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


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

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Comoros

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

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

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

criminalizATION OF money laundering:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Comoros remains a significantly underdeveloped country with little financial intermediation or sophistication. Comoros has introduced a number of measures to establish an anti-money laundering/combating the financing of terrorism (AML/CFT) regime, including Parliament’s adoption of a new AML/CFT bill in June 2012.

Comoran efforts to enforce AML/CFT regulations are hampered by insufficient resources and training, lack of capacity in government ministries, corruption, and a weak judiciary. Comoran government security forces have limited resources and lack AML/CFT training. There have been no investigations or convictions for money laundering or terrorist financing.

While the law on economic citizenship permits citizenship to those who have been convicted of money laundering or drug trafficking, among other crimes, authorities state they have implemented strict control measures intended to prevent abuses.

Comoros is ranked 133 out of 176 countries in Transparency International’s 2012 International Corruption Perception Index. On October 11, 2012, Comoros became a party to the UN Convention against Corruption.

Congo, Democratic Republic of

The Democratic Republic of Congo (DRC) is not considered an important regional financial center, but its porous borders and weak law enforcement capability make it an important money laundering conduit. Due to its large geographic size, lack of a functional judicial system, and dominant informal sector, the DRC is particularly vulnerable to money laundering. The DRC covers nearly a million square kilometers (400,000 sq. mi) and has 7,000 km of porous borders with nine countries. State authority and administration are weak because of the country’s vast geographic territory and dilapidated infrastructure, among other challenges. Most economic activity in the DRC takes place in the informal sector, estimated to be up to ten times the size of the formal sector, with most transactions, even those of legitimate businesses, carried out in cash. The accurate reporting of revenues is thus very difficult.

Inefficient and burdensome customs and tax policies and chronically low public sector salaries encourage a climate of bribery and clandestine transactions, especially in import/export activities and mineral sales. Customs and tax fraud, tax evasion, misappropriation of public funds, the sale of prohibited products and services, and illegal exploitation of minerals and other valuable materials are common. Casinos and smuggling of gold, diamonds, and weapons also are important sources of untracked money. Gold and diamonds are extensively mined in and routinely smuggled out of the DRC, and most of those cash transactions take place in dollars. The DRC’s economy remains highly dollarized, and its parallel foreign exchange market is large and tolerated by the government. There is a preponderance of currency in all financial transactions. The DRC does not have any free ports or areas designated as free trade zones.

The DRC is subject to UN, U.S., and European Union sanctions, including an arms embargo, and travel bans and asset freeze orders against members of militia and rebel groups.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 157 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: Congolese Central Bank, banks, credit institutions, money transfer institutions, financial companies, microfinance institutions, money exchangers, insurance companies, leasing companies, financial intermediaries, postal checking systems, transferable securities and stock exchange market operations, gaming companies, notaries, independent legal advisors, real estate agencies, funds conveyors, travel agencies, auditors, accountants, tax consultants, sellers of works of art, antiques and precious stones

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Banks and non-banking financial institutions are required to report all transactions over $10,000 to CENAREF, the DRC’s financial intelligence unit. CENAREF is responsible for collecting and analyzing information on money laundering (ML) and terrorist financing (TF) cases. CENAREF also investigates persons accused of ML and TF, conducts periodic studies on these subjects and advises the Government of the Democratic Republic of the Congo (GDRC) on how to combat ML and TF. In 2012, CENAREF expressed interest in signing a memorandum of understanding with U.S. Treasury’s FinCEN to increase bilateral cooperation.

Limited resources hamper the GDRC’s ability to enforce anti-money laundering (AML) regulations, and local institutions and personnel lack training and capacity to fully enforce the law and its attendant regulations. Lack of funding continues to prevent CENAREF from fully carrying out its responsibilities. A weak judicial system also impedes enforcement of AML regulations. There is a strong perception that CENAREF is not empowered to investigate businesses and transactions if the investigations might adversely impact the economic interests of high-level Congolese officials and ruling elites. The DRC is ranked 160 out of 176 countries surveyed in Transparency International’s 2012 Corruption Perception Index.

The GDRC should pursue membership in a FSRB.

Congo, Republic of

The Republic of the Congo (ROC) is not a major regional financial center nor is it a major narcotics destination or source country. The port city of Pointe Noire is frequently utilized as a transit point for narcotics moving north to Europe. Most financial crimes involve domestic corruption and embezzlement. The Bank of Central African States (BEAC), a regional Central Bank serving six Central African countries, serves as the central bank for the ROC. BEAC conducts the Economic Intervention Service which harmonizes the regulation of currency exchanges in the member states of the Central African Economic and Monetary Community (CEMAC). The BEAC supervises the ROC’s banking system, though evidence shows not particularly closely. The nontransparent banking system is one of the country’s fastest-growing industries. Anti-money laundering/counter-terrorist financing (AML/CFT) supervision, regulation, and enforcement are weak and have not kept up with the rapidly expanding public and private financial activities in the country. The capital city of Brazzaville lies directly across the Congo River from the Democratic Republic of the Congo’s capital Kinshasa, where U.S. currency is common. The ease and frequency of river crossings contribute to widespread smuggling. The ROC’s economy is heavily cash dependent, relying very little on electronic transfers and checks. Laundering money through investment in real estate is reportedly a growing 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.: NO

criminalizATION OF money laundering:

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

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

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, notaries, thrifts, and

money remitters, jewelry shops, card dealers, casinos, and law firms

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The ROC is a member of the Central African Action Group against Money Laundering (GABAC), an entity in the process of becoming a Financial Action Task Force-style regional body. The ROC has not had a mutual evaluation.

Enforcement and implementation issues and comments:

As a member of the CEMAC, the Government of the Republic of the Congo (GOC) adopted the community’s regional AML/CFT framework. These rules establish penalties for money laundering and terrorist financing, and also regulate the operations of banks, money changers, and casinos. The GOC does not offer public AML/CFT reports and statistics. Congolese law does allow information sharing with foreign counterparts on a reciprocal basis, and the Congolese are willing to cooperate on international law enforcement matters.

The National Financial Investigation Agency (ANIF), which reports directly to the Presidency, is a special committee to handle both corruption and money laundering issues. Suspicious transaction reports (STRs) are reported directly to a special commission at the BEAC, which under the current system then forwards reports to ANIF. It is not clear whether this occurs consistently.

Despite improvement in recent years, transparency and corruption remain significant problems in the ROC. For example, during 2010, the ROC was discovered to have diverted reserves required to be deposited in the BEAC to several Chinese bank accounts. The International Monetary Fund discovered the illegal fund transfer and called for a repatriation of these funds to the BEAC. The ROC complied in mid-2011, but evidence suggests that additional diversions have since occurred. Several ROC officials are former well-placed BEAC officials, and there are concerns that the embezzlement scandals at the BEAC between 2004 and 2008 involved current ROC officials. The ROC is ranked 144 of 176 countries on Transparency International’s 2012 Corruption Perception Index.

The GOC has established an AML/CFT regime but its institutions are staffed with poorly-trained or corrupt officials, or are not given sufficient enforcement authority. This is particularly worrisome as the ROC has recorded record oil profits for several consecutive years. Embezzlement and other illicit financial activities will undoubtedly become more complex and clandestine.

The GOC should take steps to decrease corruption and increase the capacity of investigators and ANIF staff. The GOC also should enact legislation to ensure all STRs are sent to ANIF and that reporting, investigation and prosecution statistics are published regularly. The GOC should become a party to the UN Convention against Transnational Organized Crime.

Cook Islands

The Cook Islands is not a regional financial center and has no free trade zones. The Cook Islands substantial offshore financial sector is an important part of the country’s economy but also represents its most significant vulnerability to money laundering and terrorist financing activities. The Government of the Cook Islands (GOCI) has taken steps to reduce the risks presented by both the offshore sector and its small domestic financial sector.

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

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 (domestic and offshore), offshore insurers, and trustee companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 47 in 2012

Number of CTRs received and time frame: 2,226 in 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

On October 17, 2011, The Cook Islands became a party to the UN Convention against Corruption.

Costa Rica

Proceeds from international cocaine trafficking represent the most significant source of assets laundered in Costa Rica. The Costa Rican-based internet gaming industry also launders millions of dollars in illicit proceeds through Costa Rica and offshore centers annually. Proceeds from domestic criminal activities, including narcotics trafficking, financial frauds, human trafficking, corruption and contraband smuggling, are also laundered in Costa Rica. The Government of Costa Rica (GOCR) reports that Costa Rica is primarily used by foreign organizations as a bridge to send funds to and from other jurisdictions using bulk cash shipments and companies or financial institutions located offshore.

Criminal organizations utilize financial institutions, licensed and unlicensed money remitters, and the free trade zones (FTZs) to launder the proceeds of their illicit activities. The money services businesses are a significant risk for money laundering and a potential mechanism for terrorist financing. The smuggling of bulk currency across borders with Panama and Nicaragua is also prevalent. Trade-based money laundering, while used, is not detected with the same frequency as the above typologies. There is no recent investigation related to terrorism 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.: YES

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: YES

KYC covered entities: Banks, savings and loan cooperatives, pension funds, insurance companies and intermediaries, money exchangers, and money remitters; securities broker/dealers, credit issuers, sellers or redeemers of travelers checks and postal money orders; trust administrators and financial intermediaries; asset managers, real estate developers and agents; manufacturers, sellers and distributors of weapons; art, jewelry and precious metals dealers; sellers of new and used vehicles; casinos, virtual casinos, and electronic or other gaming entities; lawyers and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 186: January 1 – November 19, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, savings and loan cooperatives, pension funds, insurance companies and intermediaries, money exchangers, and money remitters; securities broker/dealers, credit issuers, sellers or redeemers of travelers checks and postal money orders; trust administrators and financial intermediaries; asset managers, real estate developers and agents; manufacturers, sellers and distributors of weapons; art, jewelry and precious metals dealers; sellers of new and used vehicles; casinos, virtual casinos, and electronic or other gaming entities; lawyers and accountants

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: 3: January 1 – November 19, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Costa Rica is a member of the Financial Action Task Force on Money Laundering in South America (GAFISUD), a Financial Action Task Force-style regional body.

Its most recent mutual evaluation can be found here: http://www.gafisud.info/eng-evaluaciones.php

Enforcement and implementation issues and comments:

The GOCR made substantial progress enhancing its anti-money laundering (AML) regime through modifications to the legal and regulatory frameworks. Additional AML regulations for financial institutions and designated non-financial businesses and professions (DNFBPs) were implemented in 2012. Moreover, Costa Rica enacted a law to facilitate greater fiscal transparency through the international exchange of tax information.

However, various obstacles still exist that prevent the GOCR from effectively investigating and prosecuting money laundering crimes. Underutilized investigative tools, such as cooperating witnesses, confidential informants, electronic surveillance, and undercover operations reduce the ability of investigators to pursue these investigations. Costa Rica enacted a non-conviction based asset forfeiture law in 2009. However, the GOCR has not successfully pursued a case under this law, and it will likely need to be reformed. Costa Rican law does not contemplate the sharing of forfeited assets with other countries.

Pursuant to an interpretation of Costa Rican law, money laundering cannot be charged as an additional offense to the predicate crime (e.g., a drug dealer who is convicted on drug charges cannot also be prosecuted for laundering the drug proceeds). This practice diminishes the independent nature of the offense and greatly reduces the amount of potential money laundering prosecutions. In addition, criminal liability does not extend to legal persons.

The unregulated online gaming and casino industries pose significant risks for money laundering. The legislature rejected proposed provisions to create a regulatory body when it passed a recent gaming bill. It is difficult for the GOCR to verify the source of funds used for local real estate purchases on behalf of foreign buyers.

Cote d’Ivoire

Following a civil war and a nine-year political/military crisis during which the country was effectively split in two, a new government was formed on May 6, 2011. Ivoirian authorities remain concerned about illegal international transfers of funds by the elite of the previous regime during the prolonged crisis. In November 2011, former President Laurent Gbagbo was extradited to the International Criminal Court in The Hague, where he awaits confirmation of charges of crimes against humanity. The current Government of Cote d’Ivoire (GOCI) has since demonstrated its desire to make progress on its anti-money laundering/counter-terrorist financing (AML/CFT) regime.

A legacy of poor governance in combination with the civil war resulted in weak government systems that face serious challenges in implementing and enforcing the rule of law. Ivoirians continue to be involved in regional criminal activities such as the smuggling of consumer goods and agricultural products, reportedly as part of networks organized by nationals of Nigeria and the Democratic Republic of the Congo, and in the subsequent laundering of illicit funds. Smuggling over Cote d’Ivoire’s porous borders, motivated principally by a desire to avoid taxes, generates illicit funds that are primarily laundered via informal value transfer systems, such as money services businesses and exchange houses. In addition, Ivoirian authorities believe criminal enterprises use the formal banking system and the used car and real estate industries to launder funds. Hezbollah is present in Cote d’Ivoire and conducts fundraising activities, mostly among the large Lebanese expatriate community in the country. The potential use of Ivoirian territory as a transshipment point for drugs from South America to Europe concerns law enforcement 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: 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, post offices, deposit and consignment offices, microfinance institutions, chartered manual exchangers, insurance and reinsurance companies and brokers, regional stock exchanges, the Central Depository of Holder Instruments/Bank of International Settlements, management and brokerage firms, asset management companies, undertakings for collective investment in transferable securities, and fixed capital investment companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 51 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, exchange houses, stock brokerage firms, post offices, deposit and consignment offices, microfinance institutions, insurance and reinsurance companies and brokers, regional stock exchanges, the Central Depository of Holder Instruments/Bank of International Settlements, management and brokerage firms, asset management companies, undertakings for collective investment in transferable securities, fixed capital investment companies, the Public Treasury, the Central Bank of West African States, business contributors to financial institutions, auditors, dealers in high value items, cash couriers, casinos, the national lottery, non-governmental organizations, travel agencies, attorneys, and real estate agents

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Cote d’Ivoire 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/Cote%20d'Ivoire.html

Enforcement and implementation issues and comments:

The GOCI has established an inter-ministerial committee to ensure AML/CFT cooperation and coordination at the national level and has adopted the uniform community laws criminalizing money laundering and terrorist financing in the West African Economic and Monetary Union (WAEMU). However, the domestication of the WAEMU community laws remains incomplete, as the Appendix to Cote d’Ivoire’s AML law relating to specific obligations of financial institutions regarding customers’ financial operations has yet to be formally adopted. Terrorism, insider trading, and the manipulation of financial markets are not covered as predicate offenses under Cote d’Ivoire’s AML law, and the structures necessary to implement UNSCRs 1267 and 1373 are either insufficient or entirely absent.

Cote d’Ivoire’s banking sector caters largely to commercial enterprises rather than small account holders. Many Ivoirians use informal cash couriers, money transfer organizations, hawaladars, and, increasingly, goods transportation companies to transfer funds domestically and within the region. There is no regulation of domestic money and value transfer services. Cote d’Ivoire’s financial intelligence unit (FIU), the National Financial Information Processing Unit, can share information with other FIUs in the WAEMU, as well as with those of non-WAEMU countries on a reciprocal basis and with the permission of the Ministry of Economy and Finance.

The economic police are responsible for investigating financial and white collar crimes but have limited operations as a result of inadequate resources and a lack of presence throughout the country as a legacy of the civil war. Since the end of the crisis, the government has reestablished civilian authority throughout much of the country, but judicial and security capacity remains weak and allegations of corruption persist. Cote d’Ivoire is ranked 130 of 176 countries on Transparency International’s 2012 Corruption Perception Index.

Cote d’Ivoire remains under sanctions imposed by the United Nations Security Council stemming from the civil war and political/military crisis period. The sanctions include an arms embargo and a ban on the importation of rough diamonds from Cote d’Ivoire. The GOCI is working towards ensuring compliance, with the hope of sanctions being lifted in 2013. The country has also made progress in meeting the certification requirements of the Kimberly Process and has completed major financial and economic reforms.

On October 25, 2012, the GOCI ratified the United Nations Convention against Transnational Organized Crime and the United Nations Convention against Corruption.

While Cote d’Ivoire has made significant progress, the GOCI should continue to strengthen its rule of law institutions, including its AML/CFT legal framework, and its law enforcement and judicial capacities. Specifically, the GOCI should amend its AML law to cover all predicate offenses to money laundering included in the international standards, institute adequate requirements and structures for the implementation of UNSCRs 1267 and 1373, and provide guidance and/or training to reporting entities and judges, such that financial crimes may be more easily and consistently detected, prosecuted, and punished.

Croatia

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

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

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

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

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

Knowyour-customer (KYC) rules:

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

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

REPORTING REQUIREMENTS:

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

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

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 5: January - June 2011

Convictions: 0: January - June 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

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

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

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

Cuba

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

Cuba’s geographic location between drug-supplying and drug-consuming countries presents challenges for the authorities. Cuba has little foreign investment and a small international business presence, and no offshore casinos or internet gaming sites. There are no free trade zones, although the Government of Cuba (GOC) has announced it may develop one as part of the expansion of the Mariel Port in northwestern Cuba.

A majority of remittances from the United States reach Cuba via physical transport by relatives, friends or even informal couriers, rather than through formal channels, such as bank transfers and Western Union. These funds are traded for Cuban pesos at government foreign exchange houses, as most dollar transactions are forbidden. Western Union disburses Cuban Convertible Pesos (CUC) to recipients on the island, saving customers the 10% fee for cash exchanges into CUC from dollars. This process, coupled with new regulations on remittances, likely has increased remittance flows well above the often-stated figure of $2 billion.

The Financial Action Task Force (FATF) included Cuba in its October 19, 2012 Public Statement, citing Cuba’s strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies and stating Cuba had not engaged with the FATF. Since then, Cuba has significantly enhanced its engagement and co-operation with the FATF.

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: YES

Know-your-customer (KYC) rules:

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

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

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 and remitters, financial management firms

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: Not available

In December 2012 Cuba became a member of the Financial Action Task Force on Money Laundering in South America (GAFISUD), a FATF-style regional body. It has not yet been subject to a mutual evaluation.

Enforcement and implementation issues and comments:

With the exception of formally joining the GAFISUD, there were no significant changes in the GOC’s AML/CFT policies or regulations in 2012. Cuba does not identify money laundering as a major problem, thus, regulation has remained largely unchanged since major reforms in 1997. Cuba’s secretive and opaque national banking system hampers efforts to monitor the effectiveness and progress of Cuba’s AML/CFT regime. The GOC claims to be in full compliance with international counterterrorism conventions and to have taken into account international standards. There are no known issues with or abuse of non-profit organizations, alternative remittance systems, offshore sectors, free trade zones, bearer shares, or other specific sectors or situations.

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

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

The GOC has continued a high profile campaign against corruption, investigating and prosecuting Cuban officials and foreign businesspeople. Cuba released no reports of prosecutions for money laundering in 2012. The last reported case occurred in August 2011, when the government tried and sentenced a resident French businessman to 15 years in prison, with shorter sentences for his Cuban wife and seven other Cubans.

The deficiencies in Cuba’s AML/CFT program stem from unclear or inadequate legislation which ultimately affects implementation. Unclear requirements are found in policies related to customer due diligence, STRs, confiscation, and sanctions for non-compliance. For example, while both the Ministry of Interior and Financial Transactions Investigation Division of the Central Bank have mandates to receive STRs, financial institutions have no explicit obligation to report STRs to the Financial Intelligence Unit.

Cuba should increase the transparency of its financial sector and continue to increase its engagement with the regional and international AML/CFT communities in order to expand its capacity to fight illegal activities. Cuba should continue its engagement with the FATF and follow its high-level political commitment with active implementation of an action plan to assist it in drafting clearer, more robust legislation and implementing an AML/CFT regime that meets international standards. Cuba also should increase the transparency of criminal investigations and prosecutions, and make its trials public.

Curacao

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

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

Curacao’s offshore financial sector consists of trust service companies providing financial and administrative services to an international clientele, including offshore companies, mutual funds, and international finance companies. The extent of this sector is not clear, but it has declined in scale due to the worldwide financial crisis. Also, several international financial services companies have relocated their businesses elsewhere because the island suffers from a negative international perception as a tax haven. Banking regulations require international banks to have a physical presence and maintain records on the island. Owning bearer shares is prohibited for onshore companies, and international companies must maintain bearer shares in custody. Several casinos and Internet gaming companies operate on the island, although the number of Internet gaming companies is declining.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13,005: January 1 – October 31, 2012

Number of CTRs received and time frame: 4,557: January 1 – October 31, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Curacao is a member of the Caribbean Financial Action Task Force, (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&task=cat_view&gid=349&Itemid=418&lang=en

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

During the past year, the Public Prosecutor’s Office initiated an ongoing money laundering investigation into Robbie Dos Santos, a member of the board of the Curacao Lottery Foundation and a major lottery operator. The Government of Curacao’s (GOC) cooperation with the U.S. government led to the freezing of over $30 million of Dos Santos’ assets in the United States. Dos Santos is the half-brother of former Finance Minister George Jamaloodin, and reportedly a major donor to the Movementu Futuro Kòrsou political party in Curacao. Dos Santos reportedly has business ties to the owner of Atlantis World Group (owner of several casinos in Curacao and St. Maarten), Francesco Corallo. Italy has an outstanding arrest warrant for Corallo on charges related to money laundering.

The GOC should continue its regulation and supervision of the offshore sector and free trade zones, as well as its pursuit of money laundering investigations and prosecutions. Curacao should work to fully develop its capacity to investigate and prosecute money laundering and terrorist financing cases.

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

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

Cyprus

Since 1974, Cyprus has been divided de facto into the Republic of Cyprus (ROC)-controlled two-thirds of the island and the remaining one-third, administered by Turkish Cypriots. The ROC government is the only internationally recognized authority; in practice, it does not exercise effective control over the area administered by Turkish Cypriots, a part of the island Turkish Cypriots declared independent in 1983. The United States does not recognize the area administered by Turkish Cypriots, nor does any country other than Turkey. This section of the report discusses the area controlled by the ROC. A separate section on the area administered by Turkish Cypriots follows.

The ROC is a regional financial center with a robust financial services industry and a significant number of nonresident businesses. A number of factors have contributed to the development of Cyprus as a financial center: a preferential tax regime; double tax treaties with 45 countries (including the United States, several European Union (EU) nations, and former Soviet Union nations); well developed and modern legal, accounting and banking systems; a sophisticated telecommunications infrastructure; and EU membership. Companies formerly classified as offshore are now free to engage in business locally. There are over 240,000 international business companies (IBCs) registered in Cyprus, many of which belong to non-residents. The same disclosure, reporting, tax and other laws and regulations apply equally to all registered companies. The ultimate beneficial owners of IBCs registered in Cyprus must be disclosed to the authorities.

The biggest threats for money laundering in the ROC are primarily from domestic and international financial crime. There is no significant black market for smuggled goods in the ROC. What little black market trade exists is usually related to small-scale transactions, typically involving fake clothing, pirated CDs/DVDs and cigarettes moved across the UN-patrolled buffer zone dividing the island.

The ROC has two free trade zones (FTZs) located in the main seaports of Limassol and Larnaca, which are used for transit trade. These areas are treated as being outside normal EU customs territory. Consequently, non-EU goods placed in FTZs are not subject to any import duties, value added tax, or excise tax. FTZs are governed under the provisions of relevant EU and ROC legislation. The Department of Customs has jurisdiction over both areas and can impose restrictions or prohibitions on certain activities, depending on the nature of the goods. Additionally, the Ministry of Commerce, Industry and Tourism has management oversight over the Larnaca FTZ.

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, cooperative credit institutions, securities and insurance firms, payment institutions including money transfer businesses, electronic money institutions, trust and company service providers, auditors, tax advisors, accountants, real estate agents, dealers in precious stones and gems, and attorneys

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 525 in 2011

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 76 in 2011

Convictions: 18 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The ROC 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 (FSRB). Its most recent mutual evaluation report can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Cyprus_en.asp

Enforcement and implementation issues and comments:

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

In December 2012, Cyprus passed several new laws upgrading its existing anti-money laundering (AML) legal framework within the context of its request for bailout assistance from the EU. The changes clarify the nature of information subject to exchange with foreign tax authorities; enhance the ability of the FIU to cooperate with foreign authorities; provide increased jail sentences for persons convicted of offenses pertaining to stalling or avoiding paying taxes; address certain deficiencies in Cyprus’ existing framework for regulating and supervising lawyers, accountants, and trustees; and call for a comprehensive review of the ROC’s existing bank AML supervisory framework.

Area Administered by Turkish Cypriots

The Turkish Cypriot community lacks the legal and institutional framework necessary to provide effective protection against the risks of money laundering, although significant progress has been made in recent years with the passage of “laws” better regulating the onshore and offshore banking sectors and casinos. There are currently 22 banks (seven of which are branches) in the area administered by Turkish Cypriots, and Internet banking is available.

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 105: January 1 - October 30, 2011

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The area administered by Turkish Cypriots is not part of any FSRB and thus is not subject to normal peer evaluations.

Enforcement and implementation issues and comments:

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

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

The EU continues to provide technical assistance to the Turkish Cypriots to combat money laundering more effectively. The EU is evaluating the continuance of its assistance in light of the area’s continuing AML/CFT risks.

The Turkish Cypriot “AML Law” provides better banking regulations than were in force previously, but without ongoing enforcement its objectives cannot be met. A major weakness remains the many casinos, where a lack of resources and expertise leave the area essentially unregulated, and therefore, especially vulnerable to money laundering abuse. Amendments to a “law” to regulate potential AML activity in casinos that would essentially decriminalize failure to implement KYC rules have been pending for over one year. The largely unregulated consumer finance institutions and currency exchange houses are also of concern.

Turkish Cypriots are currently drafting new AML “legislation” that will take into account UNSCRs 1267 and 1373 as well as address other sectors that face money laundering risks, such as casinos and exchange bureaus.

The Turkish Cypriot authorities should continue efforts to enhance the “FIU,” and adopt and implement a strong licensing and regulatory environment for all obligated institutions, in particular casinos and money exchange houses. Turkish Cypriot authorities should stringently enforce the cross-border currency declaration requirements. Turkish Cypriot authorities should continue steps to enhance the expertise of members of the enforcement, regulatory, and financial communities with an objective of better regulatory guidance, more efficient STR reporting, better analysis of reports, and enhanced use of legal tools available for prosecutions.

Czech Republic

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

Domestic and foreign organized criminal groups target Czech financial institutions for laundering activity, most commonly by means of financial transfers. Links between organized crime and money laundering are present mainly in the activities of foreign groups, in particular those from the former Soviet republics, the Balkans region, and Asia. Banks, investment companies, real estate agencies, currency exchange offices, casinos, and other gaming establishments all have been used to launder criminal proceeds.

The Czech Republic is home to a significant black market for smuggled cigarettes and other tobacco products, as well as pirated products from Asia, including CDs, DVDs, and counterfeit designer goods. The Czech Customs Administration has found that Asian criminal groups use a portion of the illegal funds from contraband smuggling for the purchase of real properties, which they then use for business activities. There are ten free trade zones operating in the Czech Republic, but Czech authorities do not consider them to be vulnerable to 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: Banks, currency exchanges, insurance companies, and postal license holders; securities dealers and exchanges; gaming enterprises; attorneys, trusts and company service providers; realtors, notaries, accountants, tax advisors, and auditors; pawnshops and dealers of secondhand goods, including vehicles, and of precious metals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,852: January 1 – October 31, 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 41: January 1 - June 30, 2012

Convictions: 27: January 1 - June 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Czech Republic 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/Czech_en.asp

Enforcement and implementation issues and comments:

Two aspects of the Czech legal framework continue to constrain efforts to prosecute money laundering. First, prosecutors must prove that the accused also committed a predicate offense resulting in the laundering of assets. Second, a court can only sentence somebody to prison for one crime, even if several crimes were committed. Convictions for predicate offenses generally result in prison sentences at least as long as those for money laundering, so prosecutors have little motivation to pursue money laundering convictions.

The Czech Republic permits bearer shares, which are widely used by Czech companies and freely transferable. There is no legal requirement that transfers of bearer shares be registered or reported, obscuring true ownership. As a result, ownership is often non-transparent and registered information unreliable. Although KYC rules require companies to provide financial institutions with evidence of the identities of beneficial owners holding more than a 25 percent stake in the company, the reliability of company-provided data has sometimes proved questionable. Law enforcement personnel acknowledge that bearer shares are obstacles in their financial investigations because they obscure true ownership. According to a January 2011 report by the Czech research agency ńĆekia, there are roughly 12,000 joint stock companies that issue bearer shares in paper form, accounting for over half of all joint stock companies in the Czech Republic.

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

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

Denmark

The Kingdom of Denmark (Denmark, Greenland, and the Faroe Islands) is neither a major international financial center nor a center for significant organized crime. Outlaw motorcycle gangs have been involved in a range of offenses including narcotics-related offenses, smuggling of goods and various financial crimes.

Dealing in narcotics and smuggling of illicit substances is a problem. Trafficking in human beings, smuggling of goods that are subject to high levels of taxation, and credit card crimes have received increased attention. Denmark has legalized online gaming but this does not seem to be a vulnerability due to effective regulation. Corruption is not a significant issue.

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

REPORTING REQUIREMENTS:

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

Number of CTRs received and time frame: Not applicable

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

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

Denmark is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/documents/documents/mutualevaluationofdenmark.html

Enforcement and implementation issues and comments:

The Government of Denmark has a comprehensive anti-money laundering/counter-terrorist financing regime and has been cooperative with the United States in drug money laundering investigations. Denmark and the United States have a Customs Mutual Assistance Agreement which facilitates information sharing between the customs administrations of the two countries.

Djibouti

Djibouti is one of the most stable countries in the Horn of Africa. It is a minor financial hub in the sub-region, thanks to its U.S. dollar-pegged currency and unrestricted foreign exchange. Djibouti’s economy continues to grow by over four percent of GDP due to a surge in foreign direct investment inflows – primarily from the countries of the Gulf Cooperation Council and China – in the port, construction, and tourism sectors. Officials from the Central Bank have not reported any instances of money laundering. Smuggled goods consist primarily of highly taxed cigarettes and alcohol. Due to Djibouti’s strategic location in the Horn of Africa and its cultural and historical trading ties, Djibouti-based traders and brokers are active in the region. Djibouti’s proximity to neighboring Somalia is a risk factor, as many Djibouti-based financial institutions have operations in Somalia, a jurisdiction which lacks effective anti-money laundering/counter-terrorist financing (AML/CFT) controls. There also are allegations of Djibouti-based financial facilitation of Somali terrorist group al-Shabaab, and laundering of piracy ransom payments in Djibouti’s financial system.

Djibouti hosts no offshore banks. Its banking laws, however, explicitly permit offshore institutions. The number of locally operating banks has increased from two to eleven in the past eight years. Hawala and other money/value transfer services are prevalent in the region, and informal markets for goods are sometimes used for counter valuation.

There are currently two free zones administered by the Djibouti Ports and Free Zone Authority (DPFZA), a public independent organization. The chief executive officer of DPFZA reports directly to the Presidential Office. One free zone is located at the “old” port. The other, Djibouti Free Zone (DFZ), is located on 40 hectares and offers office space, warehouses, light industrial units, and hangars. Jebel Ali Free Zone, based in Dubai, manages the commercial and operational aspects of the DFZ. The purpose of both free zones is to promote foreign investment in Djibouti with the goal of making Djibouti the gateway to regional and East African markets. They are essentially a “one-stop shop” for companies looking to do business in the Djiboutian market. There are plans to start construction on a third free zone in 2013 and to build a fourth in the coming 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: YES civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Credit establishments, financial and investment intermediaries and advisors, banks, money transfer agents, money changers, casinos, notaries, and attorneys

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 4: January 1 – November 30, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Credit establishments, financial and investment advisors and intermediaries, banks, money transfer agents, money changers, casinos, notaries, attorneys, and other non-financial entities

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

Djibouti is not a member of a Financial Action Task Force-style regional body. In 2012, Djibouti applied for Middle East and North Africa Financial Action Task Force (MENAFATF) observer status.

Enforcement and implementation issues and comments:

The Government of Djibouti (GOD) recognizes its growing banking sector is a vulnerable area that requires monitoring by the Central Bank and the Fraud Investigation Unit (FIU). Although the GOD enacted its anti-money laundering law in 2002, enforcement of the law continues to be a major challenge. The FIU is not operationally independent from the Central Bank and does not appear to be carrying out the core FIU functions of receiving, analyzing, and disseminating suspicious transaction reports (STRs). Djibouti makes an effort to control all formal transaction points. However, greater resources and independence would improve the oversight capabilities of the Central Bank and the FIU. Because of its free zones, an increasing number of banks, and the introduction of bank-free cash transfers via mobile phones, additional training and resources for the FIU continue to be critical needs. Severe resource limitations constrain the breadth of the FIU’s investigative capability, regulatory function and ability to collect and analyze financial intelligence. Djibouti’s FIU has yet to forward a case for prosecution. There are no cash deposit/withdrawal threshold reporting requirements in Djibouti; and the FIU does not track large currency transactions without an accompanying STR, inflating the number of STRs filed. At the regional level, the FIU works in collaboration with FIUs from member states of the Intergovernmental Authority on Development.

The lack of coordination among divergent law enforcement authorities, especially security agencies, further impedes investigations and adds to an environment in which it is difficult to staff in-depth investigations. Law enforcement expertise in financial investigations and targeting financial crimes is minimal. Djiboutian magistrates and judges also lack both experience and expertise in prosecuting financial crimes. The Ministry of Justice examines each predicate offense and seldom considers links to money laundering or terrorist financing unless currency is directly involved.

Djibouti will need to work to apply its AML/CFT regime in all current and planned free zones, and to all professionals involved in financial matters. Law enforcement should not wait for a money laundering or terrorist financing referral from the FIU but rather should investigate financial crimes at the street level and in the ports. The GOD should continue to focus on improving customs controls on cross-border currency movements, especially at land borders.

Dominica

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

Per 2011 reporting, Dominica has three offshore banks, three Internet gaming companies, and over 16,000 IBCs. Bearer shares are permitted; however, the beneficial owners of the bearer shares must be disclosed to financial institutions (FIs) as part of the FIs’ know-your-customer programs.

Under Dominica’s Economic Citizenship Program, individuals can obtain citizenship for approximately $100,000 for an individual and $200,000 for a family of up to four persons. There is no residency requirement and passport holders may travel to most Commonwealth countries without a visa. An application for economic citizenship must be made through a government-approved local agent and requires a fee for due diligence or background check purposes. An in-person interview also is required.

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, cooperative credit unions, securities and insurance brokers, money exchanges or remitters, financial management firms and registered agents, gaming establishments, lawyers, notaries, real estate brokers, jewelers, auto dealers, accountants, Internet gaming and wagering services, management companies, telecommunications companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 76 in 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Dominica is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-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=348&Itemid=418&lang=en

Enforcement and implementation issues and comments:

Most of the suspicious transaction reports (STRs) in Dominica are submitted by the formal financial sector. Operators in the non-bank financial system are required by law to submit STRs; however, the compliance rate in the non-bank sector is limited.

The Money Laundering (Prevention) Act No. 8 of 2011 (MLPA) is more robust with respect to incorporation of confiscation within the law. The Suppression of Financing of Terrorism (Prevention) (Amendment) Act No. 9 of 2011 requires direct reporting of STRs to the financial intelligence unit and provides the ability to freeze accounts, funds, and property connected with a terrorist, terrorist act or terrorist group that was the subject of a freeze order in a requesting state.

FIs should hold the bearer share certificates issued by their customers. Dominica should become a party to the UN Convention against Transnational Organized Crime.

Dominican Republic

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

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

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

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

Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or that otherwise significantly affect the U.S.: 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 exchange houses, securities brokers, cashers of checks or other types of negotiable instruments, issuers/sellers/cashers of travelers checks or money orders, credit and debit card companies, remittance companies, offshore financial service providers, casinos, real estate agents, automobile dealerships, insurance companies, and dealers in firearms and precious metals

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13,130: January 1 through December 1, 2012

Number of CTRs received and time frame: 1,286,870: January 1 through December 1, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 12 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Dominican Republic is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-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=347&Itemid=418&lang=en

Enforcement and implementation issues and comments:

The Egmont Group of Financial Intelligence Units (FIUs) expelled the DR’s FIU in 2006 due to a lack of compliance with the definition of an FIU. The Egmont Group specified the formal steps the DR needs to take to re-apply for Egmont membership, thereby allowing the FIU to efficiently and securely share and exchange sensitive financial information with international FIUs. The function of the FIU improved, but problems remain. Specifically, the creation of an additional FIU-like organization to regulate international financial zones, as stipulated under Law 480/08, is in contravention of Egmont Group rules. The DR should modify Law 480/08 to eliminate the possibility of a second FIU, and re-apply for membership in the Egmont Group.

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

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

Ecuador

Ecuador is a major drug transit country. With a dollarized economy and geographic location between two major drug producing countries, Ecuador is highly vulnerable to money laundering. Corruption is a significant problem that facilitates money laundering. Since only major banks have active money laundering controls in place and a substantial percentage of transactions take place through unregulated money exchange and remittance companies, there is no reliable way to judge the magnitude of illicit finance in the country. There is evidence money laundering is taking place through trade and commercial activity, as well as through cash couriers. Large amounts of unexplained currency entering and leaving Ecuador indicate a significant transit of illicit cash.

The Government of Ecuador (GOE) closed all gaming outlets in 2012, citing money laundering concerns, among others.

The Financial Action Task Force (FATF) included Ecuador in its October 19, 2012 Public Statement because Ecuador 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.: YES

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: NO Domestic: NO

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 20 in 2012

Number of CTRs received and time frame: 32,764,737: January - June 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 6 in 2012

Convictions: 2 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Oversight of the financial sector improved in 2012, with the implementation of several anti-money laundering (AML) compliance regulations that amended the December 2010 law on money laundering and criminal financing. The regulations include enhanced monitoring of insurance companies, money couriers, money transfer companies and stock exchanges. The resolutions go into detail regarding AML compliance units within institutions and the measures that entities must enact in order to monitor for money laundering and financial crime. The Superintendency of Banks and the Superintendency of Companies perform inspections and audits, which have resulted in the imposition of penalties on a range of entities for noncompliance. However, strategic deficiencies remain in regard to confiscating funds related to money laundering and improving coordination of financial sector supervision.

Customs published a resolution in March 2012 that allows a 30 percent administrative fine for bulk cash smuggling. There was a significant increase in GOE revenues from cash seizures at entry and exit ports; however, key deficiencies remain. For example, the current law includes language complicating seizures of illicit funds by explicitly placing the burden of proof on the GOE to prove the illicit origin of funds in money laundering or cash smuggling cases, thus making criminal convictions very difficult. Ecuador does not have specific asset forfeiture legislation for money laundering violations.

The National Assembly concluded the first debate on the draft Penal Code on July 17, 2012. The draft legislation includes improvements to the anti-money laundering regime. These reforms would address the criminalization of terrorist financing and the ease with which assets linked to illegitimate sources can be confiscated but would not address freezing terrorist assets in accordance with international standards. Ecuador currently lacks adequate procedures and has a lengthy criminal process for confiscating terrorists’ assets. Law 2010-352 includes provisions that seek to criminalize terrorist financing by creating a stand-alone offense for financing certain crimes listed in the Penal Code. The law adds a new article to the Penal Code to criminalize financing all acts listed in the Penal Code as “Crimes of Sabotage and Terrorism,” including terrorism, acts of terrorism, and organized terrorism. However, the law does not contain an explicit reference to “terrorist financing,” does not define “funds” or “assets,” does not appear to cover attempts to commit the offense, and appears to require a connection to a specific act of terrorism. The draft Penal Code reform, if approved, would address most of these deficiencies.

The GOE should work to enact the Penal Code reform package. The GOE should harmonize its legislation to eliminate conflicts that hinder successful money laundering investigations and prosecutions. The GOE should ensure the Financial Analysis Unit, the GOE’s financial intelligence unit, is fully functional and meets international standards, and should also ensure that reporting requirements – covering an expanded group of obligated parties – are enforced. The GOE should make a dedicated effort to train judges, prosecutors, and investigators so they understand the country’s applicable AML/CFT legislation and regulations.

Egypt

Egypt is not considered a regional financial center or a major hub for money laundering. In the past year, the Government of Egypt (GOE) has shown increased willingness to tackle the issue of money laundering, especially with regard to investigating allegations of illicit gains or corruption under the Mubarak regime. The European Union and Canada have taken action to freeze the assets of Mubarak and several members of his regime based on their apparent misappropriation from the Egyptian state. However, while anti-money laundering resources remain focused on corruption by former members of the Mubarak regime, Egypt remains vulnerable to money laundering by virtue of its large informal, cash-based economy. There are estimates that as much as 80 percent of the small and medium enterprise sector is unregistered and reliant on the informal economy. Thus, despite having a large, well developed and well-respected formal financial sector, many smaller-scale financial transactions are undocumented or do not enter the banking system. Consequently, money laundering, such as for the purpose of avoiding taxes and fees, is common. In addition, sources of illegal proceeds reportedly include the smuggling of antiquities and trafficking in narcotics and/or arms. Authorities note increased interception of illicit cross-border fund transfers by customs agents over the past few 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: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, foreign exchange and money transfer companies, the post office, insurance companies, securities firms, leasing and factoring companies, mortgage financing companies, real estate brokers, dealers in precious metals and stones, and casinos

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,199: June 2011 – June 2012

Number of CTRs received and time frame: Not applicable

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

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

Egypt 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/MER_Egypt_ForPublication.pdf

Enforcement and implementation issues and comments:

The GOE appears to be more actively engaged on money laundering issues. The GOE is currently working to incorporate technical and analytical training on the investigation and prosecution of money laundering and related crimes into its judicial curriculum. Law enforcement authorities have shown improvements in identifying and seizing illicit cross-border shipments and currency transfers, while the courts continue to vigorously pursue corrupt members of the previous regime. There is reason to believe that statistical data regarding money laundering prosecutions and convictions may understate the number of money laundering investigations. Egyptian prosecutors are obliged to charge the most serious, readily provable offense. Because many public corruption and similar offenses carry higher penalties than money laundering, money laundering may not be charged even though the offense conduct included such activity.

The GOE should continue to build its capacity to successfully investigate and prosecute money laundering offenses. In particular, the judicial system should continue to increase the number of judges trained in financial analysis related to money laundering offenses. The GOE also should work to more effectively manage its asset forfeiture regime, including the identification, seizure and forfeiture of assets.

El Salvador

El Salvador is part of the transit route for South American cocaine destined for the United States, and the corresponding cash payments returned to South America. The U.S. dollar is the official currency in El Salvador, and the country’s dollarized economy and geographic location make it an ideal haven for transnational organized crime groups, including human smuggling and drug trafficking organizations. Money laundering is primarily related to proceeds from illegal narcotics and organized crime; there is no indication that money laundering is being used to fund terrorist activities. The Central America Four Agreement among El Salvador, Guatemala, Honduras, and Nicaragua allows for the free movement of their citizens across the respective borders, bypassing formal immigration and customs inspection. This agreement is a vulnerability to each country and the region for the cross-border movement of contraband and illicit proceeds of crime.

According to authorities, organized crime groups employ the following mechanisms to launder money: the use of front companies, parking lots, travel agencies, remittances, the import and export of goods, and cargo transportation. Illicit activity includes the use of smurfing operations, whereby small amounts of money are deposited or transferred in a specific pattern to avoid detection by government authorities.

As of December 2012, there are 16 free trade zones (FTZs) operating in El Salvador. The FTZs are comprised of more than 200 companies operating in areas such as textiles, clothing, distribution centers, call centers, business process outsourcing, agribusiness, agriculture, electronics, and metallurgy. A significant number of remittances are transferred through banks, and it is possible narcotics trafficking organizations remit illicit proceeds from drug sales in the United States to El Salvador.

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: NO civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, agricultural credit institutions, pension funds, insurance companies, money exchanges, auditors, accountants, notaries, gaming centers, auto dealers, and securities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,156 in 2012

Number of CTRs received and time frame: 3,416 in 2012

STR covered entities: Banks, agricultural credit institutions, pension funds, insurance companies, money exchanges, auditors, accountants, notaries, gaming centers, auto dealers, and securities dealers

money laundering criminal Prosecutions/convictions:

Prosecutions: 17 in 2012

Convictions: 4 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

El Salvador is a member of the Caribbean Financial Action Task Force, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here:

http://www.cfatf-gafic.org/downloadables/mer/El_Salvador_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

The regulatory institutions charged with money laundering supervision lack human resources, sufficient training, and regulatory powers. The Superintendence of the Financial System (SFS) supervises only those money remitters, accountants, and auditors with a relationship with a bank or bank holding company. Independent entities are not subject to any supervision, nor are other designated non-financial businesses and professions (DNFBPs). The SFS is developing supervisory programs for pension funds, insurance companies and securities broker/dealers.

The number of prosecutions relative to the number of crimes which generate illicit funds is low. In 2012, only $883,000 in assets was criminally forfeited. The final legislative clearance for this action is with the General Assembly and still needs approval.

El Salvador should provide a clear prohibition against tipping off in its legislation and regulations, and clarify and enforce its provisions regarding criminal liability for legal persons. To fully implement its anti-money laundering/counter-terrorist financing laws, the Government of El Salvador should develop regulations, guidelines, and adequate supervisory programs for insurance companies, securities broker/dealers, pension funds, and DNFBPs. El Salvador should lower its CTR threshold from approximately $57,143 to $10,000 to comport with the international standard.

Equatorial Guinea

Equatorial Guinea (EG) is not a regional financial center. The oil rich country has very low health and education levels. Implementation of its anti-money laundering laws is not complete and financial crimes enforcement is weak. EG’s greatest concerns in terms of money laundering and terrorist financing are cross-border currency transactions and the illegal international transfer of money by companies or by corrupt individuals. Illicit appropriation and public corruption are widespread in both commerce and government, particularly in the use of proceeds from the extractive industries, including oil, gas, and timber, the most likely sources for laundered funds. There is no known connection to drug trafficking organizations, organized crime, or terrorists operating locally. Although there is no significant market for smuggled goods, smuggling is endemic.

There are no significant offshore sectors or free trade zones.

Equatorial Guinea is a member of the Economic and Monetary Community of Central African States (CEMAC) and shares a regional Central Bank (BEAC) with other CEMAC members. The Government of Equatorial Guinea (GOEG) is also a member of the Banking Commission of Central African States within 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: Treasury, Central Bank, banks, banking intermediaries, microfinance institutions, insurance companies, investment services, money changers, casinos, notaries, real estate agents, money transfer companies, travel agencies, auditors, accountants, and high-value goods dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

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

EG 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. EG has not had a mutual evaluation.

Enforcement and implementation issues and comments:

The GOEG should work with CEMAC and BEAC to establish a viable anti-money laundering/counter-terrorist financing regime and to strengthen the capacity of the National Agency of Financial Investigation (ANIF), EG’s financial intelligence unit. Equatorial Guinea’s officers charged with crime prevention, including the police, judicial police, and ANIF, need professional training in proper investigative techniques. Although the anti-money laundering regulations require reporting entities to implement compliance programs and report large and suspicious transactions, the system is only functioning to a limited degree in banking institutions. The GOEG does not have cross-border currency reporting requirements. International law enforcement cooperation is weak although the GOEG works with the European Community in terms of money laundering and terrorism financing through the CEMAC financial agreement with the Treasury of France.

Widespread corruption, at times involving the highest levels of the GOEG, is the catalyst for money laundering and other financial crimes. EG is ranked 163 out of 176 countries in Transparency International’s 2012 Corruption Perception Index.

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

Eritrea

Eritrea is not a regional financial center. Historically, the Government of the State of Eritrea (GOE) has used command economic policies and arrangements, but it is currently attempting to privatize some key state-owned firms. Although reliable statistics are unavailable, exports are currently small, generating little hard currency. The development of the mining sector has led to an increased influx of capital, and earnings are accruing from mineral exports, notably gold. The GOE relies in part on taxation of nationals living abroad to sustain its economy; and many in the Eritrean domestic population remain dependent on remittances from relatives abroad. Eritrea is a source country for men, women, and children subjected to forced labor and, to a lesser extent, sex trafficking. The level of cross-border trafficking of narcotics is not known, but given the government’s tight control of borders, Eritrea is not believed to be a significant market or transit route for narcotics. However, there are reports that Eritrean government and military officials profit from contraband smuggling and extortion. Due to its informal cash economy, limited regulatory structure, underground remittances, prevalent use of money/value transfer systems, proximity to regions where terrorist and criminal organizations operate, and widespread corruption Eritrea is vulnerable to money laundering and related activities.

The GOE professes to oppose, and when necessary, take action against money laundering, but the mechanisms by which it does this remain unclear. Eritrea does not publish national accounts or trade statistics. The international community has long pressed for fiscal transparency, but Eritrean officials are generally not prepared to discuss anti-money laundering/counter-terrorist financing (AML/CFT) initiatives.

Eritrea is believed to have been a haven for organizations affiliated with al-Qaida and al-Shabaab; some sources continue to charge that elements of the Eritrean security apparatus provide training, supplies and financing to regional destabilizers. Evidence of the GOE’s past support to insurgents in neighboring states resulted in the UN Security Council (UNSC) levying an arms embargo against Eritrea beginning in 2009. In December 2011, the UNSC toughened existing sanctions, also addressing concerns over potential use of Eritrean mining revenues for destabilizing activities. The UN’s July 2012 Monitoring Group Report concluded that Eritrea had reduced or eliminated direct support for al-Shabaab, but the Group recommended maintaining the existing arms embargo until greater transparency is achieved.

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: Not available civilly: Not available

Know-your-customer (KYC) rules:

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

KYC covered entities: Not available

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Not available

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

The Eritrean banking, legal and regulatory systems are undeveloped and non-transparent. Currently, laws are generally issued as proclamations. The constitution, unimplemented following a period of martial law during a border war with Ethiopia beginning in 1998, has recently been distributed to citizens; and Justice Ministry officials say that implementation will take place shortly. In mid-2012, the GOE formally reversed its policy of strict self-reliance and rejection of external development assistance, announcing restoration of relations with UN agencies and commencing work on a UN Development Assistance Framework for a five-year period beginning in 2012.

The GOE should seek international assistance to help structure an AML/CFT regime that comports with international standards. Eritrea ranks 150 out of 176 countries surveyed in Transparency International’s 2012 Corruption Perception Index. Eritrea should become a party to the UN Convention against Corruption, the UN Convention against Transnational Organized Crime, and the International Convention for the Suppression of the Financing of Terrorism.

Estonia

Estonia has a highly developed and transparent banking sector and its rule of law is recognized as established and mature. Estonia is a transit country for narcotics and other illicit goods. Transnational and organized criminal groups are attracted to Estonia due to its location between Eastern and Western Europe. Analysis of suspicious transaction reports (STRs) discloses incidents of the proceeds of internet crime being transferred to Estonia. Gaming both through casinos and online is legal in Estonia. The sector is considered well regulated through the Estonian Gambling Act.

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 and credit institutions; lottery/gaming institutions; real estate firms, high value goods dealers, and pawnbrokers; auditors, accountants, and accounting and tax advisors; service providers for trust funds and business associations; notaries, attorneys, and bailiffs; trustees in bankruptcy and legal services providers; and dealers of precious metals, precious metals articles, or precious stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 5,203: January 1 – October 31, 2012

Number of CTRs received and time frame: 4,002: January 1 – October 31, 2012

STR covered entities: Banks and credit institutions; lottery/gaming institutions; real estate firms, high value goods dealers, and pawnbrokers; auditors, accountants, and accounting and tax advisors; service providers for trust funds and business associations; notaries, attorneys, and bailiffs; trustees in bankruptcy and legal services providers; and dealers of precious metals, precious metals articles, or precious stones

money laundering criminal Prosecutions/convictions:

Prosecutions: 48: January 1 – October 31, 2012

Convictions: 13 involving 36 persons: January 1 – October 31, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Estonia 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/Estonia_en.asp

Enforcement and implementation issues and comments:

In 2012, Estonia’s key anti-money laundering/counter-terrorist financing (AML/CFT) agencies provided their own risk analyses and established a national Governmental Committee to deal with AML/CFT issues. In October, the Governmental Committee decided to create a special task force to deal with the National AML/CFT Risk Assessment issues.

Estonia is a member of the European Union and the euro zone. Estonia has adopted the universal banking model, which enables credit institutions to participate in a variety of activities such as leasing, insurance, and securities. Estonia continues to work to bring its money laundering regime into compliance with international recommendations.

Ethiopia

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

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

The Financial Action Task Force (FATF) included Ethiopia in its October 19, 2012 Public Statement for its lack of sufficient progress in addressing longstanding anti-money laundering/combating the financing of terrorism (AML/CFT) deficiencies. The FATF has called upon its members to consider the risks arising from these deficiencies.

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

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

criminalizATION OF money laundering:

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

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, foreign exchange bureaus, financial leasing companies, customs and revenue, notaries, licensing organizations, auditors, accountants, real estate brokers/agents, precious metal dealers, brokers/investment advisors

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 187: January 1 - November 19, 2012

Number of CTRs received and time frame: 552,772: January 1 - November 19, 2012

STR covered entities: Banks, foreign exchange bureaus, financial leasing companies, customs and revenue, notaries, licensing organizations, auditors, real estate agents/brokers, precious metal dealers, brokers/investment advisors

money laundering criminal Prosecutions/convictions:

Prosecutions: 3: January 1 – November 19, 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: NO

Ethiopia is an observer of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-style regional body. It recently underwent its first mutual evaluation. Once published, the mutual evaluation report can be found here: http://www.esaamlg.org/reports/me.php

Enforcement and implementation issues and comments:

The Government of Ethiopia (GOE) has made progress in improving its AML/CFT regime, most notably by making the Financial Intelligence Center (FIC), its financial intelligence unit, operational in early 2012. The FIC has grown from two to over thirty employees, including analysts, administrative staff, and IT professionals; and is working to develop its investigative and referral capacity. It has begun receiving suspicious transaction reports (STRs) and currency transaction reports (CTRs), though it lacks technical capacity to effectively sort through and store the over 10,000 CTRs it receives weekly. The FIC has held workshops with banks on how to identify suspicious transactions and has engaged with federal prosecutors to improve prosecution of money laundering cases. The Ethiopian law enforcement community, from investigators to prosecutors to judges, remains deficient in its awareness of AML/CFT issues and its understanding of how to address them. The GOE’s poor record keeping system and lack of centralized law enforcement records hinder the federal police’s ability to identify and investigate trends in money laundering and terrorist financing. Further, inadequate police training and lack of resources significantly diminish the federal police’s financial investigative abilities.

On March 20, 2012, the GOE became a party to the International Convention for the Suppression of the Financing of Terrorism.

An action plan developed by the Ministry of Finance aims to improve Ethiopia’s AML/CFT capabilities comply with the national AML/CFT requirements.

Fiji

The Republic of Fiji is a small country with a population of less than one million. It has relatively significant natural resources and is among the most developed of the Pacific island nations. It is not a regional financial center but serves as a regional hub for transportation and shipping for other Pacific island nations.

Fiji’s geographical location makes it a convenient potential staging post for criminal activities in Australia and New Zealand, which is demonstrated by some significant drug related cases and a noted increase in the number of human smuggling cases. Cross-border criminal gangs involving individuals from neighboring Asian countries also operate in Fiji.

There are no casinos currently operating but one large one is being constructed. It is unclear if the owners and investors have been vetted for anti-money laundering risks; and the ability of the government to regulate it effectively is unknown.

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

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

criminalizATION OF money laundering:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 579 in 2012

Number of CTRs received and time frame: 200,404 in 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 23 in 2012

Convictions: 6 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Fiji’s financial intelligence unit does not have budgetary independence. The Government of Fiji (GOF) should continue to implement anti-money laundering/counter-terrorist financing measures that adhere to international standards. Fiji also should become a party to the UN Convention against Transnational Organized Crime. The GOF should ensure its gaming supervision program is sufficient to properly oversee the large casino which is being built and that it conducts proper due diligence on the casino’s investors and owners.

Finland

Finland is not a regional center for money laundering, financial crime, or illegal commerce. The major sources of illegal proceeds in Finland relate to financial crimes, and the majority of investigated suspicious financial activities have an international dimension. The number of organized criminal groups has grown slightly in the past few years, as has the number of their members. Illicit funds are normally laundered through currency exchangers and gaming establishments. Terrorism related fundraising, to the extent it exists, appears to be less of a problem than in other European countries.

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: Credit and financial institutions; investment firms, management companies and custodians; the central securities depository and book entry registrars; payment institutions and money transmitters and remitters; insurance companies, local mutual insurance associations, and insurance intermediaries; authorized pension insurance companies; limited liability companies or cooperatives engaged in restricted credit institution activities; tax advisors; apartment rental and real estate agents; auditors, lawyers, notaries, and accountants; trust and company service providers; pawn shops and dealers in high value goods; casinos and gaming entities

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 34,749: January 1 to November 26, 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 40: January 1 - November 30, 2011

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Finland is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/countries/d-i/finland/documents/mutualevaluationoffinland.html

Enforcement and implementation issues and comments:

The Government of Finland (GOF) has a comprehensive anti-money laundering/counter-terrorist financing regime. In June 2012, Finland’s criminal code was changed to criminalize self laundering. Self laundering in aggravated cases, where monetary amounts are greater than €10,000 (approximately $13,200), is now included as a predicate offense for money laundering.

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

A recent GOF proposal is pending in Parliament, which would establish a national administrative mechanism for freezing funds and economic resources of persons and entities involved in terrorism.

The GOF should consider laws requiring the reporting of large transactions on a consistent basis. The GOF also should require enhanced due diligence for domestic politically exposed persons (PEPs).

France

France’s banking, financial and commercial relations, especially with Francophone countries, make it an attractive venue for money laundering because of its sizeable economy, political stability and sophisticated financial system. Public corruption, narcotics trafficking, human trafficking, smuggling, and other crimes associated with organized crime generate illicit proceeds.

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

France has a large informal sector, and informal value transfer systems such as hawalas may be used by immigrant populations used to such systems in their home countries, but there is little information on the scale of such activity.

Since 2011, France has considerably expanded its financial intelligence unit (FIU), TracFin.

TracFin is looking into the ways in which new anonymous electronic payment instruments are offering an alternative to cash. The use of virtual money is growing in France through online gaming social networks.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 22,856 in 2011

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 297 in 2011

Convictions: 28 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

France is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/3/18/47221568.pdf

Enforcement and implementation issues and comments:

The Government of France (GOF) applies the 2006/70/CE European Union (EU) directive by which politically exposed persons from the EU states may benefit from simplified vigilance procedures, but only in a limited number of cases. France should review its procedures to ensure all PEPs undergo enhanced due diligence.

TracFin has hired new officers, updated its investigative methods, modernized its information system, and made more data available to the public online. In April 2012, France’s bank supervisor improved its bank questionnaires on prevention of money laundering and terrorism financing, provided guidelines to financial institutions for their dealings with occasional clients versus regular business clients, and updated its guidance on vigilance measures concerning fund transfers. These efforts should be continued to ensure effective implementation.

The GOF should examine the compliance with AML reporting requirements of company registration agents, real estate agents, jewelers, casinos and lawyers to ensure they are complying with their obligations under the law.

France does not have the capacity to share forfeited assets with other jurisdictions. The country should reform its laws to allow forfeited assets to be shared.

Gabon

Gabon is not a regional financial center. However, Gabon suffers from porous borders; and smuggling, which is facilitated by organized criminal groups, is widespread. Despite fiscal management reform efforts, systemic corruption at administrative levels still exists. Embezzlement of state funds, including by politically exposed persons (PEPs), gives rise to money laundering. There is a large expatriate community in Gabon engaged in the timber industry, construction, and general trade. Money and value transfer systems, such as hawala, and trade-based commodity transfers are often used by the expatriates, particularly the large Lebanese community, to avoid tight fiscal controls on the repatriation of profits.

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

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, exchange houses, stock brokerages, casinos, insurance companies, lawyers and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 38 in 2011

Number of CTRs received and time frame: 0 in 2011

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

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Gabon is a member of the Central African Action Group against Money Laundering and Terrorist Financing (GABAC), an organization in the process of becoming a Financial Action Task Force-style regional body. In 2012, Gabon underwent a mutual evaluation, but it has not yet been published.

Enforcement and implementation issues and comments:

Although the National Financial Investigations Agency (ANIF), Gabon’s financial intelligence unit (FIU), is now functional, it is hampered by the law, which merges suspicious activity reporting with currency transaction reporting and only requires reporting of suspicious activity for deposits over 5,000,000cfa (approximately $10,000). Banks can, however, report transactions to ANIF for sums under this threshold on a case by case basis. ANIF still lacks the necessary human resources to be effective in its mission, and ANIF staff members report they need more training to improve the agency’s effectiveness. ANIF joined the Egmont Group of FIUs in June 2012.

The Gabonese judicial system has been slow to process money laundering cases because the process is cumbersome despite ongoing reform efforts, and judges are not trained to hear such cases. Moreover, the judiciary remains inefficient and susceptible to inappropriate influence. Police inefficiency, corruption, and impunity remain serious problems; although the government is stepping up its efforts against corrupt officials. Collection of evidence is also difficult.

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

Gambia

The Gambia is not a regional financial center, although it is a regional re-export center. Goods and capital are freely and legally traded in The Gambia, and, as is the case in other re-export centers, smuggling of goods occurs. Customs officials cooperate with counterparts in Senegal to combat smuggling along their common border, although The Gambia has limited capacity to fully monitor its porous borders. A lack of resources hinders law enforcement’s ability to combat possible smuggling. The Gambia is not a known money laundering hub in the region. It is unknown to what extent laundering is related to narcotics, but recent seizures of large amounts of cocaine and marijuana have heightened concerns of drug-related money laundering. The rapid growth of commercial banks entering the local market in the past few years, currently 13, also raises possible money laundering concerns.

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: Banks and microfinance entities; money remitters and exchanges; financial instrument and securities brokers/dealers; real estate agents; bullion dealers; casinos and lottery outlets; insurance companies and intermediaries; payroll services; guarantors and safe custody services; and, trust and company service providers

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 microfinance entities; money remitters and exchanges; financial instrument and securities brokers/dealers; real estate agents; bullion dealers; casinos and lottery outlets; insurance companies and intermediaries; payroll services; guarantors and safe custody services; and, trust and company service providers

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

In June 2012, the National Assembly adopted amendments to the country’s Money Laundering Act of 2003. The extensive revision includes a comprehensive range of predicate offenses and designated non-financial businesses and professions. The Government of The Gambia (GOG) should provide adequate resources and capacity to its law enforcement, supervisory and customs personnel so they are able to effectively fulfill their responsibilities. Its inadequate financial intelligence unit also should be given autonomy and strengthened both in terms of personnel and training to help it operate effectively.

The country’s Terrorism Financing Act was amended in June 2012, but the GOG also should become a party to the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.

The GOG should examine its re-export sector to determine whether it is being used to launder criminal proceeds.

Georgia

Georgia is not considered a major financial center. According to the Georgian Ministry of Justice, the bulk of criminal proceeds laundered in Georgia are derived from domestic criminal activity such as tax evasion, falsification of documents, financial and customs fraud, intellectual property rights violations, and environmental crimes. Domestic statistics also suggest the existence of illicit proceeds from corruption and drug trafficking. The extent of organized criminal groups operating within Georgia is unknown. Outside observers have identified large Georgian-led criminal organizations operating in other countries which exposes Georgia to the risk of proceeds of crime being transferred back into the country.

South Ossetia and Abkhazia fall outside the control of Government of Georgia (GOG) authorities and are not subject to monitoring. Organized crime is present and there is a lack of effective law enforcement in these regions.

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

Georgian entities have customers that are, or are owned by, offshore companies. Often the identities of these companies or their beneficial owners are unknown or have not been verified. Additionally, there are both a rapid and ongoing growth of nonresident deposits and an increase in private banking activities, often for a clientele of foreign politically exposed persons (PEPs). The rapid growth of casinos is troublesome as the gaming industry may be involved with facilitating 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: YES

KYC covered entities: Banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; money remitters; qualified credit institutions; securities brokers and registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; dealers of antiquities, precious metals, and precious stones; Legal Entity of Public Law under the Ministry of Finance of Georgia Revenue Service; charities and issuers of grants; notaries; the National Agency of the Public Registry; accountants and auditors; leasing companies; and asset management companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 3,118: January 1 - September 31, 2012

Number of CTRs received and time frame: 78,408: January 1 - September 31, 2012

STR covered entities: Banks, currency exchange bureaus, non-bank depository institutions and microfinance organizations; money remitters; qualified credit institutions; securities brokers and registrars; insurance companies and non-state pension scheme founders; organizers of lotteries and other commercial games; dealers of antiquities, precious metals, and precious stones; Legal Entity of Public Law under the Ministry of Finance of Georgia Revenue Service; charities and issuers of grants; notaries; the National Agency of the Public Registry; accountants and auditors; leasing companies; and asset management companies

money laundering criminal Prosecutions/convictions:

Prosecutions: 32 (63 persons): January 1 - July 31, 2012

Convictions: 36 (41 persons): January 1 - July 31, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Georgia 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/Georgia_en.asp

Enforcement and implementation issues and comments:

In 2012, the GOG continued to achieve results in detection, investigation and prosecution of money laundering. However, weaknesses remain with regard to compliance with key elements of the international standards. Technical deficiencies, poor implementation, and limited resources undermine the effectiveness of the financial intelligence unit (FIU) and anti-money laundering/counter-terrorist financing supervision. Georgia should address its significant loopholes in the transparency of legal entities, domestic cooperation, measures to prevent terrorism financing, and preventive measures for designated non-financial businesses and professions.

Georgia recognizes an existing drug problem, yet narcotics trafficking is rarely recognized as a predicate offense for money laundering. Investigations and prosecutions are mostly initiated on the basis of operational law enforcement information and rarely on filed STRs and CTRs. The data compiled by the Financial Monitoring Service, the FIU, remains an untapped tool for discovering money laundering related to a variety of predicate offenses. There is a lack of information sharing among relevant Georgian government agencies and departments. The GOG should work to ensure law enforcement officials are able to conduct investigations effectively. Georgian law enforcement authorities should put more emphasis on pursuing the link between organized crime and money laundering. For example, investigations into narcotics, extortion, weapons of mass destruction, and smuggling rarely pursue financial components.

Germany

While not an offshore financial center, Germany is one of the largest financial centers in Europe. Germany is a member of the eurozone, using a currency widely available in Europe, thus making it attractive to organized criminals and tax evaders. Many indicators suggest Germany is susceptible to money laundering and terrorist financing because of its large economy, advanced financial institutions and strong international linkages. Although not a major drug producing country, Germany continues to be a consumer and a major transit hub for narcotics.

Organized criminal groups involved in drug trafficking and other illegal activities are sources of laundered funds in Germany. There is little current data on the volume of these proceeds. Terrorists have carried out terrorist acts in Germany and in other nations after being based in Germany. Germany is estimated to have a large informal sector, and informal value transfer systems such as hawalas may be used by immigrant populations accustomed to such systems in their home countries, but there is little idea of the scale of this activity.

Trends in money laundering include electronic payment systems; financial agents, i.e., persons who are solicited to make their private accounts available for money laundering transactions; and trade in rare metals, electronics, and energy. Free zones of control type I, i.e., freeports, exist in Bremerhaven, Cuxhaven, and Hamburg. Deggendorf and Duisburg are control type II Free zones, i.e., unfenced inland ports.

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

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

criminalizATION OF money laundering:

“All serious crimes” approach or “list” approach to predicate crimes: Combination 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: Credit, financial services, payment and e-money institutions as well as their agents; financial enterprises; insurance companies and intermediaries; investment companies; lawyers, legal advisers, auditors, chartered accountants, tax advisers and tax agents; trust or company service providers; real estate agents; casinos; and persons trading in goods

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 12,868 in 2011

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1,070 in 2011

Convictions: 903 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Germany is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/countries/d-i/germany/documents/mutualevaluationofgermany.html

Enforcement and implementation issues and comments:

In December 2012, German prosecutors opened investigations against 25 employees of the Deutsche Bank. Five of them were arrested on charges of serious tax evasion, money laundering and attempted obstruction of justice in connection with emissions certificate trading.

On December 29, 2011, a law on Optimizing the Prevention of Money Laundering entered into force, tightening existing regulations. The law provides for the expansion of due diligence and reporting obligations in the non-financial sector. It also increases punishments for money laundering violations. The law also incorporates new provisions for e-money, enacting stricter reporting requirements for all e-money transactions greater than €100 (approximately $129). Finally, the new law expands the number and type of obliged entities required to appoint a money laundering officer. On November 8, 2012, the German Parliament passed an amendment to Germany’s Law Against Money Laundering to tighten control over the increasing number of casinos and slot machines and to regulate online gaming, which previously had been prohibited in Germany. The new law bans gift cards, subjects online gaming companies to KYC rules, requires online gaming operators to have better risk management, and strengthens the power of regulators.

Tipping off is a criminal offense only if it is committed with the intent to support money laundering or obstruct justice, and applies only to previously-filed STRs. Otherwise, it is an administrative offense that carries a fine of up to €100,000 (approximately $129,000) under the Money Laundering Act. Legal persons are only covered by the Administrative Offenses Act, and are not criminally liable under the Criminal Code. While Germany has no automatic CTR requirement, large currency transactions frequently trigger a STR. Germany should consider strengthening the above provisions and also tightening the regulations on domestic PEPs.

The numbers of prosecutions and convictions included in this report only reflect cases in which the money laundering violation carried the highest penalty of all the crimes of which the offender was convicted. Germany has no federal statistics on the amount of assets forfeited in criminal money laundering cases. Assets can be forfeited as part of a criminal trial or through administrative procedures such as claiming back taxes.

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

Ghana

Ghana is becoming an important regional financial center, including for illicit financial activity. Most of the money laundering in Ghana involves narcotics, various forms of fraud, and public corruption. Criminals launder illicit proceeds through investments in banking, insurance, real estate, automotive and general import businesses, and reportedly, donations to religious institutions. Financial crimes, such as advance fee fraud, known locally as “sakawa;” stolen credit card and ATM account numbers originating in Ghana; and check cloning continue to increase. Public corruption is a major source of money laundering in Ghana, occurring mainly through public procurements and the awarding of licenses.Informal financial activity accounts for approximately 45 percent of the total Ghanaian gross domestic product. Trade-based money laundering is sometimes used to repatriate “profit” or to evade customs duties and other taxes. Some traders import counterfeit goods or smuggle goods to evade taxes. In most cases, smugglers transport goods into the country in small quantities, and Ghanaian authorities have no indication these smugglers have links to criminals who want to launder proceeds from narcotics or corruption. Ghana is also one of the top destinations for stolen cars, many originating in the United States.

In September 2007, the first offshore banking facility in Ghana was established. Regulations governing domestic and offshore banks are largely similar. Both are required to perform customer due diligence and file suspicious transaction reports (STRs).

Ghana has designated four free trade zone (FTZ) areas, but the Tema Export Processing Zone is currently the only active FTZ. Ghana also licenses factories outside the FTZ area as free zone companies. Free zone companies, most of which produce garments and processed foods, must export at least 70 percent of their output. The Ghana Free Zone Board and the immigration and customs authorities monitor these companies. There are identification requirements for companies, individuals, and their vehicles in the free zone; however, monitoring and due diligence procedures are lax.

In February and June 2012, the Financial Action Task Force (FATF) included Ghana in its Public Statements due to Ghana’s deficiencies in combating money laundering and terrorist financing. In October 2012, in recognition of the efforts Ghana expended, the FATF removed Ghana from its Public Statement.

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: YES

KYC covered entities: Banks, insurance and securities firms, casinos, auctioneers, notaries, lawyers, non-governmental organizations (NGOs), accountants, religious bodies, real estate developers, operators of games of chance, trust and company service providers, funds remitters and exchanges, dealers in motor vehicles, and dealers in precious minerals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 359: January 1 – December 22, 2012

Number of CTRs received and time frame: 386,303: July 1 – December 22, 2012

STR covered entities: Banks, discount houses, finance companies, and money brokers; factors; project financiers and consultants; plant and equipment leasing firms; debt, investment, pension, and fund managers; private ledger services; export finance firms; lawyers, notaries, and accountants; religious bodies and NGOs; money remitters; securities firms; casinos; insurance and real estate companies; auctioneers, dealers in cars and precious metals and stones; and, trust and company service providers

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

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

Enforcement and implementation issues and comments:

The Government of Ghana (GOG) has made significant progress in improving its anti-money laundering/counter-terrorist financing (AML/CFT) regime. In 2012, the GOG criminalized participation in organized criminal activity and racketeering, sexual exploitation, migrant smuggling, and illicit arms trafficking; adopted implementing regulations for the Anti-Terrorism Act and Economic and Organized Crime Act; and established and implemented adequate measures for the confiscation of funds related to money laundering. New Central Bank guidelines improve customer due diligence measures and extend enhanced due diligence procedures to foreign as well as domestic PEPs. Cash Transaction Reports (CTRs) for amounts above the equivalent of $20,000 must be filed electronically with the Financial Intelligence Centre (FIC). In addition, the GOG has stepped up the promotion of public awareness and understanding of financial crime, money laundering, and terrorist financing activities via training and workshops for bankers, lawyers, and government officials. The GOG has made the FIC fully functional with the deployment of AML/CFT analytical software and at least seven analysts trained in basic financial analysis techniques.

On August 21, 2012, Ghana became a party to the UN Convention against Transnational Organized Crime.

The GOG should continue to address the remaining deficiencies in its AML/CFT regime, including by enacting laws to require companies to identify beneficial owners and to require the true names of all onshore and offshore entities and their beneficial owners to be held in a registry accessible to law enforcement officials. The GOG should take steps to ensure that its emergence as an offshore banking center and tax haven do not fuel corruption and crime in West Africa. As Ghanaian mineral and oil production begins to generate wealth, the need for transparency and financial safeguards becomes particularly urgent.

Gibraltar

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

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 510 in 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Gibraltar has a comprehensive range of anti-money laundering/counter-terrorist financing laws. Some powers only available in drug related cases should be extended to money laundering cases involving the proceeds of other crimes. The Financial Services Commission should continue to review regulatory and supervisory practices to keep pace with new developments.

Gibraltar is a member of the Group of International Finance Centre Supervisors.

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

Greece

Greece is a regional financial center for the Balkans, as well as a bridge between Europe and the Middle East. Official corruption, the presence of organized crime, and a large informal economy make the country vulnerable to money laundering and terrorist financing. Greek law enforcement proceedings indicate Greece is vulnerable to narcotics trafficking, trafficking in persons and illegal immigration, prostitution, smuggling of cigarettes and other contraband, serious fraud or theft, illicit gaming activities, and large scale tax evasion.

Evidence suggests financial crimes have increased in recent years and criminal organizations (some with links to terrorist groups) increasingly are trying to use the Greek banking system to launder illicit proceeds. Criminally-derived proceeds historically are most commonly invested in real estate, the lottery, and the stock market. Criminal organizations from southeastern Europe, the Balkans, Georgia, and Russia are responsible for a large percentage of the crime that generates illicit funds. The widespread use of cash facilitates a gray economy as well as tax evasion, although the government is trying to crack down on both trends. Due to the large informal economy it is difficult to determine the value of goods smuggled into the country, including whether any of the smuggled goods are funded by narcotic or other illicit proceeds. There is increasing evidence that domestic terrorist groups are involved with drug trafficking.

Greece has three free trade zones (FTZs), located at the Piraeus, Thessaloniki, and Heraklion port areas. Goods of foreign origin may be brought into the FTZs without payment of customs duties or other taxes and remain free of all duties and taxes if subsequently transshipped or re-exported. Similarly, documents pertaining to the receipt, storage, or transfer of goods within the FTZs are free from stamp taxes. The FTZs also may be used for repacking, sorting, and re-labeling operations. Assembly and manufacture of goods are carried out on a small scale in the Thessaloniki Free Zone. These FTZs may pose vulnerabilities for trade-based and other money laundering operations.

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: NO civilly: YES

Know-your-customer (KYC) rules:

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 3,586: January 1 - November 30, 2012

Number of CTRs received and time frame: 47: January 1 - November 30, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 279 in 2012

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Greece is a member of the Financial Action Task Force. Its most recent mutual evaluation report can be found here: http://www.fatf-gafi.org/documents/documents/mutualevaluationofgreece.html

Enforcement and implementation issues and comments:

The Government of Greece (GOG) has been working to improve the effectiveness of the Greek financial intelligence unit (FIU). Although the FIU has technical and data management systems and capacities to support its functions, the GOG, due mainly to austerity measures, has not provided adequate financial resources to ensure the FIU will be able to fulfill its responsibilities and ensure its powers are in line with international standards. It also remains unclear whether the Ministry of Justice has enough resources available to deal with money laundering or terrorism financing cases.

Greece should take steps to ensure a more effective confiscation regime. While the anti-money laundering/countering the financing of terrorism (AML/CFT) law contains provisions allowing civil asset forfeiture under special circumstances, Greek authorities advise it is not practical to initiate civil procedures and currently do not do so, except in cases involving the death of a suspect. The GOG also should develop procedures for the sharing of seized assets with third party jurisdictions that assist in the conduct of investigations.

The GOG requires transactions above €3,000 (approximately $3,965) be executed with credit cards, checks or cashiers’ checks and all business-to-business transactions in excess of €3,000 (approximately $3,965) be carried out through checks or bank account transfers. All credit and financial institutions, including payment institutions, also must report on a monthly basis all transfers of funds abroad executed by credit card, check or wire transfer. Transfers in excess of €100,000 (approximately $132,150) are subject to examination. Nevertheless, the GOG should ensure its system for reporting large currency transactions is applied equally across all regulated sectors and explicitly abolish company-issued bearer shares. It also should continue to deter the smuggling of currency across its borders. Greece also should ensure companies operating within its FTZs are subject to the same level of enforcement of AML/CFT controls as other sectors. The GOG should ensure domestic PEPs are also subject to enhanced due diligence, ensure that designated non-financial businesses and professions are adequately supervised and subject to the same reporting requirements as financial institutions, and work to bring charitable and nonprofit organizations under the AML/CFT regime.

Grenada

Grenada is not a regional financial center. Grenada’s geographic location in the Caribbean places it in close proximity to drug shipment routes from South America to the United States and Europe. As a transit location, money laundering in Grenada is primarily related to smuggling and drug trafficking by domestic organized crime rings. Illicit proceeds are typically laundered through a wide variety of businesses, as well as through the purchase of real estate, boats, jewelry, and cars.

Currently there is no offshore banking in Grenada, although offshore banking and trust companies and international business companies are allowed. There were reports that one international betting company was licensed to conduct business in Grenada, but no casinos or Internet gaming sites are in operation. There are no free trade zones in Grenada.

Bearer shares are not permitted for offshore banks. The International Companies Act requires registered agents to maintain records of the names and addresses of company directors and beneficial owners of all shares. Grenada’s economic citizenship program remains suspended, though the newly installed government recently announced plans to revive it.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 127: January 1 – November 30, 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 8 in 2012

Convictions: 2 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Grenada is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-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=345&Itemid=418&lang=en

Enforcement and implementation issues and comments:

During 2012, the Government of Grenada (GOG) made substantial progress in improving its anti-money laundering/counter-terrorist financing regime. Grenada passed the Financial Intelligence Unit Act which establishes its FIU and formally delineates its powers. To improve quite limited cash seizure, restraint and forfeiture provisions, the GOG passed the revised Proceeds of Crime Bill. While the criminal confiscation provisions are an improvement on similar legislation passed in 2003, these provisions remain severely limited. The 2012 Act does not contain, for instance, civil recovery provisions. Much work remains to be done to implement the new laws, regulations, and guidelines.

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

Guatemala

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

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

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

There is a category of “offshore” banks in Guatemala in which the money of the customers (usually Guatemalans with average deposits of $100,000) is legally considered to be deposited in the foreign country where the bank’s head office is based. In 2012, there were seven “offshore” entities, with head offices in Panama, the Bahamas and Puerto Rico. These “offshore” banks are subject to the same anti-money laundering/counter-terrorist financing (AML/CFT) regulations as any local bank. Guatemala has 18 active free trade zones (FTZs) and nine more are scheduled to start operations soon. FTZs are mainly used to import duty-free goods utilized in the manufacturing of products for exportation, and there are no known cases or allegations that indicate the FTZs are hubs of money laundering or drug trafficking. There are no reported hawala or other money or value transfer services operating in Guatemala. A significant number of remittances are transferred through banks and appear to pose little risk for money laundering.

Casinos are currently unregulated in Guatemala and a number of casinos, games of chance and video lotteries operate, both onshore and offshore. Unregulated gaming activity represents a significant money laundering risk.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 417: January 1 - October 31, 2012

Number of CTRs received and time frame: 6,873,560: January 1 - October 31, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 108: January 1 - November 15, 2012

Convictions: 20 people in 19 cases: January 1 - November 15, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Staffing of the Financial Intelligence Unit (IVE) has increased over the last several years and the number of STRs filed has also increased since the unit’s beginning. However, there are still relatively few convictions for money laundering, most of which are for illegal transport of cash. The limited capacity and number of law enforcement officials and of Public Ministry (i.e., the Attorney General’s office) staff may hamper these authorities from enforcing the law and prosecuting and successfully convicting more cases.

In December 2009, former President Alfonso Portillo was indicted on one count of conspiracy to commit money laundering in the United States. On August 26, 2011, Guatemala’s Constitutional Court unanimously upheld the U.S. request to extradite former President Portillo on that charge. The Public Ministry is still awaiting the outcome of its appeal of Portillo’s May 9, 2011 acquittal on embezzlement charges in Guatemala, and the extradition remains pending based on the outcome of that case. On August 29, 2012, the Constitutional Court rejected a request from Portillo’s lawyers for an injunction against former President Alvaro Colom’s administrative approval of the extradition.

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

In October 2010, Guatemalan monetary authorities approved a regulation to establish limits for cash deposits in foreign currency, notably requiring more information and bank certification for transactions totaling over $3,000 per month. According to law enforcement authorities, banks’ purchases of foreign currency declined 34 percent during the first nine months of 2011, and an additional 16 percent during a similar period in 2012.

Guatemala’s anti-money laundering law does not cover all designated non-financial businesses and professions included in the international standards. However, real estate agents and dealers of vehicles, art and antiquities, and precious metals and stones are covered under the CFT law. Notaries, auditors, and lawyers are also covered under the CFT law, but no implementing procedures have been adopted for them. Under the CFT law, STR filing is optional for lawyers.

The Government of Guatemala (GOG) should put into force a gaming law to regulate the industry and reduce money-laundering potential. Lotteries and raffles are subject to local jurisdiction licensing but are not subject to Anti-Money Laundering Unit supervision. A draft gaming law is now under consideration by key members of Congress. In October 2012, the Guatemalan Congress approved an anti-corruption law that increases penalties for existing crimes and adds new crimes such as illicit enrichment and trafficking in influence. If implemented well and enforced, the new law should help to reduce corruption as one of the main sources of money laundering in the country.

Tipping off is not criminalized and there is no provision to protect STR filers from liability. Reportedly, concerns have been expressed by covered entities that fear there may be repercussions if they file reports. The GOG should amend its AML/CFT legislation to include such provisions.

Guernsey

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 537: January 1 – October 31, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: All businesses

money laundering criminal Prosecutions/convictions:

Prosecutions: 4 in 2012

Convictions: 4 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

Some concerns have been raised about relatively recent changes to the law on foundations which appear to increase risks for secrecy and tax evasion. Authorities should ensure due diligence and public reporting requirements are strengthened for foundations.

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

Guinea

Guinea is a known hub for packaging and distribution of narcotics in West Africa. It is widely suspected that the lack of record keeping, weak law enforcement, corruption, and the informal cash-based economy provide a fertile environment for other illegal activities that are predicate offenses for money laundering. There is an extensive black market for smuggled goods in Guinea that includes illegal drugs from Guinea-Bissau and Sierra Leone, ammunition and weapons from Guinea-Bissau, and powdered milk from Gambia and Senegal. Local officials believe the sale of counterfeit currency in Guinea involves money laundering. Reportedly, segments of the large Lebanese expatriate community launder the proceeds of outside criminal activity by purchasing or constructing buildings in Guinea for immediate sale. Other money laundering methods used in Guinea include the purchasing of diamonds or gold for resale. Stolen cars from the United States are also often destined for West African markets, including Guinea. However, due to limited law enforcement capacity, authorities are challenged to determine the nexus between illicit funds and criminal organizations and possible links with terrorism financing.

Although public corruption is endemic, it is difficult to prove that corrupt Guinean officials are involved in laundering activities. Most illicit funds are transferred via the widespread and well established network of money-transfer agents that operate in the local markets. The only financial reporting that occurs is between local banks and the central bank of Guinea.

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 Public Treasury, Central Bank, banks, currency exchanges and money remitters, microfinance institutions, insurance companies, the post office, real estate and travel agencies, auditors, service companies, cash couriers, NGOs, lawyers, independent legal advisors, accountants, brokers, dealers, casinos, dealers in precious metals and stones, and notaries

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 8 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: The Public Treasury, Central Bank, banks, currency exchanges and money remitters, microfinance institutions, insurance companies, the post office, real estate and travel agencies, auditors, service companies, cash couriers, NGOs, lawyers, independent legal advisors, accountants, brokers, dealers, casinos, dealers in precious metals and stones, and notaries

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

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

Enforcement and implementation issues and comments:

Because money laundering and trafficking issues are not considered priority topics, the Government of Guinea (GOG) has not yet criminalized money laundering or terrorist financing in a way that comports with international standards. Additionally, although many types of entities are covered under the anti-money laundering law, the reporting and customer due diligence procedures are not fully enforced or implemented; and many entities are not subject to comprehensive supervision or regulation. Furthermore, although some controls exist for cross-border currency tracking, they relate to customs fraud. Customs officials have no authority to enforce anti-money laundering/counter-terrorist financing controls.

Although institutions are in place to investigate money laundering and financial irregularities, they are hampered by corruption, political tension, and serious limitations in authority and scope. Because of these issues, Guinea’s fledgling financial intelligence unit (FIU), headquartered in the Central Bank, is not operational. The Guinean security forces are ill-equipped, disorganized, and under-trained. For the last several years, they have been reliant upon outside assistance and training in matters involving money laundering.

The GOG has been cooperative with U.S. law enforcement efforts, to include an ongoing case with the U.S. Secret Service involving the sale of counterfeit U.S. currency. However, Guinea refused a criminal extradition to France in 2007 because of the likely involvement of high-level officials in a Guinean drug shipment seized in France. Corruption within the judiciary as well as funding shortages and ineffective law enforcement make it difficult for Guinea to cooperate fully with foreign governments to combat financial crime. Guinea is ranked 154 out of 176 countries surveyed in Transparency International’s 2012 Corruption Perception Index.

The GOG should criminalize money laundering and terrorist financing in line with international standards and assign resources to implement a comprehensive legal and regulatory framework. Although Guinea has a tipping off provision, it only applies to the subject of a STR; it should be expanded to apply to disclosure to any third person. The GOG also should strive to staff and train its law enforcement, FIU, judiciary, intelligence, and customs service to recognize and combat financial crimes, including money laundering. The GOG should become a party to the United Nations Convention against Corruption.

Guinea-Bissau

Guinea-Bissau continues to experience political disruptions due to the transit of narcotics and the related flow of money. The cohesion and effectiveness of the state itself is very poor; corruption and impunity are major problems and the judiciary has demonstrated its lack of integrity on a number of occasions. There have been links between representatives of the state, military officers, and drug trafficking networks. The Bissau-Guinean police have seized a number of major drug shipments in past years; however, some of the arrested traffickers and seized narcotics have later vanished from the state’s prisons and coffers, with no explanation forthcoming from the Bissau-Guinean authorities. In April 2010, the United States Treasury froze the assets of two top Bissau-Guinean military officers and designated them as drug kingpins.

One of the poorest countries in the world, the value of the illicit narcotics trade in Guinea-Bissau is a significant contributor to its economy. Traffickers from Latin America and collaborators from the region continue to take advantage of the extreme poverty, unemployment, political instability, lack of effective customs and law enforcement, corruption, and general insecurity to make the country a major transit point for cocaine destined for consumer markets, mainly in Europe. A multitude of small offshore islands, upon or near which plane drops are made, and complicit officials and military officers able to sidestep weak and under-resourced enforcement efforts with impunity contribute to the problem. The Transition President has declared the problem a top priority for his administration.

The formal financial sector in Guinea-Bissau is undeveloped and poorly supervised. It also is dwarfed by the size of the underground economy.

On May 18, 2012, the United Nations Security Council adopted resolution 2048, imposing travel bans on five Bissau-Guinean military officers in response to the seizure of power from the civilian government on April 12, 2012. On May 31, 2012, the European Union followed with a travel ban and freezes on the assets of the military junta members running the government.

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

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

criminalizATION OF money laundering:

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

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, microfinance institutions, exchange houses, securities broker/dealers and firms, insurance companies, casinos, charities, nongovernmental organizations (NGOs), lawyers, accountants, and notaries

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, microfinance institutions, exchange houses, securities broker/dealers and firms, insurance companies, casinos, charities, NGOs, lawyers, accountants, and notaries

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

Guinea-Bissau 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/Guine-Bissau.html

Enforcement and implementation issues and comments:

The Government of Guinea-Bissau (GOGB) is not in full compliance with international conventions against money laundering and terrorist financing due to inadequate resources, weak border controls, under-resourced and understaffed police, and other compelling national priorities. Political dysfunction and corruption – including the military’s complicity in drug trafficking – are key contributors to this condition.

The Anti-Money Laundering Uniform Law, which applies to all members of the Economic Community of West African States (ECOWAS), is ineffectively enforced. The financial intelligence unit (FIU) became operational in 2011 but has yet to recruit technical staff. Guinea-Bissau’s new Law on the Financing of Terrorism has yet to receive Presidential assent, and therefore has yet to be enacted.

Article 26 of National Assembly Resolution No. 4 of 2004 stipulates that if a bank suspects money laundering it must obtain a declaration of all properties and assets from the subject and notify the Attorney General, who must then appoint a judge to investigate. The bank’s solicitation of an asset list from its client could amount to informing the subject of an investigation. In addition, banks may be reluctant to file suspicious transaction reports for fear of alerting the subject because of an allegedly indiscrete judiciary. Although the law establishes asset forfeiture authorities and provides for the sharing of confiscated assets, a lack of coordination mechanisms to seize assets and facilitate requests for cooperation in freezing and confiscation from other countries hampers implementation.

The GOGB needs to improve the coordination of efforts at the national, sub-regional, regional and international levels, reforming the country’s institutions and conducting further research to gain an accurate understanding of the scale of the problem. The GOGB should continue to work with its bilateral and ECOWAS partners, including GIABA, to establish and implement an effective anti-money laundering/counter-terrorist financing (AML/CFT) regime. The GOGB needs urgent help to restore sovereignty, administer justice, and establish border controls. The GOGB should ensure the sectors covered by its AML law have implementing regulations and competent supervisory authorities to ensure compliance with the law’s requirements. It should enact and implement its terrorist financing law to comport with international standards. The GOGB should recruit technical staff for its FIU and ensure its operational independence. It should work to improve the training and capacity of its police and judiciary to combat financial crimes. Guinea-Bissau also should undertake efforts to eradicate systemic corruption.

Guyana

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

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

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

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

money laundering criminal Prosecutions/convictions:

Prosecutions: None

Convictions: None

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

Haiti

Haitian criminal gangs are engaged in international drug trafficking and other criminal and fraudulent activity, but do not at this time appear to be involved in terrorist financing. While Haiti itself is not a major financial center, regional money laundering enterprises utilize Haitian couriers, especially via air hub routes to Central America. Much of the drug trafficking in Haiti, as well as the related money laundering, is connected to the United States. Further, most of the identified money laundering schemes involve significant amounts of U.S. currency, and all property confiscations involve significant drug traffickers convicted in the United States.

Foreign currencies comprise approximately 57% of Haiti’s bank deposits, according to Haitian Central Bank estimates, likely due to the large influx of remittances, which reached $1.5 billion in 2011.

The weakness of the Haitian judicial system and prosecutorial mechanism continue to leave the country vulnerable to corruption and money laundering, despite improving financial intelligence and enforcement capacity.

Haiti has two operational free trade zones in Ouanaminthe and Carrefour. There are at least 62 casinos in Haiti, the majority unlicensed; however, online gaming is illegal.

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: NO Domestic: NO

KYC covered entities: Banks, casinos, securities dealers, insurance companies, notaries and attorneys, dealers in jewelry and precious metals, art dealers, real estate agents, automobile dealers, and money remittance institutions

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 43: January 1 through October 31, 2012

Number of CTRs received and time frame: 264,099: January 1 through October 31, 2012

STR covered entities: Banks

money laundering criminal Prosecutions/convictions:

Prosecutions: 6: Time frame unknown

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Haiti is a member of the Caribbean Financial Action Task Force, 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=342&Itemid=418&lang=en

Enforcement and implementation issues and comments:

In the past year, the Government of Haiti (GOH) passed a new banking law that includes provisions relating to anti-money laundering (AML) prevention. The new provisions give the Central Bank the authority to issue regulations binding on banks and money service businesses relating to money laundering, and the power to impose penalties for non-compliance. The Central Bank issued guidelines to commercial banks, currency exchange agencies and money transfer companies on customer due diligence obligations. Significantly, there was a 49% decrease in the number of STRs from the previous reporting period. Anti-corruption and AML legislation are currently under consideration in Parliament and are identified as a priority by the executive branch.

The GOH should continue to devote resources to building an effective anti-money laundering/counter-terrorism financing regime, to include continued support to units to investigate financial crimes and the development of an information technology system. The GOH remains hampered by ineffective and outdated criminal and criminal procedural codes, and by the inability of judges and courts to address cases referred for prosecution. New criminal and criminal procedural codes that address these problems are currently pending in the Council of Ministers. The GOH should pass the long pending anti-terrorism legislation that will criminalize terrorist financing and allow the immediate freezing of terrorist assets without delay. Haiti also should take steps to establish a program to identify the cross-border movement of currency and financial instruments.

Holy See (Vatican City)

The Holy See is an atypical government, being simultaneously the supreme body of government of the Catholic Church, and a sovereign entity under international law. It operates from Vatican City State, a 0.44 square kilometers (0.17 square miles) territory created to provide a territorial basis for the Holy See. The Institute for Works of Religion (IOR) performs functions similar to that of a bank, so it is commonly referred to as the “Vatican Bank.” Unlike a normal bank, the IOR does not loan money, and IOR accounts do not collect interest; nor does the IOR make a profit for shareholders or owners. Rather, the IOR acts as a clearinghouse for Vatican accounts, moving funds from Catholic Church sources to Catholic Church destinations.

There is no market for illicit or smuggled goods in Vatican City, and there are no indications that trade-based money laundering occurs in the jurisdiction. There are no indications of any ties to terrorist financing activity. The population of Vatican City, around 800, consists almost entirely of priests (Holy See officials) and members of religious orders.

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: All institutions, entities, or persons dependent on the Holy See, including Dicasteries of the Roman Curia and the IOR that perform financial activities on a professional basis, as well as designated non-financial businesses and professions

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: 3,000: January 1 – July 31, 2012

STR covered entities: All institutions, entities, or persons dependent on the Holy See, including Dicasteries of the Roman Curia and the IOR that perform financial activities on a professional basis, as well as designated non-financial businesses and professions

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

The Holy See is an active observer 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/HolySee_en.asp

Enforcement and implementation issues and comments:

On January 24, 2012, the Holy See acceded to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime. It is not yet a party to UN Convention against Corruption.

The Holy See changed its laws in January 2012. While there remain some issues, the Holy See has made significant progress in advancing its AML/CFT regime. The law fully criminalizes money laundering and the financing of terrorism. The new law also requires the Vatican’s financial intelligence unit (FIU) to sign memoranda of understanding with other FIUs prior to financial intelligence sharing. Holy See authorities possess sufficient powers to freeze, seize, and confiscate criminal funds and assets, and Law No. 159 gives full force and effect to the freezing of funds associated with terrorism and terrorism financing. An STR regime and clear guidance on indicators of anomalous transactions have been set out.

Vatican City State’s Gendarmerie has responsibility for investigating financial crime and money laundering offenses, though the Gendarmerie officials have not received sufficient training in this field.

Honduras

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

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

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

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, lending companies, and financial service companies; check cashers; issuers or processors of financial instruments, traveler’s checks, or money orders; money transfer businesses; stock exchange, exchange houses, exchange posts; general deposit warehouses; public and private pension managers; insurance companies; casinos and gaming establishments

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 700: January 1 – November 30, 2012

Number of CTRs received and time frame: 122,643: January 1 – October 31, 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 27 in 2012

Convictions: 10: January 1 – October 31, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Honduras 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/Honduras_3rd_Round_MER_%28Final%29_English.pdf

Enforcement and implementation issues and comments:

Lack of data and systematic analysis makes it difficult for the Honduran government to identify trends in money laundering. The National Banking and Insurance Commission (CNBS) is the primary regulator for anti-money laundering/counter-terrorist financing (AML/CFT) compliance. The CNBS’ capacity to conduct compliance investigations is limited due to insufficient staff and infrequent training. Similarly, the Financial Investigation Unit (FIU), which is housed within the CNBS, is fully operational but inadequately staffed. Low staffing levels combined with increased responsibility delay response times for prosecutors’ information requests. The FIU does not have operational and budgetary independence.

Lack of cooperation, communication, and coordination at all levels within the Government of Honduras (GOH) obstructs a higher success rate in investigations and prosecutions. At the ministerial level, the Interagency Commission for the Prevention of Money Laundering and Financing of Terrorism (CIPLAFT) was created in 2004 to address these challenges. The CIPLAFT was a non-functioning body during the previous government, but the present administration increased resources and the CIPLAFT takes the lead in coordinating public offices that play a role in the implementation of the Asset Forfeiture Law. The GOH designed a national security strategy, and efforts are being made to include asset seizure and forfeiture policy in the strategy.

The GOH also should develop an integrated national strategy against criminality and impunity to support the AML/CFT regime improvements. Insurance brokers, lawyers and accountants are obligated to report suspicious transactions, but in practice, no reports are filed. The legality of bearer shares presents a significant money laundering vulnerability. The GOH should fully implement its laws requiring the establishment of a supervisory entity for designated non-financial businesses and professions and adopt implementing regulations to bring those entities under the AML/CFT regime. While mechanisms are in place to freeze terrorist assets, systematic inefficiencies and lack of capacity hinder timely action.

Hong Kong

Hong Kong, a Special Administrative Region (SAR) of the People’s Republic of China, is a major international financial and trading center. As of December 2012, Hong Kong’s stock market was the world’s sixth largest, with $2.83 trillion in market capitalization. Already the world’s tenth-largest banking center in terms of external transactions and the sixth-largest foreign exchange trading center, Hong Kong has continued its expansion as an offshore renminbi (RMB) financing center, accumulating as of November 2012 over $91 billion in RMB-denominated deposits at authorized institutions. Hong Kong does not differentiate between offshore and onshore entities for licensing and supervisory purposes.

Hong Kong’s low tax rates and simplified tax regime, coupled with its sophisticated banking system, shell company formation agents, free port status, and the absence of currency and exchange controls, present vulnerabilities for money laundering, including trade-based money laundering. Casinos are illegal in Hong Kong. Horse races, a local lottery, and soccer betting are the only legal gaming activities, all under the direction of the Hong Kong Jockey Club (HKJC), a non-profit organization. The HKJC’s compliance team collaborates closely with law enforcement to disrupt illegal gambling outlets. Government of Hong Kong (GOHK) officials indicate the primary sources of laundered funds—derived from local and overseas criminal activity—are fraud and financial crimes, illegal gambling, loan sharking, smuggling, and vice. They attribute a relatively low percentage of laundered funds to drug trafficking organizations.

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

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

criminalizATION OF money laundering:

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

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 entities, money exchangers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 17,795: January 1 – September 30, 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 131: January 1 - September 30, 2012

Convictions: 137: January 1 - September 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT, Financial Institutions) Ordinance, or AMLO, went into effect in April 2012. It mandates preventive AML measures, including customer due diligence and record keeping requirements. AMLO also establishes a licensing and regulatory regime for remittance agents and money changers and provides statutory powers to financial regulators to supervise compliance. The GOHK is evaluating the feasibility of a cross-border currency reporting system, along with necessary legislative and resource requirements.

Hong Kong should institute mandatory oversight for designated non-financial businesses and professions, and implement mandatory cross-border currency reporting requirements, both potential loopholes for money launderers and terrorist financiers. The recent increase in the number of STRs submitted by financial institutions should be addressed through allocation of sufficient analytical and investigative resources. The GOHK also should establish threshold reporting requirements for currency transactions and put in place structuring provisions to counter efforts to evade reporting. As a major trading hub, Hong Kong should also closely examine trade-based money laundering.

The United States and Hong Kong SAR are parties to the Agreement Between the Government of the United States of America and the Government of Hong Kong on Mutual Legal Assistance in Criminal Affairs, which entered into force in 2000. As a SAR of China, Hong Kong cannot sign or ratify international conventions in its own right. China is responsible for Hong Kong’s international affairs and may arrange for its ratification of any convention to be extended to Hong Kong. The 1988 Drug Convention was extended to Hong Kong in 1997. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime were extended to Hong Kong in 2006.

Hungary

Hungary is not considered a major financial center; however, its European Union (EU) membership and its location make it a link between the former Soviet Union and Western Europe. The country’s primarily cash-based economy and well developed financial services industry make it attractive to foreign criminal organizations. Hungary has been identified as a transit country for illegal drugs coming from Turkey and Asia and moving to other European destinations. Research suggests that, since entry into the European Union’s Schengen zone, this vulnerability has increased. Particular vulnerabilities may exist on the Hungarian -Ukrainian border in the areas of tobacco smuggling and trafficking in persons.

Authorities believe money laundering cases mostly stem from financial and economic crimes such as tax related crimes, fraud, embezzlement, misappropriation of funds, and social security fraud. Illicit proceeds also result from narcotics trafficking, prostitution, trafficking in persons and organized crime activities. Other prevalent economic and financial crimes include real estate fraud and the copying/theft of bankcards. There is a black market for smuggled goods in Hungary, primarily related to customs, excise, and value-added tax evasion. No international terrorist groups are known to operate in Hungary.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 6,312: January 2012 - October 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 9: January - May 2011

Convictions: 5: January - May 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Hungary 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 evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Hungary_en.asp

Enforcement and implementation issues and comments:

In 2011, the Government of Hungary (GOH) adopted an Action Plan to address anti-money laundering/counter-terrorist financing (AML/CFT) issues. As a consequence of the execution of the Action Plan, significant legal and institutional changes are planned in the Hungarian AML/CFT system but all have not yet been implemented. International experts have raised concerns about the lack of enhanced due diligence requirements for domestic politically exposed persons (PEPs), record keeping for designated non-financial businesses and professions, and reporting of large transactions. Hungary’s Parliament should ensure it adopts draft amendments as soon as possible to correct noted deficiencies.

The GOH has introduced sanctions for no or false declaration of the cross-border movement of cash; the new law now includes a proportionate administrative fine to be paid on the spot, up to 60% of the non-declared amount. The customs authority has the ability to detain the cash if there is a risk of non-payment of the fine.

Hungary also has established a procedure for the purpose of sanctions delisting for both the relevant UN and EU delisting requests. The National Institute of Criminology has started the work on the National Risk assessment regarding money laundering/terrorism financing. The National Risk assessment was finalized late in 2012 but has not yet been published.

Iceland

Iceland is not considered a regional financial center. Money laundering in Iceland is related primarily to narcotics smuggling and underground casinos. Financial crimes concerning market manipulation have been prosecuted, but it is not clear the scale of money laundering involved in such activities. Criminal proceeds tend to derive from domestic organizations with some linkages to foreign groups. Following the January 1, 2012 merger of the Economic Crime Unit (ECU) at the National Commissioner of the Icelandic Police and the Office of the Special Prosecutor (OSP), the OSP continued investigations of criminal actions in connection with, or in the wake of, the 2008 collapse of Iceland’s financial system.

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

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 360 in 2012

Number of CTRs received and time frame: Not applicable

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

The 2012 merger of the ECU and the OSP, which is responsible for investigating the banking collapse, is considered important in separating law enforcement and prosecution activities. The OSP has filed charges in cases related to the collapse, as appropriate. The National Commissioner of the Icelandic Police continues to operate the financial intelligence unit (FIU), which oversees AML/CFT matters. The FIU continues to participate in the interagency committee on measures against money laundering. However, as the financial operation fee allocated to the ECU was transferred from the National Commissioner of Police to the OSP, totaling $1 million annually, there are new budgetary constraints. Additionally, the FIU reports its primary challenge is a shortage of staff and funding.

Under Icelandic law, real estate agents and auditors are not subject to supervision by a public authority. The GOI should appoint supervisory authorities to effectively monitor these service providers, and they should be required to file suspicious transaction reports. Icelandic authorities have admitted the shortcomings, but have not yet found an effective and practical solution to the matter. The FIU should continue educating reporting entities regarding measures against money laundering. According to the FIU, even though considerable progress has been made in this area and most reporting parties now understand their obligations, non-financial institutions appear to lag in meeting the reporting requirements.

India

India is developing as both a regional economic power and financial center. Its rapidly growing economy has both formal and informal financial systems. India’s extensive informal economy and remittance systems, persistent corruption, and onerous tax administration and currency controls contribute to its vulnerability to economic crimes, including fraud, cybercrime, identity theft, money laundering and terrorist financing. India’s porous borders and location between heroin-producing countries in the Golden Triangle of Southeast Asia and Golden Crescent of Central Asia make it a frequent transit point for drug trafficking. Proceeds from Indian-based heroin traffickers is widely known to re-enter the country via bank accounts, the hawala system, and money transfer companies.

High-level corruption both generates and conceals criminal proceeds. Illicit funds are often laundered through real estate, educational programs, charities, and election campaigns. The most common money laundering methods include: opening multiple bank accounts, intermingling criminal proceeds with assets of legal origin, purchasing bank checks with cash, and routing funds through complex legal structures. Transnational criminal organizations use offshore corporations and trade-based money laundering to disguise the criminal origin of funds. Companies use trade-based money laundering to evade capital controls. Tax avoidance and the proceeds of economic crimes are significant vulnerabilities but laundered funds are also derived from narcotics trafficking, trafficking in persons and illegal trade. Counterfeit Indian currency is also a significant problem. Criminal networks exchange high-quality counterfeit currency for genuine notes.

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

India licenses seven offshore banking units (OBUs) to operate in Special Economic Zones (SEZs), which were established to promote export-oriented commercial businesses. As of November 2012, there were 158 SEZs in operation, and 588 SEZs which have received formal approval but have yet to start operations. Customs officers control access to the SEZs. OBUs essentially function as foreign branches of Indian banks, but with defined physical boundaries and functional limits. OBUs are prohibited from engaging in cash transactions, can only lend to the SEZ wholesale commercial sector, and are subject to the same anti-money laundering/counter-terrorism financing (AML/CFT) regulations as the domestic 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: 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, merchant banks, and depositories; insurance companies; housing and non-bank finance companies; casinos; payment system operators, authorized money changers and remitters; chit fund companies; charitable trusts that include temples, churches and non-profit organizations; financial intermediaries; stock brokers, sub-brokers, and share transfer agents; trustees, underwriters, portfolio managers and custodians; investment advisors; foreign institutional investors; credit rating agencies; venture capital funds and collective schemes including mutual funds; and the post office

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 31,317 in 2011

Number of CTRs received and time frame: 10,198,262 in 2011

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

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

India has worked to implement an effective AML/CFT regime. The Government of India (GOI) made significant changes to its legal framework to bring it into compliance with international standards. In November 2012, the Lok Sabha (lower house of Parliament) unanimously passed amendments to the Prevention of Money Laundering Act (PMLA). In December 2012, the Rajya Sabha (upper house) also passed the amendments. The amendments to the PMLA widen the definition of money laundering and bring domestic law in line with international standards.

Despite these important steps, deficiencies in India’s AML/CFT regime remain. India should address noted shortcomings in both the criminalization of money laundering and terrorist financing and in the domestic framework of confiscation and provisional measures, and ensure all relevant sectors of designated non-financial businesses and professions are complying with AML/CFT regulations.

Even with passage of the PMLA amendments, observers and law enforcement professionals express concern about effective implementation of the current laws. As of December 2012, the GOI had not successfully won any court cases involving money laundering or confiscations. Law enforcement agencies typically open substantive criminal investigations reactively and seldom initiate proactive analysis and long-term investigations. Furthermore, while the GOI has taken action against certain hawala activities, these successes generally stem from prosecuting primarily non-financial businesses that conduct hawala transactions on the side.

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

The GOI is taking steps to increase financial inclusion through “small [banking] accounts,” but should consider further facilitating the development and expansion of alternative money transfer services in the financial sector, including mobile banking, domestic funds transfer, and foreign remittances. Such an increase in lawful, accessible services would allow broader financial inclusion of legitimate individuals and entities and reduce overall AML/CFT vulnerabilities by shrinking the informal network, particularly in the rural sector. India’s current safe harbor provision is too limited and only protects principal officers/compliance officers of institutions who file STRs in good faith. The GOI should extend its safe harbor provision to also cover staff or employees of institutions.



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