR make a profit for shareholders or owners. Rather, the IOR acts as a clearinghouse for Vatican accounts, moving funds from Catholic Church sources to Catholic Church destinations.

There is no market for illicit or smuggled goods in Vatican City, the 0.17 square mile physical territory in which the government of the Holy See exercises its authority. The population of Vatican City, around 800, consists almost entirely of priests (Holy See officials) and members of religious orders.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Dicasteries of the Roman Curia and for every institution, entity, or person dependent on the Holy See, including the Institute for Works of Religion

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Fewer than five since January 1, 2011

Number of CTRs received and time frame: Zero in 2011

STR covered entities: Dicasteries of the Roman Curia and for every institution, entity, or person dependent on the Holy See, including the Institute for Works of Religion

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Zero in 2011

Convictions: Zero in 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

In 2011, the Holy See became an active observer of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its first mutual evaluation was conducted in late 2011. Once adopted, the report will be available at: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/HolySee_en.asp

Enforcement and implementation issues and comments:

In September 2009, the IOR saw 23 million euros (approximately $30 million) of its funds frozen by Italian financial authorities. That episode did not result in the prosecution of any Vatican officials. It did impel Vatican City State and the Holy See to promulgate a series of new laws to bring the Holy See in line with internationally accepted standards on money laundering and fraud. The IOR has also undertaken a series of internal reforms. On May 31, 2011, the Italian authorities released the frozen assets and the case was dropped.

On December 30, 2010, the Pontifical Commission for Vatican City State announced new laws for the prevention and countering of illegal activities in the financial and monetary sectors. The same day Pope Benedict XVI released an apostolic letter titled “For the Prevention and Countering of Illegal Activities in the Area of Monetary and Financial Dealings,” which made the law effective for all bodies canonically part of the Holy See, including those without a physical presence inside Vatican City State. These laws entered into force on April 1, 2011.

The laws of December 30 were formulated to implement the Monetary Convention of December 17, 2009 (2010/C 28/05) between Vatican City State and the European Union (EU), which allows Vatican City State to use the euro as its official currency. The laws were drafted with the assistance of the Mixed Committee, composed of representatives of Vatican City State and the EU. The Holy See’s Secretariat of State issued a communiqué on the new laws, including the “Law concerning the prevention and countering of the laundering of proceeds from criminal activities and of the financing of terrorism;” and the “Law on fraud and counterfeiting of Euro banknotes and coins.” The explicitly declared purpose of the law on fraud and counterfeiting is the protection of euro banknotes and coins. The law on the prevention of money laundering contains three obligations: adequate verification of the counterpart; registration and maintenance of data concerning ongoing relations and operations; and reporting of suspicious transactions. According to this law, all transactions dependent on the Holy See, whether through the IOR or not, require the parties to provide full identification, the records of which are kept for ten years.

The new laws also created the Financial Information Authority (AIF), a financial intelligence unit (FIU). By law, any suspicious transaction must be reported to the AIF for investigation. In addition, the movement of more than 10,000 euros (approximately $13,000) across the Vatican-Italian border must be reported. The AIF has jurisdiction over all international financial transactions that involve organizations or persons dependent on the Holy See. The judicial authorities of Vatican City State exercise penal jurisdiction over all bodies which fall under the AIF’s purview.

The Holy See has mechanisms in place to cooperate fully with other FIUs on investigations for money laundering and fraud. The new laws of December 2010 provide for forfeiture of seized assets in the case of a conviction; in the case of cooperation with foreign FIUs, the law permits sharing of third-party assets.

The Holy See is pursuing accession to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. It should become a party to the UN Convention against Corruption.

The Holy See has the legal framework in place to combat money laundering, fraud, and terrorism finance. The Vatican has taken steps to bring its laws in line with international standards. It has the legal framework to allow the government to freeze assets in a timely manner, and there are no judicial impediments to the ability of the AIF to execute its mandate. The Vatican should ensure its new laws are fully implemented to effectively deter illicit financial activity.

Honduras

Honduras is not an important regional or offshore financial center. It continues to be a transshipment route for South American cocaine and heroin destined for the United States and for cash returning to South America. Smuggling of the precursors to methamphetamine is also a problem.

Weak law enforcement and judiciary systems coupled with endemic corruption and increasing organized crime activity contribute to a favorable climate for significant money laundering activity. Assassination, human smuggling, weapons trafficking and organized crime are the main sources of laundered funds. Money laundering derives from domestic and foreign criminal activity, and the majority of proceeds are suspected to be controlled by international criminal organizations partnered with local crime syndicates. Laundered proceeds typically pass directly through the formal banking system, but illicit funds are increasingly being used to purchase businesses and real estate, yachts, luxury automobiles, armored cars, and other big-ticket items. Laundering funds through remittance companies, currency exchange houses, the construction sector, the insurance sector, the agricultural sector, and automobile and real estate front companies may be increasing. The country has several free trade zones. There are indications that trade-based money laundering may be occurring in these zones.

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

There are no reported hawala or other money or value transfer services operating in Honduras. A significant number of remittances are transferred through banks and appear to pose little risk for money laundering. Casinos are legal in Honduras and unsupervised gaming activity may represent a money laundering risk.

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.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered? criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC Covered entities: Banks, money service businesses, real estate agents, accountants, attorneys, casinos and lotteries, bingo operators, antique and art shops, commercial precious metals companies, notaries, company administrators, postal service companies, currency and valuables transportation firms, non-governmental organizations, funds transfer firms, international financial services companies

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 314 January to October 2011

Number of CTRs received and time frame: 2,189,603 January to September 2011

STR covered entities: Banks and financial institutions, real estate agents, used car dealerships, antique and jewelry dealers, pawn shops, remittance companies, armored car contractors, and non-governmental organizations

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS

Prosecutions: 26 from January to October 2011

Convictions: Three from January to October 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other: YES

With other governments/jurisdiction: YES

Honduras is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Honduras_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

The government of Honduras should increase the staff and capacity of the National Banking and Insurance Commission, the primary regulator for AML/CFT compliance. In addition, while changes in the law in 2010 gave the country’s financial intelligence unit new powers, it remains inadequately staffed. Honduras needs to continue efforts to ensure the Office that Administers Seized and Forfeited Assets is not politicized or susceptible to corruption.

Overall, there is a lack of cooperation, communication, and coordination at all levels of the government that prevents a higher success rate in investigations and prosecutions. The government should strengthen the Interagency Commission for the Prevention of Money Laundering and Financing of Terrorism.

Hong Kong

Hong Kong, a Special Administrative Region (SAR) of the People’s Republic of China, is a major international financial and trading center. As of September 2011, Hong Kong’s stock market was the world’s seventh largest and Asia’s third largest, with $2.08 trillion in market capitalization. Already the world’s tenth largest banking center in terms of external transactions and the sixth largest foreign exchange trading center, Hong Kong has continued its expansion as an offshore Renminbi (RMB) financing center, accumulating as of September 2011 over $98 billion in RMB-denominated deposits at authorized institutions. Hong Kong does not differentiate between offshore and onshore entities for licensing and supervisory purposes.

Hong Kong’s low tax rates and simplified tax regime, coupled with its sophisticated banking system, shell company formation agents, free port status, and the absence of currency and exchange controls, present vulnerabilities for money laundering, including trade-based money laundering. Primary sources of laundered funds, derived from local and overseas criminal activity, are: illegal gambling, fraud, financial crimes, loan sharking, goods smuggling activities and vice. Hong Kong law enforcement authorities attribute only a small percentage of laundered funds to drug trafficking organizations.

For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, securities and insurance entities, money exchangers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 14,751 from January to September 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: All persons, irrespective of entity or amount of transaction involved

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 223 from January to September 2011

Convictions: 158 from January to September 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Hong Kong is a member of the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/19/38/41032809.pdf

Enforcement and implementation issues and comments:

Hong Kong enacted legislation in July 2011 (AML/CFT Ordinance) that will go into effect in April 2012 and better align its financial sector with prevailing international standards. The legislation provides statutory backing to existing financial regulatory guidelines on preventive AML measures, including customer due diligence and record keeping requirements for financial institutions, and puts in place a licensing and regulatory regime for remittance agents and money changers. It also grants authority for administrative and criminal sanctions.

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

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

As a SAR of China, Hong Kong cannot sign or ratify international conventions in its own right. Rather, China is responsible for Hong Kong’s international affairs and may arrange for the ratification of any convention to be extended to Hong Kong. The 1988 Drug Convention was extended to Hong Kong in 1997. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime were extended to Hong Kong in 2006.

Hungary

Hungary is not considered a major financial center; however, its European Union (EU) membership and its pivotal location in Central Europe - as a link between the former Soviet Union and Western Europe - as well as its cash-based economy and well-developed financial services industry make it attractive to foreign criminal organizations. Money laundering cases mostly stem from financial and economic crimes, such as fraud, embezzlement, tax evasion, and tax and social security fraud, although narcotics trafficking, prostitution, trafficking in persons and organized crime activities also contribute. Other prevalent economic and financial crimes include real estate fraud and the copying/theft of bankcards. There is a black market for smuggled goods in Hungary, primarily related to customs, excise, and value-added tax evasion. No international terrorist groups are known to operate in Hungary.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks; investment service providers, employer pension services, and commodity exchange services; insurance intermediary and mutual insurance fund services; sellers and issuers of domestic and international postal money orders; real estate agents and brokers; auditors; accountants; tax consultants and advisors; casinos or other gambling services; precious metal and high value goods traders; lawyers; and notaries

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 3,144 from January to July 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks; investment service providers, employer pension services, and commodity exchange services; insurance intermediary and mutual insurance fund services; sellers and issuers of domestic and international postal money orders; real estate agents and brokers; auditors; accountants; tax consultants and advisors; casinos or other gambling services; precious metal and high value goods traders; lawyers; and notaries

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Nine from January to May 2011

Convictions: Five from January to May 2011

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

Hungary is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Hungary_en.asp

Enforcement and implementation issues and comments:

In September 2011, in a government resolution, Hungary adopted an action plan to address noted deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime. The action plan establishes a road map for the relevant authorities responsible for AML/CFT issues. As of November 2011, Hungarian authorities had started implementing tasks as determined by the action plan.

Iceland

Iceland is not considered a regional financial center. Money laundering in Iceland is related primarily to narcotics smuggling and trading and is not considered a major problem. Criminal proceeds tend to derive from domestic organizations with some linkages to foreign groups. In 2011, investigators continued to look into the 2008 collapse of Iceland’s financial system and to re-examine allegations that its banks may have been involved in money laundering. The collapse of the Icelandic banks continues to affect the activities of the Financial Intelligence Unit (FIU), not least in connection with foreign interaction and information exchange with its counterparts abroad due to investigation into cases relating to the collapse.

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 414 in 2010

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2010

Convictions: One in 2010

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: NO Other mechanism: YES

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Iceland (GOI) has improved its anti-money laundering/counter-terrorist financing (AML/CFT) system through the enforcement of existing laws, and review and implementation of international standards. A domestic mechanism should be implemented to allow designation of terrorists at a national level as well as to give effect to designations and asset freeze requests from other countries. Iceland does have a legal framework that allows authorities to freeze terrorist assets in a timely manner; however, all orders to freeze assets must have prior judicial approval. The country does not have asset sharing capabilities. The GOI should continue to enhance its AML/CFT program, as appropriate.

The Economic Crime Unit at the National Commissioner of the Icelandic Police and the Office of the Special Prosecutor, which is responsible for investigating the banking collapse, merged on January 1, 2012. As a result of the merger, both the investigation and prosecution of cases that have been dealt with at the Police’s Economic Crime Unit are now the responsibility of the Special Prosecutor. The National Commissioner of the Icelandic Police will only be involved in receiving announcements and tip offs based on money laundering and terrorist financing laws – not in investigating potential legal violations. In addition, a committee will be appointed to review the organization and arrangement of investigations and prosecutions, and make suggestions for future improvements. Several new positions are being moved and established as a result of the merger.

The authorities' collaborative committee on measures against money laundering continues to educate reporting parties, including those who have not received education or training regarding measures against money laundering. According to the FIU, considerable achievements have been made in this area and most reporting parties should now be able to comprehend the importance of such measures in their activities. A shortage of reports from non-financial institutions, however, indicates that more still needs to be done.

On March 1, 2011, Iceland acceded to the UN Convention against Corruption.

India

India is a regional financial center, with a rapidly growing economy and well-developed formal and informal financial systems. India’s extensive informal economy and remittance systems, porous borders, persistent corruption, and onerous tax administration and currency controls contribute to its vulnerability to economic crimes (including fraud, cyber crime, and identity theft), money laundering, and terrorist financing. Tax avoidance and the proceeds of economic crimes are the mainstays of money launderers in India, but laundered funds are also derived from narcotics trafficking and trafficking in persons, transnational organized crime, illegal trade, and corruption. Transnational criminal organizations use offshore corporations and trade-based money laundering to conceal the proceeds of crime. Criminal networks exchange high-quality counterfeit currency for genuine notes, which facilitates money laundering.

India’s porous borders and location between heroin-producing countries in the Golden Triangle and Golden Crescent make it a frequent transit point for drug trafficking. Proceeds from Indian-based heroin traffickers re-enter the country via bank accounts, the hawala system, and money transfer companies.

India is also a significant target for both domestic and foreign terrorist groups. Several indigenous terrorist organizations coexist in various parts of the country; many are linked to external terrorist groups with global ambitions. Terrorist groups often use hawaladars and currency smuggling to move funds from external sources to finance their activities in India. Indian authorities also report they have seized drugs sold by India-based insurgents to production and/or trafficking groups in neighboring countries.

High-level corruption both generates and conceals criminal proceeds. Illicit funds are often laundered through real estate, educational programs, charities, and election campaigns. Companies use trade-based money laundering to evade capital controls.

India licenses seven offshore banking units (OBUs) to operate in Special Economic Zones (SEZs), which were established to promote export-oriented commercial businesses, including manufacturing, trading, and services (mostly information technology). As of November 2011, there were 143 SEZs in operation, with another 582 SEZs formally approved. Customs officers control access to the SEZs. OBUs essentially function as foreign branches of Indian banks, but with defined physical boundaries and functional limits. OBUs are prohibited from engaging in cash transactions, can only lend to the SEZ wholesale commercial sector, and are subject to the same anti-money laundering/counter-terrorist financing (AML/CFT) provisions as the domestic sector.

For additional information focusing on terrorism financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found here: http://www.state.gov/j/ct/rls/crt/

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

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 20,698 from April 2010 to March 2011

Number of CTRs received and time frame: 8,687,107 from April 2010 to March 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 36 from April 2006 to March 2011

Convictions: Zero

RECORDS EXCHANGE MECHANISM:

With U.S.: MLAT: YES Other mechanism: YES

With other governments/jurisdictions: YES

India is a member of the Financial Action Task Force (FATF), as well as two FATF-style regional bodies, the Asia/Pacific Group on Money Laundering (APG) and the Eurasian Group on Combating Money Laundering and Terrorist Financing (EAG). Its most recent mutual evaluation can be found here: www.fatf-gafi.org/dataoecd/60/56/45746143.pdf

Enforcement and implementation issues and comments:

India is strongly committed to implementing an effective AML/CFT framework and has taken numerous steps to improve its AML/CFT regime and bring it into compliance with international standards. In 2011, the Government of India (GOI) drafted amendments to the Prevention of Money Laundering Act (PMLA) and the Unlawful Activities (Prevention) Act that would expand the scope of India’s AML/CFT regime to cover several designated non-financial businesses and professions, including jewelers and real estate firms. The draft amendments also would address deficiencies with respect to the criminalization of money laundering and terrorist financing and to confiscation and provisional measures, including by making money laundering a stand-alone offense and allowing authorities to attach property even if the predicate offense is not proven.

In 2011, the financial services regulators issued an extensive range of enforceable circulars improving customer due diligence requirements, including with respect to customers and transactions involving countries with “strategic AML/CTF deficiencies.” In addition, the FIU enhanced outreach to the financial sector on suspicious transaction reporting, revised the cash and suspicious transaction reporting format for non-banking financial companies, and streamlined an electronic reporting format for CTRs and STRs, resulting in a significant increase in the number of STRs filed with respect to both money laundering and terrorist financing.

Despite these important steps, deficiencies remain. Since Parliament has not yet approved the draft PMLA amendments, India lacks both effective criminal asset forfeiture provisions and conspiracy laws. Moreover, effective implementation of the current law remains a significant concern. Despite increased law enforcement resources, as of April 2011, there were still no money laundering convictions or confiscations. Law enforcement typically opens substantive criminal investigations reactively, after an offense is discovered, and seldom initiates proactive analysis and long-term investigations. At the prosecutorial level, there is an appropriate focus on terrorist financing; however, this effort has yet to be followed up convincingly by convictions and firm case law. Furthermore, while the GOI has taken action against certain hawala activities, these successes generally stem from prosecuting primarily non-financial businesses that conduct hawala transactions on the side.

Levels of training and expertise in financial investigations involving transnational crime or terrorist-affiliated groups vary widely among the federal, state, and local levels and depend on the particular jurisdiction’s financial capabilities and perceived necessities. U.S. investigators have had limited success in coordinating the seizure of illicit proceeds with their GOI counterparts. While intelligence and investigative information supplied by U.S. investigators have led to numerous money seizures, a lack of follow-through on investigational leads has prevented a more comprehensive offensive against offenders and related groups.

The GOI is taking steps to increase financial inclusion through “small [banking] accounts”, but should consider further facilitating the development and expansion of alternative money transfer services, including mobile banking, domestic funds transfer, and foreign remittances. Such an increase in lawful, accessible services would allow broader financial inclusion of legitimate individuals and entities and reduce overall AML/CFT vulnerabilities, particularly in the rural sector, by shrinking the informal network. The GOI also should establish a clear safe harbor provision for those filing STRs in good faith.

In May 2011, India ratified both the United Nations Convention against Corruption and the United Nations Convention against Transnational Organized Crime.



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