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


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

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Swaziland

Swaziland is not considered a regional financial center. The financial sector in the kingdom is small and dominated by subsidiaries of South African financial institutions. The small size of the country as well as its proximity to major cities in Mozambique and South Africa make it a transit country for illegal operations in those countries and, to some extent, in the rest of the Southern African region. Proceeds from the sale or trade in dagga (marijuana) may be laundered in Swaziland. Cash gained from the sale of marijuana and other illegal activities may be used to buy goods for retail outlets and to build houses on non-titled land.

There is a general belief that trade-based money laundering exists in Swaziland, and proceeds generated through corrupt activities are a major concern. In addition to narcotics, robbery, theft, fraud, counterfeit currency, forgery, corruption, real estate, tax evasion and customs evasion are major sources of illicit proceeds. Fraudulent cross-border bank transfers, checks, insurance claims and forged invoices, and debit card fraud are major crimes in the financial sector. A large amount of proceeds involve cross-border transactions through banks, casinos, investment companies, and savings and credit cooperatives. There is a significant black market for smuggled goods such as cigarettes, liquor, and pirated radio cassettes, videocassettes, and DVDs among Mozambique, South Africa and Swaziland. Swazi officials believe terrorist financing to be of little risk in the kingdom.

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, securities firms, real estate brokers, cooperatives, provident fund managers, and insurance brokers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Approximately 240 in 2011

Number of CTRs received and time frame: None

STR covered entities: Banks and pension funds

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two ongoing

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Swaziland is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/userfiles/Detailed-MER-for-the-Kingdom-of-Swaziland(1).pdf

Enforcement and implementation issues and comments:

Swaziland has taken several important steps to establish an anti-money laundering/counter-terrorist financing (AML/CFT) regime. In 2011, the Government of the Kingdom of Swaziland (GOS) passed the Money Laundering and Financing of Terrorism (Prevention) Act which, among other things, provides for the establishment of a financial intelligence unit (FIU) and seeks to forge closer national cooperation and coordination among government institutions involved in money laundering and terrorist financing deterrence. However, the law has yet to come into force and, while the FIU has been established, it is not yet adequately staffed or fully operational. The authorities have not undertaken a money laundering risk assessment to determine the level of vulnerability.

The Royal Swaziland Police Service (RSPS) and the Anti-Corruption Commission (ACC) are the two main law enforcement agencies mandated to investigate money laundering offenses. The RSPS also is charged with investigating terrorist financing offenses. Swaziland has not successfully prosecuted money laundering or terrorist financing cases. According to officials, RSPS officers require additional training and capacity to be adequately prepared to investigate both money laundering and terrorist financing offenses. The GOS should take steps to improve the capacity of, and coordination among, the RSPS, the Anti-Corruption Commission, and the FIU.

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

Sweden

While Sweden is not a regional financial center, revenue and suspicious transactions increased from 2009 to 2010. According to statistics from the Swedish Financial Police, the amount of suspected money laundering transactions totaled $1.2 billion in 2010 compared with $882.8 million in 2009.

Money laundering in Sweden occurs either through individuals who use the financial system to turn over illicit funds, or with the help of corporations that use financial system services. Money laundering is further facilitated by criminals having contacts or acquaintances within, or influence over corporations and actors within the financial system. Laundered money emanates from narcotics, tax fraud, economic crimes, robbery, and organized crime. Money laundering is concentrated primarily in large urban regions, such as Stockholm, and is frequently conducted over the internet, utilizing international money transfer services, gaming sites, and narcotics and illicit chemical vending sites. Suspicious transaction reports (STRs) generally do not reference serious organized crime, although it is a growing concern. Public corruption is not an issue in Sweden.

Sweden does not have an offshore financial center. Sweden provides no offshore banking, and does not readily attract foreign criminal proceeds as it does not have especially favorable banking regulations. There is not a significant market for smuggled goods in Sweden; however, the Swedish police consider the smuggling of bulk cash to be a problem. Sweden is a member of the European Union, and money is moved freely within the union. Sweden has foreign trade zones with bonded warehouses in the ports of Stockholm, Göteborg, Malmö, and Jönköping. Goods may be stored for an unlimited time in these zones without customs clearance, but they may not be consumed or sold on a retail basis. Permission may be granted to use these goods as materials for industrial operations within a free trade zone. The same tax and labor laws apply to foreign trade zones as to other workplaces in Sweden.

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 12,218 in 2010

Number of CTRs received and time frame: Not applicable

STR covered entities: Independent certified public accountants; tax advisors; lawyers; real estate agents; casinos; banks, life insurance and securities companies; insurance brokers; fund companies; companies that issue electronic money; and high value goods dealers

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

Sweden is a member of the Financial Action Task Force. Its most recent Mutual Evaluation can be found here: http://www.fatf-gafi.org/infobycountry/0,3380,en_32250379_32236963_1_70765_43383847_1_1,00.html

Enforcement and implementation issues and comments:

Swedish legislation dealing with money laundering exists in the Penal Code and the Money Laundering Act. In practice, predicate crimes are prosecuted, but not money laundering itself. Most often money laundering is prosecuted as tax evasion, if no other direct connection to crime is found. Many money laundering incidents involve self laundering, wherein a person tries to launder his own ill-gotten gains. In these cases only the predicate offense can be prosecuted, due to the lack of criminalization of self laundering in the Penal Code, even though it is defined as money laundering within the Money Laundering Act. The Money Laundering Act defines what is considered suspicious and should be reported to the Swedish Financial Intelligence Unit, rather than establishing criminal regulations.

The Swedish financial authority, Finansinspektionen, oversees compliance with current reporting regulations. It has the power to fine institutions and issue warnings, as well as to revoke licenses.

The FIU reports that STR filings reveal the most popular destinations for money leaving Sweden are Nigeria, Ghana, the UK, Iran, Russia, the Philippines, China, and Poland. Those countries most frequently named on STRs concerning money entering Sweden are China, Russia, the U.S., the U.A.E, Germany, Angola, Turkey, and Canada. According to the FIU, the significant increase in STR filings between 2009 and 2010 can partially be attributed to more banks utilizing detection systems for suspicious transactions, as well as an increase in the number of companies required to file reports. The biggest increase was in the credit market companies sector, which increased its STR rate from 51 in 2009 to 1,309 in 2010. STRs from remittance services also more than doubled from 1,749 reports in 2009 to 3,721 reports in 2010. Hawaladars are legally obligated to apply Swedish bookkeeping regulations.

Switzerland

Switzerland is a major international financial center. Reporting indicates that criminals attempt to launder illegal proceeds in Switzerland from a wide range of criminal activities conducted worldwide. These illegal activities include, but are not limited to, financial crimes, narcotics trafficking, arms trafficking, organized crime, terrorist financing and corruption. Although both Swiss and foreign individuals or entities launder money in Switzerland, foreign narcotics trafficking organizations, often based in Russia, the Balkans, Eastern Europe, South America and West Africa, dominate the narcotics-related money laundering operations in Switzerland.

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,159 in 2010

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks; securities and insurance brokers; money exchangers or remitters; financial management firms; casinos; and individuals acting as intermediaries in bank lending, money transactions, trading of currencies or providing wealth management and investment advice services

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 360 in 2010

Convictions: 219 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Because there are no laws for declaration of currency and monetary instruments, Swiss authorities cannot effectively conduct bulk cash investigations.

The number of suspicious activity reports increased by 29% from 2009 to 2010, to 1,159 reports encompassing a total of CHF 850 million (approximately $962 million), compared to CHF 2.2 billion (approximately $2.3 billion) in 2009. In 2010, 13 reports were related to terrorism finance, amounting to CHF 23 million (approximately $26 million).

The country’s central geographic location, relative political, social, and monetary stability, the range and sophistication of financial services it provides, and its long tradition of bank secrecy not only contribute to Switzerland’s success as a major international financial center, but also continue to expose Switzerland to potential money laundering abuse. This potential is exacerbated by the current lack of adequate regulation of some potential means of facilitating money laundering, such as real estate, jewelry, luxury cars, works of art, and commodities like oil and gas.

Syria

Syria was not an important regional or offshore financial center even before the beginning of unrest in March 2011, primarily because of its underdeveloped private banking sector and constraints on full convertibility of the Syrian pound. Prior to widespread civil unrest, only 20% of Syria’s population of nearly 23 million people used formal banking services, although private-sector banks’ market penetration was growing rapidly. However, following the imposition of robust sanctions on individuals, entities, and banks by several jurisdictions, banking services were used considerably less in 2011 than in the year prior. While large commercial transactions rely on banks, the majority of business transactions are still conducted in cash.

The United States has designated Syria as a State Sponsor of Terrorism. In addition, in March 2011, the Syrian regime began a violent crackdown against protestors, which included widespread human rights violations. As a result, the United States, the European Union, Arab League and individual nations imposed sanctions against individuals, entities, and corporations assisting the regime’s crackdown. On April 29, the United States began sanctions on individuals enacted through Executive Orders (E.O.) 13572, 13573, and 13382. Several rounds of sanctions continued throughout the subsequent nine months and have targeted the Commercial Bank of Syria, the Real Estate Bank, Syrian-Lebanese Commercial Bank, and U.S. dealings with the Syrian petroleum industry.

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

After suspending Syria’s membership on November 12, 2011, the Arab League, which normally comprises 22 Arab member states including Syria, approved sanctions on Syria on November 28, 2011. These sanctions include cutting off transactions with the Syrian central bank; halting funding by Arab governments for projects in Syria; a ban on senior Syrian officials traveling to other Arab countries; and a freeze on assets related to President Bashar al-Assad’s government. The declaration also calls on Arab central banks to monitor transfers to Syria, with the exception of remittances from Syrians abroad.

Syria is included in the October 28, 2011 Financial Action Task Force (FATF) Public Statement for its failure to adequately implement its action plan to address noted deficiencies, including the need to adopt adequate measures to implement and enforce the 1999 International Convention for the Suppression of the Financing of Terrorism; implement procedures for identifying and freezing terrorist assets; ensure that financial institutions are aware of and comply with their obligations to file STRs; and ensure that appropriate laws and procedures are in place to provide mutual legal assistance.

Estimates of the volume of business conducted in the black market by Syrian money changers range between $15 and $70 million per day. Additionally, a lack of necessary legislation and poor enforcement of existing laws contribute to significant money laundering and terrorist financing vulnerabilities in Syria’s banking and non-bank financial sectors. Syria’s black market moneychangers are not adequately regulated, and the country’s borders remain porous. Regional hawala networks, intertwined with smuggling and trade-based money laundering, raise significant concerns, including involvement in the financing of terrorism. The most obvious indigenous money laundering threat involves some members of Syria’s political and business elite, whose corruption and extra-legal activities continue unabated.

There are eight public free trade zones (FTZs) in Syria and five additional FTZs were planned in Damascus, Homs, Dayr ez-Zawr, Idleb, and the port of Tartous prior to the start of the uprising in March 2011. In recent years, Iran announced plans to build FTZs in Syria, although it later dropped this idea in favor of pursuing a free trade agreement with Syria. China’s free zone in Adra was officially inaugurated in July 2008; 13 businesses have been established in Adra to date. The volume of goods entering the FTZs is estimated to be in the billions of dollars and is growing, especially with increasing demand for automobiles and automotive parts, which enter the zones free of customs tariffs before being imported into Syria. While all industries and financial institutions in the FTZs must be registered with the General Organization for Free Zones, part of the Ministry of Economy and Trade, the Syrian General Directorate of Customs continues to lack strong procedures to check country of origin certification, or the resources to adequately monitor goods that enter Syria through the zones. There also are continuing reports of Syrians using the FTZs to import arms and other goods into Syria in violation of U.S. sanctions under the Syrian Accountability Act, and a number of United Nations Security Council Resolutions.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:

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

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

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

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

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

Taiwan

Taiwan is a regional financial center. Its modern financial sector, strategic location on international shipping lanes, expertise in high-tech sectors, and role as an international trade hub make it vulnerable to transnational crimes, including money laundering, drug trafficking, telecom fraud, and trade fraud. Though illegal in Taiwan, a significant volume of informal financial activity takes place through unregulated non-bank channels. Taiwan has five free trade zones and a growing offshore banking sector. There is no significant black market for smuggled goods in Taiwan.

Domestic money laundering is generally related to tax evasion, drug trafficking, public corruption, and a range of economic crimes. Jewelry stores increasingly are being used as a type of underground remittance system. Jewelers convert illicit proceeds into precious metals, stones, and foreign currency, and generally move them using cross-border couriers. The tradition of secrecy in the precious metals and stones trade makes it difficult for law enforcement to detect and deter money laundering in this sector, even though dealers in precious metals and stones are required to implement know-your-customer rules.

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, credit co-operative associations, credit departments of Farmers’ Associations and Fishermen’s Association, Department of Savings & Remittances of Chunghwa Post Co., securities firms, life insurance companies, and dealers in precious metals and stones

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 5,379 from January to September 2011

Number of CTRs received and time frame: 65,054 from January to September 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 20 from January to September 2011

Convictions: Eight from January to September 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Taiwan is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Chinese%20Taipei%20MER2_FINAL.pdf

Enforcement and implementation issues and comments:

Taiwan continues to strengthen its AML/CFT regime, but is not in full compliance with international standards on combating terrorist financing. While Taiwan criminalized the financing of terrorist activities, it is not an autonomous offense and does not specifically cover the financing and support of terrorist activities overseas. Taiwan should pass legislation to criminalize terrorism and terrorist financing as an autonomous crime, and clarify that the law covers such activities overseas. The government should abolish all shell companies and prohibit the establishment of new shell companies of any type.

Taiwan’s AML/CFT requirements do not apply to several types of designated non-financial businesses and professions (DNFBPs), which remain vulnerable to money laundering/terrorist financing activity. Taiwan should raise awareness of the vulnerabilities of non-profit organizations to terrorist financing, and should exert more authority over this sector. Taiwan should take steps to amend its legislation and regulations to bring all DNFBPs, as listed in the international standards, and the non-profit sector within the scope of its AML/CFT coverage. Given the increasing threat of alternative remittance centers such as the precious metals and stones sector, Taiwan’s law enforcement should enhance investigations of underground financial systems.

In September 2011, Taiwan’s Financial Supervisory Commission, the top financial regulator in Taiwan, directed Taiwan’s financing institutions to begin implementing enhanced due diligence procedures for politically exposed persons, through an established databank for “high profile politician.” Financial institutions are required to identify, record, and report the identities of high-profile customers engaging in significant or suspicious transactions.

In two decisions rendered in 2011, Taiwan’s High Court upheld earlier convictions and reversed a lower court acquittal against former President Chen Shui-bian and members of his family for a range of corruption offenses including money laundering, forgery, embezzlement and bribery committed while he was in office. The Court fined him NT$180 million (approximately $5.9 million) and sentenced him to an additional 18 years in prison, in addition to his previous 17-year sentence for corruption.

Taiwan is unable to ratify UN conventions because of long-standing political issues. However, it has enacted domestic legislation to implement the standards in the 1988 UN Drug Convention, the UN Convention against Transnational Organized Crime, and the UN Convention for the Suppression of the Financing of Terrorism.

Tajikistan

Tajikistan operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. Furthermore, deficiencies in Tajikistan’s recently enacted AML/CFT law increase Tajikistan’s vulnerability to money laundering and terrorism financing.

Criminal proceeds laundered in Tajikistan derive from both foreign and domestic criminal activities related to the large amounts of opium and heroin trafficked from Afghanistan to Russia via Tajikistan. The money laundering proceeds are primarily controlled by high-level drug trafficking networks, with some smaller actors involved. It is suspected that corruption at high levels within the government facilitates the drug trade and associated money laundering. Some money laundering takes place in the formal financial sector, according to the National Bank of Tajikistan (NBT), the Central Bank. Other banks offer clients whose income is likely to be criminally derived the ability to purchase properties in the Persian Gulf States, particularly Dubai. Tajik authorities have reported that some unlawfully derived proceeds are handled through offshore accounts in the Middle East.

While there is a market for smuggled goods, there is little evidence that most items are financed with narcotics money, with the exception of imported cars and other luxury items. There are concerns about the abuse of non-profit organizations, hawalas, money or value transfer services, free trade zones, and bearer shares in regard to money laundering; however, the Government of Tajikistan (GOT) has not provided any information with respect to this issue.

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: 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, money remitters, foreign exchange dealers, microfinance institutions

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 remitters, foreign exchange dealers, microfinance institutions

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

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

Enforcement and implementation issues and comments:

Tajikistan adopted several laws in 2011 that attempt to address severe shortcomings identified by international experts. Several changes to the law on securities, adopted in June, establish a regulatory authority, introduce a state register and determine the procedures for transfer of rights to securities. Rules were also adopted for bank payment cards to help identify and limit suspicious transactions and counter the legalization of proceeds from crime and terrorist financing using these instruments.

While the new AML/CFT law does increase the due diligence requirements for foreign politically exposed persons, it does not impose similar requirements for domestic PEPs. The new law defines tipping off; however, international experts have raised serious concerns about the law’s effectiveness in meeting international recommendations. The new law also put in place new suspicious reporting requirements, but these need some improvements in order to meet international standards. In addition, concerns remain about the authorities’ ability to access these in a timely fashion.

The GOT has developed an action plan to address noted deficiencies, including by adequately criminalizing money laundering and terrorist financing, establishing and implementing adequate procedures for the confiscation of funds related to money laundering and for identifying and freezing terrorist assets, enhancing financial transparency, ensuring a fully operational and effectively functioning financial intelligence unit (FIU), improving STR requirements, and improving and broadening customer due diligence measures. The GOT also should criminalize tipping off and should provide for criminal liability for legal persons.

The NBT indicated it has received a number of STRs and CTRs since May, but it was not authorized to provide exact numbers. The NBT developed a list of indicators of suspicious transactions and, using provisions of the new law, created an FIU. The FIU will be able to analyze and disseminate information, although there are concerns about its independence and allocated resources.

While Tajikistan has signed several international agreements pertaining to money laundering and financial crime, the government needs to codify these in Tajik law. The country needs to amend its laws to better address seizure, forfeiture, and ultimate disposition of assets determined to be unlawfully derived proceeds of money laundering in accordance with international standards. In addition, the GOT needs to improve its criminalization of terrorist financing to comply with international standards and establish procedures to implement United Nations Security Council Resolutions 1267 and 1373.

Tanzania

While Tanzania is not a major regional financial center, its location at the crossroads of southern, central and eastern Africa leaves it vulnerable to activities that generate illicit revenue, such as smuggling and the trafficking of narcotics, arms, and humans. The major profit generating crimes in Tanzania include theft, robbery, corruption, smuggling of precious metals and stones, and drug trafficking. With only 12% of the population engaged in the formal financial sector, money laundering is more likely to occur in the informal non-bank sectors. Criminals have been known to use front companies, hawaladars and bureaux de change to launder funds, though these are not currently significant areas of concern for Tanzanian AML officials, who are not aware of any issues with or abuse of non-profit organizations, alternative remittance systems, offshore sectors, free trade zones, or bearer shares. Real estate and used car businesses also appear to be sources of money laundering. The use of front companies to launder money is especially common on the island of Zanzibar, where fewer federal regulations apply. Officials indicate that money laundering schemes in Zanzibar generally take the form of foreign investment in the tourist industry and bulk cash smuggling.

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: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks and financial institutions, cash dealers, accountants, dealers in art/metal/precious stones, customs officials, and legal professionals

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 15 - January to November 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks and financial institutions, cash dealers, accountants, realtors, dealers in art/metal/precious stones, casinos and gaming operators, regulators, customs officials, and legal professionals

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Five in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

Although in recent years the Government of Tanzania (GOT) has strengthened its response to money laundering activities, Tanzania has serious deficiencies in its legislation and AML/CFT regime. The Anti-Money Laundering Act (AMLA) of 2006 includes a limited list of predicate offenses that does not meet international standards. The Minister of Finance has discretion to add offenses, and Tanzanian officials express commitment to amending the AMLA as necessary. Additional key issues include weaknesses in supervision of the financial sector and the lack of designated competent authorities responsible for ensuring compliance by financial institutions.

Coordination with Zanzibar on AML regulations and procedures has typically been complicated by the broader question of where Zanzibar’s authority ends and the Union’s authority begins. In October 2011, mainland and Zanzibari authorities came to an agreement to share a single financial intelligence unit (FIU), and established a national AML/CFT Center to serve as this authority. Thus, in 2011, the FIU significantly expanded its reach from mainland-only to all of Tanzania, and its staff from five to 16. However, there continue to be weaknesses in the structure and function of Tanzania’s FIU, including inadequate provisions to safeguard the FIU’s operational independence. The GOT must dedicate the resources necessary to build an effective FIU. The FIU should continue its efforts to train new staff, to inform institutions of their reporting and record keeping responsibilities, and to train the financial sector to identify suspicious transactions.

Currently, there are five AML prosecutions underway but there have been no convictions. Authorities note that training and attention has focused on mainland authorities, and authorities in Zanzibar reportedly lag behind their mainland counterparts. Additional training for the judiciary, as well as for the law enforcement authorities charged with investigating financial crimes is critical.

There is limited capacity to effectively implement all the requirements and adequately supervise the banking sector. A lack of enforceable requirements to ensure customer due diligence; a focus mainly on the formal banking sector rather than full coverage of designated non-financial businesses and professions; and ineffective provisions pertaining to recordkeeping, including a threshold approach to recordkeeping requirements, continue to be issues. Bankers report the AMLA is a good law, but expectations on the industry are unreasonable, e.g., a requirement to fingerprint customers when there is no national ID or establish a database to store the collected biometrics. Mobile banking is growing rapidly in Tanzania, opening up formerly underserved rural areas to formal banking.

Tanzania does not have formal records exchange mechanisms. The Ministry of Foreign Affairs and Central Bank of Tanzania do cooperate with other governments via memoranda of understanding, but this happens infrequently.

Tanzania should work to increase the level of awareness and understanding of money laundering issues in the financial, law enforcement and judicial areas and should allocate the necessary human, technical, and financial resources to implement its AML/CFT regime. The GOT should focus its efforts on practical implementation of the AMLA. The GOT also should improve its cross-border cash declaration regime. Tanzanian police and customs officials also would benefit from training on identifying and preventing money laundering through exploitation of the money/value transfer services used in the region.

Terrorist financing is not adequately criminalized. Additionally, there are deficiencies in the mechanisms to freeze and confiscate terrorist assets, including a lack of implementing regulations to give effect to the freezing mechanism under the Prevention of Terrorism Act for the purposes of UNSCRs 1267 and 1373. Authorities should ensure the Prevention of Terrorism Act comports with international standards and the GOT implements all provisions in the law.

Thailand

Thailand is a centrally located, upper-middle-income Southeast Asian country with an extremely porous border. Thailand is vulnerable to money laundering within its own underground economy as well as to many categories of cross-border crime, including illicit narcotics and other contraband smuggling. The Thai black market includes a wide range of pirated and smuggled goods, from counterfeit medicines to luxury automobiles. Money launderers and traffickers use banks, as well as non-bank financial institutions and businesses, to move the profits of narcotics trafficking and other criminal enterprises. In the informal money-changing sector, there is an increasing presence of hawalas - a remittance system that uses relationship-based networks via money shops that service Middle Eastern travelers in Thailand. Thai banking regulations cover financial institutions adequately, but struggle to achieve effective oversight over less formal operations.

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

Thailand was publicly identified by the Financial Action Task Force (FATF) in February 2010 for its strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies, for which it has developed an action plan. Thailand’s action plan includes adequately criminalizing terrorist financing and establishing and implementing adequate procedures to identify and freeze terrorist assets. In October 2011, the FATF determined that Thailand’s progress against the agreed action plan’s timeline has been insufficient and the Government of Thailand (GOT) needs to take adequate action to address its main deficiencies or risk further action from the FATF.

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 (including state banks), finance companies, mortgage finance companies, securities dealers, insurance companies, money exchangers and remitters, asset management companies, jewelry and gold shops, automotive hire-purchase businesses or car dealers, real estate agents/brokers, antiques shops, personal loan businesses, electronic card businesses, credit card businesses, and electronic payment businesses, as well as deposit/lending cooperatives with total operating capital exceeding $67,000

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 166,578 from October 1, 2010 to September 30, 2011

Number of CTRs received and time frame: 933,485 from October 1, 2010 to September 30, 2011

STR covered entities: Private and state-owned banks, finance companies, insurance companies, savings cooperatives, securities firms, asset management companies, and mortgage finance companies; land registration offices, moneychangers, remittance agents, jewelry and gold shops, automotive hire-purchase businesses and car dealerships, real estate agents and brokers, antique shops, personal loan companies, electronic and credit card companies, and electronic payment companies

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2011

Convictions: One in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdiction: YES

Thailand is a member of the Asia/Pacific Group on Money Laundering, 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/Thailand%20DAR.pdf

Enforcement and implementation issues and comments:

Political and civil unrest in Thailand in mid-2010, followed by catastrophic flooding, the dissolution of Parliament and subsequent general election in July 2011, have impeded Thailand’s implementation of its AML/CFT action plan. Despite high-level political commitment to address strategic AML/CFT deficiencies, Thailand’s legislative framework still does not adequately criminalize terrorist financing and does not establish adequate procedures for identifying and freezing terrorist assets.

Despite these significant deficiencies, Thailand has made some progress in improving its FIU and its regulatory framework. The Anti-Money Laundering Office (AMLO) now has a full staff and is operational. The AMLO issued memoranda of understanding with two financial supervisors, the Office of Insurance Commission, signed April 26, and the Bank of Thailand, signed May 25. The memoranda establish the role of the AMLO in monitoring compliance with AML/CFT requirements, coordinating information sharing and ensuring that financial supervisors carry out their responsibilities effectively. Thailand has also made progress in the training and supervision of reporting entities, particularly money changers and transfer businesses. Ministerial regulations for cash threshold transactions and customer identification were endorsed and legalized via Cabinet resolution, and came into force in August.

Thai law does not adequately prohibit “tipping off,” leaving financial institutions and their employees subject to potential liability for filing STRs. The GOT should amend its legislation as necessary to ensure this deficiency is corrected.

On March 1, 2011, Thailand became a party to the UN Convention against Corruption. Thailand should become a party to the UN Convention against Transnational Organized Crime.

Timor-Leste

Timor-Leste is not a regional or offshore financial center and has no free trade zones. The economy is cash based, and the Ministry of Finance estimates only 1.3% of Timorese regularly use banking facilities. The national economy depends on petroleum and natural gas revenues, supplemented by assistance from international donors. The private sector is small, concentrated in the services and retail sectors.

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

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

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

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: 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: Financial institutions, casinos, financial and real estate service providers, accountants, auditors, and financial consultants

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: Financial institutions

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

Timor-Leste is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. The APG will conduct the first mutual evaluation of Timor-Leste in late November 2011.

Enforcement and implementation issues and comments:

Timor-Leste lacks critical AML/CFT controls and its low technical, financial, and human capacity make it difficult to enforce adequately the laws that are in place. Central Bank regulations require financial institutions to know their customers and to report suspicious transactions of any size, but there is no enforcement mechanism to freeze or seize assets. All three major banks in Timor-Leste (ANZ Bank, Banco Ultramarino, and Bank Mandiri) are branches of foreign banks, chartered in Australia, Portugal, and Indonesia respectively, and are subject to the reporting requirements of their home jurisdictions. The government is in the process of creating a development and investment bank, expected to have partial foreign ownership.

The National Parliament passed AML/CFT legislation in December 2011. The new law criminalizes engaging in financial transactions with the intent of concealing assets derived from criminal activity, or engaging in transactions with the intent of providing material support to terrorist organizations. The law also creates an FIU with the power to identify, freeze, and seize criminal proceeds, and requires financial institutions to report large or unusual transactions.

However, the new law lacks provisions that would make it fully compliant with international standards, including provisions for extradition, transparency of transactions with professions historically linked to money laundering, and enhanced scrutiny of transactions of politically exposed persons.

Timor-Leste should become a party to the 1988 UN Drug Convention and the UN Convention for the Suppression of the Financing of Terrorism.

Togo

Togo’s porous borders, susceptibility to corruption, and large informal sector make it vulnerable to drug transshipments and small-scale money laundering. Most narcotics passing through Togo are destined for European markets. Trafficking in persons, corruption, misappropriation of funds, tax evasion, and smuggling are major crimes in Togo. The country’s small financial infrastructure dominated by regional banks makes it a less attractive venue for money laundering through its financial institutions.

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

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: 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, lending and savings institutions, microfinance entities, insurance and securities brokers and companies, mutual funds, the regional stock exchange, attorneys, notaries, auditors, dealers of high value goods, money exchangers and remitters, casinos and gaming establishments, non-governmental organizations, travel and real estate agents, and the post office

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 80 in 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, lending and savings institutions, microfinance entities, insurance and securities brokers and companies, mutual funds, the regional stock exchange, attorneys, notaries, auditors, dealers of high value goods, money exchangers and remitters, casinos and gaming establishments, non-governmental organizations, travel and real estate agents, and the post office

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2011

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Togo 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: www.giaba.org

Enforcement and implementation issues and comments:

The Government of Togo is slowly implementing a national plan to fight drugs and money laundering, and has been receiving increasing support from foreign donors. Togo’s anti-money laundering laws, including the 2009 law covering terrorism related financing, are primarily administered by its financial intelligence unit (FIU), called the Cellule Nationale de Traitement des Informations Financieres (CENTIF). CENTIF analyzes STRs as well as reports of attempts to transport money across borders in excess of the amounts allowed by law. CENTIF lacks full operational autonomy and is inadequately resourced.

Investigating magistrates, police and customs have little expertise in anti-money laundering/counter-terrorist financing (AML/CFT) matters. In addition to a lack of capacity on the investigative side, Togo has difficulty pursuing prosecutions due to an inefficient and overburdened court system. Corruption in government and all levels of society presents further obstacles. Togo is ranked 143 out of 183 countries in Transparency International’s 2011 Corruption Perception Index.

Togo’s terrorism financing law does not comport with the international standards. Additionally, although Togo’s AML/CFT laws include know your customer provisions, most covered entities were not aware of the requirements and compliance is negligible. Also, some designated non-financial businesses and professions are not subject to supervisory oversight for AML/CFT purposes.

Tonga

Tonga is an archipelago located in the South Pacific. Tonga is neither a financial center nor an offshore jurisdiction. It has only three commercial banks. Remittances from Tongans living and working abroad are the largest source of hard currency earnings, followed by tourism. Tonga is not a major narcotics transit point. Tonga is deemed by local police authorities to be vulnerable to smuggling and money laundering due to inadequate border controls.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, foreign exchange dealers, money lenders, Tonga Development Bank, credit unions, insurance companies and intermediaries, Retirement Fund Board, accountants, lawyers, real estate agents, securities dealers, casinos, sellers of payment instruments, and trustees

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Average of ten per year

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, foreign exchange dealers, money lenders, Tonga Development Bank, credit unions, insurance companies and intermediaries, Retirement Fund Board, accountants, lawyers, real estate agents, securities dealers, casinos, sellers of payment instruments, and trustees

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

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

Enforcement and implementation issues and comments:

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

Although many types of entities are covered under the MLPCA, know your customer procedures and STR requirements are only applied to banks and foreign exchange dealers actively supervised by the National Reserve Bank of Tonga or the TRA.

Relevant legislation regarding money laundering and terrorist financing does not expressly provide for national cooperation and coordination, which is therefore based on policy and practice. Information sharing with the United States is very good.

The primary limitation to detecting money laundering in Tonga is the lack of technical and experienced staff and staffing restraints at key anti-money laundering/counter-terrorist financing agencies, including the TRA and the Tonga Police Transnational Crimes Unit. The lack of resources results in a lack of monitoring and depth of investigation of suspicious transactions, and an absence of prosecutions. A related issue is that the investigators may not be aware of new money laundering methodologies.

The Government of Tonga should become a party to the United Nations Convention against Corruption and the United Nations Convention against Transnational Organized Crime.

Trinidad and Tobago

Drug-trafficking, illegal arms sales and fraud continue to be the most likely sources of laundered funds in Trinidad and Tobago (TT). It is suspected that criminal assets laundered in TT are derived from domestic criminal activity as well as from the activity of nationals involved in crime abroad. According to information from financial institutions and legal analysts, financial crimes in general are increasing, particularly those involving the use of fraudulent checks, wire transfers, and related instruments in the banking sector. There is no significant black market for smuggled goods in TT, but the incidence of drug money supporting illegal arms imports is thought to be growing. Officials in the financial community report that funds generated from the arms and ammunition trade are being laundered through the financial system, mainly through simple bank currency trades below the suspicious activity reporting threshold. There are indications trade-based money laundering occurs in TT.

TT does not have a significant traditional offshore business sector. Although its banking system is regarded as one of the strongest and most efficient in the region, costs of banking are higher than neighboring countries due to limited exploitation of new technology and limited competition. To what extent hawalas and money or other value transfer services are a problem in TT is unclear. There are six free trade zones (FTZs) where exporting of manufactured products takes place. There is no evidence the FTZs are involved in money laundering schemes, and companies operating in the FTZs are required to submit tax returns quarterly and audited financial statements yearly. Casinos are legal in TT, however, online gambling is not allowed.

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: NO

KYC covered entities: Banks, financial institutions, building societies, co-operative societies, insurance companies, securities firms, exchange bureaus, cash remitting services, Postal services, entities providing mutual funds, development banks, trust companies, mortgage companies, real estate firms, motor vehicle dealers, money or value transfer services, gaming houses, pool betting, on-line betting games, lotteries, jewelry merchants, private clubs, accountants, attorneys or other independent legal professionals, art dealers, trust and company service providers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 303 from October 2010 – September 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Trinidad and Tobago is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Trinindad_and_Tobago_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

TT continues to have significant AML/CFT vulnerabilities which the government is taking steps to address. In 2011, the government named a new interim director to the FIU and enacted new regulations including the Financial Intelligence Unit of Trinidad and Tobago (Amendment) Act; the Financial Intelligence Unit of Trinidad and Tobago Regulations, 2011; and the Financial Obligations (Financing of Terrorism) Regulations, 2011. These regulations improve the collection and storage of financial intelligence and information; suspicious transaction/activity reporting; information analysis, feedback and dissemination; periodic reports; supervisory authority, and compliance programs. In addition, the laws extend the requirements on financial institutions and listed businesses to include the financing of terrorism. There also was an increase in the number of sectors required to report suspicious transactions in 2011.

There are concerns over the ineffective use of confiscation provisions under the Proceeds of Crime Act because there have been no asset confiscations to date. However, the Trinidad and Tobago Customs and Excise Division, the Financial Investigations Branch and Criminal Tax Investigations Unit did make 11 cash seizures during 2011, including one for $300,000.

Staffing of the FIU is improving, but at a very slow pace. The Central Bank has reported commencing AML/CFT inspections of money remitters. A confiscation/forfeiture regime with regard to terrorist financing has been legally established, but is yet to be demonstrated.

Tunisia

Tunisia is not considered an important regional financial center. Tunisia has strict currency exchange controls which authorities believe mitigate the risk of international money laundering. The primary domestic criminal activities that generate laundered funds are clandestine immigration, smuggling, and trafficking in stolen vehicles and narcotics. Use of the financial sector for laundering is prevalent; but there is no evidence to suggest significant levels of narcotics are involved. There is a low level of organized crime in Tunisia.

Trade-based money laundering is also a concern. Throughout the region, invoice manipulation and customs fraud are often involved in hawala counter-valuation. Since the overthrow of former Libyan ruler Muammar Qadhafi and the reopening of the Libyan-Tunisian border, an indeterminate amount of small arms has been smuggled into Tunisia.

As of the end of 2011, Tunisia had eight offshore banks and a considerable number of offshore international business companies. Tunisia also has two free trade zones, in Bizerte and Zarzis, with a limited number of companies manufacturing products for export. There are no offshore financial institutions located in either free trade zone.

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, nonbank financial institutions, financial intermediaries; company and asset managers; real estate brokers and agents; dealers of precious metal, jewels, precious stones or high value goods; and managers of casinos

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, nonbank financial institutions, financial intermediaries; company and asset managers; real estate brokers and agents; dealers of precious metal, jewels, precious stones or high value goods; and managers of casinos

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: YES

Tunisia 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/MENAFATF.7.07.E.P5R2%20_with%20response_.pdf

Enforcement and implementation issues and comments:

The Governor of the Central Bank heads Tunisia’s interagency FIU, known as the Tunisian Financial Analysis Commission (CTAF). Other members draw from Tunisia’s regulatory, legal, and law enforcement authorities and include a magistrate, representation from the Ministry of Finance, Customs General Directorate, National Post Office, Council of Financial Markets, Insurance General Committee, Ministry of Interior, and “an expert specialized in the fight against financial infringements”. However, these interagency representatives are not analysts, and CTAF lacks analytical capacity due to both lack of analytical staff as well as lack of training for the staff already in place.

Under Tunisian law, all offshore financial institutions are held to the same regulatory standards as onshore financial institutions and undergo the same due diligence process. Offshore international business companies are subject to all regulatory requirements, except for tax requirements and currency convertibility restrictions. Tunisia prohibits bearer financial instruments or shares, as well as anonymous and numbered accounts. The Tunisian penal code provides for the seizure of assets and property tied to narcotics trafficking and terrorist activities.

The Government of Tunisia (GOT) should continue to implement and enhance its anti-money laundering/combating the financing of terrorism (AML/CFT) regime. In keeping with international standards, GOT officials should disseminate statistics such as prosecutions and convictions; this will also aid in measuring progress. Tunisian authorities should examine, regulate where needed, and enforce existing regulations on hawala, mobile phone banking, and other money and value transfer systems operating in Tunisia. Authorities should build their capacity to recognize and investigate trade-based laundering and value transfer.

Turkey

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

In June 2011, the Financial Action Task Force (FATF) added Turkey to its list of “Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies.” As such, FATF called on its members to consider the risks arising from the deficiencies associated with Turkey’s anti-money laundering/counter-terrorist financing (AML/CFT) enforcement and implementation when conducting business within the country. Turkey was included in the FATF Public Statement for failure to adequately criminalize terrorist financing and implement an adequate legal framework to identify and freeze terrorist assets. The FATF action does not call for any countermeasures against Turkey as a result of its status.

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: NO Domestic: NO

KYC covered entities: Banks, the Central Bank, post office banks, and money exchanges; issuers of payment and credit cards; lending, financial leasing, custody, settlement, and factoring companies; securities brokers, investment partnerships, and fund and asset managers; insurance, reinsurance and pension companies, and insurance and reinsurance brokers; Islamic financial houses; Directorate General of the Turkish Mint and precious metals exchange intermediaries; auctioneers, and dealers of precious metals, stones, jewelry, all types of transportation vehicles, art and antiquities; lawyers, accountants, auditors, and notaries; sports clubs; lottery and betting operators; and post and cargo companies

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 6,500 from January - October 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, the Central Bank, post office banks, and money exchanges; issuers of payment and credit cards; lending, financial leasing, custody, settlement, and factoring companies; securities brokers, investment partnerships, and fund and asset managers; insurance, reinsurance and pension companies, and insurance and reinsurance brokers; Islamic financial houses; Directorate General of the Turkish Mint and precious metals exchange intermediaries; auctioneers, and dealers of precious metals, stones, jewelry, all types of transportation vehicles, art and antiquities; lawyers, accountants, auditors, and notaries; sports clubs; lottery and betting operators; and post and cargo companies

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 15 in 2009

Convictions: Three in 2009

MASAK no longer keeps statistics on prosecutions and convictions (2009 was the last year it maintained these statistics).

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

MASAK, the Financial Crimes Investigation Board, Turkey’s financial intelligence unit, receives, analyzes, and refers STRs for investigation. In 2010, 354 individuals were referred to the public prosecutor’s office as a result of MASAK investigations into terrorism finance.

For the past year, a draft terrorism finance law has been under consideration by the Turkish Parliament and is scheduled to be discussed by the Parliament’s Internal Affairs Commission in late November 2011. It is not, however, clear when or if the draft would reach the General Assembly. Concerns remain, that the draft does not sufficiently address the above enumerated deficiencies outlined by the FATF. Turkey should insure any new legislation meets the FATF standards.

The non-profit sector is vulnerable to terrorist financing. Turkey’s investigative powers, law enforcement capability, and supervisory oversight are weak and lacking in all the necessary tools and expertise to effectively counter this threat through a comprehensive approach; all these areas need to be strengthened. The nonprofit sector is not audited on a regular basis for terrorist finance vulnerabilities and does not receive adequate AML/CFT outreach or guidance from the authorities. The General Director of Foundations issues licenses for charitable foundations and oversees them. However, there are a limited number of auditors to cover more than 70,000 institutions.

Turkmenistan

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

There are no offshore centers in the country. The current Law on Free Economic Zones (FEZs) in Turkmenistan determines the legal regime for conducting business in these zones. There are ten FEZs in Turkmenistan, all created prior to 1998. Businesses operating in a FEZ are exempt from taxes on profits for the first three years of profitable operation. In May 2007, Turkmenistan introduced the Awaza (or Avaza) Tourist Zone (ATZ) to promote the development of its Caspian Sea coast. The tax code exempts construction and installation of tourist facilities in the ATZ from value added tax (VAT). Various services offered at tourist facilities, including catering and accommodations, are also VAT-exempt.

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: NOcivilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, money exchangers, and money remitters; postal service operators; leasing companies; securities brokers and intermediaries; insurance institutions; portfolio and asset managers; precious metals and stones dealers; accountants, lawyers, notaries, and other legal professionals; real estate agents; lottery or gaming entities; charitable foundations; State registrars; and, pawnshops

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Two from January 1 to May 20, 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Nine from January 1 to May 20, 2011

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Turkmenistan is a member of Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a Financial Action Task Force (FATF)-style regional body. Its most recent evaluation can be found here: http://eurasiangroup.org/ME_2011_2_eng_rev3.doc

Enforcement and implementation issues and comments:

In June 2011, Turkmenistan became a member of the EAG. The country’s new financial intelligence unit, established in 2010, has begun to function. International experts have seen positive movement in the country’s AML/CFT actions.

In response to international concerns, the parliament adopted a law in 2011 which extends the Criminal Code to include activities designed to conceal the unlawful origin of monetary assets and other property. Turkmenistan should explicitly criminalize tipping off.

Turks and Caicos

The Turks and Caicos Islands (TCI) is a British Overseas Territory with a population of approximately 46,000. The economy depends greatly on tourism and the offshore financial sector. Financial services contributed almost 30% of GDP. The TCI is vulnerable to money laundering due to its significant offshore financial services sector and notable deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime. In addition, corruption is a problem. The country’s geographic location has made it a transshipment point for narcotics traffickers.

As of November 2011, the TCI’s well-developed financial sector is comprised of eight banks, seven money remitters, 18 professional trustees, six securities firms, and 5,291 insurance companies. At the end of 2011, 9,871 “exempt companies,” or international business companies (IBCs), were included in the Companies Registry. Trust legislation allows establishment of asset protection trusts insulating assets from civil adjudication by foreign governments; therefore, TCI remains something of a tax haven for foreign criminals seeking to evade domestic tax reporting requirements. The country also has two casinos.

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

CRIMINALIZATION OF MONEY LAUNDERING:

“All serious crimes” approach or “list” approach to predicate crimes: 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, credit card services, company managers, domestic insurance companies, insurance brokers/agents, investment dealers, money transmitters, mutual funds, professional trustees, dealers in high value goods, dealers in precious metals and stones, estate agents, casinos, accountants, auditors, and lawyers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 44 in 2011

Number of CTRs received and time frame: Not available

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

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

TCI is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Turks_and_Caicos_Islands_3rd_Round_MER_%28Final%29_English.pdf

Enforcement and implementation issues and comments:

New regulations addressing AML/CFT came into force on May 6, 2011. TCI also made amendments to the companies and limited partnerships ordinances. Together these updates improve record keeping and STR reporting, and strengthen due diligence requirements. Amendments to improve the determination of beneficial ownership of legal persons or legal arrangements were anticipated for November 2011, but it is unclear if these came into effect.

Even though trust legislation allows establishment of asset protection trusts, the Superintendent of Trustees has investigative powers and may assist overseas regulators. The Financial Services Commission licenses and supervises banks, money transmitters, mutual funds and funds administrators, investment dealers, trust companies, insurance companies and agents, company service providers and designated non-financial businesses. It also licenses IBCs and acts as the Company Registry for the TCI.

Deficiencies remain, including weaknesses in cross-border currency controls and effective dissemination of designated terrorists lists. TCI does not produce or regularly release reports containing statistics on STRs, trends and typologies, something which international experts have identified as an area for further improvement. It is also unclear whether the new law has increased the speed by which STRs are reported to the authorities.

The AML/CFT reporting and compliance responsibilities of designated non-financial businesses and professions should be more clearly articulated, in particular for casinos. TCI should consider implementing domestic provisions which allow for the enforcement of foreign restraining and confiscation orders, and the sharing of assets confiscated as a result of such cooperation. While this occurs in practice, having a formal system in place would ease such actions.

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

Uganda

While Uganda is not a major hub for narcotics trafficking or terrorist financing, it is a growing site for money laundering. Because Uganda is the only member of the five-nation East African Community without AML legislation, authorities believe the flow of money into Uganda from neighboring countries is increasing. Uganda’s inability to monitor formal and informal financial transactions, particularly along porous borders with Sudan, Kenya, Tanzania, and the Democratic Republic of Congo render Uganda vulnerable to more advanced money laundering activities and potential terrorist financing. Money laundering in Uganda is primarily a domestic enterprise, deriving largely from government corruption, misappropriation of public funds and foreign assistance, abuse of the public procurement process, arms and natural resource smuggling, and exchange control violations. Proceeds are primarily laundered through cash-based real estate transactions.

Uganda’s active informal economy also provides a fertile environment for money laundering as Uganda’s black market for smuggled and counterfeit goods takes advantage of porous borders and lack of customs and tax collection enforcement capacity. Many Ugandans working abroad use an informal cash-based remittance system to send money to their families. Annual remittances are Uganda’s largest single source of foreign currency. Counterfeit U.S. currency also is a recurring problem.

For more 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: Not applicable

Legal persons covered: criminally: NO civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

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, finance companies and microfinance institutions, foreign exchange bureaus, insurance companies, and the securities sector

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

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

Enforcement and implementation issues and comments:

Ugandan efforts to combat money laundering are limited by the lack of comprehensive anti-money laundering (AML) legislation, severe resource constraints, and internal government corruption. Uganda has not criminalized money laundering. Uganda’s Anti-Money Laundering Committee (UAMLC), which comprises multiple Ugandan government ministries and is chaired by the BOU, drafted a comprehensive AML bill approved by the Cabinet in January 2005. However, it remains stalled in Parliament, where there is little political will to pass it.

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

The Financial Institutions Act provides the Bank of Uganda (BOU) with the ability to freeze accounts believed to hold funds which are the proceeds of crime, but does not provide procedures for releasing funds or forfeiture. It also gives the BOU authority to set KYC and STR requirements for financial institutions, foreign exchange bureaus, and deposit-taking microfinance institutions. However, reporting procedures remain unclear, and insufficient whistleblower protection limits the efficacy of these regulations. In November 2010, Uganda formally gazetted as statutes the guidelines mandating KYC procedures and reporting of large and suspicious transactions. The codified guidance regarding STR and CTR reporting, and KYC practices, is a good step forward, but does not take the place of a comprehensive AML law.

The BOU vigilantly monitors banks and other financial institutions, but does not closely monitor remittances or foreign exchange bureaus, or keep statistics on suspicious transaction reporting. The BOU does not keep data on filed reports, and no other government entity receives them. While the BOU’s practices have enabled it to block some suspicious transactions and discourage money laundering to some extent, without an AML law the BOU remains powerless to seize laundered funds or take legal action against offenders. There is no requirement for more stringent KYC on PEPs. The Insurance Commission and Capital Markets Authority also have KYC and STR guidelines for their regulated entities, but no firm regulations.

The Criminal Investigations Department (CID) of the Ugandan Police Force is responsible for investigating financial crimes. The CID is understaffed and lacks adequate training in financial investigation techniques related to AML and terrorist financing. Internal corruption within the CID also hampers police investigative capacity. According to GOU officials, criminals often have access to technology that is more sophisticated than that available to police investigators.

In 2011, the Uganda Revenue Authority (URA) decided to implement a new policy requiring anyone involved in real estate purchases valued at more than $20,000 to declare his/her source of income. This measure is intended to improve tax collection, but may have the side effect of deterring money laundering via the real estate sector. The policy remains controversial, however, and it is unclear when or if the URA will begin enforcing it.

Ukraine

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

In October 2011, the Financial Action Task Force (FATF) removed Ukraine from its list of countries with “strategic deficiencies” following Ukraine’s enactment of amendments to its anti-money laundering/counter-terrorist financing (AML/CFT) legislation. Ukraine continues to work to further strengthen its AML/CFT regime.

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: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, non-banking institutions, insurance companies, gambling institutions, credit unions, depositories, securities traders, registers, pawn shops, mail service operators and other operators conducting money transfers, real estate traders, certain traders of precious metals and stones, notaries, auditors, independent lawyers and leasing providers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 778,907 January - September 2011

Number of CTRs received and time frame: Not available

Ukraine combines STRs and CTRs in its reporting.

STR covered entities: Banks, non-banking institutions, insurance companies, gambling institutions, credit unions, depositories, securities traders, registers, pawn shops, mail service operators and other operators conducting money transfers, real estate traders, certain traders of precious metals and stones, notaries, auditors, independent lawyers, and leasing providers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 13 in the first half of 2011

Convictions: One in the first half of 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdiction: YES

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

Enforcement and implementation issues and comments:

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

In April 2011, Ukraine adopted amendments to its AML/CFT legislation, making insider trading and stock market manipulation predicate crimes for money laundering and improving the procedures for administrative seizure related to terrorist assets. There is no corporate criminal liability because the Law on Corporate Liability has not taken effect yet. Most importantly, while Ukraine’s legislation has been significantly modernized, Ukraine lacks examples of successful prosecutions of money laundering. This is due to the lack of specialized expertise among prosecutors in handling complex financial cases and corruption within law enforcement and the courts. In order to correct these problems, Ukraine needs to reform its Prosecutor General’s Office to allow for greater specialization of prosecutors and improved coordination among prosecutors, investigators, and the FIU. Additionally, although the current legislation provides for autonomous prosecution of money laundering, in practice a link is often sought between a specific predicate offense and money laundering. Ukrainian authorities are unable to break out prosecutions for autonomous money laundering, or cases where the money laundering offense is added to another predicate offense, as well as to differentiate between self- or third-party laundering.

Amendments to the AML law in 2010 require enhanced due diligence procedures for PEPs. However, the procedure of informing primary financial monitoring agencies about the list of PEPs of foreign countries is yet to be developed.

While Ukraine has the necessary treaties signed and ratified, in many instances they are not applied or applied poorly. This is particularly true in the area of international law enforcement cooperation, mutual legal assistance and asset forfeiture. Furthermore, while Ukraine is a party to UNCAC and UNTOC, the provisions of these conventions are not implemented or are not working properly in Ukraine.

United Arab Emirates

The United Arab Emirates (UAE) is the primary transportation and trading hub for the Persian Gulf States, East Africa, and South Asia. Its robust economic development, political stability, and liberal business environment have attracted a massive influx of people, goods, and capital which may leave the country vulnerable to money laundering activity. Dubai, especially, is a major international banking and trading center. The potential for money laundering is exacerbated by the large number of resident expatriates (roughly 80% – 85% of total population) who send remittances to their homelands.

A significant portion of the money laundering/terrorist financing (ML/TF) activity in the UAE is likely related primarily to proceeds from illegal narcotics produced in South West Asia. Narcotics traffickers from Afghanistan, where most of the world’s opium is produced, are increasingly reported to be attracted to the UAE’s financial and trade centers. Groups operating primarily outside the country almost certainly control the funds. Domestic public corruption contributes little to money laundering or terrorist financing.

Regional hawalas and associated trading companies in various expatriate communities, most notably the Somalis, have established clearinghouses, the vast majority of which are not registered with the UAE government. Likewise, the UAE’s proximity to Somalia has generated anecdotal reports suggesting some influx and/or transit of funds derived from piracy. There is no significant black market for smuggled goods in the UAE, but contraband smuggling (alcohol) probably generates some funds that are laundered through the system. There are some indications that trade based money laundering occurs in the UAE and that such activity might support terrorist groups in Afghanistan, Pakistan and Somalia.

Other money laundering vulnerabilities in the UAE include exploitation of cash couriers, the real estate sector, and the misuse of the international gold and diamond trade. The country also has an extensive offshore financial center and 38 free trade zones (FTZs). There are over 5,000 multinational companies located in the FTZs, and thousands more individual trading companies. Companies located in the free trade zones are considered offshore or foreign entities for legal purposes. However, UAE law prohibits the establishment of shell companies and trusts.

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, hawalas, money exchange houses, finance companies, securities brokers, and insurance companies

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 479 in the first quarter of 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, hawalas, money exchange houses, finance companies, securities brokers, and insurance companies

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

Enforcement and implementation issues and comments:

The Government of the UAE has shown some progress in enhancing its AML/CFT program; however, several areas requiring further action by the UAE Government (UAEG) remain. The UAEG should increase the capacity and resources it devotes to investigation of ML/TF both federally at the Anti-Money Laundering/Suspicious Cases Unit (AMLSCU) and at emirate-level law enforcement. AMLSCU needs to improve its timely financial information sharing capability to conform to international standards. The AMLSCU also needs additional resources to be able to execute its mandate of hawala supervision – currently it is not capable of supervising the vast number of hawalas in the country or enforcing hawala compliance.

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

Although firms operating in the Dubai International Financial Center (DIFC) are subject to the AML law, the Dubai Financial Services Authority (DFSA) has issued its own anti-money laundering regulations and supervisory regime, which has caused some ambiguity about the Central Bank’s and the FIU’s respective authorities within the DIFC.

In September 2011 the UAEG enacted an inbound and outbound cash declaration regulation covering financial instruments valued at more than DHS 100,000 (approximately $27,000), an amount above the desired standard but consistent with the traditional cash-based economy. Law enforcement and customs officials should conduct more thorough inquiries into large declared and undeclared cash imports into the country, as well as enforce outbound declarations of cash and gold utilizing existing smuggling laws.

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

United Kingdom

The United Kingdom (UK) plays a leading role in European and world finance and remains attractive to money launderers because of the size, sophistication, and reputation of its financial markets. Although narcotics are still a major source of illegal proceeds for money laundering, the proceeds of other offenses, such as financial fraud and the smuggling of people and goods, have become increasingly important. The past few years have seen an increase in the movement of cash via the non-bank financial system, as banks and mainstream financial institutions have tightened their controls and increased their vigilance. The use of bureau de change, cash smugglers (into and out of the UK), and traditional gatekeepers (including solicitors and accountants) to move and launder criminal proceeds has been increasing. Also on the rise are credit/debit card fraud, use of the internet for fraud, and the purchase of high-value assets to disguise illegally obtained money.

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 crimes 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, credit unions, building societies, emoney issuers, and credit institutions; insurance companies; securities and investment service providers and firms; independent legal professionals, auditors, accountants, tax advisors, and insolvency practitioners; estate agents; casinos; high value goods dealers; and trust or company service providers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

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

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, credit unions, building societies, emoney issuers, and credit institutions; insurance companies; securities and investment service providers and firms; independent legal professionals, auditors, accountants, tax advisors, and insolvency practitioners; estate agents; casinos; high value goods dealers; and trust or company service providers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 2,439 in 2009

Convictions: 1,411 in 2009

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

The United Kingdom is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/infobycountry/0,3380,en_32250379_32236963_1_70432_1_1_1,00.html

Enforcement and implementation issues and comments:

The United Kingdom has a comprehensive range of anti-money laundering/countering the financing of terrorism (AML/CFT) laws. It is an active participant in multilateral efforts to meet AML/CFT threats. The UK engages in efforts to freeze the assets of persons who commit terrorist acts, and its legislative framework relies on “reasonable belief” rather than “reasonable suspicion” as the burden of proof for freezing assets. The UK continuously reviews and assesses the effectiveness and proportionality of its AML/CFT regime – including through the approval of updated and more accessible industry guidance. In order to improve the regime further, and based on the responses in a recent industry consultation, the UK plans to announce proposals to improve guidance and will publish these towards the end of the year.

The Financial Services Authority, which supervises firms for compliance with their legal and regulatory obligations, including those related to politically exposed persons (PEPs), will be merged with the Bank of England at the end of 2012. Also, the Serious Organized Crime Agency, which includes the UK financial intelligence unit, will transition to the National Crime Agency by 2013. It is important that these changes not impede the UK’s AML/CFT efforts.

Uruguay

Uruguay remains vulnerable to the threats of money laundering (ML) and terrorist financing (TF). Uruguay has a highly dollarized economy, with the U.S. dollar often used as a business currency; about 75% of deposits and 50% of credits are denominated in U.S. dollars. Officials from the Uruguayan police and judiciary assess that there is a growing presence of Mexican and Colombian criminal organizations in the region and are concerned they could begin operating in Uruguay. Drug dealers are increasingly participating in other illicit activities like car theft and trafficking in persons.

The vast majority of money laundering cases that have become public have been related to drugs and/or involve the real estate sector. Uruguay has porous borders with Argentina and Brazil and, despite its small size, there is a market for smuggled goods that is greatly determined by price differentials between Uruguay and its neighbors. Regular trade-based money laundering is likely to occur but specialists do not identify it as a major source of risk, and there is no indication it is tied to terrorist financing. However, bulk cash smuggling is likely to occur. Public corruption does not seem to be a significant factor behind money laundering or terrorist financing. To the extent known, laundered criminal proceeds derive primarily from foreign activities related to drug-trafficking organizations.

Given the longstanding free mobility of capital in Uruguay, the informal financial sector is practically non-existent. Money is therefore likely to be laundered via the formal financial sector (onshore or offshore). The six offshore banks operating in Uruguay are subject to the same laws, regulations, and controls as local banks, with the Government of Uruguay (GOU) requiring they be licensed through a formal process that includes a background investigation of the principals. Offshore trusts are not allowed. Bearer shares may not be used in banks and institutions under the authority of the Central Bank, and any share transactions must be authorized by the Central Bank. There are 13 free trade zones (FTZs) located throughout the country. While most are dedicated solely to warehousing, two were created exclusively for the development of the paper and pulp industry, and three accommodate a wide variety of tenants offering a wide range of services, including financial services. Some of the warehouse-style FTZs have been used as transit points for containers of counterfeit goods bound for Brazil and Paraguay. A decree passed in November 2010 discourages shell companies from establishing a presence in FTZs.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, currency exchange houses, stockbrokers, pension funds, insurance companies, casinos, art dealers, real estate and fiduciary companies, lawyers, accountants, and other non-banking professionals that carry out financial transactions or manage commercial companies on behalf of third parties

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 150 - January 1–November 4, 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four in 2009

Convictions: Four in 2009

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Uruguay 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.gafisud.info/pdf/InformeEMUruguay09.pdf

Enforcement and implementation issues and comments:

Uruguay continued making progress in 2011. The main development was the design of a new National Strategy against money laundering put together with the technical support of the IMF. The project, expected to be a major improvement from the previous 2007 strategy, was developed in two stages: identification of the most vulnerable areas (2010) and design of a strategy to address those (2011). The strategy will be implemented in 2012-2015.

The GOU is also strengthening its Anti-Money Laundering Secretariat (AMLS) that will grow in scope and staff. In addition to developing the new strategy, in 2011, the AMLS continued working with non-financial sector entities obliged to report suspicious transactions, mainly notaries, real estate agents and casinos. The AMLS has made substantial progress in the design of standardized forms with the local association of notaries. A group of large bureaus that administer corporations are also developing auto-regulatory standards. The AMLS also is very focused on financial investigations and seeks to create awareness about the importance of seizing assets as well as imprisoning criminals.

Another positive development is the signing of an MOU under which the Financial Intelligence Unit (UIAF) is granted immediate online access to the database of the tax administration authority (DGI). In turn, DGI is working to open an international division to work on AML cases that are reported from abroad.

Other UIAF-related developments in 2011 include the design of a set of early-warning indicators that will allow it to leverage its comprehensive database of currency transaction reports, and the upgrading of regulations for firms that wire funds in order to level the playing field vis-à-vis financial services firms (a structure that stemmed from some large exchange houses).

The Superintendency of Financial Services, which oversees the UIAF, is also in the process of redesigning and upgrading management requirements for financial companies. This process entails the extension to insurance and capital market institutions of strong management practices already established for banks. In 2011, the Superintendency made significant progress with insurance companies and moderate progress with capital market institutions. The UIAF also emphasized onsite inspections of capital market institutions that previously received less attention than banking firms.

Prosecutions and convictions dropped in 2010 and 2011. In 2009 alone the GOU had frozen assets totaling $17 million. In 2011, it did not freeze any funds except for one safe-deposit box.

The GOU should amend its legislation to provide for criminal liability for legal persons.

Uzbekistan

Uzbekistan operates largely on a cash economy and with decentralized accounting systems, which makes money laundering difficult to detect. Furthermore, deficiencies in Uzbekistan’s recently-enacted AML/CFT law pose significant risks of money laundering and terrorism financing.

Uzbekistan is not an important regional financial center and does not have a well-developed financial system. Corruption, narcotics trafficking and smuggling generate the majority of illicit proceeds. Local and regional drug trafficking and other organized crime organizations control narcotics markets and proceeds from other criminal activities, such as smuggling of cash, high-value transferable assets (e.g., gold), property, or automobiles. Uzbekistan is home to a significant black market for smuggled goods. This black market does not appear to be significantly funded by narcotics proceeds, but can be used to launder drug-related money.

The presence of hawalas, money or value transfer services, and free trade zoness poses risks in regard to money laundering; however, there is little publicly available information on these entities.

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: All serious crimes

Legal persons covered: criminally: NO civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, credit unions, micro-credit institutions, securities brokers, members of the Stock Exchange, insurance brokers, leasing companies, money transfer companies, postal operators, dealers in precious metals and stones, real estate agents, notaries, lawyers, audit organizations, pawn shops, and lotteries

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 17,151 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, credit unions, micro-credit institutions, securities brokers, members of the Stock Exchange, insurance brokers, leasing companies, postal operators, dealers in precious metals and stones, real estate agents, notaries, lawyers, and audit organizations

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 61 in 2010

Convictions: 58 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Uzbekistan is a member of the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://eurasiangroup.org/ru/restricted/EAG_ME_2010_1_eng_amended.doc

Enforcement and implementation issues and comments:

Uzbekistan’s legal system is generally susceptible to corruption and political influence. Legislation to reestablish AML measures has been adopted piecemeal since April 2009, leading to confusion from vague requirements, incomplete procedures and occasional conflicts with banking regulations. Government secrecy surrounding cases and statistics inhibits evaluation. The Prosecutor General’s Office attempts to maintain secrecy by not releasing the criteria for identifying suspicious transactions, even to banks. Fearing the consequences of not reporting criminal activity, banks adopted excessively cautious policies that led to massive over-reporting in 2010.

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

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

In July 2011, Uzbekistan was admitted as a member of the Egmont Group of Financial Intelligence Units. International donors are advising the government on money laundering issues to improve the legal framework and build national enforcement capacity.

Vanuatu

The Pacific island nation of Vanuatu has a developing economy that is primarily agriculturally based; it is closely tied to the economies of Australia and New Zealand. Vanuatu has historically maintained strict bank secrecy provisions that have prevented law enforcement agencies from identifying the beneficial owners of offshore entities registered in the sector, making its offshore sector vulnerable to money laundering. In 2010, the offshore banking sector included eight international banks and 3,600 international business companies, along with offshore trusts and captive insurance companies.

The Reserve Bank of Vanuatu (RBV) regulates the offshore banking sector and in recent years, in response to international pressure, has strengthened domestic and offshore financial regulation.

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 40

Number of CTRs received and time frame: Approximately 8,500

STR covered entities: Financial institutions, insurance and securities companies, foreign exchange instrument dealers, money remitters, casinos, lawyers, accountants, trust and company service providers, auditors, real estate agents, and car dealerships

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: One

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Vanuatu is a member of 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/Vanuatu%20ME2%20_Final_.pdf

Enforcement and implementation issues and comments:

The Government of Vanuatu (GOV) should implement all the provisions of its Proceeds of Crime Act and enact all additional legislation that is necessary to bring both its onshore and offshore financial sectors into compliance with international standards. The GOV should also establish a viable asset forfeiture regime. The GOV should continue to initiate outreach to all reporting institutions regarding customer due diligence obligations, as well as establish legislative requirements for financial institutions to have policies and procedures to address risks arising from new or developing technologies such as mobile payments and internet payment providers.

The Vanuatu Financial Intelligence Unit is the body charged with investigation into financial crime; it works closely with the Vanuatu Police Force.

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

On July 12, 2011, the GOV became a party to the UN Convention against Corruption.

Venezuela

Venezuela is a major cocaine-transit country. The country’s proximity to drug producing countries, weaknesses in its anti-money laundering regime, limited bilateral cooperation, and substantial corruption in law enforcement and other relevant sectors continue to make Venezuela vulnerable to money laundering. The main sources of money laundering are proceeds generated by drug trafficking organizations and illegal transactions that exploit Venezuela’s currency controls and its various exchange rates. The current regime of price and foreign exchange controls has provided opportunities for corruption; and corruption continues to be a very serious problem in Venezuela.

Money laundering occurs through commercial banks, exchange houses, gambling sites, fraudulently invoiced foreign trade transactions, smuggling, real estate, agriculture and livestock businesses, securities transactions, and trade in precious metals. Venezuela’s multiple exchange rates allow launderers to profit from arbitrage conditions while using the black market. Trade-based money laundering, such as the black market peso exchange, through which money launderers furnish narcotics-generated dollars in the United States to commercial smugglers, travel agents, investors, and others in exchange for Colombian pesos, remains a prominent method for laundering regional narcotics proceeds. It is reported that many black market traders ship their goods through Margarita Island’s free port.

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: 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, leasing companies, money market and risk capital funds, savings and loans, foreign exchange operators, regulated financial groups, and credit card operators; hotels and tourist institutions that provide foreign exchange; general warehouses or storage companies; regulated securities entities; regulated insurance entities; casinos, bingo halls, and slot machine operators; and regulated notaries and public registration offices

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 582 through June 30, 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, leasing companies, money market funds, savings and loans, foreign exchange operators, regulated financial groups, and credit card operators; hotels and tourist institutions that provide foreign exchange; general warehouses or storage companies; regulated securities entities; regulated insurance entities; casinos, bingo halls, and slot machine operators; and regulated notaries and public registration offices

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 13 from July 2010 - January 2011

Convictions: Two cases, involving seven persons from July 2010 - January 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Venezuela is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Venezuela_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

The Financial Crimes Enforcement Network (FinCEN) suspended the exchange of information with Venezuela’s National Financial Intelligence Unit (UNIF) in January 2007 due to the unauthorized disclosure of information provided by FinCEN, and the relationship has not resumed to date. In 2009 - 2011, there was no financial intelligence information exchange between Venezuela and the United States.

In 2010, the country was identified as having strategic anti-money laundering and counter-terrorist financing deficiencies and developed an action plan to address the following issues: criminalizing terrorist financing; establishing and implementing adequate procedures to identify and freeze terrorist assets; ensuring a fully operational and effectively functioning financial intelligence unit; implementing adequate customer due diligence guidelines for all sectors; and establishing adequate STR reporting obligations for money laundering and terrorist financing. The country has approved new regulations and improved the supervision of banks and securities intermediaries/brokers.

The judicial system has been ineffective and is politicized. During the year, legislation to strengthen supervision of insurance, securities, notaries and operators of casinos, bingo halls and slot machines was passed. Venezuela must increase its institutional infrastructure and technical capacity so it can effectively implement these new regulations. The government should adopt the amendments to incorporate anti-money laundering reforms into the organic law as recommended by international experts.

Vietnam

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

Vietnam’s banking sector is in transition from a state-owned to a partially-privatized industry. At present, about 50% of the assets of the banking system are held by state-owned commercial banks that allocate much of the available credit to state-owned enterprises, many of which are related through interlocking directorates. Almost all trade and investment receipts and expenditures are processed by the banking system, but transactions are not monitored effectively. As a result, the banking system could be used for money laundering through false declarations, including phony investment transactions and over- or under-invoicing of exports and imports. Real property is also believed to play a significant role in the money laundering process.

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 267 from July 2010 through June 2011

Number of CTRs received and time frame: Not applicable

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

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

Vietnam is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Vietnam%20ME1.pdf

Enforcement and implementation issues and comments:

In October 2010, the Government of Vietnam (GOV) made a high-level political commitment and adopted an action plan to address its strategic anti-money laundering /counter-terrorist financing (AML/CFT) deficiencies. In March 2011, Vietnam’s Prime Minister issued a decision that set out a revised action plan to adequately criminalize money laundering and terrorist financing, establish adequate procedures to identify and freeze terrorist assets, improve the AML/CFT supervisory framework, enhance customer due diligence and reporting, and strengthen international cooperation. A second draft of the AML law, intended to address significant deficiencies, is now under review but fails to address the legal deficiencies that preclude the comprehensive criminalization of money laundering. The draft AML law includes only preventative measures and not enforceable obligations with penalties for criminal offenses.

The amended AML provisions of the Penal Code took effect on January 1, 2010. These provisions define money laundering as an independent criminal offense. However, they do not meet current international standards, with deficiencies that include a very high burden of proof (essentially, a confession) to pursue money laundering allegations. Consequently, prosecutions are non-existent and international cooperation is extremely difficult. This difficulty is compounded by the lack of administrative regulations providing guidance on implementation. The Penal Code also does not include a definition of ‘property’ that is in line with international standards and therefore limits the offense for money laundering. Additionally, legal persons are not subject to criminal liability under the Penal Code. Vietnam currently has no plans to impose criminal liability on legal persons because of perceived conflicts with fundamental principles of domestic law.

AML Decree 74 on Preventing and Combating of Money Laundering (Decree 74) specifies STR reporting obligations but, in practice, the Anti-Money Laundering Department (AMLD) of the State Bank of Vietnam appears to receive little of the financial information required by this decree. Given the size of Vietnam’s economy, the number of reports received is low and suggests a correspondingly low level of STR compliance. All STRs are received in paper form; the AMLD lacks an electronic information reporting and analysis system, limiting its ability to collect, store, and analyze financial transactions. Vietnam should ensure the AMLD acquires such a system, and give its law enforcement authorities the necessary resources to investigate and prosecute money laundering, trade fraud, and financial crimes in Vietnam’s informal economy. Decree 74 regulates customer identification and the collection of customer details and documents. It does not explicitly require verification of a customer’s identity, unless the financial institution becomes “suspicious.” However, circulars provide specific instructions for verification of identity in situations where identification is required. Also, the concept of “politically exposed persons” (PEP) is not addressed in Decree 74. Though the draft of the new AML law partially addresses PEP requirements, there are currently no enforceable obligations addressing PEP requirements.

There has been no known exchange of records pursuant to any inter-governmental exchange mechanism, despite Vietnam’s 28 bilateral mutual legal assistance treaties. The Ministry of Public Security (MPS) signed a non-binding memorandum of understanding with the U.S. Drug Enforcement Administration (DEA) in 2006 to strengthen law enforcement cooperation in combating transnational drug-related crimes, including money laundering. MPS claims, however, that it cannot provide such information due to constraints within the Vietnamese legal system. Vietnam does not have a comprehensive system for implementing UNSCR 1267 or 1373 and lacks a system for freezing terrorist assets in accordance with these resolutions. While Vietnam has criminalized terrorist financing, it is not criminalized as an autonomous offense.

Vietnam should pass and implement the draft AML law and criminalize money laundering according to international standards. The GOV also should complete drafting its anti-terrorism law and comprehensively criminalize terrorist financing. Additionally, the GOV should become a party to the UN Convention against Transnational Organized Crime.

Yemen

The financial system in Yemen is not well developed and the extent of money laundering is not known. Yemen is not considered a regional financial center. However, government corruption, substantial politicization of government institutions, a largely cash based economy, and lax government enforcement of existing laws and regulations render Yemen vulnerable to money laundering and other financial abuses—including possible terrorist financing. Yemen has a large underground economy due, in part, to the profitability of the smuggling of trade goods and contraband. Criminal proceeds in Yemen tend to emanate from foreign criminal activity, including smuggling by criminal networks, and, possibly, terrorist groups operating locally, although the extent is unknown. There have been a number of U.S. investigations of Yemeni and East African natives smuggling khat from the East African region, including Yemen, Somalia and Ethiopia, into the United States with profits laundered and repatriated via hawala networks.

Yemen has a free trade zone (FTZ) in the port city of Aden. Identification requirements within the FTZ are enforced. Truckers must file the necessary paperwork in relevant trucking company offices and must wear ID badges. FTZ employees must undergo background checks by police, the Customs Authority and employers. There is no evidence the FTZ is being used for trade based money laundering or terrorist financing schemes.

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: NO Domestic: YES

KYC covered entities: Banks, exchange companies, insurance companies, funds transfer companies, General Post and Postal Savings Authority, real estate agents, gold or precious metal dealers, public notaries, lawyers, accountants, financial and investment services companies, various government ministries such as the Central Organization for Control and Audit, Central Bank of Yemen, Ministry of Industry and Trade, and others

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 35 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, exchange companies, insurance companies, funds transfer companies, General Post and Postal Savings Authority, real estate agents, gold or precious metal dealers, public notaries, lawyers, accountants, financial and investment services companies, various government ministries such as the Central Organization for Control and Audit, Central Bank of Yemen, Ministry of Industry and Trade, and others

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Yemen’s law 1/2010 requires obliged sectors to file STRs and establishes the Financial Information Unit (FIU) in the Central Bank of Yemen. The FIU has promulgated regulations, Circular Number 1 for 2010, pursuant to this law; however, in practice, compliance is limited, both with the law and with standard KYC requirements. The FIU has only a few employees and no computerized database, nor is it networked to other government or regional financial data systems. The FIU needs substantial improvement of its operational capacity, especially its analytical capacity, to effectively fulfill its responsibilities.

The government needs to develop an anti-money laundering/counter-terrorist financing regime that conforms to international standards. Even with the 2010 law, the Government of Yemen (GOY) needs to improve its inter-ministerial coordination, standards, policies, and procedures to enable it to effectively detect, investigate, and prosecute money laundering activities. Law enforcement as well as border control agencies are reactive rather than proactive in money laundering matters. The GOY needs to investigate and prosecute any abuse of money/value transfer systems such as hawala networks with regard to money laundering and terrorist financing. Law enforcement and customs authorities also need to examine trade-based money laundering and customs fraud. Yemen has a cross-border declaration or disclosure requirement for cash; however, compliance is lax and customs inspectors do not routinely file currency declaration forms if funds are discovered.

The GOY has no effective institutionalized coordination or information sharing procedures for terrorism matters among the different ministries and has yet to implement steps listed under the UN international terrorism protocols, to which Yemen is a party. Any request to Yemen for mutual assistance is to be conducted through diplomatic channels rather than through faster and more expedient administrative channels. The GOY lacks specific legislation with respect to forfeiture of the assets of suspected terrorists. Yemen has not applied UN mandated sanctions or frozen the assets of Sheikh Abdul Majid Zindani, who was added to the UN 1267 Sanctions Committee’s consolidated list in February 2004. There is no information on whether Yemeni authorities have frozen, seized, or demanded forfeiture of other assets related to terrorist financing. The GOY should enhance institutions that address terrorism financing and money laundering issues and strive to implement the UN counter-terrorism protocols.

Limited resources have hampered the government’s ability to enforce AML laws and regulations. There is reportedly a lack of political support for full and vigorous enforcement of some aspects of the AML laws and related regulations. In 2011, civil strife further hindered the government’s capacity on AML issues.

Zambia

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

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

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, money exchangers and 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 and remitters, securities dealers and pension funds, insurance companies, leasing companies, the Bank of Zambia, the Registrar of Banks and Financial Institutions, the Registrar of Insurance, the Securities and Exchange Commissioner, the Commissioner of Lands, and the Registrar of Companies

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

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

Enforcement and implementation issues and comments:

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

In 2010, the major shareholder of Finance Bank, Zambia’s sixth largest bank, was charged with money laundering in connection with an illegal ownership stake in the bank. The Bank of Zambia also intervened in the operations of the bank, removed senior management, and dissolved the equity holders’ shares. In June 2011, the Zambian government sold Finance Bank. After September 2011 elections resulted in a change in government, the new Zambian government cancelled the sale and returned Finance Bank to its original equity holders.

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

The Prevention and Prohibition of Money Laundering Act does not expressly set out any direct customer identification obligation, but the Bank of Zambia Anti-Money Laundering Directives of 2004 provide for a customer identification obligation. Zambian banks also have voluntarily adopted KYC rules.

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

Zimbabwe

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

Nearly all transactions in Zimbabwe are now carried out with either the U.S. dollar or the South African rand. The Government of Zimbabwe’s (GOZ) switch to this “multi-currency regime” dramatically reduced opportunities for money laundering and financial crime arising from the multiple exchange rates and opaque foreign-exchange controls that were in place until 2009. Legislators from all parties in the coalition government have increased scrutiny of government activities, and ministers from former opposition parties have pushed for further reforms. For example, the parliamentary committee on mining has held officials to account for GOZ actions in the Marange diamond fields, and the minister of finance has implemented a new law to improve accountability at the Reserve Bank of Zimbabwe (RBZ).

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

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: Commercial banks, acceptance houses, discount houses, money transfer agencies, bureaux de change, legal practitioners, accounting firms, pension funds, real estate agents, cash dealers, and finance houses

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: None in 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Commercial banks, acceptance houses, discount houses, money transfer agencies, bureaux de change, legal practitioners, accounting firms, pension funds, real estate agents, cash dealers, and finance houses

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdiction: YES

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

Enforcement and implementation issues and comments:

Zimbabwe has developed an action plan to address its strategic AML/CFT deficiencies. Zimbabwe needs to adequately criminalize money laundering and terrorist financing; establish and implement adequate procedures to identify and freeze terrorist assets; ensure a fully operational and effectively functioning financial intelligence unit; and ensure financial institutions are aware of and comply with their obligations to file suspicious transaction reports.

Law enforcement and regulatory agencies lack the resources to combat money laundering vigorously. Anti-money laundering (AML) legislation is sometimes abused for political purposes. More broadly, corruption sometimes impedes application of Zimbabwe’s AML mechanisms. Zimbabwe has criminalized money laundering and put in place mechanisms for freezing and forfeiting assets; however, deficiencies remain in being able to do so in a timely manner. The banking system can quickly freeze accounts, but financial institutions typically receive information related to designations from private sources and not government agencies. Zimbabwe has broad legislation on mutual legal assistance in both civil and criminal cases. In general, there are no legal or practical impediments to rendering assistance, providing both Zimbabwe and the requesting country criminalize the conduct underlying the offense.

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



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