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Diplomacy in Action

2013 International Narcotics Control Strategy Report (INCSR)--Volume II: Money Laundering and Financial Crimes Country Database--Afghanistan through Colombia


Report
Bureau of International Narcotics and Law Enforcement Affairs
July 1, 2013

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Afghanistan

Afghanistan is not a regional or offshore center. Terrorist and insurgent financing, money laundering, cash smuggling, abuse of informal value transfer systems, and other illicit activities designed to finance organized criminal activity continue to pose serious threats to the security and development of Afghanistan. Afghanistan remains a major narcotics trafficking and producing country, and is the world’s largest opium producer and exporter. The narcotics trade, corruption and contract fraud are major sources of illicit revenue and laundered funds. Corruption permeates all levels of Afghan government and society and the country rates very poorly on various indices.

The growth in Afghanistan’s banking sector has slowed considerably in recent years; and traditional payment systems, particularly hawala networks, remain significant in their reach and scale. The corrupt government and weaknesses in the banking sector incentivize the use of informal mechanisms and exacerbate the difficulty of developing a transparent formal financial sector in Afghanistan. The unlicensed and unregulated hawaladars in major drug areas such as Helmand likely account for a substantial portion of the illicit proceeds being moved in the financial system. Afghan business consortiums that control both hawaladars and banks allow criminal elements within these consortiums to manipulate domestic and international financial networks to send, receive, and launder illicitly-derived monies or funds intended for criminal, insurgent, or terrorist activities. The rapid depreciation of the Iranian rial in October 2012 led to increased demand for U.S. dollars in Iran and a reported increase in cash smuggling from Afghanistan to Iran.

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/index.htm

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

Are 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: Central Bank of Afghanistan (DAB), banks, registered money service businesses (MSBs), insurance companies, dealers in precious metals and stones, lawyers, accountants, securities dealers, and real estate agents

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 684 in 2012

Number of CTRs received and time frame: 1,921,129 in 2012

STR covered entities: Banks, MSBs, hawaladars, insurance companies and securities dealers

money laundering criminal Prosecutions/convictions:

Prosecutions: 22 in 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Afghanistan is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/mutual-evaluations/page.aspx?p=a901712a-54e4-4b3b-a146-046aefca6534

Enforcement and implementation issues and comments:

 

The Government of Afghanistan (GOA) has no formal extradition or mutual legal assistance arrangements with the United States. Requests for extradition and mutual legal assistance are processed on an ad hoc basis, with assistance from the Afghan Attorney General’s Office. The government should adopt the drafted extradition-related legislation which is pending in Afghan parliament.

Using Presidential executive orders the GOA has frozen bank accounts owned by hawala networks listed under UNSCR 1988. There are no instances of seized bank accounts, and there is no mechanism for asset sharing. The GOA should increase the capacity of enforcement officers, prosecutors, and judges to provide them a better understanding of the basis for seizing and forfeiting assets.

Corruption and insufficient political will affect Afghanistan’s ability to regulate institutions and enforce relevant legislation. Limited resources and lack of technical expertise and infrastructure also hamper effective regulatory oversight. Dealers in precious metals and stones, lawyers, accountants, and real estate agents are not supervised in Afghanistan. Insurance companies and securities dealers are technically under the regulatory regime and are required to file STRs, but there is no compliance or enforcement. The government should move to ensure these sectors are regulated and comply with anti-money laundering/combating the financing of terrorism (AML/CFT) regulations.

Less than 5% of the Afghan population uses banks, depending instead on the entrenched hawala system, which provides a range of financial and non-financial business services in local, regional, and international markets. Approximately 90% of financial transactions run through the hawala system, including foreign exchange transactions, funds transfers, micro and trade finance, as well as some deposit-taking activities. There is not a clear division between the hawala system and formal financial sector. Hawaladars often keep accounts at banks and use wire transfer services to settle their balances with other hawaladars abroad. Due to limited bank branch networks, banks occasionally use hawaladars to transmit funds to hard-to-reach areas within Afghanistan. Afghanistan’s financial intelligence unit (FIU) reports that no MSBs or hawaladars have ever submitted STRs.

The GOA should issue the necessary regulatory instruments to increase the number of MSB/hawala inspections, and expand implementation of the MSB/hawala licensing program. The GOA also should create an outreach program to notify and educate hawaladars about the licensing and STR filing processes.

Border security continues to be a major challenge throughout Afghanistan, with the country’s 14 official border crossings under central government control. Cargo is often exempted from any screening or inspection due to corruption at the border crossings and customs depots. Outside of official border crossings, most border areas are under-policed or not policed at all, and are particularly susceptible to cross-border trafficking, trade-based money laundering, and bulk cash smuggling. Kabul International Airport lacks stringent inspection controls for all passengers, and includes a VIP lane that does not require subjects to undergo any inspections or controls. The GOA should strengthen inspection controls for airport passengers.

Afghanistan’s Central Bank reported that approximately $4.6 billion in cash left Afghanistan via Kabul International Airport in 2011, exceeding Afghanistan’s official revenue of about $2 billion. Tracking cash movements across borders or through airports has become increasingly difficult with implementation of an executive order that makes it illegal to take more than $20,000 out of the country, but eliminates the need to report outbound currency.

Afghanistan’s laws related to terrorist financing are not in line with international standards and do not criminalize all elements of the terrorist financing offense. Afghanistan has taken steps towards improving its AML/CFT regime, including by establishing high level AML/CFT coordination mechanisms. However, certain strategic AML/CFT deficiencies remain. Afghanistan should continue to work to adequately criminalize money laundering and terrorist financing; establish and implement an adequate legal framework for identifying, tracing and freezing terrorist assets; implement an adequate AML/CFT supervisory and oversight program for all financial sectors; establish and implement adequate procedures for the confiscation of assets related to money laundering; establish a fully operational and effectively functioning FIU; and establish and implement effective controls for cross-border cash transactions.

Albania

Albania is not an important regional financial or offshore center; however, the country remains at significant risk for money laundering due to rampant corruption and weak legal and government institutions. Albania also has a large cash economy and significant money flows from abroad in the form of remittances.

Albania has a significant black market for certain smuggled goods, mainly tobacco, jewelry, stolen cars, and mobile phones, due to its high level of consumer imports and weak customs controls. Albania is a transit country for Afghan heroin smuggled to Western Europe and serves as a key gateway for heroin distribution throughout Europe. Local production of marijuana is also on the rise for domestic and European use. Albania serves as a base of operations for regional organized crime organizations as illicit proceeds are easily laundered, with real estate and business development projects being the most popular methods.

Terrorist financing remains a threat in Albania, as during the last decade government officials have taken action in several cases involving individuals and non-profit organizations suspected of financing terrorist activities.

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/index.htm

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 403: January 1 to November 30, 2012

Number of CTRs received and time frame: 1,309,923: January 1 to November 30, 2012

STR covered entities: Commercial banks; non-banking financial institutions; foreign exchange offices; savings/credit companies and their unions; postal services that perform payment services; issuers or managers of debit and credit cards, checks, traveler’s checks, payment orders, electronic money, or other similar instruments; stock markets and securities agents and brokers; life insurance or re-insurance companies, agents or intermediaries; pension funds; the State Authority Responsible for the Administration and Sale of Public Property and property transfer agents; games of chance, casinos and race tracks of any form; lawyers, notaries and other legal representatives; real estate agents and appraisers; accountants and financial consultants; and the Agency of Legalization, Urbanization and the Integration of Informal Constructions/Zones

money laundering criminal Prosecutions/convictions:

Prosecutions: 4: January 1 to September 30, 2012

Convictions: 7: January 1 to November 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Despite passing criminal code reforms in 2012, the Government of Albania’s (GOA) implementation efforts are lacking, as evidenced by the low number of successful prosecutions and convictions. Few steps have been taken to combat government corruption, especially in the judiciary where it plays a major role in the inability of the government to successfully prosecute criminal activity. Although the Parliament lifted official and judicial immunities in September 2012, subsequent amendments to implement these changes have not yet been adopted. Action should be taken to effect these changes.

The Bank of Albania has established a task force to confirm banks’ compliance with customer verification rules although enforcement remains poor in practice. Additionally, the GOA should provide for enhanced due diligence for foreign politically exposed persons (PEPs). There are an increasing number of STRs coming from banks as that sector matures. While Albania provides currency declaration forms at border crossing points, customs controls on cross-border transactions lack effectiveness due to a lack of resources, poor training and corruption of customs officials.

The Albanian court system applies a difficult burden of proof in money laundering cases. Some, but not all, courts require a simultaneous conviction for the predicate offense before issuing a conviction for money laundering, even though the law specifically states that no predicate offense is necessary. The Supreme Court has not issued a unified decision, so the law in this area remains in flux. Currently, no law criminalizes negligence by financial institutions in money laundering cases.

The Joint Investigative Unit to Fight Economic Crime and Corruption (JIU) in the Tirana District Prosecution Office focuses efforts and builds expertise in the investigation and prosecution of financial crimes and corruption cases by bringing together members of the General Prosecutor’s Office, the Albanian State Police Financial Crimes Sector, the Ministry of Finance’s Customs Service and Tax Police, and the National Intelligence Service. The JIU also has liaisons from the financial intelligence unit, High State Audit, and the High Inspectorate for the Declaration and Audit of Assets. The JIU prosecutes money laundering cases within the District of Tirana. Six additional regional JIUs are in operation and have similar missions. These units have jurisdiction over corruption, money laundering, and other types of economic crime. The GOA should continue to develop the effectiveness of these units.

Despite efforts to improve Albania’s capacity to deal with financial crimes and money laundering, the GOA’s AML/CFT regime is plagued by numerous technical deficiencies. The GOA should take steps to address these deficiencies and work to deter corruption.

Algeria

The extent of money laundering through formal financial institutions in Algeria is thought to be minimal due to stringent exchange control regulations, a large segment of the economy that is cash-based, and an antiquated banking sector dominated by public banks. The restricted convertibility of the Algerian dinar enables the Central Bank to monitor all international financial operations carried out by public and private banking institutions. Notable criminal activity includes trafficking, particularly of drugs and cigarettes, but also arms and stolen vehicles; kidnapping for ransom (KFR); theft; extortion; and embezzlement. Public corruption remains a serious concern as does terrorism. Algerian authorities are increasingly concerned by cases of customs fraud and trade-based money laundering. Other risk areas for financial crimes include unregulated alternative remittance and currency exchange systems, tax evasion, abuse of real estate transactions, commercial invoice fraud, and a cash-based economy. Most money laundering is believed to occur primarily outside the formal financial system, given the large percentage of financial transactions occurring in the informal gray and black economies in general. Al-Qaida in the Islamic Maghreb, which originated in Algeria, is currently confined to outlying areas but has a history of terrorist activity in Algiers and elsewhere in the country, including suicide attacks, KFR, roadside bomb attacks, and assassinations.

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

Are 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, financial leasing institutions, and investment and shareholding companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,373 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, financial leasing institutions, and investment and shareholding companies; real estate agents; car dealers; and other financial professionals who advise or carry out transactions, such as deposits, exchanges, or other movements of capital

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

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

Enforcement and implementation issues and comments:

In 2012, the Government of Algeria (GOA) implemented a package of policies intended to diminish the informal sector, motivate Algerian business people to formalize their activities, and generate revenue for the central government. A new law enacted in February 2012 extends the scope of KYC obligations to all financial institutions and expands the list of professionals who must report suspicious activity to include real estate agents, car dealers, and financial professionals who advise or carry out transactions, such as deposits, exchanges, and other movement of capital. The law also gives the GOA the authority to freeze and/or seize assets belonging to or destined for terrorists or a terrorist organization for a renewable one-month period. However, the administrative processes associated with this new authority remain unclear, while the corresponding judiciary processes appear not to conform to international standards. The GOA should move forward with the implementation of these laws, issue implementing regulations where required, and continue to work to address the remaining deficiencies in its anti-money laundering/counter-terrorist financing regime.

Specifically, the GOA should take significant legislative action to criminalize the financing of terrorism for any purpose, i.e., regardless of a link to the planning or commission of a terrorist act, and to establish a formal legal framework to implement the targeted financial sanctions included in UNSCRs 1267 and 1373. According to the director of the Algerian Financial Intelligence Cell (CTRF), the financial intelligence unit, the GOA is in the process of developing legislation that would criminalize terrorist finance even where unconnected to a terrorist act. This legislation was delayed by the Algerian President’s medical crisis.

The CTRF should be the focal point for receiving and analyzing suspicious activity reports, and for the exchange of information regarding suspicious transactions related to money laundering/terrorist financing activity. This will require the CTRF to develop in-house analytical and information technology capabilities. The CTRF should continue outreach to the formal and informal financial sectors. In addition, given the scope of Algeria’s informal economy, new efforts should be made to identify value transfer mechanisms not covered by Algeria’s legal and regulatory framework. Algerian law enforcement and customs authorities should enhance their ability to investigate trade-based money laundering, value transfer, and bulk cash smuggling used to finance terrorism and other illicit activities.

Andorra

Although the Principality of Andorra is not a regional financial center, it does have a well developed financial infrastructure. The Andorran banking system, comprised of five banking groups, is considered to be the most important part of the country’s financial sector.

The non-financial crime rate is low in Andorra with few instances of drug-related offenses or other serious crimes.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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 and factoring firms; asset, mutual fund and risk capital management firms; exchange houses; financial advisors and intermediaries; insurance companies; lawyers, notaries, accountants and tax advisors; dealers of precious metals and stones; real estate agents; and bingo establishments

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 25 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks; leasing and factoring firms; asset, mutual fund and risk capital management firms; exchange houses; financial advisors and intermediaries; insurance companies, accountants and tax advisors; real estate agents; notaries and other legal professionals; bingo establishments; and dealers in precious stones and metals

money laundering criminal Prosecutions/convictions:

Prosecutions: 2 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

In recent years Andorra has made continued progress in its efforts against money laundering as banking secrecy has been softened. Although the country has made significant improvements, both by updating legislation and signing international agreements, the Government of Andorra (GOA) should continue to loosen its bank secrecy laws and make its banking system more transparent.

The Andorran Financial Intelligence Unit (UIF) is an independent body established to foster and coordinate measures to prevent money laundering and terrorist financing. The UIF has seen its work and resources increase as the GOA has increased its efforts to thwart those activities.

Andorra has 13 tax information exchange agreements in place. Andorra has signed a double taxation agreement with France, which is pending ratification, and is working toward signing additional agreements with other countries.

In furtherance of its fight against organized crime, in 2012 Andorra signed a bilateral agreement with the United States regarding the sharing of confiscated proceeds and instrumentalities of crimes and preventing criminal organizations from benefiting from the proceeds of their crimes. In 2012 Andorra also signed an arrangement with the U.S. government for cooperation in the exchange of information related to money laundering and terrorist financing.

The GOA should consider the adoption of a large currency transaction reporting system. Andorra should become a party to the UN Convention against Corruption.

Angola

Angola is not a regional financial center. It does not produce large quantities of narcotics but continues to be a transit point for drug trafficking, particularly for drugs brought in from Brazil and South America destined for Europe. Increasingly, Angola is becoming a destination point as well with a growing market for illicit drugs. Angola’s borders are porous and vulnerable to general smuggling and trafficking in small arms, diamonds, humans, and motor vehicles. Angola has a high rate of U.S. dollar cash flow. The laundering of funds derived from widespread corruption is a concern.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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: Financial and credit institutions, financial groups, insurers, stock markets, casinos, lotteries, dealers in precious stones and metals, high value goods merchants, currency exchange agencies, paycheck issuers and managers, pension fund managers, individual and collective estate management groups, accountants, auditors, notaries, registrars, attorneys, solicitors and other independent professionals

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 12: January 1 – August 31, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Credit institutions, financial groups, insurers, pension fund managers, casinos, lotteries, dealers in precious stones and metals, high value goods merchants, currency exchange agencies, paycheck issuers and managers, individual and collective estate management groups, accountants, auditors, notaries, registrars, attorneys, solicitors, and other independent professionals

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

In August 2012, Angola became a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force-style regional body. Angola has not yet had a mutual evaluation.

Enforcement and implementation issues and comments:

In 2010, Angola developed an anti-money laundering/counter-terrorist financing (AML/CFT) action plan and made a political commitment to address noted AML/CFT deficiencies. In December 2011, the Angolan National Assembly revoked the 2010 AML/CFT law and adopted a new law more in line with international standards. Angola is in the process of further amending its AML/CFT law to criminalize additional predicate offenses currently not included and to allow for search and seizure of assets related to terrorist activities.

Angola’s financial intelligence unit (FIU) has focused on educating reporting entities, primarily financial institutions regulated by the Central Bank, on AML/CFT reporting requirements. The FIU started receiving suspicious transaction reports (STRs) in May 2011, but only a few of Angola’s 22 banks are reporting. The FIU has developed an information technology platform to allow for electronic filing of STRs. In 2012, Angola signed memoranda of understanding to share information related to financial crimes, money laundering and terrorist financing with Namibia and Portugal.

Angola’s capacity and expertise to investigate financial crimes is limited. Corruption is endemic and pervades all facets of commerce and government. Angolan politically exposed persons (PEPs) residing outside of the country are subject to due diligence requirements. Angola is ranked 157 out of 176 countries surveyed in Transparency International’s 2012 International Corruption Perception Index.

Angola should continue to work on implementing its action plan to address remaining deficiencies, including by: adequately criminalizing money laundering and terrorist financing; ensuring a fully operational and effectively functioning FIU; and establishing and implementing an adequate legal framework to identify and freeze terrorist assets without delay.

Anguilla

Anguilla is a United Kingdom (UK) overseas territory with a population of approximately 15,000. There are few offenses committed on the island by the local populace that generate substantial monies or profits from crime. The economy depends heavily on luxury tourism, offshore banking, lobster fishing, and remittances from emigrants. Increased activity in the tourism industry has spurred the growth of the construction sector.

The financial sector is small in comparison to other jurisdictions in the Caribbean, but the ability to register companies online and the use of bearer shares make Anguilla vulnerable to money laundering. The biggest perceived money laundering threat in the coming years will continue to come from abuses of the offshore industry in relation to mutual funds, trusts, and international business companies (IBCs). Anguilla has seven licensed banks, 291 insurance companies and four other financial or credit institutions, collectively holding assets worth just over $1 billion. Anguilla has over 10,000 IBCs, which are attractive to users due to the online registration system and zero-tax regime.

The Eastern Caribbean Central Bank (ECCB) is Anguilla’s monetary authority. Anguilla’s currency is the East Caribbean (EC) dollar, used by eight of the nine ECCB jurisdictions. There is little evidence the common use of the EC dollar significantly raises the risk for money laundering.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 43 in 2011

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 12 in 2012

Convictions: 2 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Anguilla is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=356&Itemid=418&lang=en

Enforcement and implementation issues and comments:

While Anguilla prohibits anonymous accounts, it continues to seek offshore financial business, offering business and tax structures and company formation which allow some degree of anonymity. IBCs can be incorporated by company service providers in Anguilla without the requirement to publicly register shareholders or directors. Once incorporated, an IBC is capable of holding assets and operating bank accounts, both on Anguilla and in other jurisdictions. There are cases where IBCs are used as “flow through” accounts, facilitating the mingling of monies, confusing money trails and generally assisting the layering process in money laundering; there has been only one instance where the money from suspected IBC abuse remained in Anguilla. IBC abuse remains responsible for a significant proportion of suspicious activity reports.

Anguilla’s record keeping requirements do not meet international standards. Requirements to retain records of accounts are not uniform across different types of companies and accounts, and there is no requirement to keep underlying documentation, or to maintain records for five years.

Anguilla is a UK Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for Anguilla’s international affairs and may arrange for the ratification of any convention to be extended to Anguilla. The 1988 Drug Convention was extended to Anguilla in 1995. In April 2011, Anguilla’s Executive Council agreed in principle to extend the UN Convention against Corruption to Anguilla and requested a legislative analysis to ascertain the changes necessary to implement the Convention. The International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime have not yet been extended to Anguilla.

Antigua and Barbuda

Antigua and Barbuda is a significant offshore center that, despite recent improvements, remains susceptible to money laundering due to its offshore financial sector and Internet gaming industry. Illicit proceeds from the transhipment of narcotics and from financial crimes occurring in the United States are laundered in Antigua and Barbuda. During the past year, the Office of National Drug Control and Money Laundering Policy (ONDCP) compiled evidence that money laundering related to drug trafficking takes place through local financial institutions. The ONDCP’s analysis shows both that criminals abuse the system and financial institutions, in some instances, fail to apply sufficiently rigorous due diligence in relation to transactions that should be seen as questionable. The funds involved include Eastern Caribbean dollars traced to the sale of local property by at least one person U.S authorities identified as trafficking drugs through Antigua and Barbuda to U.S. territory. Funds also include significant quantities of U.S. currency found in bank safety deposit boxes.

Domestic casinos are required to incorporate as domestic corporations. Internet gaming companies are required to incorporate as international business corporations (IBCs), and as such are required to have a physical presence. Internet gaming sites are considered to have a physical presence when the primary servers and the key person are resident in Antigua and Barbuda. The Government of Antigua and Barbuda (GOAB) receives approximately $2,800,000 per year from license fees and other charges related to the Internet gaming industry. A nominal free trade zone in the country seeks to attract investment in areas the GOAB deems priority. Casinos and sports book-wagering operations in Antigua and Barbuda’s free trade zone are supervised by the ONDCP and the Directorate of Offshore Gaming.

Bearer shares are permitted for international companies. However, the license application requires disclosure of the names and addresses of directors (who must be natural persons), the activities the corporation intends to conduct, the names of shareholders and number of shares they will hold. Registered agents or service providers are required by law to know the names of beneficial owners. Failure to provide information or giving false information is punishable by a fine of $50,000. Offshore financial institutions are exempt from corporate income tax. All licensed institutions are required to have a physical presence, which means presence of at least a full-time senior officer and availability of all files and records. Shell companies are not permitted.

Currently, the Eastern Caribbean Central Bank (ECCB) supervises Antigua and Barbuda’s domestic banking sector, along with the domestic sectors of seven other Caribbean jurisdictions.

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

Are 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, agricultural credit institutions, money exchangers, accountants, notaries, gaming centers, auto dealers and securities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 102: January 1 – November 7, 2012

Number of CTRs received and time frame: 591: January 1 – November 7, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 3 in 2012

Convictions: 3 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Antigua and Barbuda is a member of Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=355&Itemid=418&lang=en

Enforcement and implementation issues and comments

The Money Laundering Prevention Act of 1996 (MLPA), as amended, covers banks, offshore banks, IBCs, money transmitters, credit unions, building societies, trust businesses, casinos, Internet gaming companies, and sports betting companies. Intermediaries such as lawyers and accountants are not included in the MLPA.

The Banking (Amendment) Act 2012 requires the ECCB to approve the appointment of bank directors, senior management and significant shareholders. The Financial Services Regulatory Commission is responsible for the regulation and supervision of all institutions licensed under the International Business Corporations Act of 1982, including offshore banks and all aspects of offshore gaming. This includes issuing licenses for IBCs, maintaining the register of all corporations, and conducting examinations and reviews of offshore financial institutions as well as some domestic financial entities, such as insurance companies and trusts.

The GOAB adopted regulations for the licensing of interactive gaming and wagering entities to address possible money laundering through client accounts of Internet gaming operations. Internet gaming companies are required by the Interactive Gaming and Interactive Wagering Regulations to report to the ONDCP all payouts over $25,000. The Interactive Gaming and Interactive Wagering (Amendment) Regulations 2012 removes the provision that previously allowed the duplicate reporting of STRs to authorities other than the ONDCP. Internet gaming companies are required to submit quarterly and annual audited financial statements, enforce KYC verification procedures, and maintain records relating to all gaming and financial transactions of each customer for six years.

The GOAB should continue to work on strengthening all provisions of its AML/CFT legislation and enforcement.

Argentina

Argentine and international observers express concern that money laundering related to narcotics trafficking, corruption, contraband, and tax evasion occurs throughout the financial system. It is also believed most money laundering operations in Argentina are conducted through transactions involving specific offshore centers. The most common money laundering operations in the non-financial sector involve transactions made through attorneys, accountants, corporate structures, and in the real estate sector. The widespread use of cash (including U.S. dollars) in the economy also leaves Argentina vulnerable to money laundering. Tax evasion is the predicate crime in the majority of Argentine money laundering investigations.

Argentina has a long history of capital flight and tax evasion. Traditionally, Argentina is an economy with strong links to U.S. currency. Many Argentines prefer to hold their savings in U.S. dollars and/or dollar-denominated assets as a hedge against the high levels of inflation and peso devaluation that commonly occur in the Argentine economy. Approximately 30% of the labor market is informal, and it is estimated that Argentines hold billions of U.S. dollars outside the formal financial system, both offshore and in country, much of it legitimately earned money that was not taxed. The general vulnerabilities in the system also expose Argentina to a risk of terrorist financing.

Argentina is a source country for precursor chemicals and a transit country for cocaine produced in Bolivia, Peru, and Colombia, and for marijuana produced in Paraguay. While most of the cocaine transiting Argentina is bound for the European market, virtually all of the marijuana is for domestic or regional consumption; there has been an increase in domestic drug consumption and production. Argentine officials also identified smuggling, corruption and different types of fraud as major sources of illegal proceeds.

A substantial portion of illicit revenue also comes from black market peso exchanges or informal value transfers. Informal value transfers occur when unregistered importers, for example, use entities that move U.S. currency in bulk to neighboring countries where it is deposited and wired to U.S. accounts or to offshore destinations. Products from the United States are often smuggled into Argentina, or the shipping manifests are changed to disguise the importer and merchandise. U.S. law enforcement agencies consider the tri-border area (Argentina, Paraguay and Brazil) to be a major source of smuggling, especially of pirated products.

The Financial Action Task Force’s (FATF) third-round mutual evaluation report of Argentina found the country partially compliant or non-compliant with 46 of the then 49 FATF Recommendations. The Government of Argentina (GOA) developed an action plan to address the deficiencies, and has made substantial progress carrying out this action plan by passing, and at least partially, implementing several new laws. However, the effectiveness of these laws has not yet been demonstrated in terms of enforcement and increased convictions.

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

Are 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, financial companies, credit unions, tax authority, customs, currency exchange houses, casinos, securities dealers, insurance companies, accountants, notaries public, dealers in art and antiques, jewelers, real estate registries, money remitters, charitable organizations, auto dealers, and postal services

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13,308 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, financial companies, credit unions, tax authority, customs, currency exchange houses, casinos, securities dealers, insurance companies, accountants, notaries public, dealers in art and antiques, jewelers, real estate registries, money remitters, charitable organizations, auto dealers, and postal services

money laundering criminal Prosecutions/convictions:

Prosecutions: 31: Unknown time frame

Convictions: 2: June - December 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

On December 27, 2011, Argentina passed Law 26.734, which broadens the definition of terrorism, and increases monetary fines and prison sentences for crimes linked to terrorist financing. The law closes several loopholes in previous legislation, empowers the Argentine financial intelligence unit (UIF) to freeze assets, and criminalizes the financing of terrorist organizations, individuals, and acts. To date, this law has been used in human rights cases related to individuals wanted for criminal actions taken during Argentina’s military dictatorships thirty-plus years ago. The law was used to freeze funds related to both the wanted persons and to family members and associates who allegedly provided the fugitives recent financial assistance. The UIF brought 44 such cases in the past year, and froze funds related to four individuals. While this does demonstrate that the law can be used to quickly freeze the assets, the investigation and prosecution of long-standing cases does not demonstrate an ability to detect and prevent ongoing or more current terrorist activities.

Argentine exchange houses are significantly more regulated than similar operations in other Latin American countries. However, this past year Argentina sharply limited access to foreign exchange in the formal market for most purposes, which drove most foreign exchange activities away from formal actors and into the informal sector. The market shift away from formal methods of exchange makes it difficult to evaluate the effectiveness of new regulations.

The UIF claims it made significant progress in formalizing transactions in the real estate sector, a significant area for money laundering operations. Its efforts were directed toward triangulating the reports of notaries, real estate agents, and real estate registrars to insure consistency. Consequently, there was a significant decrease in real estate sales in Argentina in the past year as these policies were implemented. However, it is difficult to determine if this change is due to increased difficulties in acquiring foreign currency (traditionally real estate in Argentina has been priced in U.S. dollars), an economic slowdown, or efforts to make money laundering through real estate more difficult. There was a significant increase in the number of STRs filed in 2011 when compared to 2010.

Notwithstanding these improvements, technical deficiencies and challenges still remain in closing legal and regulatory loopholes and improving interagency cooperation. Argentina demonstrated a commitment to expand the knowledge of personnel involved in fighting financial crime and a willingness to act on the results of those trainings. For example, after attending a sponsored training on money laundering using pre-paid credit cards, Argentina implemented new regulations to try to prevent this practice. The GOA is open to advice on structuring new legal frameworks from international organizations. Most of the challenges Argentina now faces are in implementing these new laws and regulations in a proper, non-politicized manner. There have been two convictions from 31 money laundering cases opened after the 2011 revision of the law criminalizing money laundering.

Argentina continues to update its legal structures with an eye toward meeting international standards. Going forward, Argentina should continue to address the implementation of these laws to demonstrate the effectiveness of its anti-money laundering/counter-financing of terrorism (AML/CFT) infrastructure. Argentina should also take steps to foster the principals of transparency and good governance, criminalize tipping off, foster a culture of AML/CFT compliance, combat corruption, insure the court system is efficient, and build high ethical standards for police officers, prosecutors and judges, as well as professionals such as lawyers, accountants and auditors. Structural elements such as these are critical to establishing a functional legal and institutional AML/CFT framework.

Armenia

Armenia is not a regional financial center and is not believed to be at major risk for money laundering and terrorist financing. Government corruption, an organized crime presence, and a large shadow economy make the country vulnerable. According to authorities, drugs such as heroin from Afghanistan and amphetamines from Russia and Turkey transit the country and are also abused domestically. However, the major sources of laundered proceeds likely stem from theft, tax evasion, and fraudulent financial activity, particularly transactions with forged credit cards.

Money laundering in Armenia generally takes place through the banking system, through informal remittances from Armenians living abroad, and through high-value transactions such as real estate purchases and misuse of the international gold trade. Casinos are legal and are regulated by the Ministry of Finance.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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 and exchange houses; real estate agents; notaries, lawyers, accountants, and auditors; dealers in artwork and precious metals and stones; auction organizers; casinos and organizers of prize games, lotteries, and internet prize games; trust and company service providers; credit bureaus, the State Cadaster, and the State Registry

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 170: January 1 – November 1, 2012

Number of CTRs received and time frame: 136,324: January 1 – November 1, 2012

STR covered entities: Banks and exchange houses; real estate agents; notaries, lawyers, accountants, and auditors; dealers in artwork and precious metals and stones; auction organizers; casinos and organizers of prize games, lotteries, and internet prize games; trust and company service providers; credit bureaus, the State Cadaster, and the State Registry

money laundering criminal Prosecutions/convictions:

Prosecutions: 6: January 1 – November 1, 2012

Convictions: 1: January 1 – November 1, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Armenia (GOA) has continued to increase the number of money laundering investigations and prosecutions. The government should provide criminal penalties for legal persons involved in money laundering, criminalize tipping off, and require additional scrutiny for domestic politically exposed persons (PEPs). The GOA should ensure its counter-terrorist financing law and enabling regulations are in accordance with international standards. Armenian authorities and the financial intelligence unit (FIU) should ensure all obligated reporting sectors provide mandated financial intelligence reports to the FIU. The government is seeking international assistance to better regulate its activities.

Aruba

Aruba is not considered a regional financial center. Because of its location, Aruba is a transshipment point for drugs from South America bound for the United States and Europe and the transshipment of currency in the opposite direction. Money laundering is primarily related to proceeds from illegal narcotics trafficking by domestic and foreign criminal organizations. There is no significant black market for smuggled goods in Aruba. Bulk cash smuggling represents a risk due to the close proximity of Aruba to South America.

There are at least 11 casinos, and online gaming is allowed under a licensing and reporting system. The extent to which gaming facilitates money laundering in Aruba is not known. Aruba Customs controls three economic free zones managed by Free Zone Aruba NV (FZA). All companies with free zone status are reviewed and controlled by FZA, a government-owned limited liability company. Financial and business advisory services (such as banks, insurance companies, lawyers, notaries, tax consultants) are not allowed in the free zones. There is an integrity system in place to deter illegal activities, including smuggling and money laundering. A few cases of trade-based money laundering have been discovered and prosecuted.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: Not available

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, life insurance companies, money transfer companies, investment companies, trust and company services providers, casinos, lawyers, civil notaries, accountants, tax advisors, realtors, dealers in precious metals and stones, and dealers in high value goods

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 3,047: January 1 – August 31, 2012

Number of CTRs received and time frame: 3,153: January 1 – August 31, 2012

STR covered entities: Banks, life insurance companies, money transfer companies, lawyers, civil notaries, accountants, tax advisors, casinos, dealers in jewels and precious metals, realtors, and dealers in art, antiques, vehicles, aircraft, and ships

money laundering criminal Prosecutions/convictions:

Prosecutions: 44: January 1 – November 9, 2012

Convictions: 4: January 1 – November 9, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Aruba is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/43/56/43988459.pdf

Enforcement and implementation issues and comments:

Aruba’s money laundering laws do not cover proceeds generated from counterfeiting and piracy of products, insider trading and market manipulation, many types of environmental crimes, or fraud. Aruba does not have a suspicious transaction reporting system but rather a broader unusual transaction reporting system. Filed reports address: large cash transactions of $14,000 or more; wire transactions of $562,000 or more; other atypical transactions (e.g., persons or groups listed on the UN sanctions list); and, suspicious transactions. Bearer shares were eliminated in 2011.

The FZA has been invited to participate in regional working groups to promote its economic free zone integrity system.

Aruba uses listing and delisting mechanisms for persons and organizations in connection with anti-terrorist freezing measures taken by the competent authorities in Aruba. The Kingdom of the Netherlands, of which Aruba is an autonomous constituent part, may arrange for the ratification of any convention to be extended to Aruba. The 1988 UN Drug Convention was extended to Aruba in 1999; the UN International Convention for the Suppression of the Financing of Terrorism was extended to Aruba in 2005; and the UN Convention against Transnational Organized Crime was extended to Aruba in 2007. The Kingdom has not yet extended the application of the UN Convention against Corruption to Aruba.

Australia

Australia has deep, liquid financial markets and is recognized as a leader in investment management, as well as areas such as infrastructure financing and structured products. Australia is a financial services hub within the Asia-Pacific region, supported by a number of government initiatives such as the implementation of an investment manager regime and measures to provide taxation exemption or tax relief for foreign managers. Finance and insurance are the largest sectors in the Australian economy. Australia has one of the largest pools of consolidated assets under management globally, valued at about A$1.8 trillion (approximately $1.9 trillion). It is also a significant destination for foreign direct investment, with total inflows growing by over 16 percent in the first half of 2012 compared with the same period of 2011.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 48,155: July 2011 - June 2012

Number of CTRs received and time frame: 16,332: July 2011 - June 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 65: July 2011 - June 2012

Convictions: 53: July 2011 - June 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Australia is a member of the Financial Action Task Force (FATF) and of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent evaluation can be found here: http://www.fatf-gafi.org/dataoecd/60/33/35528955.pdf

Enforcement and implementation issues and comments:

The Government of Australia maintains a comprehensive system to detect, prevent, and prosecute money laundering. The Attorney-General’s Department is the policy agency responsible for the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) in collaboration with the Australian Transaction and Reports Analysis Center (AUSTRAC) who administers the Act and is also the country’s anti-money laundering regulator and financial intelligence unit. Australia’s financial system benefits from its global best practices regulatory regime. AUSTRAC works collaboratively with Australian industries and businesses in their compliance with anti-money laundering/counter-terrorism financing (AML/CFT) legislation. Australia has active interagency task forces, and consultations with the private sector are frequent. Australian law enforcement agencies investigate an increasing number of cases that directly involve offenses committed overseas.

Third-party deposits, which can be used as vehicles to facilitate money laundering, are legal in Australia. However, authorities are working to limit the associated risks in Australia’s financial system. In 2011, additional AML/CFT provisions came into effect, which require banking institutions to identify third parties undertaking transactions of $10,000 or more. This obligation is in addition to reporting the details of the account holder involved in the transaction, and builds on existing customer due diligence and STR obligations.

The Australian government recently established a new Criminal Assets Confiscation Taskforce, which brings together agencies with key roles in the investigation and litigation of proceeds of crime matters. The Taskforce should enhance the identification of potential asset confiscation matters and strengthen their pursuit.

Austria

Austria is a major regional financial center, and Austrian banking groups control significant shares of the banking markets in Central, Eastern, and Southeastern Europe. Money laundering occurs within the Austrian banking system as well as in non-bank financial institutions and businesses. Money laundered by organized crime groups derives primarily from serious fraud, smuggling, corruption, narcotics trafficking, and trafficking in persons. Theft, drug trafficking and fraud are the main predicate crimes in Austria according to conviction and investigation statistics. Austria is not an offshore jurisdiction and has no free trade zones.

Casinos and gambling are legal in Austria. The laws regulating casinos include anti-money laundering/countering the financing of terrorism (AML/CFT) provisions. There are migrant workers in Austria who send money home via all available channels, regular bank transfers and money transmitters (e.g., Western Union), but also informal and illegal remittance systems. No information is available to what extent such informal systems are used.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 2,075 in 2011

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 537 in 2011

Convictions: 6 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Austria has been extremely slow to give effect to a bilateral forfeited asset sharing agreement with the United States that entered into force in March 2011. The agreement applies retroactively to a June 2004 request from the United States that asked the Austrian authorities to recognize a final U.S. forfeiture judgment against drug proceeds in a bank account in Austria belonging to a convicted drug trafficker. Subsequent court decisions, including both an Austrian interim appeals court decision and a Supreme Court decision – ordered the Vienna bank holding the assets to turn them over to the Government of Austria. However, the Austrian courts are now entertaining a series of collateral attacks on that decision and the latest action has been pending before the Austrian Supreme Court since April 2012. Under the 2011 asset sharing agreement, the United States is seeking the recovery of 50 percent of the forfeited proceeds, with the remainder going to the Government of Austria.

Austria has a combination of both an “all serious crimes” approach plus a list of predicate offenses which do not fall under the domestic definition of serious crimes, but which Austria includes to comply with international legal obligations and standards. Asset freezing authority applies to all economic resources including financial funds, real estate, companies, and vehicles.

Austrian banks have strict legal requirements regarding secrecy. Banks and other financial institutions must not divulge or exploit secrets which are revealed or made accessible to them exclusively on the basis of business relations with customers. However, the law stipulates that secrecy regulations do not apply with respect to banks’ obligation to report suspicious transactions in connection with money laundering or terrorist financing, or with respect to ongoing criminal court proceedings. Any amendment of these secrecy regulations requires a two thirds majority approval in Parliament.

The Austrian Financial Market Authority (FMA) regularly updates a regulation issued January 1, 2012, which mandates banks and insurance companies apply additional special due diligence in doing business with designated countries. The FMA regulation currently includes 21 jurisdictions. This regulation implements Austria’s new AML/CFT regime requiring banks to exercise enhanced customer due diligence, and is based on the Austrian Banking Act, the Insurance Supervision Act, and FATF statements on jurisdictions with AML/CFT deficiencies.

As of May 1, 2012, administrative fines in Austria have been doubled. This measure also affects the administrative fines in the Banking Act. The fine for violating due diligence or STR filing requirements rose to €150,000 (approximately $197,400).

While there is no enhanced customer due diligence for Austrian PEPs, procedures are being established. Austria should ensure that domestic PEPs are subject to increased due diligence.

A January 2012 report criticized Austria’s anti-money laundering controls, stating that Austria should implement stronger measures to fight cross-border corruption and money laundering. The report also singled out the Austrian Banker’s Association by citing the group as an obstacle to law enforcement investigations and also noted that Austria’s gambling sector needs stricter monitoring.

Azerbaijan

Azerbaijan is a rapidly growing economy, at the crossroads of Europe and central Asia, with vast amounts of natural resources. In 2012, the majority of international trade and foreign investment took place in the energy sector. All other sectors lagged energy in growth and sophistication, including the financial sector. This lag, coupled with Azerbaijan’s shared history, long-standing trade relationships, and common border with Iran, make Azerbaijan’s financial institutions vulnerable to being used by foreign entities looking to conduct money laundering/terrorist financing transactions. The major source of criminal proceeds in Azerbaijan is endemic public corruption, which cuts across all sectors. International reports identify Azerbaijan as a transit country for the Afghan drug trade; Azerbaijani authorities suspect this illicit drug trade generates a significant amount of illicit funds. It is likely that Iranian sanctions have also forced illicit funding into and out of Azerbaijan. Other generators of illicit funds include robbery, tax evasion, smuggling, trafficking, and organized crime. Money laundering likely occurs in the formal financial sector, non-bank financial systems, and alternative remittance systems. There is a significant black market for smuggled goods in Azerbaijan, which serves as a transit country for illicit goods.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 10,874: January 1 – July 31, 2011

Number of CTRs received and time frame: 97,862: January 1 – July 31, 2011

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1: February 1 – December 31, 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Over the past year, Azerbaijan has made concerted efforts to address financial institution vulnerability by bolstering the capabilities of its Financial Monitoring Service (FMS), implementing regulations in line with international standards, and working with donor support to implement systems to improve financial reporting. The FMS, Azerbaijan’s financial intelligence unit under the Central Bank of the Republic of Azerbaijan, is making progress in data collection, storage, and analysis. However, the lack of interagency cooperation and inadequate training significantly diminish its investigative abilities.

The anti-money laundering law excludes from the list of covered entities dealers of arts, antiques, and other high-valued consumer goods; entities dealing with jewelry and precious metals; travel agencies; and auto dealers. These entities are not required to maintain customer information or report suspicious activity. The shortcomings should be addressed.

The small number of prosecutions and successful convictions demonstrate, in part, that there is too much emphasis on initiating money laundering investigations via the filing of suspicious transaction reports. Azerbaijan law enforcement and customs authorities should be trained to recognize money laundering at the street level and in the ports. They should emphasize border enforcement and counter-smuggling techniques. Concerned enforcement agencies also should receive training on how to recognize and combat regional trade-based money laundering, value transfer, and underground finance.

Bahamas

The Commonwealth of the Bahamas is an important regional and offshore financial center. The economy of the country is heavily reliant upon tourism, tourist-driven construction and the offshore financial sector. The Bahamas is a transshipment point for cocaine bound for the United States and Europe. The major sources of laundered proceeds stem from drug trafficking, human smuggling, and illegal gambling. There is a significant black market for smuggled cigarettes and guns. Money laundering trends include the purchase of real estate, large vehicles, boats, and jewelry, as well as the processing of money through a complex web of legitimate businesses and international business companies (IBCs) registered in the offshore financial sector. Drug traffickers and other criminal organizations take advantage of the large number of IBCs and offshore banks registered in The Bahamas to launder significant sums of money, despite strict know-your-customer and transaction reporting requirements.

The archipelagic nature of The Bahamas and its proximity to the United States make the entire country accessible by medium-sized boats; smuggling and moving bulk cash is relatively easy. The country has one large free trade zone (FTZ), Freeport Harbor. The FTZ is managed by a private entity, the Freeport Harbor Company, owned and operated through a joint venture between Hutchison Port Holdings, and The Port Group (The Grand Bahama Port Authority, the Bahamian parastatal regulatory agency). Businesses at the harbor include private boats, ferry and cruise ship visits, roll-on/roll-off facilities for containerized cargo, and car transshipments. Freeport Harbor has the closest offshore port to the United States.

Gaming is legal for tourists. The Bahamas has three large casinos and a fourth is scheduled to open in March 2013 in Bimini. Ferry service between Florida and Bimini, located just 50 miles off the Florida coast, also is scheduled to begin in March 2013. The $2.6 billion Chinese Export-Import Bank-funded Baha Mar Casino and Resort will open in 2014 in New Providence as the largest casino in the Caribbean. Current law excludes Bahamian citizens, permanent residents, and temporary workers from gambling in the Bahamas. Illicit gaming operations based on U.S.-based lottery results and the internet, locally known as “web shops,” flourish in The Bahamas. The Government of the Commonwealth of The Bahamas (GOB) has scheduled a referendum for January 2013, to consider the legalization of web shop gaming.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: YES

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 183 in 2011

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2011

Convictions: 0 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Bahamas is a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_content&view=category&layout=blog&id=376&Itemid=561&lang=en

Enforcement and implementation issues and comments:

In 2011, the Financial Intelligence Unit (FIU) of the Ministry of Finance signed a Memorandum of Understanding with the Financial Monitoring Service of the Russian Federation.

The GOB should provide adequate resources to its law enforcement, judicial, and prosecutorial bodies in order to enforce existing legislation and to safeguard the financial system from possible abuses. Gaming will expand in 2013, from the growth of casino gaming and possibly from the legalization of web shop gaming. With this expansion, the government should ensure proper safeguards are in place, and provide additional suspicious transaction report (STR) training. The FIU should continue its outreach, training and coordination with the Royal Bahamas Police Force financial investigators. The GOB should further enhance its anti-money laundering/counter-terrorist financing regime by criminalizing bulk cash and human smuggling; implementing the National Strategy on the Prevention of Money Laundering; ensuring full compliance with UNSCRs 1267 and 1373; criminalizing participation in an organized criminal group; establishing a currency transaction reporting system; and implementing a system to collect and analyze information on the cross-border transportation of currency. It also should ensure there is a public registry of the beneficial owners of all entities licensed in its offshore financial center.

Bahrain

Bahrain is a leading financial center in the Gulf region. In contrast to its Gulf Cooperation Council neighbors, Bahrain has a primarily service-based economy, with the financial sector providing more than 20 percent of GDP. It hosts a diverse group of financial institutions, including 152 banks, 38 money changers and money brokers, and several other investment institutions, including 88 insurance companies. The greatest risk of money laundering stems from illicit proceeds of foreign origin that transit the country. The vast network of Bahrain’s banking system, along with its geographical location in the Middle East as a transit point along the Gulf and into Southwest Asia, may attract money laundering activities. Bahrain does not have a significant black market for smuggled goods or known linkages to drug trafficking.

Khalifa bin Salman Port, Bahrain's major port, provides a free transit zone to facilitate the duty-free import of equipment and machinery. Another free zone is located in the North Sitra Industrial Estate. Raw materials intended for processing in Bahrain, and machinery imported by Bahraini-owned firms, are also exempt from duty; the imported goods may be stored duty-free. These free zones are not a significant source for money laundering or terrorist financing. The informal and non-bank financial sectors are regulated and investigated similarly to the formal sector.

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, investment houses, insurance firms, money exchangers, brokers/dealers, real estate brokers, gold dealers, financial intermediaries, and attorneys

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 317: January 1 - August 31, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, investment houses, insurance firms, money exchangers, brokers/dealers, real estate brokers, gold dealers, car dealers, financial intermediaries, attorneys, auction houses & galleries

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Bahrain is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/Linkcounter.asp?rid=656&attached=MutualEvaluationReportOfBahrain.pdf

Enforcement and implementation issues and comments:

There is an over-reliance on STR reporting to initiate money laundering investigations. As a result, there has been a consistent lack of money laundering prosecutions and convictions. Financial crimes investigations and linking predicate offenses to laundering money should be more of a priority for Bahrain law enforcement.

Awareness within the capital markets and designated non-financial businesses and professions regarding STR reporting obligations is inconsistent. Tipping off is not prohibited and should be criminalized. According to authorities, the informal and non-bank financial sectors are regulated and investigated. Cash transaction reporting is not separated from STR reporting requirements. There is little awareness of trade based money laundering. The Government of Bahrain should strengthen the implementation of its anti-money laundering/counter-terrorist financing regime.

Bangladesh

While Bangladesh is not a regional financial center, its geographic location—including its seaports and long porous borders with India and Burma—makes it a transshipment point for drugs produced in both the “golden triangle” of Southeast Asia and “golden crescent” of Central Asia. In addition to drug trafficking, corruption, fraud, counterfeit money, and trafficking in persons are the principle sources of illicit proceeds. Bangladesh is also vulnerable to terrorist financing, including funding that flows through the hawala/hundi system and by cash courier. The Bangladesh-based terrorist organization Jamaat ul-Mujahideen Bangladesh has publicly claimed to receive funding from Saudi Arabia. Additionally, the banking sector’s general lack of oversight and controls enhances the potential that banks within the country could be used to finance terrorism. Furthermore, money may stream into the country to support other illegal activity.

The Bangladeshi economy relies heavily on remittances, with remittances through official channels reaching over $13.4 billion in 2012. According to the Central Bank, a larger share of remittances is now transmitted through the formal sector although there remains widespread use of the underground and illegal hawala/hundi alternative remittance system. Black market money exchanges remain popular because of the non-convertibility of the local currency and scrutiny of foreign currency transactions made through official channels. Alternative remittance systems are also used to avoid taxes and customs duties. Additional terrorism financing vulnerabilities exist, especially concerning the use of non-governmental organizations (NGOs), charities, counterfeiting, and loosely-regulated private banks.
 

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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, finance and investment companies, leasing companies, insurance companies, money changers, money remittance or transfer companies, stock dealers and brokers, portfolio managers, merchant banks, securities custodians, asset managers, non-profit organizations and NGOs
 

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 175: July 1, 2011 – June 30, 2012

Number of CTRs received and time frame: 3,546, 991: July 1, 2011 – June 30, 2012

STR covered entities: Banks, finance and investment companies, leasing companies, insurance companies, money changers, money remittance or transfer companies, stock dealers and brokers, portfolio managers, merchant banks, securities custodians, asset managers, non-profit organizations and NGOs, dealers of precious metals and stones, trust companies, lawyers, and accountants

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Bangladesh 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/Bangladesh%20ME2%20-%20final120809.pdf

Enforcement and implementation issues and comments:

In 2012, the Government of Bangladesh (GOB) took steps to improve its anti-money laundering/counter-terrorist financing (AML/CFT) legal framework. These efforts include the enactment of amendments to its AML legislation in February 2012, and the issuance of AML/CFT guidance to the capital markets. The AML amendments expand the predicate offenses for money laundering and the categories of reporting entities. However, serious deficiencies persist, including failure to: adequately criminalize terrorist financing, specifically with respect to individuals who engage in such activity; establish and implement adequate procedures to identify and freeze terrorist assets; ensure a fully operational and effectively functioning financial intelligence unit (FIU) with adequate resources to fully perform its functions; and improve international co-operation.

Implementation of existing laws remains a significant issue. The GOB should continue its work on legislative amendments as well as implementing mechanisms, and should continue to improve investigation, prosecution, supervision, and enforcement capacity. While the country recovered approximately $1.6 million in proceeds in November, the low number of money laundering convictions is not commensurate with the size of Bangladesh’s economy or its threat profile. Investigators and prosecutors prefer to pursue relatively straightforward crimes while failing to scrutinize the more complex, and potentially more serious, crimes. The GOB should improve its capacity to investigate financial crimes of greater sophistication. The GOB should build the capacity of its law enforcement and prosecutorial services and enhance training of investigators so they better understand the connections among corruption, money laundering, and related crimes. Finally, the GOB also should emphasize the importance of human intervention and analysis in terrorist financing cases, as the varied profiles of these cases may not trigger an automated report.

Criminal investigators and Bangladesh customs should systematically examine trade-based money laundering and value transfer. Not only will combating customs fraud provide needed revenue, but international trade is frequently used in Bangladesh and the surrounding region to provide counter-valuation or a method of settling accounts between hawala/hundi brokers.

The GOB should address weaknesses in the transaction monitoring systems and ensure reporting entities fully implement appropriate due diligence procedures, to include both computerized tracking systems and active engagement by trained frontline personnel. It should require enhanced due diligence for domestic politically exposed persons (PEPs).

While the GOB amended its legislation to prohibit “tipping off” and to provide a safe harbor for financial institutions and their employees who report suspicious activity to the GOB in good faith, it must ensure that financial institutions are compliant with these new laws, especially given how pervasive corruption and bribery are in Bangladesh. Bangladesh should issue clear guidance to the capital market on its AML/CFT obligations, including STR reporting. Additionally, Bangladesh should continue its efforts to gain membership in the Egmont Group of FIUs.

Barbados

Barbados is a regional financial center with a large international business company (IBC) presence. The country’s vulnerability to money laundering is primarily associated with the domestic sale of illegal narcotics and the laundering of criminal proceeds. Some evidence suggests that proceeds from illicit activities abroad are laundered through domestic financial institutions. There is no evidence of public corruption or the offshore financial sector contributing to money laundering activity.

Per 2011 reporting, there are nine commercial banks and holding companies, 13 trusts and merchant banks, and 45 international banks licensed by the Central Bank of Barbados. There are no clear statistics available on the IBC sector, although promotional material suggests there are over 4,000 IBCs. The Central Bank of Barbados estimates the offshore sector is a $32 billion industry. IBCs are subject to enhanced due diligence requirements for license applications and renewals, and are audited if total assets exceed $500,000. Bearer shares are not permitted. Observers have concerns with information sharing restrictions and the effectiveness of supervision.

There are no free trade zones and no domestic or offshore casinos.

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

Are legal persons covered: criminally: YES civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, securities and insurance brokers and companies, money exchanges or remitters, and financial management firms; lawyers, real estate brokers, high-value goods dealers and accountants; investment services or any other financial services; credit unions; building, restricted liability, and friendly societies; offshore banks; IBCs and foreign sales corporations; mutual funds and fund administrators and managers; and international trusts

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 214 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Commercial and offshore banks and credit unions; money transmission services, investment services or any other financial services; credit unions; building, restricted and friendly societies; offshore banks; IBCs and foreign sales corporations; mutual funds and fund administrators and managers; international trusts; real estate agents; dealers in precious metals and precious stones; lawyers, trust and company service providers; insurance companies, accountants, and finance companies

money laundering criminal Prosecutions/convictions:

Prosecutions: 3 in 2012

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Barbados is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=353&Itemid=418&lang=en

Enforcement and implementation issues and comments:

There is a Double Taxation Treaty with the United States and a specific agreement between Barbados and the United States for the exchange of information with reference to taxes.

The Government of Barbados (GOB) should be more aggressive in conducting examinations of the financial sector and maintaining strict control over vetting and licensing of offshore entities. The GOB should devote sufficient resources to ensure the financial intelligence unit (FIU), law enforcement, supervisory agencies, and prosecutorial authorities are properly staffed and have the capacity to perform their duties. Supervision of nonprofit organizations, charities, designated non-financial businesses and professions, and money transfer services should be strengthened, as should information sharing among regulatory and enforcement agencies. Finally, to further enhance its legal framework against money laundering, Barbados should move expeditiously to become party to the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

Belarus

Belarus is not a major financial center, and its financial sector generally lacks sufficient transparency and accountability. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. Due to high taxes and an intricate taxation system that encourage off-book cash transactions, underground markets, and the dollarization and eurozation of the economy, a significant volume of foreign currency cash transactions eludes the banking system. Belarus has concluded several large natural resource concessions without a tender and public scrutiny. The concentration of power in the hands of the Presidency and the lack of a system of checks and balances among the various branches of government are the greatest hindrances to the rule of law and transparency of governance. Economic decision-making in Belarus is highly concentrated within the top levels of government and, ultimately, in the presidency. Financial institutions have little autonomy.

Illicit proceeds and assets are sometimes laundered in Belarus through fake contracts primarily between Russian and Belarusian businesses for the supply of various products; deposits of illicit funds into operating accounts of businesses in the form of authorized capital contributions; the sale of illicitly acquired assets through retail networks; and the transfer of assets to balance sheets of front companies.

There are many casinos, especially in the capital, Minsk, and foreign ownership is allowed. It is not clear what regulation occurs in the sector but it may be a significant vulnerability for money laundering. Belarus has up to a million workers abroad and it is unclear how their remittances end up back in the country.

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

Are 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 and non-bank financial credit institutions; professional operators of the securities market; persons engaged in exchange transactions, including commodity exchanges; insurance firms and insurance brokers; postal service operators; and property leasing firms

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks and non-bank financial credit institutions; professional operators of the securities market; persons engaged in exchange transactions, including commodity exchanges; insurance firms and insurance brokers; postal service operators; and property leasing firms

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

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

Enforcement and implementation issues and comments:

The 2006 advisory to U.S. financial institutions alerting them to potential money laundering threats involving Belarusian government senior regime elements (including senior executives in state-owned enterprises) seeking to move misappropriated Belarusian state assets as well as proceeds from illicit arms sales to or through the U.S. financial system, either acting individually or through government agencies and associated front companies, remains in effect. In 2006, the U.S. also imposed targeted financial sanctions on Belarusian government senior regime elements. In 2004, Infobank, Minsk (renamed PJSC Trustbank) was designated as being of primary money laundering concern under Section 311 of the USA PATRIOT Act. In May 2012, the U.S. Treasury also identified Belarus-based JSC CredexBank (renamed JSC InterPayBank) as a financial institution of primary money laundering concern under the same section of the above Act.

In 2007, the United States imposed sanctions on the state petrochemical conglomerate, Belneftekhim. On August 11, 2011 the United States imposed additional, new economic sanctions against four major Belarusian state-owned enterprises that were determined to be owned or controlled by the Belneftekhim conglomerate.

On December 19th, 2011, the European Union Council implemented Regulation (EU) No 1320/2011 relating to the asset-freezing measures directed by the Council of the European Union in respect of Belarus.

On January 3, 2012, the Belarus Democracy and Human Rights Act of 2011 was signed into law. The new package of sanctions expands the list of Belarusian officials and law enforcement representatives subject to visa bans and financial restrictions. In August 2012, the U.S. extended limitations on trade with Belarus under the International Emergency Economic Powers Act (IEEPA). In 2006, Belarus was put on the list of countries with which the U.S. has only limited trade relations under IEEPA for the reason of deconstructing democratic institutions.

In 2012, the Government of Belarus (GOB) took steps to improve its legal and regulatory framework to fight money laundering and terrorist financing. In October, Belarus amended the Criminal Code to significantly expand its Articles on Terrorism and International Terrorism. In December, Belarus ratified the Agreement between the Customs Union (CU) members (Russia, Belarus, Kazakhstan) on their AML/CFT cooperation in money and monetary instruments transfers through the CU border. In April, Belarus’ Ministry of Taxes and Duties replaced the Ministry of Sport and Tourism as the chief controlling and inspecting agency over organizers of legal gambling, and drafted and cleared regulations for internal control in such businesses. While Belarus has made progress in several areas, serious deficiencies remain, and in many instances, implementation falls below international standards. Enforcement problems are often caused by inadequate training, staffing and funding of the relevant agencies, as well as poor national and international cooperation.

The GOB should take serious steps to combat corruption in commerce and government. The GOB also should take steps to ensure the AML/CFT framework operates more objectively and less as a political tool.

Belgium

Belgium’s banking industry is medium sized, with assets of over $1.5 trillion in 2012. Illicit funds primarily derive from serious forms of financial crime, including tax crime and drug trafficking proceeds. Authorities note that criminals are increasing their use of money mules, remittance transactions and shell companies; they rely primarily upon non-financial sectors, in particular lawyers, real estate entities and nonprofit organizations, whose under-reporting raises questions. The Belgian diamond industry also has been used to launder money. Approximately 80 percent of the world’s rough diamonds and 50 percent of polished diamonds pass through Belgium. In 2011, the Financial Information Processing Unit (CTIF), Belgium’s financial intelligence unit, estimated the total theoretical amount of ‘dirty’ money in Belgium at $3 billion, or almost 1 percent of the country’s GDP.

According to CTIF, most of the criminal proceeds laundered in Belgium are derived from foreign criminal activity. Belgium generally has very little public corruption that contributes to money laundering and none known related to terrorist financing. According to the 2011 CTIF annual report, contraband smuggling represents 10.1 percent of all cases, while terrorist financing represents only 1.6 percent.

Casinos are licensed, and the total number of casinos is limited to nine; eight licenses have been issued. There appears to be steady growth in Internet gaming.

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

Are 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, estate agents, private security firms, funds transporters, diamond merchants, notaries, auditors, accountants, tax advisors, surveyors, lawyers and casinos

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 20,001 in 2011

Number of CTRs received and time frame: 5,541 in 2011

STR covered entities: Banks, estate agents, private security firms, funds transporters, diamond merchants, notaries, auditors, accountants, tax advisors, surveyors, lawyers and casinos

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

Belgium is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/countries/a-c/belgium/

Enforcement and implementation issues and comments:

Belgium permits bearer shares for individuals, banks, and companies. The Government of Belgium should take steps to immobilize these shares.

In 2012, Belgian authorities continued timely freezing of suspicious transactions due to cooperation among the different operational levels of law enforcement authorities. They scrutinize the purchase of properties by non-profit organizations with religious goals, since most of these transactions occur through cash deposited into the accounts of these organizations.

Belgian authorities recognize the importance and challenges to law enforcement of the diamond industry, as well as the potential vulnerabilities it presents to the financial sector. Authorities have transmitted a number of cases relating to diamonds to the public prosecutor.

Only a quarter of the approximately 3,000 phone shops in Belgium are formally licensed. Police raids on these shops have uncovered evidence of money laundering operations. Authorities report challenges for officials trying to collect tax revenue and detect money laundering operations because phone shops often declare bankruptcy and later reopen under new management.

Belize

While Belize is not a major regional financial center, it is an offshore financial center. In an attempt to diversify Belize’s economic activities, the Government of Belize (GOB) encouraged the growth of offshore financial activities that are vulnerable to money laundering, including offshore banks, insurance companies, trust service providers, mutual fund companies, and international business companies. The Belizean dollar is pegged to the U.S. dollar, and Belizean banks continue to offer financial and corporate services to nonresidents in its offshore financial sector. Additionally, some money laundering is believed to be related to proceeds from U.S. residents participating in unlawful Internet gaming.

Belizean officials suspect there is money laundering activity in their two free trade zones known as Commercial Free Zones or CFZs. The largest, the Corozal Commercial Free Zone, is located on the border with Mexico, and the smaller one, the Benque Viejo Free Zone, recently started operating on the western border with Guatemala. The Corozal Free Zone was designed to attract Mexicans for duty free shopping, and Belizean authorities believe it is heavily involved in trade-based money laundering and the illicit importation of duty free products.

As Belize is a transshipment point for marijuana and cocaine, there are strong indications that money laundering proceeds are increasingly related to local drug trafficking organizations and organized criminal groups involved in the trafficking of illegal narcotics, psychotropic substances, and chemical precursors.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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: Domestic and offshore banks; venture risk capital; money brokers, exchanges, and transmission services; moneylenders and pawnshops; insurance; real estate; credit unions; building societies; trust and safekeeping services; casinos; motor vehicle dealers; jewelers; international financial service providers; attorneys; notaries public; accountants and auditors

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 82: January 1 - November 8, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Domestic and offshore banks; venture risk capital; money brokers, exchanges, and transmission services; moneylenders and pawnshops; insurance; real estate; credit unions; building societies; trust and safekeeping services; casinos; motor vehicle dealers; jewelers; international financial service providers; attorneys; notaries public; accountants and auditors

money laundering criminal Prosecutions/convictions:

Prosecutions: 14: January 2009 - September 2012

Convictions: 11: January 2009 - September 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Belize is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=352&Itemid=418&lang=en

Enforcement and implementation issues and comments:

The August 2012 “Domestic Banks and Financial Institution Act” strengthens internal anti-money laundering (AML) controls. The Act improves provisions to govern domestic banks and financial institutions by strengthening the supervisory powers and regulatory independence of the Central Bank, addressing deficiencies and vulnerabilities in the domestic banking sector, and providing for the appointment of a statutory license administrator, where appropriate, to protect the interests of depositors, creditors and shareholders. While the Act enhances the Central Bank’s control of domestic banks and financial institutions, the GOB should determine how the act can be used to strengthen money laundering investigations and prosecutions.

The GOB should provide additional resources to effectively enforce AML regulations. The responsibility for enforcement and implementation of all financially-related regulations as well as international sanctions lists, domestic tax evasion, and all money laundering investigations lies with the financial intelligence unit (FIU). There is limited assistance from other law enforcement agencies, governmental departments, and regulatory bodies. The FIU has a broad mandate and a small staff, and does not have sufficient training or experience in identifying, investigating, reviewing, and analyzing evidence in money laundering cases. Prosecutors and judges should receive additional training on financial crimes, including money laundering, to increase prosecutions. The FIU currently contracts outside attorneys for prosecutions.

The Prime Minister and other government officials have made public statements supportive of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s 2012 designations of Belizeans, and all local banks comply and prohibit business with the designated entities.

In August 2012, Belize successfully convicted three people in a case involving Moneygram’s local owners and employees laundering money gained through an Internet gaming website. Three individuals were convicted on money laundering charges in November 2012. This is Belize’s first significant money laundering conviction.

The GOB should increase monitoring and control of the offshore financial sector and CFZs. It is widely believed there is illicit financial activity in both sectors, although no one has been charged with a financial crime. Belize should require the CFZs to be reporting entities.

Belize also should become a party to the UN Convention against Corruption.

Benin

Benin is not a financial center. It is a regional re-export hub, particularly for trafficked vehicles. A large percentage of the motor fuels sold in Benin is informally imported from Nigeria. There is also significant informal trade in consumer goods with Nigeria. There is no indication the informal markets are funded through narcotics proceeds. Internet and other fraud schemes are common. Benin is a transit point for cocaine and heroin moving from Latin America, Pakistan, and Afghanistan into Europe. Human trafficking and corruption also are concerns. While some money laundering may occur through Benin’s banking system, Government of Benin (GOB) officials believe money laundering is undertaken primarily through the purchase of assets, such as real estate; shipment of used vehicles for resale; and front companies. Free trade zones are permitted but none have been developed to date.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 44 in 2011

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2011

Convictions: 0 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Benin is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/reports/mutual-evaluation/Benin.html

Enforcement and implementation issues and comments:

The GOB has taken specific steps to construct an anti-money laundering/counter-terrorist financing (AML/CFT) regime; however, it suffers from poor information sharing and cooperation among government agencies and departments. Additionally, Benin’s law enforcement is hindered by a lack of financial crimes expertise. There is little data to reliably measure progress in combating money laundering.

Benin does not have specific legislation criminalizing terrorist financing, but individuals found guilty of such crimes may be charged under the country’s penal code.

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

In 2011, Benin was involved in a massive, international scheme in which Lebanese financial institutions, including a bank and two exchange houses linked to Hezbollah, used the U.S. financial system to launder narcotics trafficking and other criminal proceeds through West Africa and back into Lebanon. As part of the scheme, funds were wired from Lebanon to the United States to buy used cars, which were then transported to Benin. Cash from the sale of the cars, along with proceeds of narcotics trafficking, were then funneled to Lebanon through Hezbollah-controlled money laundering channels, including bulk cash smuggling routes to and from Benin. Substantial portions of the cash were paid to Hezbollah, which the U.S. Department of State has designated as a Foreign Terrorist Organization.

Bermuda

Bermuda, a British Overseas Territory, is a major offshore financial center. It is the third largest reinsurance center in the world and the second largest captive insurance domicile. Bermuda is not considered a major drug transit country. To the extent money laundering occurs in Bermuda, it is believed to be principally related to the domestic drug trade. Money laundering proceeds are controlled primarily by domestic gangs, which have proliferated in recent years.

There is no significant black market for smuggled goods in Bermuda. There is no known money laundering/terrorist financing (ML/TF) activity through free trade zones, or money or other value transfer services in Bermuda. However, there have been cases where domestic criminals have utilized the formal financial sector for money laundering purposes. Bermuda does not permit offshore banks. A foreign bank may establish a subsidiary as a Bermuda company with its own board of directors, but it may not establish a branch. Bermuda does not permit bearer shares, nor does it permit shell companies. Sports betting is legal, but online betting and casinos are not permitted.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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, trustees, securities brokers and financial management firms, long-term insurance companies, money service businesses, insurance managers and brokers, fund administrators, investment fund operators, and independent legal advisers and accountants who are members of the Bermuda Bar Association and the Institute of Chartered Accountants of Bermuda

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 310: January 1 – October 30, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: All persons must report any suspicion of money laundering that comes to their attention in the course of their ‘trade, profession, business or employment’

money laundering criminal Prosecutions/convictions:

Prosecutions: 3: January 1 – October 31, 2012

Convictions: 2: January 1 – October 31, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Bermuda is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=351&Itemid=418&lang=en

Enforcement and implementation issues and comments:

On July 13, 2012, Bermuda enacted the Criminal Justice (International Co-operation) (Bermuda) Amendment Act 2012 to effect the February 2012 Treaty between the Government of the United States of America and the Government of Bermuda (GOB) relating to Mutual Legal Assistance in Criminal Matters. The U.S. Department of Justice assisted Bermuda with a mutual legal assistance request resulting in a conviction under the Act.

The GOB works closely with international partners, including U.S. law enforcement agencies. In June 2012, a joint Bermuda Police Service (BPS) - Department of Homeland Security (DHS) - Drug Enforcement Agency investigation led to a conviction in a case involving the importation of drugs and ammunition valued at $10 million. In September 2012, the BPS assisted the Federal Bureau of Investigation in an ongoing case involving use of a Bermudian finance company to deposit approximately $300 million in Ponzi scheme funds between 1990 and 2008. Also in September 2012, three persons were convicted of importing $1,000,000 of drugs in a BPS investigation supported by DHS. The Bermuda Monetary Authority also cooperated with the U.S. Securities and Exchange Commission in 2012.

There were two successful money laundering prosecutions in 2012. In March, a defendant was sentenced to five years in prison and forfeiture of $100,000 cash for laundering more than $63,000 between 2007 and 2010. His co-conspirator received a sentence of four months. In May, a jury convicted a couple of money laundering and other crimes committed from 2005 to 2008, and sentenced them to eight-year and six-year jail terms. The couple was ordered to repay the stolen $526,834.

Effective August 15, 2012, attorneys and accountants who are members of the Bermuda Bar Association and the Institute of Chartered Accountants of Bermuda, respectively, became subject to anti-money laundering/counter-terrorist financing (AML/CFT) regulations. During 2012, significant additional enforcement powers were added to the regulatory acts covering insurance, banking, trusts, and investment businesses, including the capacity to use those powers in relation to AML/CFT compliance issues. The 2012 amendments to the Revenue Act 1898 significantly enhance customs’ powers to search goods and persons for cash in customs areas, or outside customs areas in cases of pursuit; on board any vessel or aircraft; or under a magistrate’s warrant.

As a British Overseas Territory, Bermuda cannot sign or ratify international conventions. Instead, the United Kingdom, which is responsible for Bermuda’s international affairs, may arrange to extend the ratification of any convention to Bermuda. The 1988 Drug Convention was extended to Bermuda in 1995. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime have not yet been extended to Bermuda. Through domestic regulation, in 2012 Bermuda instituted international sanctions against Iran, Sudan, South Sudan, Afghanistan, Syria and al-Qaida, in addition to those already in place against Libya, Tunisia, Egypt, Syria and Belarus.

Bolivia

Bolivia is not a regional financial center but remains vulnerable to money laundering. Illicit financial activities are related primarily to cocaine trafficking, but include corruption, tax evasion, smuggling, and trafficking in persons. Criminal proceeds laundered in Bolivia are derived from smuggling contraband and from the foreign and domestic drug trade.

There is a significant market for smuggled goods in Bolivia. Chile is the primary entry point for illicit products, which are then sold domestically or informally exported to Brazil and Argentina. An estimated 70% of Bolivia’s economy is informal, with proceeds entering the formal market through the financial system. There is no indication the illicit financial activity is linked to terrorist financing, though lack of proper safeguards creates a vulnerability to such activity.

Much of the informal economy occurs in non-regulated commercial markets where many products can be bought and sold outside of the formalized tax system. Public corruption is common in these commercial markets and money laundering activity is likely.

The Bolivian financial system is moderately dollarized, with some 31% of deposits and 24% of loans distributed in U.S. dollars rather than Bolivianos, the national currency. Bolivia has 13 free trade zones for commercial and industrial use located in El Alto, Cochabamba, Santa Cruz, Oruro, Puerto Aguirre, Desaguadero and Cobija. Casinos (hard gaming) are illegal in Bolivia. Soft gaming (e.g., bingo) is regulated; however, many operations have questionable licenses.

Bolivia is included in the October 2012 Financial Action Task Force (FATF) Public Statement because it has not made sufficient progress in implementing its action plan and continues to have certain strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies, including inadequacies in its criminalization of both money laundering and terrorist financing.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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, micro-financial institutions, insurance companies, exchange houses, remittance companies, securities brokers, money transporter companies and financial intermediaries

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, micro-financial institutions, insurance companies, exchange houses, remittance companies, securities brokers, money transporter companies and financial intermediaries

money laundering criminal Prosecutions/convictions:

Prosecutions: 70: January through October 2012

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: Not available

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

Enforcement and implementation issues and comments:

In December 2008, the Egmont Group of Financial Intelligence Units (FIU) expelled Bolivia’s Financial Investigation Unit (UIF), Bolivia’s FIU, and continues to bar the UIF from participating in Egmont Group meetings or using the Egmont Secure Web, the primary means of information exchange among Egmont Group member FIUs. To regain Egmont membership, Bolivia must reapply and provide written evidence of compliance with Egmont definitions and requirements. A continued lack of personnel in the UIF, combined with inadequate resources and weaknesses in Bolivia’s basic legal and regulatory framework, limits the UIF’s reach and effectiveness. Given the UIF’s limited resources relative to the size of Bolivia’s financial sector, compliance with reporting requirements is extremely low. The exchange of information between the UIF and appropriate police investigative entities is also limited, although the UIF does maintain a database of suspect persons that financial entities must check before conducting business with clients.

Cash transporters, informal exchange houses, and wire transfer businesses are not subject to anti-money laundering controls. Non-registered currency exchanges are illegal.

The September 2011 legislation criminalizing terrorist financing is not sufficiently broad to meet international standards. According to the law, all terrorist activity must be connected to a group, and “terrorism” is narrowly defined. The financing of an individual terrorist would be covered only if he/she also takes part in such a group. Additionally, the Government of Bolivia (GOB) should demonstrate that procedures for freezing assets can be completed in a timely manner, and the freeze can be maintained indefinitely.

While Bolivia does not have a mutual legal assistance treaty with the United States, various multilateral conventions to which both countries are signatories are used for requesting mutual legal assistance.

The GOB should address the AML/CFT legislative deficiencies and extend its laws to the widest range of predicate offenses.

Bosnia and Herzegovina

Bosnia and Herzegovina (BIH) is primarily a cash-based economy and it is not an international or regional financial center. Most money laundering activities in BIH are for the purpose of evading taxes. A lesser amount involves concealing the proceeds of illegal activities including trafficking, illicit drugs, organized crime, and corruption.

With porous borders and weak enforcement capabilities, BIH is a significant market and transit point for smuggled commodities including cigarettes, illicit drugs, firearms, counterfeit goods, lumber and fuel oils. Bulk cash couriers are also used by organized criminal elements and potential terrorist financiers. There is no indication BIH law enforcement has taken action to strongly combat the trade-based money laundering likely to be occurring in the country. Corruption is endemic, affecting all levels of the economy and society.

There are four active free trade zones in BIH, with production based mainly on automobiles, forestry and wood products, and textiles. There have been no reports that these areas are used in trade-based money laundering. The Ministry of Foreign Trade and Economic Relations is responsible for monitoring free trade zone activities.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 212,893: September 2011 - September 2012

Number of CTRs received and time frame: 132,871: September 2011 - September 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1: September 2011 - September 2012

Convictions: 1: September 2011 - September 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

BIH’s political structure and ethnic politics hinder the effectiveness of its anti-money laundering/counter-terrorist financing regime. Coordination of financial law enforcement among the multiple jurisdictional levels in BIH -- the State, the two entities (the Federation of Bosnia and Herzegovina and the Republika Srpska), and Brcko District – is improving, but should be improved further.

Criminal codes and criminal procedure codes from the State, the two entities, and Brcko District were enacted and harmonized in 2003, but further harmonization is necessary. Since the State does not have the resources to investigate all money laundering violations, the respective criminal codes complement one another. The jurisdictions, however, maintain separate bank supervision and enforcement/regulatory bodies. Although BIH has an overarching law providing a framework for implementing UNSC measures, in some cases, it lacks appropriate implementing regulations.

BIH law requires customs officials and the Indirect Tax Administration (ITA) to report to the Financial Intelligence Department (FID) all cross-border transportation of cash and securities in excess of KM 10,000 (approximately $6,900). However, due to weak enforcement and corruption, large amounts of currency leave and enter the country undetected. In addition, the ITA has no State level authority to seize currency upon discovery of a false declaration or suspicion of illegal activity. Although the Government of BIH (GOBIH) recognizes the threat of money laundering posed by bulk cash couriers, enforcement problems continue to exist. The government should remedy these shortcomings.

Officially, the FID has access to other government entities’ records, and formal mechanisms for interagency information sharing are in place. In practice, however, the FID has only indirect access to the full range of databases required to perform proper analysis. Interagency cooperation has improved but the GOBIH should continue to strengthen institutions with responsibilities for money laundering prevention.

Although the Council of Ministers passed amendments to the Law on Prevention of Money Laundering and Terrorist Financing, the State Parliament rejected the legislation in October 2011. In October 2012, a working group revised the draft legislation. The draft law recommends keeping a law enforcement model financial intelligence unit, increases the ability to monitor domestic PEPs, and clarifies and enhances the ability to disseminate information to domestic law enforcement agencies. It has been submitted to the Council of Ministers for further consideration. The GOBIH should pass these amendments.

Although prosecutors, police, and tax officials have received training on tax evasion, money laundering, and other financial crimes, the GOBIH should enhance the capacity to understand diverse methodologies, and aggressively pursue investigations. BIH authorities should undertake efforts to understand trade-based money laundering and alternative remittance systems and their role in money laundering.

BIH law enforcement and customs authorities should take additional steps to control the integrity of the borders and limit smuggling. The GOBIH should take specific steps to completely implement its anti-corruption strategy and to combat corruption at all levels of commerce and government. The GOBIH also must adopt a comprehensive asset forfeiture law that implements a formal mechanism for the administration of seized assets, and should enact implementing legislation for the international conventions to which it is a party.

Botswana

Botswana is not a regional financial center, though its role as the world’s largest diamond producer offers opportunities for money laundering and illicit finance. The stringent institutional framework for the mining and processing of diamonds affords little opportunity for organized diamond smuggling. Smuggling that may occur is not believed to be linked to terrorist finance or the laundering of criminal proceeds. There is no evidence that money laundering, to the extent it occurs, is primarily related to proceeds from drugs. The authorities believe there is a low risk of terrorist activity, though they acknowledge the potential for terrorist financing. Botswana enjoys a low level of corruption compared to other African states.

Botswana is a cash-based society. The presence of organized criminal groups is growing. The growing trade in second-hand car dealerships is an area of concern. In recent years there has been an increase in the amount and frequency of major fraud committed against large organizations, e.g., banks or government departments, typically with the collusion of an employee. It is not known whether the laundering of the proceeds of these crimes takes place in country or involves transport of proceeds across borders. Some observers have noted an increase in the sophistication and level of organization of cross-border crime, but there is no evidence Botswana has developed a robust cross-border trade in illicit proceeds. There are no mechanisms in place to effectively regulate or monitor informal value transfer systems.

The Government of Botswana (GOB) operates the International Financial Service Center (IFSC), an organization authorizing entities to provide financial services. IFSC accredited companies focus on funds management, banking services, international insurance and financial intermediary services. The services must be provided to/for clients outside Botswana and in currencies other than the pula. The supervisory standards applied to domestic entities also are applicable to IFSC entities. Shell companies and anonymous directors and trustees are 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

Are 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, building societies, collective investment undertakings, the Botswana Savings Bank, post offices, registered stockbrokers, issuers/brokers of long-term insurance, foreign exchange traders, and an IFSC certification committee

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 7 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, building societies, collective investment undertakings, the Botswana Savings Bank, post offices, registered stockbrokers, issuers/brokers of long-term insurance, foreign exchange traders, an IFSC certification committee

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Botswana has set up the key fundamentals of an anti-money laundering (AML) regime through various legislative and regulatory instruments. The key components of the institutional framework for AML are in place and the Central Bank has been enforcing compliance with the AML requirements. Botswana has established the Non-Bank Financial Institutions Regulatory Authority which is responsible for AML oversight of non-financial institution entities. However, there is no legal provision in Botswana for an obliged entity, other than a bank, to actually monitor for complex, unusually large transactions, or unusual patterns of transactions with no apparent lawful purpose.

To date, only banks are filing suspicious transaction reports (STRs), and fundamental deficiencies exist relating to customer due diligence guidelines. The number of STRs filed is consistently very low. The GOB has been slow in taking steps to allow the Financial Intelligence Agency, its financial intelligence unit (FIU), to fulfill its mandate; and it is not yet operational. The GOB has yet to amend its legislation to prevent dual submission of STRs to both the Central Bank and the Directorate on Corruption and Economic Crimes (DCEC).

Botswana law enforcement, intelligence, and customs services have little understanding or expertise in recognizing and combating money laundering. Moreover, the small number of financial intelligence reports filed and the lack of AML prosecutions and convictions demonstrate that the AML regime in Botswana is not working effectively. The DCEC is actively investigating an increasing number of corruption cases. The Department of Public Prosecution regularly prosecutes these offenses, including those alleged against politically important persons. The GOB has not enacted legislation that criminalizes terrorism financing. There have been no terrorism related prosecutions.

The GOB should address its anti-money laundering/counter-terrorist financing deficiencies by passing terrorism financing legislation, establishing an operational FIU, and amending both the Arms and Ammunition Act and the Penal Code to address offenses related to money laundering as provided for by the 1988 UN Drug Convention and the UN Convention Against Transnational Organized Crime.

Brazil

Brazil was the world’s sixth largest economy by nominal gross domestic product (GDP) in 2011, and is considered a regional financial center for Latin America. It is also a major drug transit country, as well as one of the world’s largest consumer countries. Money laundering in Brazil is primarily related to domestic crimes, especially drug trafficking, corruption, organized crime, illegal gambling, and trade in various types of contraband. Laundering channels include the use of banks, real estate investment, financial asset markets, luxury goods, remittance networks, informal financial networks, and trade-based money laundering.

Sao Paulo and the Tri-Border Area (TBA) of Brazil, Argentina, and Paraguay are specific areas that possess high-risk factors for money laundering. In addition to weapons and narcotics, a wide variety of counterfeit goods, including CDs, DVDs, and computer software (much of it originating in Asia), are routinely smuggled across the border from Paraguay into Brazil. In addition to Sao Paulo and the TBA, other areas of the country are also of growing concern. The Government of Brazil (GOB) and local officials in the states of Mato Grosso do Sul, and Parana, for example, report increased involvement by Rio de Janeiro and Sao Paulo gangs in the already significant trafficking in weapons and drugs that plagues Brazil’s western border states.

Brazil has four free trade zones/ports (FTZs). The GOB provides tax benefits in certain FTZs, which are located to attract investment to the country’s relatively underdeveloped North and Northeast regions. In October 2011, the President of Brazil signed a constitutional amendment which extends the industrial zone status of Manaus, the most prominent FTZ, for another 50 years.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: NO civilly: NO

Know-your-customer (KYC) rules:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame:

Number of CTRs received and time frame:

1,289,087 STRs/CTRs in 2011 (only combined figures are available)

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

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

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

Enforcement and implementation issues and comments:

The GOB achieved visible results over the last few years from the increased anti-smuggling and law enforcement efforts by state and federal agencies. Brazilian Customs and the Brazilian Tax Authority continue to take effective action to suppress the smuggling of drugs, weapons, and contraband goods along the border with Paraguay. Because of the effective crackdown on the Friendship Bridge connecting Foz do Iguaçu, Brazil, and Ciudad del Este, Paraguay, most smuggling migrated to other sections of the border. The Federal Police Special Maritime Police Units aggressively patrol the maritime border areas.

In June 2012, the GOB passed a new anti-money laundering law. The new legislation provides Brazilian legal authorities with greater latitude in defining and prosecuting money laundering offenses and significantly increases the maximum fine for money laundering crimes. The law also allows assets held by third parties to be seized more easily; however, the 2012 legislation does not criminalize terrorism financing in a manner consistent with international standards and does not provide the GOB with the ability to quickly freeze terrorists’ assets. The GOB should take steps to correct these deficiencies by passing draft legislation that addresses these issues.

Legal persons are not subject to direct civil or administrative liability for committing money laundering offenses. Corporate criminal liability is not possible due to fundamental principles of domestic law. The GOB should enact legislation that imposes criminal and/or civil/administrative penalties for legal persons involved in money laundering/terrorist financing activity.

Some high-priced goods in the TBA are paid for in U.S. dollars, and cross-border bulk cash smuggling is a concern. Large sums of U.S. dollars generated from licit and suspected illicit commercial activity are transported physically from Paraguay into Brazil. From there, the money may make its way to banking centers in the United States. However, the GOB maintains some controls over capital flows and requires disclosure of the ownership of corporations.

Brazil’s Trade Transparency Unit (TTU), operating in partnership with the U.S. Department of Homeland Security, aggressively analyzes, identifies, and investigates companies and individuals involved in trade-based money laundering activities between Brazil and the United States. As a result of the TTU, the GOB has identified millions of dollars of lost revenue. The GOB has generally responded to U.S. efforts to identify and block terrorist-related funds, including U.S. designations related to terrorist financing activity within the country.

British Virgin Islands

The British Virgin Islands (BVI) is a United Kingdom (UK) overseas territory with a population of approximately 22,000. The economy is heavily dependent on tourism and its offshore operations. BVI is a well-established financial center offering accounting, banking and legal services, captive insurance, company incorporations, mutual funds administration, trust formations, and shipping registration. The Financial Services Commission (FSC) is the sole supervisory authority responsible for the licensing and supervision of financial institutions under the relevant statutes. BVI’s unique share structure does not require a statement of authorized capital and the lack of mandatory filing of ownership information poses significant money laundering risks.

Tourism accounts for 45 percent of the economy and employs the majority of the workforce; however, over one-half of government revenues derive from the financial sector. BVI’s proximity to the U.S. Virgin Islands and the use of the U.S. dollar for its currency pose additional risk factors for money laundering. The BVI is a major target for drug traffickers, who use the jurisdiction as a gateway to the United States. Drug trafficking, in general, is a serious problem.

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks; currency exchanges and money remitters; trusts and company service providers; mutual and public fund managers; non-governmental organizations; insurance companies, agents and brokers; dealers in autos, yachts and heavy machinery; dealers in precious metals and stones; lawyers and accountants; real estate agents; casinos; and leasing companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 152 in 2011

Number of CTRs received and time frame: 59: January - June 2012

STR covered entities: Banks; currency exchanges and money remitters; trusts and company service providers; mutual and public fund managers; insurance companies, agents and brokers; non-governmental organizations; dealers in autos, yachts, and heavy machinery; dealers in precious metals and stones; leasing companies; money service businesses; lawyers and accountants; real estate agents; casinos

money laundering criminal Prosecutions/convictions:

Prosecutions: 7 in 2011

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

BVI is a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=327&Itemid=418&lang=en

Enforcement and implementation issues and comments:

In July 2012, The Proceeds of Criminal Conduct (Amended) Act (PCCA), 2012 significantly increased penalties for most money laundering criminal acts. Additionally, the Anti-Money Laundering and Terrorist Financing (AML/TF) Code of Conduct (Amended, 2012) supplements the PCCA and provides risk-based approach guidance to businesses while allowing for stiff administrative penalties for violations. The FSC has increased its staffing in order to meet the recommended inspection and reporting requirements.

While real estate agents, lawyers, other independent legal advisers, accountants, dealers in precious metals and stones, and non-governmental organizations are covered by the AML/CFT regulations, there appears to be no effective mechanism to ensure compliance with AML/CFT requirements. Furthermore, although casinos also are covered, there are no casinos in the BVI at the present time.

As a United Kingdom (UK) Caribbean overseas territory, the BVI cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the BVI’s international affairs and may arrange for the ratification of any convention to be extended to the BVI. The 1988 Drug Convention was extended to the BVI in 1995. The UN Convention against Corruption was extended to the BVI in 2006. The International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime were extended to the BVI on May 17, 2012.

Brunei

Brunei is not a regional financial center. Brunei has a mandatory death penalty for many narcotics offenses and gambling is illegal. Brunei does have a small offshore financial center and its proximity to high crime regions, along with its large foreign worker population and limited anti-money laundering/counter-terrorist financing (AML/CFT) institutional capacity, make it vulnerable to cross-border criminal activity. Domestically, Brunei is a low threat country for money laundering and terrorist financing. Proceeds of crime generally originate in fraud, gambling, the drug trade, and fuel smuggling. There are also concerns about an increase in cybercrime, and in particular, financial fraud such as pyramid schemes and email scams.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

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

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

Enforcement and implementation issues and comments:

While the Government of Brunei (GOB) has made progress in strengthening its AML/CFT regime, certain strategic deficiencies have been identified that the country should urgently seek to remedy. These include criminalizing terrorist financing, establishing and implementing adequate procedures to identify and freeze terrorist assets, and ensuring a fully operational and effectively functioning financial intelligence unit. The GOB should continue to address all of the items in its AML/CFT action plan.

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

While the GOB issued a notice to banks to conduct enhanced due diligence on politically exposed persons (PEPs) in 2011, it is unclear how effective this instruction has been. Authorities should continue

Bulgaria

Bulgaria’s developing financial sector, large underground economy, prevalent use of cash transactions, and lack of effective enforcement combine to make Bulgaria vulnerable to money laundering. Laundered funds are derived primarily from domestic and foreign criminals engaging in human or drug trafficking, smuggling, tax fraud, credit card fraud, and increasingly, internet fraud. Bulgaria is a major transit point for the trafficking of drugs and persons into Western Europe. Contraband continues to generate laundered funds within the Bulgarian financial system, particularly the trade in smuggled cigarettes, alcohol, and fuel. The smuggling of cigarettes is particularly problematic. Public corruption remains a serious problem.

Bulgarian criminals often establish small businesses to hide laundered funds, increasingly in offshore territories. However, due to the adverse effects of the economic crisis, businesses are seeing less profit, making it more difficult to launder money in these venues. In 2012, casinos, night clubs, car dealerships and, to a lesser extent, wholesale traders, were the most common businesses associated with money laundering in Bulgaria. The tourism and gaming industries are considered important venues for money laundering activities by organized crime groups.

Online gaming is regulated by the State Commission for Gambling under the Ministry of Finance. There are six free trade zones in Bulgaria, also supervised by the Ministry of Finance. The goods produced in these zones are exported without duties. Some believe free trade zones are used to avoid paying customs fees, especially on gas derivatives and cigarettes sold within Bulgaria.

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

Are legal persons covered: criminally: NO civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, money exchangers, insurance companies, investment funds, notaries, gambling businesses, securities dealers, real estate brokers, political parties, sport clubs, and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 743: January 1 – July 31, 2012

Number of CTRs received and time frame: 95,887: January 1 – July 31, 2012

STR covered entities: Banks, money exchangers, insurance companies, investment funds, notaries, gaming businesses, securities dealers, real estate brokers, political parties, sport clubs, and accountants

money laundering criminal Prosecutions/convictions:

Prosecutions: 34: January 1 - November 30, 2012

Convictions: 19: January 1 - November 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Bulgaria (GOB) has implemented the 2011 Strategy for Combating Money Laundering and is considering amendments to further strengthen its legal framework, particularly with respect to significant and complex transactions. While the country adopted new non-conviction based asset forfeiture legislation in May, it is still pending implementation.

In July, 2012 Parliament enacted new legislation which specifically regulates the licensing of online casinos and other types of gaming institutions. The law introduces higher requirements for organizers of the institutions and requires all participants in online gaming to register prior to using the sites.

The authorities opt for easy-to-prove, low level corruption and related money laundering cases. As a result, progress on cases of high public interest, such as the public procurement of big energy infrastructure projects involving alleged siphoning of millions in taxpayer money, have not generally been pursued.

Financial crimes enforcement capacity is limited. Aggressive prosecution of money laundering cases is significantly hampered by the lack of financial expertise within law enforcement and the prosecution service and by the limited pool of independent experts contracted to make complex financial analyses with respect to such cases. Other limitations are based on a reluctance of key witnesses to testify against organized criminal groups and lack of incentives to motivate prosecutors to take on such complex cases. While prosecution services are making efforts, for example through the implementation of training programs and the development of manuals and internal guidelines, more should be done.

Although reporting by non-bank institutions, such as gaming entities, investment intermediaries, notaries and leasing companies has increased, it continues to be low. The Financial Intelligence Directorate conducts a quarterly risk analysis, which serves as a basis for scheduling onsite inspections. However, due to staffing constraints, the number of inspections is limited.

There is considerable remittance flow from emigrants working abroad who send money to their families in Bulgaria. While the magnitude of remittances is hard to measure it is believed that most enter the country either in cash or through official channels. For the most part, Bulgarian officials have turned a blind eye to underground remittance systems such as hawala. Yet in one case in April 2012, a Syrian national purportedly affiliated with hawala transfers was arrested and charged with illegal banking activity.

The GOB did not identify, freeze, seize, or forfeit any terror-related assets.

Burkina Faso

Burkina Faso is not a regional financial center. Its economy is primarily cash-based, and most economic activity takes place in the informal sector. Only an estimated six percent of the population has bank accounts. Burkina Faso lacks the resources necessary to protect its borders adequately and to monitor the movement of goods and people. Because the country’s borders tend to be largely unregulated, narcotics trafficking, smuggling, contraband, and black market currency transfers occur within the country and in the surrounding region. Corruption, a lack of resources, and overburdened and weak judicial and law enforcement systems are also major challenges.

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

Are 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: The Public Treasury, Central Bank of West African States (BCEAO), banks and micro-finance organizations, exchange bureaus, independent legal professionals, auditors, real estate agents, funds transporters, owners of casinos and lotteries, travel agencies, non-governmental organizations (NGOs), and agents selling high value goods and precious metals

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 22: January 1 - September 30, 2012

Number of CTRs received and time frame: 0

STR covered entities: The Public Treasury, BCEAO, banks and micro-finance organizations, exchange bureaus, independent legal professionals, auditors, real estate agents, funds transporters, owners of casinos and lotteries, travel agencies, NGOs, and agents selling high value goods and precious metals

money laundering criminal Prosecutions/convictions:

Prosecutions: 10: December1, 2011 - September 30, 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Burkina Faso is a member of the Inter Governmental Action Group Against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/reports/mutual-evaluation/Burkina%20Faso.html

Enforcement and implementation issues and comments:

In 2012, Burkina Faso made notable progress in strengthening its anti-money laundering/combating the financing of terrorism (AML/CFT) regime, including by validating the country’s AML/CFT Strategy and Action Plan, operationalizing its inter-ministerial coordinating committee, and appointing a magistrate to handle AML/CFT-related matters in the Ouagadougou Prosecution Office. CENTIF, Burkina Faso’s financial intelligence unit (FIU), procured computer equipment, recruited three senior officials, organized capacity-building programs for reporting entities, prepared guidelines for the completion of STRs, and began analyzing STRs.

The Government of Burkina Faso (GOBF) continues to cooperate with regional and global counterterrorism efforts. Records exchange with countries outside of the West African Economic and Monetary Union is possible via bilateral agreement. CENTIF is open to exchanging information with counterpart FIUs on a reciprocal basis.

The GOBF should continue its efforts to address the deficiencies in its AML/CFT regime, including by implementing provisions aimed at compelling financial institutions to conduct customer due diligence in line with applicable international standards and putting in place a structure to monitor compliance with UNSCRs 1267 and 1373. The GOBF should increase CENTIF’s resources and analytical staff. There is currently little enforcement and no formal method for tracking the movement of goods or money into or out of the country at either land or air ports of entry. The GOBF should train customs officials to identify smugglers and cash couriers.

Burma

Burma is not a regional or offshore financial center. Its economy is underdeveloped and its historically isolated banking sector has just started taking tentative steps to connect to the international financial system. However, Burma’s prolific drug production, relationship with the North Korean government, the growing use of credit/debit cards connected to international financial institutions and lack of transparency make it attractive for domestic and possibly international money laundering. While its underdeveloped economy remains unattractive as a destination to harbor funds, the low risk of enforcement and prosecution makes it appealing to the criminal underground. Trafficking in persons and public corruption are also major sources of illicit proceeds. Additionally money launderers exploit the illegal trade in wildlife, gems, and timber; and trade-based money laundering is of increasing concern.

Burma continues to be a major source of opium and exporter of heroin, second only to Afghanistan. However, Burma’s level of poppy cultivation is considerably lower than in the peak during the 1980s and 1990s. Burma’s long, porous borders are poorly patrolled. In some remote regions where smuggling is active, ongoing ethnic tensions, and in some cases armed conflict, impede government territorial control. In other areas, political arrangements between traffickers and Burma’s government allow organized crime groups to function with minimal risk of interdiction. The Government of Burma (GOB) considers drug enforcement secondary to security and is willing to allow narcotics trafficking in border areas in exchange for cooperation from ethnic armed groups.

Corruption is endemic in both business and government. State-owned enterprises and military holding companies control a substantial portion of Burma’s resources, although there is a continued push for the privatization of more government assets. China, Japan and the United Arab Emirates have recently provided large amounts of investment which increase corruption and illicit activities. The privatization process provides potential opportunities for graft and money laundering, including by business associates of the former regime and politicians in the current civilian government, some of whom are allegedly connected to drug trafficking. Over the past several years, the GOB has enacted several reforms intended to reduce vulnerability to drug money laundering in the banking sector. However, connections to powerful patrons still outweigh rule of law, and Burma continues to face significant risk of drug money being funneled into commercial ventures. There are at least five casinos that operate, including one in the Kokang special region near China; however, little information is available about the regulation or scale of these institutions.

In July 2012, the United States eased economic sanctions related to new U.S. investments in Burma and the exportation of financial services to Burma. In November 2012, the ban on Burmese imports imposed in 2003 under the Burmese Freedom and Democracy Act and Executive Order 13310 was also eased to a large extent. However, U.S. legislation and Executive Orders that block the assets of members of the former military government and three designated Burmese foreign trade financial institutions, freeze the assets of additional designated individuals responsible for human rights abuses and public corruption, and impose travel restrictions on certain categories of individuals and entities remain in force.

In 2003, the United States also designated Burma as a jurisdiction of primary money laundering concern and imposed countermeasures, pursuant to Section 311 of the USA PATRIOT Act, because of its extremely weak anti-money laundering /counter-terrorist financing (AML/CFT) regime.

In its October 2012 Public Statement, the Financial Action Task Force (FATF) notes that Burma has taken steps to improve its AML/CFT regime, including by removing its reservations to the extradition articles of several international conventions. However, FATF expressed concern that Burma has not made sufficient progress in implementing its action plan and continues to have certain strategic AML/CFT deficiencies. The United States continues to issue advisories to financial institutions, alerting them of the risk posed by Burma’s AML/CFT deficiencies and of the need to conduct enhanced due diligence with respect to financial transactions involving Burma.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: no

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 97: January 1 to October 31, 2012

Number of CTRs received and time frame: 172,559: January 1 to October 31, 2012

STR covered entities: Banks (including bank-operated money changing counters); GOB bodies such as the Customs Department, Internal Revenue Department, Trade Administration Department, Marine Administration Department and Ministry of Mines; state-owned insurance company and small loans enterprise; securities exchange; accountants, auditors, the legal and real estate sectors; and dealers of precious metals and stones

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

Burma is a member of the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found here:

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

Enforcement and implementation issues and comments:

Burma’s financial sector is extremely underdeveloped and most currency is held outside the formal banking system. The informal economy generates few reliable records, and the GOB makes no meaningful efforts to ascertain the amount or source of income or value transfers. Regulation of financial institutions is likewise extremely weak. While some Burmese financial institutions may engage in currency transactions related to international narcotics trafficking that include significant amounts of U.S. currency, the absence of publicly available GOB information precludes confirmation of such conduct. Burmese law does not contain any customer due diligence (CDD) requirements, although the Central Bank (CB) issues guidelines for banks to follow and some entities implement CDD procedures under other, non-AML related legal provisions. The government should draft new KYC/CDD rules and expand the number of organizations required to have such rules.

Burma does not specifically criminalize terrorist financing or designate it as a predicate offense for money laundering, nor is terrorist financing an extraditable offense. Burma should continue implementing its action plan in order to address these and other deficiencies, including by passing the draft Counter Terrorism Law (finalized in October 2012) that will criminalize terrorist financing, establish procedures to identify and freeze terrorist assets, and further strengthen the extradition framework for terrorist financing.

Government workers do not receive a living wage and routinely seek bribes as additional “compensation.” Efforts to address the rampant corruption are impeded by the military’s influence over civilian authorities, including the police, especially at the local level. The GOB should end all policies that facilitate corrupt practices and money laundering, including strengthening regulatory oversight of the formal financial sector and strengthening CDD measures in the 2002 Control of Money Laundering Law. The financial intelligence unit should become a fully funded independent agency that functions without interference, and the GOB should supply adequate resources to administrative and judicial authorities for their enforcement of government regulations. The GOB also should move the CB from under the operational control of the Ministry of Finance and make it an operationally independent entity.

The GOB should become a party to the UN Convention against Corruption.

Burundi

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

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: No

criminalizATION OF money laundering:

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

Are 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: Not available

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 0

Number of CTRs received and time frame: 0

STR covered entities: Not available

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

The Burundi Central Bank supervises and examines financial institutions for compliance with AML/CFT laws and regulations. A law requiring banks to report large deposits or transactions to authorities is not enforced.

There are significant problems that deter effective AML/CFT efforts. Although laws exist, there appears to be little political will to prosecute or commit the resources to investigate crimes, particularly those that could implicate high-level government officials. Burundi is listed 165 out of 176 countries surveyed in Transparency International’s 2012 International Corruption Perception Index. Burundian law enforcement officials lack training and expertise in investigating financial crimes. The GOB should develop an oversight capability and provide sufficient resources, funding, and training to the FIU and the FCU.

On May 24, 2012, the GOB became a party to the United Nations Convention against Transnational Organized Crime. Burundi should become a party to the International Convention for the Suppression of the Financing of Terrorism, and take steps toward becoming a member of an FSRB.

Cambodia

Cambodia is neither a regional nor an offshore financial center. Several factors, however, contribute to Cambodia’s significant money laundering vulnerability. These include Cambodia’s weak and ineffective anti-money laundering regime; cash-based, dollarized economy; fast-growing formal banking sector and active informal banking system; porous borders; loose oversight of casinos; and limited capacity to oversee the fast growing financial and banking industries through the National Bank of Cambodia. A weak judicial system and endemic corruption are additional factors negatively impacting enforcement.

Cambodia has a significant black market for smuggled goods, including drugs and imported substances for local production of methamphetamine. Both licit and illicit transactions, regardless of size, are frequently done outside of formal financial institutions and are difficult to monitor. Cash proceeds from crime are readily channeled into land, housing, luxury goods, and other forms of property without passing through the formal banking sector. Casinos along the borders with Thailand and Vietnam also are another potential avenue to convert ill-gotten cash.

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

Are 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, microfinance institutions, and credit cooperatives; securities brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals and stones; post offices offering payment transactions; lawyers, notaries, accountants, auditors, investment advisors and asset managers; casinos and gambling institutions; NGOs and foundations

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 58: January - October 2012

Number of CTRs received and time frame: 778,408: January - October 2012

STR covered entities: Banks, microfinance institutions, and credit cooperatives; securities brokerage firms and insurance companies; leasing companies; exchange offices/money exchangers; real estate agents; money remittance services; dealers in precious metals, stones and gems; post offices offering payment transactions; lawyers, notaries, accountants, auditors, investment advisors and asset managers; casinos and gambling institutions; NGOs and foundations

money laundering criminal Prosecutions/convictions:

Prosecutions: 0: January - October 2012

Convictions: 0: January - October 2012

Records exchange mechanism:

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

With other governments/jurisdiction: YES

Cambodia is a member of the Asia/Pacific Group on Money Laundering, a Financial Action Task Force-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:

In July, the Government of Cambodia (GOC) signed a memorandum of understanding with the Japan Financial Intelligence Center, formalizing a mechanism for anti-money laundering/counter-terrorist financing (AML/CFT) information sharing.

Cambodia’s AML/CFT law allows authorities to freeze assets relating to money laundering or terrorist financing until courts have decided the case, but the AML/CFT regime lacks a clear system for identifying, seizing, and sharing assets with foreign governments. Furthermore, although Cambodia has the legal ability to identify and freeze terrorist assets, the GOC should establish and implement adequate procedures to perform this function. The GOC should adequately criminalize money laundering and terrorist financing; establish and implement adequate procedures for the confiscation of funds related to money laundering; ensure a fully operational and effectively functioning financial intelligence unit (FIU); and establish and implement effective controls for cross-border cash transactions. Given the high level of corruption, the GOC also should require enhanced due diligence for domestic politically exposed persons (PEPs).

The primary enforcement and implementation issues involve the willingness and ability of commercial bankers to comply with, and law enforcement to enforce, money laundering laws and regulations. The GOC should work to increase the reporting of STRs and increase the capability of the nascent and understaffed FIU. The FIU’s effectiveness is severely limited by the inability of the FIU to receive reports in an electronic format, to store received reports in an electronic database, and to perform systematic analyses on the electronic database. This is compounded by the paucity of reports received from reporting entities, probably due to the lack of credible regulatory enforcement. Effectiveness is further limited by the practice of sending analyses exclusively to Cambodia’s Interpol National Central Bureau rather than directly to relevant law enforcement bodies.

The law on AML/CFT excludes pawn shops from its explicit list of covered entities but does allow the FIU to designate any other profession or institution to be included within the scope of the law. In April 2012, the GOC issued a sub-decree to establish a National Coordination Committee on Anti-Money Laundering and Combating the Financing of Terrorism (NCC), as a permanent and senior-level coordination mechanism for preventing and controlling money laundering and terrorist financing in Cambodia. The NCC has the authority to coordinate with all stakeholders and to make decisions on the prevention and control of money laundering and terrorism financing in Cambodia. The key role of the NCC is to ensure the effective implementation of the AML/CFT law, including the development of national policy and a monitoring system to measure AML/CFT efforts. It is too early to tell what effect this committee will have on the country’s AML deficiencies.

The GOC should work to strengthen control over its porous borders. Cambodia should design and implement effective operational procedures both within affected agencies as well as among agencies, and measure the effectiveness of these procedures on an ongoing basis. It must also provide training to increase the capacity of commercial banks, law enforcement agencies, and regulatory bodies, as well as empower law enforcement and regulators to strictly enforce AML/CFT laws and regulations.

Cameroon

Cameroon’s growing financial sector is the largest in the Economic and Monetary Community of Central African States (CEMAC). Despite numerous banks, insurance companies, micro financial institutions, and a nascent stock exchange, Cameroon is still relatively disconnected from the international financial system. Only a small portion of the population has bank accounts and the majority of financial transactions occur in cash. Many of the financial crimes occurring in Cameroon derive from domestic corruption, tax evasion and embezzlement. In recent years, authorities have begun to suspect offshore transfers in some corruption cases, and the use of real estate to launder money has grown. Cameroon is not a major narcotics destination.

Terrorist activity in neighbouring countries, illicit wildlife trafficking, and maritime piracy present vulnerabilities and their proceeds may facilitate the movement and activities of terrorists and drug trafficking organizations. Instability in neighbouring countries and the use of a common currency have resulted in Cameroon being used as a conduit to move funds from those countries to Europe. Cameroon’s economy is heavily cash dependent. Trade-based money laundering is rampant, utilizing the banking system or microfinance institutions. Cameroon is particularly vulnerable to the abuse of cross-border bulk currency movements and exploitation by/of companies transferring money internationally. Most foreign currency transactions are in euros or dollars.

As a member of CEMAC, Cameroon shares a regional Central Bank, Bank of the States of Central Africa (BEAC), with other member countries. Members have ceded banking regulatory sovereignty to CEMAC.

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

Are 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: The treasuries of CEMAC member states; BEAC; banks and financial institutions; insurance brokers and firms; manual money changers; managers, directors and owners of casinos and gaming establishments; notaries, accountants, auditors, tax advisors, and lawyers; securities or asset managers and brokers; company formation agents and managers; trusts; real estate agents; companies that transport and transfer funds; travel agencies; dealers in high value goods, metals, precious stones, and automobiles; and the Douala Stock Exchange

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 147 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: The treasuries of CEMAC member states; BEAC; banks and financial institutions; insurance brokers and firms; manual money changers; managers, directors and owners of casinos and gaming establishments; notaries, accountants, auditors, tax advisors, and lawyers; securities or asset managers and brokers; company formation agents and managers; trusts; real estate agents; companies that transport and transfer funds; travel agencies; dealers in high value goods, metals, precious stones, and automobiles; and the Douala Stock Exchange

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

Cameroon is a member of the Action Group against Money Laundering in Central Africa (GABAC), an entity in the process of becoming a Financial Action Task Force-style regional body (FSRB). A mutual evaluation for Cameroon has not yet been published.

Enforcement and implementation issues and comments:

The Government of Cameroon (GOC) should continue to work with regional groups and the National Financial Investigations Unit (ANIF), Cameroon’s financial intelligence unit (FIU), to fully develop and implement regulations to establish a complete anti-money laundering/counter-terrorist financing regime that comports with international standards. ANIF has conducted several training sessions during the past two years, including a recent training session for money changers in October 2012, as well as annual working sessions and meetings with banks and microfinance institutions. It also should work to improve coordination with law enforcement and judicial authorities with the objectives of enhancing investigations, obtaining convictions, and tracking law enforcement statistics.

Cameroon’s Ministry of Justice does not keep statistics on prosecutions and convictions for financial crimes. The Ministry of Justice should begin tracking cases more closely and providing closer cooperation with ANIF to improve STR information gathering. The Ministry of Justice should explore training needs for prosecutors and magistrates. The GOC also should continue to work toward implementing cross-border currency reporting requirements and training its agents at points of entry in the identification FSRB.

Canada

Money laundering activities in Canada are primarily a product of illegal drug trafficking and financial crimes, such as credit card and securities fraud. The criminal proceeds laundered in Canada derive primarily from domestic activity which is controlled by drug trafficking organizations and organized crime.

Canada does not have a significant black market for illicit or smuggled goods. Cigarettes are the most commonly smuggled good in the country. There are indications that trade-based money laundering occurs in the jurisdiction. There is no certainty that this activity is tied to terrorist financing activity.

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks and credit unions; life insurance companies, brokers, and agents; securities dealers; casinos; real estate brokers/agents; agents of the Crown; money services businesses; accountants and accounting firms; lawyers; dealers in precious metals and stones; and notaries in Quebec and British Columbia

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 70,392 in 2012

Number of CTRs received and time frame: 35,026 in 2012

STR covered entities: Banks and credit unions; life insurance companies, brokers, and agents; securities dealers; casinos; real estate brokers and agents; agents of the Crown; money services businesses; accountants and accounting firms; dealers in precious metals and stones; and notaries in British Columbia and Quebec

money laundering criminal Prosecutions/convictions:

Prosecutions: 180 in 2011

Convictions: 18 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

http://www.fatf-gafi.org/countries/a-c/canada/documents/mutualevaluationofcanada.html

Enforcement and implementation issues and comments:

Canada has a rigorous detection and monitoring process in place to identify money laundering and terrorist financing activities, but a weak enforcement and conviction capability. A report released in June 2012, by the Canadian Centre for Justice Statistics found that actual suspects were identified in only 20% of reported money laundering cases and convictions were obtained in only one third of those cases. Industry experts cite several reasons for the problem: privacy rules that prevent Canada’s financial intelligence unit, the Financial Transaction Reports Analysis Centre of Canada (FINTRAC), from freely sharing information with law enforcement; complex investigations that can take understaffed police agencies years to finish; and overworked Crown Prosecutors who often plea bargain away difficult money laundering cases, instead prioritizing drug trafficking charges since they are viewed as having a stronger likelihood of conviction.

In Canada, the possession of proceeds of crime is a criminal offense under the Criminal Code which would be considered money laundering. A maximum term of imprisonment of 10 years applies to both money laundering convictions and possession of crime proceeds convictions involving more than $5,000. As such, possession of proceeds of crime is not considered to be a lesser offense and is equally effective in pursuing criminals and forfeiting their illicit assets.

Deficiencies were identified in Canada’s anti-money laundering/counter-terrorist financing (AML/CFT) regime relating to its customer due diligence obligations. The Government of Canada published proposed regulations amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations in October 2012, in order to address those deficiencies. The proposed changes would require reporting entities to better identify customers and understand their business, consequently enabling the reporting entities to identify transactions and activities that are at greater risk for money laundering or terrorist financing. The final regulations will go into effect one year after publication.

Canada should continue its work to strengthen its AML/CFT measures within the casino industry and reduce the length of time needed for FINTRAC to prepare reports used by law enforcement authorities. Canada also should continue to ensure its privacy laws do not excessively prohibit providing information to domestic and foreign law enforcement that might lead to prosecutions and convictions.

Cape Verde

As a small archipelago nation off the west coast of Africa, Cape Verde is not known as a regional financial center. Nevertheless, given its location between Latin America and Africa, its significant coastline, and a large shadow economy, Cape Verde remains vulnerable to money laundering operations and terrorist financing. At present, the vast majority of laundered proceeds come from narcotics trafficking. Because of its location in the Atlantic Ocean, along major trade routes, Cape Verde is an important transit country for narcotics headed for Europe from South America via Africa. Narcotics transit Cape Verde by commercial aircraft and maritime vessels, including yachts.

While smuggling along Cape Verde’s island coastlines remains a concern, there is no significant market for illicit or smuggled goods in Cape Verde. Most drugs are destined for other markets. As a result of drug trafficking, the formal financial sector may be involved in money laundering, but there is no evidence that it finances terrorism. Public corruption is limited and does not appear to contribute to money laundering in Cape Verde.

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

Are 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, accountants and fiscal consultants, notaries, insurance companies, lawyers, real estate or property brokers, dealers in precious metals and stones, gaming centers, auto dealers and securities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 14: January 1 – September 30, 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Cape Verde is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/reports/mutual-evaluation/Cabo%20Verde.html

Enforcement and implementation issues and comments:

Limited resources hamper the government’s ability to enforce anti-money laundering regulations, and local institutions are often unaware of their reporting responsibilities. Both Cape Verdean government officials and international experts have found Cape Verde’s Financial Information Unit (FIU) deficient in terms of its regulatory framework. In 2012 those findings led to Decree-Law No. 9/2012, which extends the powers of the FIU and transfers its physical structure from the Central Bank to the Ministry of Justice. However, the FIU still lacks adequate human and financial resources to effectively implement all its functions, particularly the proper identification and analysis of suspicious transactions. For statistical purposes, CTRs and STRs are not differentiated; a total of 260 reports were received between January 1 and September 30, 2012.

Cape Verde should take steps to criminalize terrorist financing and include suspected terrorist financing activity within its reporting requirements. Cape Verde also should criminalize tipping off and provide for the ability to freeze and seize assets that are the proceeds or instruments of illegal activity.

Cayman Islands

The Cayman Islands, a United Kingdom (UK) Caribbean overseas territory, is an offshore financial center. Most money laundering that occurs in the Cayman Islands is primarily related to fraud and drug trafficking. Due to its status as a zero-tax regime, the Cayman Islands is also considered attractive to those seeking to evade taxes in their home jurisdictions.

The Cayman Islands is home to a well-developed offshore financial center that provides a wide range of services, including banking, structured finance, investment funds, various types of trusts, and company formation and management. As of September 2011, the banking sector had $1.60 trillion in assets. There are more than 92,000 companies licensed or registered in the Cayman Islands. According to the Cayman Islands Monetary Authority, at the end of December 2012, there were 226 banks, 143 active trust licenses, 741 captive insurance companies, six money service businesses, and 10,841 registered mutual funds, of which 408 were administered and 121 were licensed. Shell banks are prohibited, as are anonymous accounts. Bearer shares can only be issued by exempt companies and must be immobilized.

Gambling is illegal; nor does the Cayman Islands permit the registration of offshore gaming entities. There are no free trade zones, and the authorities do not see risks from bulk cash smuggling related to the large number of cruise ships that dock in the jurisdiction.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 406: July 1, 2011 - June 30, 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 6: Time frame unknown

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Cayman Islands is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Cayman_Islands_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

While the Cayman Islands has increased both its regulatory and law enforcement staffing, the number of prosecutions and convictions is extremely low given the vast scale of the country’s financial sector.

Registered agents of private trust companies are obligated to maintain ownership and identity information for all express trusts under their control. International reporting suggests agents for private trust companies and individuals carrying on trust businesses may not consistently maintain identity and ownership information for all express trusts for which they act as trustees. In addition, there remains a lack of penalties for failing to report ownership and identity information, which undermines the effectiveness of identification obligations. There also is a need to pay greater attention to the risks and proper supervision of non-profit organizations.

The regulation of Master Funds (numbering 1,849 as of September 2012) under the Mutual Funds Law (2012 Revision) reduced the estimated number of unregulated funds. There is a fine for not maintaining identity information.

The Cayman Islands continues to develop its network of exchange of information mechanisms. The Cayman Islands has signed additional tax information exchange agreements with Argentina, China, and Guernsey. The Cayman Islands now has a network of 27 information exchange agreements, with 24 of those already in force.

The Cayman Islands is a United Kingdom (UK) Caribbean overseas territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for the Cayman Islands’ international affairs and may arrange for the ratification of any Convention to be extended to the Cayman Islands. The 1988 Drug Convention was extended to the Cayman Islands in 1995, and is implemented through several laws. The UN Convention against Transnational Organized Crime was extended to the Cayman Islands on May 17, 2012. The UN Convention against Corruption has not yet been extended to the Cayman Islands; however, the full implementation platform for the anti-corruption convention exists under current Cayman law. A 2002 request for extension of the International Convention for the Suppression of the Financing of Terrorism to the Cayman Islands has not been finalized by the UK, although the provisions of the Convention also are implemented by domestic laws.

Central African Republic

The Central African Republic (CAR) is not a major financial center and has an extremely limited banking sector. The economy is almost entirely cash-based and enforcement of existing anti-money laundering laws is weak. Widespread corruption permeates commerce and government. There is little information on the extent of the drug trade in CAR or any financial transactions which occur as a result. Given the extremely limited scope of the financial sector, government authorities have expressed confidence in their ability to spot anomalies or significant suspicious banking transactions.

Smuggling of contraband including diamonds and weapons is believed to occur across the unsecured border areas with Chad and Sudan, while undocumented trade across the river with the Democratic Republic of Congo involves primarily domestic or agricultural goods. CAR’s weak security forces have limited presence and lack the ability to prevent cross-border activities.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Public treasuries, banks, microfinance organizations, money exchange and transfer companies, casinos, notaries, real estate and travel agencies, accountants and auditors, and merchants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, microfinance organizations, merchants, public treasuries and money exchanges

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The CAR is a member of the Economic and Monetary Community of Central Africa (CEMAC) and shares a regional bank (BEAC) with other members. In addition to BEAC and CEMAC, CAR adheres to the regulations of the Banking Commission of Central Africa.

Oversight and enforcement of regulations is lax in most areas of governance in the CAR. The CAR lacks the capacity and political will to supervise financial activity and enforce legislation, and the responsibility to do so is ill-defined among the relevant enforcement bodies. The CAR has taken steps to establish a financial intelligence unit, but it is not operational due to lack of funding and staff. Insufficient data and transparency make it difficult to assess the effectiveness of the CAR’s anti-money laundering efforts.

The CAR is ranked 144 out of 176 countries in Transparency International’s 2012 Corruption Perception Index.

Chad

Chad has a small and relatively weak financial services sector. It does not serve as a regional financial center. The banking system is underdeveloped, and the economy is largely cash-based with few transactions passing through formal financial institutions.

Contraband and smuggling vary by region in Chad. Along the southern and western borders, the contraband goods market consists largely of foodstuffs, cigarettes, fuel, and household items smuggled to avoid import duties. Across Chad’s northern desert, which is sparsely populated and transected by Sahelian trade routes, smuggled items include drugs and weapons. Some of these items transit Chad rather than remain in the domestic market.

Chad does not have a significant illegal drug market. There is no indication that smuggling of household goods is financed by proceeds from narcotics or other illegal activities. Illicit proceeds do not appear to enter Chad’s formal financial system. However, there is little quantitative information available on these activities or their financing.

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

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Public treasuries, banks, microfinance organizations, money exchange and transfer companies, casinos, notaries, real estate and travel agencies, accountants and auditors, and merchants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 9: January 1 – August 31, 2012

Number of CTRs received and time frame: 0

STR covered entities: Public treasuries, banks, microfinance organizations, money exchange and transfer companies, casinos, notaries, real estate and travel agencies, accountants and auditors, and merchants

money laundering criminal Prosecutions/convictions:

Prosecutions: 5: January 1 – August 31, 2012

Convictions: 5: January 1 – August 31, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Chad is a member of the Action Group against Money Laundering in Central Africa (GABAC), an entity in the process of becoming a Financial Action Task Force-style regional body.

Enforcement and implementation issues and comments:

Although COBAC engages with financial institutions and is charged with enforcing customer due diligence procedures, Chad’s banking sector is under-regulated. Chad’s National Financial Investigative Agency (ANIF), Chad’s financial intelligence unit, faces serious resource constraints, and law enforcement and customs officials need training in financial crimes enforcement. Financial intelligence reporting and analysis is limited. Chad does not have cross-border currency reporting. Chad agreed to assist in one U.S. investigation in 2012.

Chad was ranked 165 out of 176 countries in Transparency International’s 2012 Corruption Perception Index. Chad should become a party to the UN Convention against Corruption.

Chile

Chile has a large and well developed banking and financial sector with an established anti-money laundering/counter-terrorist financing (AML/CFT) regime. Systematic vulnerabilities in Chile’s regime include stringent bank secrecy laws and relatively new regulatory institutions in which oversight gaps remain. Increased trade and currency flows, combined with an expanding economy, could attract illicit financial activity and money laundering. Limited incidences of public corruption demonstrate no significant link to money laundering or terrorist financing.

Given Chile’s extensive trading partnerships and long borders, its largely unregulated free trade zones are additional vulnerabilities. While in the past there appeared to be no significant market for illicit or smuggled goods in Chile, there have been recent seizures of counterfeit goods in Iquique and Valparaiso by Chilean Customs officials.

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

DO FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: NO

criminalizATION OF money laundering:

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

Are 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, credit unions, pension funds, mutual fund administrators, securities brokers and dealers, leasing and factoring companies, credit card issuers and operators, insurance brokers and companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 854: January 1 - September 30, 2012

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 251: January 1 - September 30, 2012

Convictions: 47: January 1 - November 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Chile 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/documentos/eng/evaluaciones_mutuas/Chile_3ra_Ronda_2010.pdf

Enforcement and implementation issues and comments:

The Government of Chile’s (GOC) anti-money laundering efforts continue to mature. Despite increased activity, however, the most significant obstacle to money laundering investigations in Chile continues to be bank secrecy. Article 154 of the General Banking Law places all types of bank deposits and obligations under bank secrecy, and only allows banking institutions to share information about such transactions with the depositor or creditor (or an authorized legal representative). Law 707 states that banks may not share information about the movement and balances in a current account with a third party. Due to these legal restrictions, banks do not share information with prosecutors without a judicial order. Some banks and their compliance officers aggressively apply rigorous, international AML/CFT standards, but they are restricted to simply reporting suspicious activity. STR reporting applies only to checking, not savings, accounts. Other banks are slow to reply to court orders to provide prosecutors with additional information. Judges can detain the bank’s general manager until all information is disclosed, but this tool is rarely used. In instances when a judge has issued an order for the general manager’s detention, bank information was provided immediately. Tax authorities are allowed access to bank information without a judicial order under certain circumstances.

Furthermore, contraband, intellectual property rights violations, and income tax evasion are not considered criminal offenses. Therefore, these illegal activities cannot be used as predicate offenses in money laundering investigations. These omissions can impose limitations in the prosecution of financial crimes.

The GOC should continue to improve its AML/CFT regime by establishing regulatory control over non-bank institutions, such as money exchange houses and charities. Additionally, the GOC should pass the draft law currently pending in the Senate to allow for the lifting of bank secrecy and the freezing of terrorist assets to bring Chile closer to compliance with its UNSCR 1267 and 1373 obligations. Additionally, the GOC should amend its anti-money laundering legislation to cover all predicate offenses noted in the international standard.

China, People’s Republic of

The development of China’s financial sector has required increased enforcement efforts to keep pace with the sophistication and reach of criminal and terrorist networks. The primary sources of criminal proceeds are corruption, narcotics and human trafficking, smuggling, economic crimes, intellectual property theft, counterfeit goods, crimes against property, and tax evasion. Criminal proceeds are generally laundered via methods that include: bulk cash smuggling; trade-based money laundering; manipulating the invoices for services and the shipment of goods; the purchase of valuable assets such as real estate; the investment of illicit funds in lawful sectors; gambling; and the exploitation of the formal and underground financial systems, in addition to third-party payment systems.

Most money laundering cases currently under investigation involve funds obtained from corruption, fraud, drug smuggling, and bribery. Chinese officials have noted that corruption in China often involves state-owned enterprises, including those in the financial sector.

While Chinese authorities continue to investigate cases involving traditional money laundering schemes, they have also identified the adoption of new money laundering methods, including illegal fund raising activity, cross-border telecommunications fraud, and corruption in the banking, securities, and transportation sectors. Chinese authorities have also observed that money laundering crimes are spreading from the developed coastal areas such as Guangdong and Fujian provinces to underdeveloped, inland regions.

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

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: YES

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks and credit unions, securities dealers, insurance and trust companies; financial leasing and auto finance companies; and currency brokers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 61,852,018 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, securities and futures institutions, and insurance companies

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: 11,380 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

China is a member of the Financial Action Task Force (FATF), as well as the Asia/Pacific Group on Money Laundering (APG) and the Eurasian Group on Combating Money Laundering and Terrorist Financing (EAG), both of which are FATF-style regional bodies. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/33/11/39148196.pdf

Enforcement and implementation issues and comments:

While China’s October 2011 legislation has addressed some deficiencies in the implementation of the requirements of UNSCRs 1267 and 1373, some deficiencies remain to be addressed. These include guidance for designated non-financial businesses and professions; delisting and unfreezing procedures; and the rights of bona fide third parties in seizure/confiscation actions.

The Government of China (GOC) has strengthened its preventative measures, with an emphasis on requiring financial institutions to collect and maintain beneficial ownership information, and to make the STR reporting regime more comprehensive. China should enhance coordination among its financial regulators and law enforcement bodies to better investigate and prosecute offenders. China’s Ministry of Public Security should continue ongoing efforts to develop a better understanding of how anti-money laundering/counter-terrorist financing (AML/CFT) tools can be used to support the investigation and prosecution of a wide range of criminal activity.

The GOC should ensure all courts are aware of and uniformly implement the mandatory confiscation laws. In domestic cases, once an investigation is opened, all law enforcement entities and the Public Prosecutors are authorized to take provisional measures to seize or freeze property in question in order to preserve the availability of the same for later confiscation upon conviction. At present, although China’s courts are required by law to systematically confiscate criminal proceeds, enforcement is inconsistent and no legislation authorizes seizure/confiscation of assets of equivalent value. Confiscation is conviction based, while civil forfeiture is unavailable.

The United States and China are parties to the Agreement on Mutual Legal Assistance in Criminal Matters. U.S. law enforcement agencies note the GOC has not cooperated sufficiently on financial investigations and does not provide adequate responses to requests for financial investigation information. In addition to the lack of law enforcement-based cooperation, the GOC’s inability to enforce U.S. court orders or judgments obtained as a result of non-conviction based forfeiture actions against China-based assets remains a significant barrier to enhanced U.S. - China cooperation in asset freezing and confiscation. Such unwillingness and failure to provide seizure and forfeiture assistance increases the likelihood of the U.S. resorting to unilateral measures in cases where criminal forfeiture has been unavailable as no known defendants can be identified or returned to the U.S. for prosecution, thereby making civil forfeiture the only viable means to recover the criminal proceeds located in China.

The GOC should expand cooperation with counterparts in the United States and other countries, and pursue international AML/CFT linkages more aggressively. U.S. agencies consistently seek to expand cooperation with Chinese counterparts on AML/CFT matters and to strengthen both policy and operational level cooperation in this critical area. While China continues to make significant improvements to its AML/CFT legal and regulatory framework and is gradually making progress toward meeting international standards, implementation remains lacking, particularly in the context of international cooperation.

Colombia

The Government of Colombia (GOC) has a forceful anti-money laundering/counter-terrorist financing (AML/CFT) regime. However, the laundering of money from Colombia’s illicit cocaine and heroin trade continues to penetrate its economy and affect its financial institutions. Laundered funds are derived from commercial smuggling for tax and import duty evasion; kidnapping; arms trafficking; and terrorism connected to violent, illegally-armed groups (known as bandas criminales or BACRIM) and U.S. government-designated terrorist organizations, like the Revolutionary Armed Forces of Colombia (FARC) and the National Liberation Army (ELN), operating locally and regionally. Official corruption and the growth of illegal mining have also aided money laundering and terrorist financing in geographic areas controlled by both the FARC and the BACRIM. It is reported that drug and money laundering groups have influenced high-level bank officials, especially in the stock brokerage market, in order to circumvent both established AML controls and government regulations. Colombian money brokers, primarily concentrated in Bogota, but also in Medellin and Cali, are additional actors that facilitate money laundering activities.

Smuggled merchandise remains a source for money laundered through the financial system. It occurs via trade and the non-bank financial system and is visible through Colombian criminal organizations with connections to financial institutions in Mexico, China, Ecuador, Peru, Panama, and Venezuela. This trend grew exponentially in recent years. In the black market peso exchange (BMPE), goods are bought with drug dollars from abroad, often Mexico. Many of the goods are either smuggled into Colombia via Panama or brought directly into Colombia’s customs warehouses, thus avoiding various taxes, tariffs, and customs duties. In other trade-based money laundering schemes, goods are over- or under-invoiced to transfer value. According to experienced BMPE industry workers, evasion of the normal customs charges is frequently facilitated through corruption of Colombian oversight authorities.

Casinos, the postal money order market, bulk cash smuggling, wire transfers, remittances, the securities markets in the U.S. and Colombia, electronic currency, prepaid debit cards, and illegal mining all are being utilized to repatriate illicit proceeds to Colombia. The trade of counterfeit items in violation of intellectual property rights is an ever increasing method to launder illicit proceeds.

Free trade zones (FTZs) in Colombia present opportunities for criminals to take advantage of inadequate regulation and transparency. Colombia’s FTZ law opens investment to international companies, allows one-company or stand-alone FTZs, and permits the designation of pre-existing plants as FTZs. As of October 2012, there are 104 FTZs in Colombia. Companies within FTZs enjoy a series of benefits such as a preferential corporate income tax rate and exemption from customs duties and value-added taxes on imported materials. The Ministry of Commerce administers requests for establishing FTZs, but the government does not participate in their operation.

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: yes

criminalizATION OF money laundering:

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

Are 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, stock exchanges and brokers, mutual funds, investment funds, export and import intermediaries (customs brokers), credit unions, wire remitters, money exchange houses, public agencies, notaries, casinos, lottery operators, car dealers, gold dealers, foreign currency traders, sports clubs, cargo transport operators, and postal order remitters

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 4,842: January through August 2012

Number of CTRs received and time frame: 7,943,732: January through August 2012

STR covered entities: Banks, securities broker/dealers, trust companies, pension funds, savings and credit cooperatives, depository and lending institutions, lotteries and casinos, vehicle dealers, currency dealers, importers/exporters and international gold traders

money laundering criminal Prosecutions/convictions:

Prosecutions: 97 in 2012

Convictions: 80 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Colombia is a member of the Financial Action Task Force 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/InformedeEvaluacinMutuaRepblicadeColombia_1.pdf

Enforcement and implementation issues and comments:

The President takes a hard line on corruption and demonstrates a serious intent to punish corrupt officials at all levels. The President also has directed the Colombian National Police to assign more resources to illegal mining activities throughout Colombia.

The Government of Colombia (GOC) continues to make progress in the development of its financial intelligence unit (FIU), regulatory framework, and interagency cooperation within the government. Placing greater focus and priority on money laundering and terrorist financing investigations, including increasing resources and training, is necessary to ensure continued and improved progress. Congestion in the court system, procedural impediments in the asset forfeiture prosecutions, and corruption remain problems that should be addressed. While the GOC still should take steps to foster better interagency cooperation, including improved case coordination between the Unidad Aministrativa Especial de Información Análisis Financiero (UIAF), Colombia’s FIU, and the Colombian National Police’s specialized judicial police units, Colombia stands out as a regional leader in the fight against money laundering and terrorist financing and is a key part of a Regional FIU Initiative.

The DIAN, Colombia’s Tax and Customs Authority, regulates activities and materials in FTZs, and there are identification requirements for companies and individuals who enter or work in the FTZs. The current administration is revising the FTZ and tax exemption scheme.

The Government of Colombia tried to pass a law in 2012 that would allow money to be transferred electronically through cell phones. After over two months in Congress, and due in part to a procedural misstep in April 2012, the e-money law did not pass to a vote. In general, banks were concerned with the proposal, which lacked sufficient controls and an enhanced regulatory framework to avoid potential problems.

In September 2012, the Ministry of Foreign Affairs, the Fiscalia General, and the Treasury Ministry’s Financial Superintendency and UIAF signed an interagency memorandum of understanding (MOU) to allow for coordination and implementation of the Colombian government’s authority to block assets of individuals and entities on the UN 1267 and UN 1373 Sanctions Committees’ consolidated lists and to freeze the funds of designated terrorists, terrorist financiers, and terrorist groups. The MOU gives legal authority to the Fiscalia to implement the necessary seizure orders against the assets of individuals and entities on the UN 1267 Sanctions Committee’s consolidated list and provides administrative authorities to the Ministry of Foreign Affairs, the Financial Superintendency, and UIAF to provide the relevant UN orders and supporting information to the Fiscalia to assist it to locate and freeze any identified assets in Colombia.

The GOC should put in place streamlined procedures for the liquidation and sale of seized assets under state management and should revise procedures to permit expedited forfeiture of seized assets. An average seven- to ten-year time frame for forfeiture opens opportunities for waste, fraud, and abuse while limiting the deterrent effect that could result from rapid forfeiture. Colombian prosecutors should take steps to not only seize the physical assets (real property) of narcotics traffickers but also seize their Colombian bank accounts. This element is frequently not a part of regular Colombian asset seizure operations. In addition, the GOC should increase the number of judges and related administrative support resources that oversee asset forfeiture and money laundering cases to expedite the judicial process. The GOC is currently working on a revision of its asset forfeiture law. Key steps to the new streamlined approach include one expedited personal notification about forfeiture (at present, notifications can take up to six months or two years), the ability to notify and seize at the same time, and elimination of the appellate hierarchy that currently allows three opportunities to appeal. An important component will be a provision to allow Colombian courts to enforce asset forfeiture judgments of foreign courts without needing to resort to the current lengthy process. This law is slated to reach Congress during its next session in February 2013.



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