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


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

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Montserrat

Montserrat is a United Kingdom (UK) Caribbean Overseas Territory; it has one of the smallest financial sectors of those territories. Less than 5,000 people are resident on the island. Montserrat’s operating budget is largely funded by the British government and administered through the Department for International Development. There are few offenses committed in Montserrat that generate substantial profits from crime. The low number of transactions in the financial sector suggests that criminal funds are not entering the mainstream economy through financial institutions.

Montserrat’s international business companies are required to have a locally licensed company manager as registered agent, or in the case of trusts, a locally licensed trust company with responsibility for undertaking know your customer (KYC) procedures and monitoring anti-money laundering compliance.

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, securities dealers, money transmission services, company management services, and financial leasing companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 5 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, securities dealers, money transmission services, company management services, and financial leasing companies

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Montserrat 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=339&Itemid=418&lang=en

Enforcement and implementation issues and comments:

Montserrat’s Financial Services Commission is not adequately structured and staffed to effectively carry out its functions. There are insufficient human resources; and the staff for money laundering investigations also performs other policing functions. The lack of resources and personnel may reduce the effectiveness of current regulations. There also should be additional training in anti-money laundering/counter-terrorist financing issues for customs officials.

Montserrat is a British Overseas Territory and cannot sign or ratify international conventions in its own right. Rather, the UK is responsible for Montserrat’s international affairs and may arrange for the ratification of any convention to be extended to Montserrat. The 1988 Drug Convention was extended to Montserrat in 1995. The UN Convention against Corruption, the International Convention for the Suppression of the Financing of Terrorism, and the UN Convention against Transnational Organized Crime have not yet been extended to Montserrat.

Montenegro

Montenegro is a mountainous country in southeastern Europe. Montenegro continues to struggle to improve its capacity to prevent and address money laundering, along with other aspects of organized crime and corruption. The government needs to demonstrate greater political will to pursue the most sensitive cases. Criminal organizations, including sophisticated international narcotics trafficking enterprises, have a presence in Montenegro, and the country is also part of transit routes used to smuggle narcotics and other contraband. Within Montenegro, criminal groups smuggle stolen cars, narcotics, cigarettes, and counterfeit products. Evidence exists that the proceeds of narcotics trafficking, tax evasion, internet fraud and other illegal activities are being laundered through construction and real estate transactions. According to the Montenegrin financial intelligence unit (FIU), most of the suspicious transactions involve lease and real estate contracts. The perception of corruption remains widespread. Factors that facilitate and increase Montenegro’s vulnerability to money laundering are the high use of cash for purchases and Montenegro’s use of the euro without being a euro zone country.

Investigations by Montenegrin government agencies into organized crime operations and suspicious financial transactions show money moving from and through foreign offshore financial institutions. These funds are being used to purchase real estate, luxury consumer goods, and businesses.

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, savings banks, savings and loan institutions, and loan brokers; post offices and organizations performing payment, e-money, or credit card transactions; stock brokers and investment and pension fund managers; insurance brokers and companies dealing with life assurance; organizers of lotteries and special games of chance; exchange offices; pawnshops; audit companies, independent auditors and tax advice services; humanitarian, nongovernmental and other non-profit organizations; sellers and purchasers of claims; factors; safekeeping and guaranty firms; property managers; financial leasing companies; sports organizations; catering services; travel and real estate agents; motor vehicle, vessel and aircraft dealers; credit agencies; auctioneers and traders of works of art, high value goods, and precious metals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 91: January 1 to November 10, 2012

Number of CTRs received and time frame: 32,851: January 1 to November 10, 2012

STR covered entities: Banks, savings banks, savings and loan institutions, and loan brokers; post offices and organizations performing payment, e-money, or credit card transactions; stock brokers and investment and pension fund managers; insurance brokers and companies dealing with life assurance; organizers of lotteries and special games of chance; exchange offices; pawnshops; audit companies, independent auditors and tax advice services; humanitarian, nongovernmental and other non-profit organizations; sellers and purchasers of claims; factors; safekeeping and guaranty firms; property managers; financial leasing firms; sports organizations; catering services; travel and real estate agents; motor vehicle, vessel and aircraft dealers; credit agencies; auctioneers and traders of works of art, high value goods, and precious metals and stones

money laundering criminal Prosecutions/convictions:

Prosecutions: 0: January 1 to November 20, 2012

Convictions: 2: January 1 to November 20, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Montenegro 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/Montenegro_en.asp

Enforcement and implementation issues and comments:

Government of Montenegro (GOM) bodies suffer from a lack of financing, administrative capacity, and technology, inhibiting adequate implementation of the existing legislation to combat money laundering (ML). As a result, cases of money laundering often remain undetected in Montenegro. Furthermore, the GOM has not fully harmonized its laws with international standards. March 2012 amendments to the law expand the list of reporting entities, including, for example, sports organizations and catering companies. In June 2012, the list of ML indicators was expanded to include suspicious transactions in the areas of real estate, construction, legal, and notary operations.

Although legal and institutional mechanisms to fight corruption were strengthened, the perception of corruption remains pervasive, due to the lack of convictions, which potentially affects efforts to combat ML. The fact that all high level corruption cases have been uncovered by third parties also remains a matter of concern.

Montenegro has a low number of STRs, mostly reported by banks; however, many cases go unreported. A GOM Special Team Investigator’s report concludes banks are not fully complying with reporting requirements and are even providing valued customers with “VIP treatment” by not reporting their large transactions. Government bodies claim outdated technology systems and insufficient administrative capacities remain their largest problems.

The FIU is not completely independent from the Ministry of Finance, impeding its ability to investigate all claims of ML. The FIU has no enforcement authority. Prosecutors have to rely on the FIU to obtain information through a formal request process. In suspected cases of money laundering/terrorist financing (ML/TF), the FIU has to turn to the Central Bank, which conducts bank inspections. The legal and institutional framework to deal with ML/TF is in place and cooperation between the financial supervisory authorities and law enforcement has been established; however, the cooperation and ML/TF investigative capacities of the financial supervisory authorities need further enhancement. Investigators and auditors complain the Central Bank is not enforcing all regulations applicable to financial institutions.

In 2012, Montenegro signed bilateral agreements on ML/TF financial intelligence data exchange with Canada, Cyprus, and Japan. The framework for international judicial cooperation in ML/TF cases is generally comprehensive. Although the GOM has signed bilateral cooperation agreements with a number of countries, Montenegrin authorities should strengthen their implementation.

There are also concerns with asset seizures. While the law allows for the temporary seizure of criminally obtained money and/or property, the capacity of the Public Property Administration, responsible for the management of seized assets, needs to be strengthened. In 2012, there were two seizure cases amounting to 41.14 million euro (approximately $52.74 million). During the first eleven months of 2012, the FIU temporarily blocked eight transactions in the amount of $4.3 million. Nevertheless, there were no prosecutions.

Montenegrin authorities do not consider Montenegro to be vulnerable to terrorism or a haven for terrorism financing. The FIU examined one possible case of terrorism financing in 2012. In August, the government adopted the report on the 2010 – 2012 implementation of the Strategy for Preventing and Suppressing Terrorism, Money Laundering, and Terrorism Financing for the period 2010 - 2014. The country’s capacity to detect actions related to terrorism remains limited.

Law enforcement, judicial, and legal institutions engaged in curbing money laundering need additional resources and further training. There is also a need for increased public awareness of the problem of money laundering and its possible connection to narcotics and corruption.

Morocco

Morocco is not a regional financial center but is well integrated into the international financial system. Money laundering is a concern due to Morocco’s international narcotics trade, vast informal sector, trafficking in persons, and large level of remittances from Moroccans living abroad. Cash-based transactions in connection with Morocco’s substantial trade in cannabis are of particular concern. While some of the narcotics proceeds are laundered in Morocco, most proceeds are thought to be laundered in Europe. Approximately three of ten Moroccans use banks, while credible estimates of Morocco’s informal financial sector place it at nearly 15 percent of GDP. The predominant use of cash, informal value transfer systems and remittances from abroad help fuel Morocco’s informal financial sector. In 2011, remittances from Moroccans living abroad were approximately seven percent of GDP and drove household consumption in large segments of the population.

Offshore banks are located in the Tangier Free Zone. They are regulated by an interagency commission chaired by the Ministry of Finance. The free trade zone (FTZ) also allows customs exemptions for goods manufactured in the zone for export abroad. Morocco’s financial intelligence unit (FIU) reports suspicion of money laundering schemes using the Tanger-Med FTZ.

Criminal activities of particular risk include bulk cash smuggling and unverified reports of trade-based money laundering, including invoice fraud and the purchase of smuggled goods. Most businesses are cash-based with little invoicing or paper trails. Unregulated money exchanges remain a problem in Morocco and were a prime impetus for Morocco’s anti-money laundering legislation. Although the legislation targets previously unregulated cash transfers, the country’s vast informal sector creates conditions for this practice to continue.

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: Domestic and offshore banks, finance companies, insurance industry, lawyers, accountants, real estate intermediaries, and gaming operators

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 123: January 1 – September 30, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Domestic and offshore banks, finance companies, insurance industry, lawyers, accountants, real estate intermediaries, and gaming operators

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

Morocco 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/TopicList.asp?cType=train

Enforcement and implementation issues and comments:

The Government of Morocco has made progress since the promulgation of the 2007 anti-money laundering law. Morocco has taken action in addressing the majority of the deficiencies included in its action plan but is still working to adequately criminalize terrorist financing.

The Financial Information Processing Unit (UTRF), Morocco’s FIU, and Central Bank regulations adopted in 2012 require enhanced due diligence for politically exposed persons.

Operationally, the UTRF’s capacities have increased both in terms of human resources and logistics. The unit recruited and trained new officers and launched a new automated system to deal with financial information. In addition, UTRF has signed memoranda of understanding facilitating information exchange with regional FIUs.

Moroccan authorities should continue to develop regulatory oversight and investigative expertise that targets Morocco’s large informal value transfer sector, especially money remittance networks. Morocco also should work to address trade-based money laundering.

Mozambique

Mozambique is not a regional financial center. Money laundering is believed to be fairly common and is linked principally to customs fraud and narcotics trafficking. Most narcotics are believed to be destined for South African and European markets although consumption is on the rise in Mozambique, mainly of cannabis and mandrax. Local organized criminal groups control narcotics trafficking operations in the country and are thought to involve networks with links to Pakistani and Indian nationals and immigrants. Authorities believe the proceeds from these illicit activities have helped finance commercial real estate developments, particularly in the capital. While money laundering in the banking sector is considered to be a serious problem, foreign currency exchange houses, cash couriers, and the hawala remittance system play more significant roles in financial crimes and money laundering. For instance, much of the laundering is believed to be happening behind the scenes at foreign currency exchange houses, and the number of exchange houses operating in Mozambique surpasses the number required for normal business. Black markets for smuggled goods and informal financial services are widespread, dwarfing the formal retail and banking sectors in most parts of the country. There are no indications such activity is tied to terrorist financing.

For additional information about 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 and credit companies; securities companies and exchanges; debt collectors; leasing and rental companies; gaming facilities; capital/asset management concerns; payment and currency exchange operators; insurance brokers; and overseas subsidiaries or branches of Mozambican financial institutions

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks and credit companies; securities companies and exchanges; debt collectors; leasing and rental companies; gaming facilities; capital/asset management concerns; payment and currency exchange operators; insurance brokers; and overseas subsidiaries or branches of Mozambican financial institutions

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Mozambique is a member of the East and South 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/Mozambique_Mutual_Evaluation_Detail_Report(5).pdf

Enforcement and implementation issues and comments:

Limited resources and high levels of corruption hamper the Government of Mozambique’s (GOM) ability to fight money laundering and terrorism financing and to enforce anti-money laundering regulations. Local institutions, including police, customs and judicial authorities, lack the funding, training, and personnel necessary to investigate money laundering activities and to enforce the law.

Authorities acknowledge that alternative remittance systems are common in Mozambique. Many operate in exchange houses that, on paper, are heavily regulated, but in fact, can easily avoid reporting requirements. Foreign exchange regulations, enacted in 2011, sought to reduce the use of these exchange houses by requiring customers with foreign currency accounts at local banks to change that foreign currency into meticais, the local currency, rather than receiving foreign currency for domestic use; an exception exists for foreign travel.

GOM administrative action for payment of back taxes and fines continues against prominent businessman, Mohamed Bachir Suleman, a subject on the Department of Treasury’s Drug Kingpin list. Although the GOM found insufficient evidence of drug trafficking, it is pursuing him for extensive tax, customs and foreign exchange violations.

The GOM should implement an anti-money laundering/counter-terrorist financing regime that adheres to international standards.

Namibia

Namibia is not a regional financial center, although it has one of the most highly developed financial systems in Africa. Sources of money laundering in Namibia are related to both regional and domestic criminal activities. Falsification or misuse of identity documents, customs violations, trafficking of precious metals and gems, trafficking in illegal drugs, and stolen vehicles - mostly from South Africa - are regional problems that affect Namibia. Organized crime groups involved in smuggling activities generally use Namibia as a transit point, particularly for goods destined for Angola. Domestically, real estate as well as minerals and gems are suspected of being used as vehicles for money laundering. Namibian authorities believe the proceeds of these activities are laundered through Namibian financial institutions, but on a small scale. The organized fencing of stolen goods, not just vehicles, is also a problem in Namibia. The Namibian government has set up Export Processing Zones.

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

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

criminalizATION OF money laundering:

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

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 entities, pension funds, asset managers and trust companies, casinos and gaming institutions, exchange houses, stock brokerages, cash couriers, casinos, dealers in jewels and precious metals, insurance companies, pawn shops, realtors, dealers in high-value art and vehicles, auctioneers to include livestock and real estate, lawyers, accountants, and notaries

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 148 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, microfinance entities, pension funds, asset managers and trust companies, exchange houses, stock brokerages, cash couriers, casinos, dealers in jewels and precious metals, insurance companies, pawn shops, realtors, dealers in high-value art and vehicles; auctioneers to include livestock and real estate, lawyers, accountants, 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

Namibia 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/Namibia_detailed_report.pdf

Enforcement and implementation issues and comments:

The Government of Namibia (GON) has taken steps to implement its National Strategy on Anti-Money Laundering and Combating the Financing of Terrorism. In November 2012, the Namibian Parliament repealed the 2007 Financial Intelligence Act and passed a new Financial Intelligence Act which legally establishes a Financial Intelligence Center with a more robust mandate than its predecessor. The same week, Parliament also passed Namibia’s first Prevention and Combating of Terrorist Activities Bill.

Namibia revised its anti-money laundering framework to change from a rules-based to a risk-based approach. Enhanced due diligence requirements for all high-risk persons, including politically exposed persons (PEPs), are now specified by law.

The Office of the Prosecutor General successfully obtained forfeiture orders worth N$4.5 million (approximately $503,000) over the last year. The Prosecutor General’s office has frozen an additional N$8.7 million (approximately $972,000) pending prosecution.

On October 18, 2012, the GON became a party to the UN Convention for the Suppression of the Financing of Terrorism.

The GON should continue implementing its new legislation and ensure sufficient resources and training are provided to supervisory, analytical, investigative, prosecutorial and judicial entities. The informal banking and trading sectors need additional focus. The GON also should continue efforts to better control its porous borders.

Nauru

Nauru is a small central Pacific island nation with a population of approximately 10,000. A member of the British Commonwealth, Nauru is an independent republic but uses Australian currency. Nauru has low anti-money laundering/counter-terrorist financing (AML/CFT) risks. Currently, the only financial institution offering financial services is one wire transfer service based in a hardware store. The economy is entirely cash-based and reliant on formal and informal remittance.

Nauru has a relatively small offshore company registry with 59 operating corporations, a number of which are pending removal. In the past ten years no new trust company licenses have been issued, although 15 unit trusts have been formed under the 11 existing licenses. The offshore companies and trusts represent a residual risk, although the very low rate of company and trust formation in the sector may indicate the risks are relatively low.

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 money remitters; securities and investment businesses; insurance firms; real estate agents; dealers in art, precious metals and stones; trust or company service providers; real estate agents/brokers; casinos and lotteries; legal practitioners and accountants; payroll services using cash; and alternative remittance services

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 0 in 2012

Number of CTRs received and time frame: 0 in 2012

STR covered entities: Banks and money remitters; securities and investment businesses; insurance firms; real estate agents; dealers in art, precious metals and stones; trust or company service providers; real estate agents/brokers; casinos and lotteries; legal practitioners and accountants; payroll services using cash; and alternative remittance systems

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: NO

Nauru 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/default.aspx?DocumentCategoryID=17

Enforcement and implementation issues and comments:

The AML/CFT regime in Nauru is broadly commensurate with the risks and threats facing the country; however, there is a need for additional controls in the offshore sector. The GON should ensure the Nauru Agency Corporation, a state-owned incorporation agent, and Nauru Trustee Corporation, which registers trusts, focus their AML/CFT efforts on providing controls for the offshore sector. Nauru should try to attract a banking institution to ensure a wider range of financial services are available to Nauruans, and that entity should be subject to AML/CFT controls. The Government of Nauru (GON) also should supervise alternative remittance providers.

The GON should amend its AML legislation to include a greater number of predicate offenses and reduce restrictive conditions in relation to tax matters. In 2011, the GON began work on a new Crimes Act which is expected to be completed by 2013. The Crimes Act will cover money laundering and corruption offenses.

Concurrently, the GON’s interagency working group on international agreements and obligations has prioritized the ratification of UN Conventions. Recommendations to the cabinet were expected to be submitted in late 2012 concerning the UN Convention against Corruption and the 1988 UN Drug Convention. Nauru also should become a party to the UN Convention against Transnational Organized Crime.

Nepal

Nepal is not a regional financial center. Government corruption, poorly regulated trade, weak financial sector regulation, and a large informal economy make the country vulnerable to money laundering and terrorist finance. Although Nepal is neither a significant producer of, nor a major transit route for narcotic drugs, hashish, heroin, and domestically produced cannabis and opium are trafficked to and through Nepal every year. Its relatively porous borders with India and China are used to conceal trafficking in drugs and human beings.

The major sources of laundered proceeds stem from tax evasion, corruption, counterfeit currency, smuggling, and invoice manipulation. There is an unregulated, informal remittance system of unknown size in Nepal. Officials have identified the use of under- and over-invoicing as a major money laundering challenge. Another problem is the illicit flow of bulk cash and counterfeit currency. An open border with India and inadequate security screening make it difficult to detect hard currency flowing in and out of 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: 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, securities agents, insurance agents, casinos, money remitters and changers, cooperatives, some government agencies, lawyers and notaries, auditors, trust and company service providers, and precious metals and stone traders

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 547 in 2012

Number of CTRs received and time frame: 3,253,664: January 1 - November 23, 2012

STR covered entities: Banks, securities agents, insurance agents, casinos, money remitters and changers, cooperatives, some government agencies, lawyers and notaries, real estate brokers, auditors, and precious metals and stone traders

money laundering criminal Prosecutions/convictions:

Prosecutions: 17 in 2012

Convictions: 10 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: NO

Nepal 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/NEPAL%20ME2.pdf

Enforcement and implementation issues and comments:

The GON has taken a number of steps to bring its legislation into compliance with the international standards. However, lack of resources and capacity, and low awareness of processes and reporting requirements hamper efforts to combat money laundering. While the anti-money laundering law was enacted in 2008, Nepal’s financial intelligence unit is still putting in place the required legislation and directives. The Government of Nepal (GON) lacks expertise and skills in the responsible agencies, particularly in investigation techniques. Nepal also lacks comprehensive anti-terrorism and anti-organized crime laws, complicating enforcement efforts.

Coordination among key government agencies is weak. Financial institutions and individuals are reluctant to provide relevant information. The Nepal Police Criminal Investigation Bureau and the Nepal Police Counterterrorism Directorate both have authority to investigate and arrest counterfeit currency operatives, narcotics traffickers, smugglers, and human traffickers but have done little in the way of pursuing pure financial crimes.

The GON still needs to enact the appropriate implementing regulations to address key AML/CFT deficiencies, including regulatory guidance obligating the seizing, freezing or confiscation of terrorist assets in order to comply with UNSCRs 1267 and 1373 and other provisions.

Netherlands

The Netherlands is a major financial center and consequently an attractive venue for laundering funds generated from illicit activities, including activities often related to the sale of cocaine, cannabis, or synthetic and designer drugs, such as ecstasy. Financial fraud, especially tax-evasion, is believed to generate a considerable portion of domestic money laundering. There are a few indications of syndicate-type structures in organized crime or money laundering, but there is virtually no black market for smuggled goods in the Netherlands. Although there are few controls on national borders within the Schengen Area of the European Union (EU), Dutch authorities run special operations in the border areas with Germany and Belgium to keep smuggling to a minimum.

Six islands in the Caribbean fall under the jurisdiction of the Netherlands. Bonaire, St. Eustatius, and Saba are special municipalities of the country The Netherlands. Aruba, Curacao, and St. Maarten are countries within the Kingdom of the Netherlands. The Netherlands is responsible for the courts and for combating crime and drugs trafficking within the Kingdom. As special municipalities, Bonaire, St. Eustatius and Saba are officially considered “public bodies” under Dutch law.

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, credit institutions, securities and investment institutions, providers of money transaction services, life insurers and insurance brokers, credit card companies, casinos, traders in high value goods, other traders, accountants, lawyers and independent legal consultants, business economic consultants, tax consultants, real estate brokers, estate agents, civil law notaries, trusts and asset administrative companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 23,224 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, credit institutions, securities and investment institutions, providers of money transaction services, life insurers and insurance brokers, credit card companies, casinos, traders in high value goods, other traders, accountants, lawyers and independent legal consultants, business economic consultants, tax consultants, real estate brokers, estate agents, civil-law notaries, trust and asset administrative companies

money laundering criminal Prosecutions/convictions:

Prosecutions: 1,300 in 2010

Convictions: 812 in 2010

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Netherlands is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/countries/n-r/netherlandskingdomof/documents/mutualevaluationreportofthenetherlands.html

Enforcement and implementation issues and comments:

The Government of The Netherlands (GON) is largely in compliance with international standards but some implementation shortcomings exist. To address concerns about the operational independence and effectiveness of the Dutch financial intelligence unit (FIU), the Ministry of Security and Justice has plans to reorganize the National Police to create more flexibility and enhance its effectiveness in responding to money laundering cases. The government should ensure implementation of these actions in 2013.

The Dutch legal system does not include an autonomous offense of terrorism financing; the current legal framework is being changed to provide for it. The Netherlands has proposed legislation for a number of measures. The GON should enact the following proposed amendments, including: a flexible maximum fine based on business profits and gains; criminalization of abuse of public funds and corruption by public servants and the private sector; an increase in punishment to combat the commission of crimes within the context of the Economic Offenses Act; and a faster procedure to determine the right to seize documents in cases where lawyers and civil law notaries, among others, invoke their right not to submit evidence.

The Netherlands utilizes an “unusual transaction” reporting system. Designated entities are required to file unusual transaction reports (UTRs) with the FIU on any transaction that appears unusual (applying a broader standard than “suspicious”) or when there is reason to believe that a transaction is connected with money laundering or terrorist financing. The FIU investigates UTRs and forwards them to law enforcement for criminal investigation; once the FIU forwards the report, the report is then classified as a STR. There were 167,237 UTRs in 2012.

The GON should enact the draft legislation to strengthen its reporting regime and enact stronger KYC rules. The draft legislation includes specific requirements for customer due diligence (CDD) related to legal arrangements; an exchange of information among supervisory authorities; good faith as a condition for protection from criminal liability; a requirement to immediately obtain information in case of reliance on third parties for CDD; and politically exposed person (PEP)-related requirements that include non-Dutch PEPs resident in the Netherlands. The GON also should consider the draft law to modernize the supervision of lawyers, which has been sent to parliament.

The Netherlands cooperates fully with international investigations. The assignment of dedicated money laundering prosecutors is bringing change to historically low asset seizure rates. To further increase the confiscation of criminal assets, the Dutch Minister of Security and Justice introduced a new law including confiscation as a standard procedure of any money-driven criminal case, aimed at increasing law enforcement agencies’ capacity to take such action. The government should move to pass this law.

New Zealand

New Zealand is not a major regional or offshore financial center, and money laundering cases are infrequent. However, authorities note it is difficult to estimate the extent of money laundering activities, since every serious crime that generates proceeds could lead to a money laundering offense.

Money laundering generally occurs through the financial system, but the purchase of real estate and other high value assets as well as the use of foreign exchange dealers have become increasingly popular methods of laundering money. Narcotics proceeds (mostly from methamphetamine and cannabis sales) and fraud-associated activity, primarily Internet banking fraud, are the primary sources of illicit funds. International organized criminal elements, mostly from Asia, are known to operate in New Zealand, but not to a wide extent. New Zealand is a low threat environment for terrorist finance.

New Zealand has a small number of casinos, which operate gaming machines and a variety of table games.

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: Combined 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, exchange offices, and money service businesses; credit card companies; mortgage lenders; casinos; securities brokers/dealers; safekeeping providers; asset and individual or collective portfolio managers; and, life insurance or other investment related insurance companies and brokers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 4,100 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, exchange offices, and money service businesses; credit card companies; mortgage lenders; casinos; securities brokers/dealers; safekeeping providers; asset and individual or collective portfolio managers; and, life insurance or other investment related insurance companies and brokers

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

New Zealand 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/document/28/0,3746,en_32250379_32236963_43998044_1_1_1_1,00.html

Enforcement and implementation issues and comments:

The Government of New Zealand (GONZ) is actively strengthening its ability to detect and deter money laundering and terrorist financing. New Zealand’s Anti-Money Laundering/Counter-Terrorist Financing Act of 2009 sets reporting requirements for financial service providers and casinos and establishes a risk-based approach to tracking potential money laundering and terrorism financing activities. However, while the Act is in force, the Ministry of Justice is still finalizing regulations, and enforcement will not begin until 2013, in part to give covered entities more time to accommodate the changes. The New Zealand financial intelligence unit has hired additional personnel to manage the workload.

In December 2012, the New Zealand Cabinet approved proposed amendments to the Companies Act which will address the vulnerabilities created by foreign-owned shell companies. As a result of these vulnerabilities, New Zealand was removed from the European Union white list in June 2011, apparently due to revelations over New Zealand shell companies being linked with east European and Russian corruption.

New Zealand and the United States do not require a bilateral mutual legal assistance treaty to enter into a mutual assistance relationship. The United States has been designated as a “prescribed foreign country” in New Zealand’s Mutual Assistance in Criminal Matters Act 1992, enabling New Zealand to process requests for assistance from the United States on a reciprocal basis. In practice, New Zealand and U.S. authorities have a good record of cooperation and information sharing in this area. The GONZ regularly cooperates in international money laundering and terrorist financing initiatives and investigations.

Nicaragua

The Republic of Nicaragua is not considered a regional financial center. However, the financial system is vulnerable to money laundering as the country continues to be a strategic narcotics transshipment route for South American cocaine and heroin destined for the United States and cash returning to South America. The high level of political corruption is also a significant concern. It is suspected money laundering occurs via traditional mechanisms such as legal businesses. Additionally, some evidence exists of informal “cash and carry” networks for delivering remittances from abroad that may be indicative of money laundering. There are no convictions for money laundering in either sector.

Nicaragua, with access to the Atlantic and Pacific Oceans, large inland lakes, porous border crossings, and a sparsely-populated and underdeveloped Atlantic Coastal region, is an ideal haven for transnational organized criminal groups, including human and drug trafficking organizations. The Central America Four Agreement among El Salvador, Guatemala, Honduras, and Nicaragua allows for free movement of these countries’ citizens across their respective borders without passing through immigration or customs inspection. Consequently, the agreement represents a vulnerability to each country for the cross-border movement of contraband and proceeds of crime.

The National Free Trade Zone Commission, a government agency, regulates free trade zone (FTZ) activities. As of 2012, a total of 215 companies operated in 34 designated FTZs. The Nicaraguan Customs Agency monitors all FTZ imports and exports.

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, financial companies, credit institutions, stock exchange, insurance companies, credit and loan cooperatives, brokerage firms, money exchanges and remitters, credit card issuers, casinos, microfinance organizations, and pawn shops

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 133: August 2011 - February 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, financial companies, credit institutions, stock exchange, insurance companies, credit and loan cooperatives, brokerage firms, money remitters and exchanges, casinos, credit card issuers, microfinance organizations, and pawn shops

money laundering criminal Prosecutions/convictions:

Prosecutions: 9 in 2012

Convictions: 9 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Nicaragua 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=337&Itemid=418&lang=en

Enforcement and implementation issues and comments:

The 2010 Anti-Organized Crime Law 735 and Executive Decree 70-2010 impose key obligations on all reporting institutions, including microfinance institutions, money remitters and currency exchange houses. Supplemental legislation, Law 769, Law of Promotion and regulation of Microfinance, went into effect in January 2012. Law 769 creates a supervisory agency for the microfinance sector, the National Commission for Microfinance, and applies a broad range of anti-money laundering requirements on microfinance institutions. In June 2012, the National Assembly approved law 793 which creates a Financial Intelligence Unit to replace the Commission for Financial Analysis. The effective implementation of law 793 remains a challenge.

Law 735 regulates the prevention, investigation and prosecution of organized crime, as well as the administration of seized, forfeited and abandoned assets. However, the Government of Nicaragua should improve the enforcement activities of Law 735. Nicaragua has yet to create a unit to administer seized, confiscated, and abandoned assets.

On December 5, 2011, Law 766, “Special Law for the Control and Regulation of Casinos and Slot Parlors,” went into effect. This law regulates casinos and slot parlors and establishes categories of gaming. The law complements Law 735; Chapter VIII of the law establishes anti-money laundering/counter-terrorism financing regulations for the industry that include suspicious transaction reporting and customer due diligence requirements. The Board of Directors of the Nicaraguan Tourism Institute is the enforcement authority.

During 2012, two noteworthy money laundering cases related to the narcotics trade were prosecuted. In the first case, a politically-appointed government official and nine other defendants were found guilty of trafficking and money laundering. It was the first case involving an appointed government official. The second case involved 18 Mexican citizens and three Nicaraguans posing as journalists in an elaborate scheme to transit illicit money through Central America.

Nicaragua should improve strategic anti-money laundering/counter-terrorist financing deficiencies, including inadequate customer due diligence measures, recordkeeping requirements, and STR reporting requirements. Statutes enacted to criminalize money laundering and terrorist financing lack sufficient enforcement due to weak mechanisms, budget deficiencies, and a lack of independence in the judicial system. The effectiveness of the criminal justice system is also limited by the lack of financial and human resources.

Niger

Niger is one of the poorest and least developed countries in the world. Niger is not a regional financial center, and its banking sector is rudimentary. It is a member of the Central Bank of West African States, and shares its central bank and currency, the CFA Franc, with other countries in the region. With porous borders and a large territory, Niger provides an ideal transit point for various criminal organizations and terrorist groups. High transaction costs deter businesses from placing large amounts of cash in the banking system. Most economic activity takes place in the informal, cash-based financial sector; and informal remittances and transfer systems are widespread.

Money laundering and financial crimes are commonplace in Niger. Illegal proceeds derive from rampant trafficking of drugs, small arms, people, and everyday commodities across the Algerian and Mauritanian borders in the sparsely-populated north of the country. Since 2008, kidnappings for ransom have become a preferred fundraising method for terrorist groups. More recent factors affecting security are the return of pro-Qaddafi mercenaries, the takeover of western neighbor Mali by al Qaida and affiliates, and the terrorist organization Boko Haram based in southern neighbor Nigeria. After a 2010 military coup, Niger installed a democratically-elected regime in April 2011.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Public Treasury and State Savings Deposit institutions; BCEAO; banks, microfinance institutions, and money exchanges; insurance companies and brokers; securities exchanges or brokers; post office; mutual funds and fixed capital investment companies; lawyers, asset or fund custodians, and management and intermediation firms; business brokers for financial entities, auditors, and real estate agents; sellers of valuable items such as fine arts or precious stones; fund carriers; casinos; travel agencies; and non-governmental organizations (NGOs)

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Public Treasury and State Savings Deposit institutions; BCEAO; banks, microfinance institutions, and money exchanges; insurance companies and brokers; securities exchanges or brokers; post office; mutual funds and fixed capital investment companies; lawyers, asset or fund custodians, and management and intermediation firms; business brokers for financial entities, auditors, and real estate agents; sellers of valuable items such as fine arts or precious stones; fund carriers; casinos; travel agencies; and NGOs

money laundering criminal Prosecutions/convictions:

Prosecutions: 3 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Niger is a member of the Inter Governmental Action Group against Money Laundering and Terrorist Financing 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/Niger.html

Enforcement and implementation issues and comments:

The Government of Niger’s anti-money laundering/counter-terrorist financing (AML/CFT) laws are not in full compliance with international standards. Also, although addressed in the AML/CFT laws, customer due diligence procedures for designated non-financial businesses and professions have not been implemented.

The National Center for the Treatment of Financial Information (CENTIF) is Niger’s financial intelligence unit (FIU). It has accomplished little since its establishment in 2004. With new management, in 2012 CENTIF made progress with 13 declarations of suspicious activities and five reports submitted to the Ministry of Justice for legal action. In April 2012, CENTIF organized an AML/CFT awareness raising workshop for domestic stakeholders. CENTIF works with other FIUs in the region to provide technical assistance and outreach to stakeholders. In addition, Nigerien authorities cooperate with law enforcement efforts, mutual legal assistance, and asset sharing groups within the region.

On January 21, 2010, Niger enacted Law # 2010-05 on Terror Financing. Subject to corrections, the law was adopted in February 2012. The law puts in place a legal framework that addresses suspicious transaction reporting obligations for banking and financial institutions and the cross-border transportation of currency. It also brings charities and nonprofit organizations within the legal framework. The AML/CFT inter-ministerial committee, formally created in 2010, held its inaugural meeting in April 2012.

Nigeria

Nigeria remains a major drug transshipment point and a significant center for criminal financial activity. Individuals, such as internet fraudsters and corrupt officials and businessmen, as well as criminal and terrorist organizations take advantage of the country’s location, porous borders, weak laws, corruption, inadequate law enforcement, and poor socioeconomic conditions to launder the proceeds of crime. The proceeds of illicit drugs in Nigeria derive largely from foreign criminal activity rather than domestic activities. One of the schemes used by drug traffickers to repatriate and launder their proceeds involves the importation of various goods at sub-market prices, followed by their resale within Nigeria, sometimes at a loss. Such goods include, predominantly, luxury cars and items such as textiles, computers, and mobile telephones. Drug traffickers reportedly also use Nigerian financial institutions to conduct currency transactions involving U.S. dollars derived from illicit drugs.

Proceeds from drug trafficking; illegal oil bunkering; bribery and embezzlement; contraband smuggling; theft; bank robberies; and financial crimes, such as bank fraud, real estate fraud, and identity theft, constitute the major sources of illicit proceeds in Nigeria. Advance fee fraud, also known as “419 fraud” in reference to the fraud section in Nigeria’s criminal code, remains a lucrative financial crime that generates hundreds of millions of illicit dollars annually. Money laundering in Nigeria takes many forms, including: investment in real estate; wire transfers to offshore banks; political party financing; deposits in foreign bank accounts; use of professional services, such as lawyers, accountants, and investment advisers; reselling goods imported at sub-market prices; and bulk cash smuggling. Nigerian criminal enterprises adeptly subvert international and domestic law enforcement efforts and evade detection. Nigeria is ranked 139 of 176 on Transparency International’s 2012 Corruption Perception Index.

The Financial Action Task Force (FATF) highlighted Nigeria’s lack of adequate improvement by including Nigeria in its October 19, 2012 Public Statement. The FATF did not consider sufficient Nigeria’s anti-money laundering/counter-terrorist financing (AML/CFT) progress in 2012 relative to its action plan.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, investment and securities broker/dealers, and discount houses; insurance institutions; debt factorization and conversion firms, money exchanges, and finance companies; money brokerage firms whose principal business includes factoring, project financing, equipment leasing, debt administration, fund management, private ledger service, investment management, local purchase order financing, export finance, project and financial consultancy, or pension funds management; dealers in jewelry, cars and luxury goods; chartered accountants, audit firms, and tax consultants; clearing and settlement companies and legal practitioners; hotels, casinos, and supermarkets

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,153: January 1, 2012 – November 30, 2012

Number of CTRs received and time frame: 3,386,117: January 1, 2012 – November 30, 2012

STR covered entities: Banks, investment and securities broker/dealers, and discount houses; insurance institutions; debt factorization and conversion firms, money exchanges, and finance companies; money brokerage firms whose principal business includes factoring, project financing, equipment leasing, debt administration, fund management, private ledger service, investment management, local purchase order financing, export finance, project and financial consultancy, or pension funds management; dealers in jewelry, cars and luxury goods; chartered accountants, audit firms, and tax consultants; clearing and settlement companies and legal practitioners; hotels, casinos, and supermarkets

money laundering criminal Prosecutions/convictions:

Prosecutions: 14: October 1, 2011 – September 30, 2012

Convictions: 5: October 1, 2011 – September 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Nigeria 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/Nigeria.html

Enforcement and implementation issues and comments:

In 2012, the Government of Nigeria (GON) enacted the Money Laundering (Prohibition) (Amendment) Act to broaden the predicate offenses to money laundering. The GON continued to work to address strategic deficiencies in its AML/CFT regime. Those deficiencies include the failure to criminalize fraud as a predicate offense to money laundering and the failure to criminalize the financing of terrorism for any purpose, i.e., regardless of a link to the planning or commission of a terrorist act.

Lack of investigative capacity as well as judicial corruption have hindered the progress of, or else thwarted, many prosecutions and investigations. The GON should ensure the autonomy and independence from political pressure of the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU). The GON also should strengthen its supervision of designated non-financial businesses and professions. Moreover, the GON should work to counter corruption within law enforcement bodies and make every effort to ensure that all those agencies that pursue money laundering cases – including the EFCC, Nigerian Drug Law Enforcement Agency, Independent Corrupt Practices and Other Related Offenses Commission, Nigerian Agency for the Prevention of Trafficking in Persons, and the National Police Force – have the resources and capacity to function as investigative partners in financial crimes cases. The National Assembly should adopt safe harbor provisions to protect STR reporting entities and their employees. The GON should consider developing a cadre of specially trained judges with dedicated portfolios in order to handle financial crime cases more effectively, and the National Assembly also should adopt a non-conviction based asset forfeiture bill.

Niue

Niue is not a regional financial center and has no free trade zones. Niue is a self-governing democracy, operating in free association with New Zealand, upon which it relies heavily for assistance with external and economic affairs. Niue has experienced a significant decline in population, largely from the emigration of its population to New Zealand. Niue’s domestic economy and infrastructure, reflective of its small population, limits the ability of criminals and terrorists to operate and to generate funds.

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

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

criminalizATION OF money laundering:

“All serious crimes” approach or “list” approach to predicate crimes: 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; safe deposit box, trust and company service providers, and individual funds trustees; insurers and insurance intermediaries; securities dealers, futures brokers, money exchangers and remitters; issuers, sellers, or redeemers of travelers checks, money orders, or similar instruments; payroll and payroll funds delivery businesses; dealers in precious metals and stones; real estate agents; casinos and gambling houses (including internet gaming); lawyers, notaries, and accountants engaged in real estate, client financial management, and the creation, operation and management of companies; and legal persons and arrangements

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks; safe deposit box, trust and company service providers, and individual funds trustees; insurers and insurance intermediaries; securities dealers, futures brokers, money exchangers and remitters; issuers, sellers, or redeemers of travelers checks, money orders, or similar instruments; payroll and payroll funds delivery businesses; dealers in precious metals and stones; real estate agents; casinos and gambling houses (including internet gaming); lawyers, notaries, and accountants engaged in real estate, client financial management, and the creation, operation and management of companies; and legal persons and arrangements

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

Niue 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/Niue%20ME2.pdf

Enforcement and implementation issues and comments:

In recent years Niue has tightened its legislation to comply with anti-money laundering/counter-terrorist financing (AML/CFT) international standards. Two draft bills are being pursued to fill legislative gaps in existing legislation: the Mutual Assistance in Criminal Matters (Amendment) Bill and the Terrorism Suppression and Transnational Organized Crime (Amendment) Bill. The government should pass these bills. The government should increase its efforts to enforce the laws with regard to cross border currency declarations.

The Niue financial intelligence unit (FIU) exchanges financial intelligence related to money laundering and financing of terrorism with the New Zealand FIU. The Niue Crown Law office reports it has received a small number of cash transaction reports. However, it is not apparent that any prosecutions or asset seizures have occurred under its AML/CFT legislation, nor has it received any suspicious transaction reports in the last year. While all banks, money remitters, and appropriate designated non-financial businesses and professions (DNFBPs) are covered under the law for reporting purposes, none are subject to supervision. Only one lawyer and one accounting firm are active on the island; there are no insurance or securities entities or other active DNFBPs. 

Niue is not a member of the United Nations. On July 16, 2012, Niue acceded to the UN Convention against Transnational Organized Crime. Niue should become a party to the UN Convention against Corruption.

Norway

Although it is a high income country, Norway is not considered a regional financial center. Norway’s significance in terms of money laundering is low. There are illicit proceeds related to narcotics sales and production, prostitution, robberies, smuggling, and white collar crimes. Criminal proceeds laundered in Norway derive primarily from domestic criminal activity, often by foreign criminal gangs or guest workers who in turn remit the proceeds home.

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, the Central Bank, finance companies, e-money institutions, pension funds, postal operators, auditors, asset managers, securities and investment dealers and firms, credit agents, money exchangers, insurance companies, accountants, lawyers, notaries, auction houses, realtors and housing associations acting as real estate agents, money transporters, and dealers in autos and high value goods

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 3,433: January 1 - October 31, 2012

Number of CTRs received and time frame: 821: January 1 - October 31, 2012

STR covered entities: Banks, the Central Bank, finance companies, e-money institutions, pension funds, postal operators, auditors, asset managers, securities and investment dealers and firms, credit agents, money exchangers, insurance companies, accountants, lawyers, notaries, auction houses, realtors and housing associations acting as real estate agents, money transporters, and dealers in autos and high value goods

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

Norway is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/61/55/35535328.pdf

Enforcement and implementation issues and comments:

The Norwegian financial intelligence unit (FIU) voices concern over the low number and poor quality of reports from certain entities covered by the reporting obligation. The number of submitted suspicious transaction reports (STRs) dropped significantly in 2011, to 4,018, down from 6,660 in 2010 and a high of 9,026 in 2008. The reduction can be explained partly by improved customer screening and changes in the reporting regimes of major reporting institutions, but given the overall transaction volume, the FIU suspects considerable underreporting. The implementation of the European Union Payment Services Directive also has resulted in a larger number of smaller agents being licensed to provide money transfer services; and these may be lacking in knowledge or experience about when and how to report. The FIU is attempting to improve the quality of STR reporting by providing specific guidance and follow up to obligated entities. Although aggregate data is not available, the number of money laundering prosecutions and convictions is believed to be low given the size of the Norwegian economy.

In addition to Norway’s large currency transaction reporting requirement a purpose declaration is required for currency transactions over NOK 100,000 (approximately $18,165).

Norwegian police agencies share responsibility for identifying, tracing, freezing, seizing, and forfeiting narcotics and terrorist financing related assets. As a general rule, the police may seize direct proceeds from criminal acts. Norwegian law also allows for seizing instruments of crime, but a relationship to the crime must be proven.

Oman

Oman is not a regional or offshore financial center; trade is generally financed in small amounts of cash. Due to its location on the tip of the Strait of Hormuz, smugglers have been known to operate between Musandam, the northern-most exclave of Oman, and Iran. Oman’s 3,000 km coastline and land border crossings are vulnerable to exploitation by smugglers, specifically in Musandam and along its borders with Yemen and the United Arab Emirates. There is a market for smuggled consumer goods, particularly alcohol and narcotics. Police controls and security measures at the points of entry are largely successful in interdicting smuggled goods; and the Government of Oman (GOO) is proactive in tracking and prosecuting drug traffickers. Smuggling and drug trafficking activities raise a limited amount of illegal proceeds. Corruption remains a concern for the GOO.

Terrorist financing is not prevalent in Oman. Hawala is not permitted in the financial service sector, and Omani authorities have acted on two occasions to shutter attempted hawala 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: All serious crimes

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer rules:

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

KYC covered entities: Banks; foreign exchange companies; investment and credit companies; insurance companies; companies and individuals providing financial services; stock and securities brokers; real estate brokers; merchants of gold, precious metals, and stones; notaries; law and accounting professionals; and investment portfolio managers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks; foreign exchange companies; investment and credit companies; insurance companies; companies and individuals providing financial services; stock and securities brokers; real estate brokers; merchants of gold, precious metals and stones; notaries; law and accounting professionals; and investment portfolio managers

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdiction: YES

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

Enforcement and implementation issues and comments:

The GOO continues to improve its anti-money laundering/counter-terrorist financing (AML/CFT) regime. In December 2012, Oman formally introduced Islamic banking services into the financial system through Royal Decree 69/2012, which adds a provision to allow such services to be offered under existing banking law. Two new banks are slated to provide Islamic banking products. In addition to the banks, the Central Bank of Oman oversees finance and leasing companies and money exchange establishments, including those which handle remittances of expatriate laborers.

In response to corruption issues, Oman has taken steps against corrupt practices. The GOO has removed ministers and other senior officials, brought investigations by its elected lower house of parliament, granted the State Audit Institution greater investigatory power and strengthened its public Tender Law. The Royal Oman Police Financial Investigations Unit is responsible for enforcing AML/CFT laws and regulations. Oman’s financial intelligence unit (FIU) receives few suspicious transaction reports (STRs) from non-bank entities; about 95 percent of STRs are received from mostly foreign banks. The FIU does not have access to daily transaction flows via the Central Bank database. The FIU recognizes its lack of capacity in forensic analysis, compromising its ability to analyze financial data and seriously pursue AML cases. The Omani government does not publish information regarding suspicious transactions and criminal prosecutions. Omani authorities, from the FIU to law enforcement, have no central database; more than 70 databases currently receive different data sets.

To enhance Oman’s operational capabilities, the GOO should finalize steps to empower the FIU and law enforcement authorities, as well as provide additional training to improve analytical and investigatory capacity. The FIU should conduct outreach to non-bank financial institutions to improve reporting from the non-bank sectors. The GOO should enhance and integrate its databases to ensure access by appropriate Omani interagency authorities; require enhanced due diligence procedures for politically exposed persons; and collect and publish statistics indicating numbers of STRs, prosecutions, investigations, and convictions in line with international standards. The GOO should become a party to the UN Convention against Corruption.

Pakistan

Pakistan is strategically located between south, central and western Asia, with a coastline along the Arabian Sea. Its porous borders with Afghanistan, Iran, and China facilitate the smuggling of narcotics and contraband between Afghanistan and overseas markets. The country suffers from financial crimes associated with tax evasion, fraud, corruption, trade in counterfeit goods, contraband smuggling, narcotics trafficking, and terrorism. The black market economy generates substantial demand for money laundering and illicit financing.

Common methods for transferring illicit funds include fraudulent trade invoicing, phony currency exchange, and bulk cash smuggling. Criminals utilize import/export firms, front businesses, and the charitable sector to carry out such activities. Pakistan’s real estate sector is another common money laundering destination, since real estate transactions tend to be poorly documented.

Money laundering in Pakistan affects both the formal and informal financial systems. In 2012, the Pakistani diaspora legitimately remitted $13.2 billion back to Pakistan via the formal banking sector. Though it is illegal to change foreign currency without a license, unlicensed hawalas/hundis are prevalent throughout Pakistan. These entities also are commonly used to transfer and launder illicit money.

In October 2012, the Financial Action Task Force (FATF) included Pakistan on its Public Statement because of continuing deficiencies in its anti-money laundering/counter-terrorist financing (AML/CFT) regime.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, Developmental Financial Institutions (DFIs), exchange companies, mutual funds, asset management companies, investment banks, leasing companies, modarabas—a kind of partnership, wherein one party provides finance to another party for the purpose of carrying on a business, pension funds, stock exchanges and brokers, insurance and reinsurance companies, insurance brokers and insurance surveyors

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 560 in 2011

Number of CTRs received and time frame: 204,417 in 2011

STR covered entities: Banks, DFIs, exchange companies, mutual funds, asset management companies, investment banks, leasing companies, modarabas, pension funds, stock exchanges and brokers, insurance and reinsurance companies, insurance brokers and insurance surveyors

money laundering criminal Prosecutions/convictions:

Prosecutions: Not available

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Though Pakistan has taken some progressive steps towards remedying its AML/CFT regime, the FATF has noted Pakistan’s failure to adequately implement the totality of its action plan, or to address certain deficiencies in its terrorism finance laws. Pakistan should adopt legislation to address these deficiencies. Pakistani authorities also need to investigate and prosecute money laundering and terrorism financing and not focus on the predicate offense creating the proceeds of crime. Awareness raising on AML/CFT issues is critical to the judicial sector.

Weak legislation and lack of implementation also have stymied Pakistan’s AML regime. Enforcement deficiencies, particularly regarding the movement of cash, leave Pakistan’s informal financial sector vulnerable to illicit exploitation. For example, the State Bank of Pakistan (SBP) requires all money exchange companies to obtain licenses and meet minimum capital requirements. As a result, it is illegal for money exchange companies or hawalas to operate without a license. However, few hawalas have been registered by the authorities, and unlicensed hawaladars continue to operate illegally throughout Pakistan, particularly in Peshawar and Karachi.

To address these deficiencies, Pakistan should resolve remaining legal inadequacies related to the criminalization of money laundering; demonstrate effective regulation over exchange companies, specifically by creating an appropriate sanctions regime and increasing the range of preventive measures applicable to such services; implement effective controls for cross-border cash transactions; and develop an effective asset forfeiture regime.

Palau

Palau is not a regional or offshore financial center. The primary sources of illegal proceeds are illegal drugs and prostitution. Corruption in the governmental sector includes the misuse of government funds and cronyism, in part due to Palau’s small size and extensive family networks. Palau is a low-risk jurisdiction for organized crime and terrorist financing.

Palau has one free trade zone, the Ngardmau Free Trade Zone (NFTZ). A public corporation, Ngardmau Free Trade Zone Authority, oversees the development of the NFTZ and issues licenses for businesses to operate there. NFTZ licensing exempts businesses from Foreign Investment Act requirements and certain import and export taxes. To date, no development has taken place within the designated free trade zone area, and the NFTZ directors continue to search for developers and investors.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, credit unions, and money remitters

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 102 in 2012

Number of CTRs received and time frame: 106 in 2012

STR covered entities: Banks, credit unions, money remitters, and non-governmental organizations

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Palau 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/Palau%202008.pdf

Enforcement and implementation issues and comments:

The Money Laundering Prevention and Control Act (MLPCA) does not include all predicate crimes prescribed in the international standards and currently lacks implementing regulations. Nor does it cover the designated non-financial businesses and professions operating in Palau. Significant deficiencies remain in the areas of customer due diligence, record keeping, monitoring of transactions, and supervision. The Financial Institutions Commission is the anti-money laundering/counter-terrorist financing (AML/CFT) supervisor, but it does not have the resources to issue any regulations nor to ensure AML/CFT compliance. These shortfalls should be remedied by the Government of Palau (GOP).

The Palau financial intelligence unit (FIU) lacks a dedicated budget and staff. The GOP, with donor assistance, organized a multi-agency STR review team to review the reports to help identify and initiate investigations. The multi-agency approach has enabled the FIU to function given its limitations of manpower and funding, and has fostered information sharing and joint investigations among the relevant law enforcement agencies. It is not, however, a long-term solution, and the GOP should dedicate funds and permanent staff to the FIU.

The Cash Courier Disclosure Act has been used successfully by Palau Customs and Security to make bulk cash currency seizures at the airport. The GOP should extend its effective monitoring of the airport to all its border points of entry and exit to protect against the smuggling of bulk cash, narcotics and other contraband.

Palau’s Counter-Terrorism Act specifically addresses its obligations under UN Security Council Resolution 1373. However, it does not adequately address provisional measures for seizing of evidence and property and the freezing of capital and financial transactions related to the financing of terrorism. Palau should strengthen its ability to freeze and confiscate assets related to terrorism financing. The GOP should circulate the UNSCR 1267 Sanctions Committee’s consolidated list of terrorist entities. Palau also should become a party to the 1988 UN Drug Convention and the UN Convention against Transnational Organized Crime.

Panama

Panama’s strategic geographic location, dollarized economy, and status as a regional financial, trade and logistics center make it an attractive target for money launderers. The Colon Free Zone (CFZ), the second-largest free trade zone in the world, is located on Panama’s Atlantic coast. Money laundered in Panama is believed to be primarily from the proceeds of drug trafficking due to the country’s location along major drug trafficking routes. Numerous factors hinder the fight against money laundering, including a weak regulatory framework, the existence of bearer share corporations, a lack of collaboration among government agencies, inconsistent enforcement of laws and regulations, and a weak judicial system susceptible to corruption and favoritism.

The Government of Panama (GOP) has issued 14 permits to operate free trade zones (FTZs) in Panama. Currently, there are only nine active FTZs, all concentrated in Panama City and Colon.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, savings cooperatives, savings and mortgage banks, and money exchanges; investment houses and brokerage firms; insurance and reinsurance companies; fiduciaries; casinos; free trade zone companies; finance companies; real estate brokers; and lawyers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 652 in 2011

Number of CTRs received and time frame: 517,267: January 1 - September 30, 2012

STR covered entities: Banks, cooperatives, money exchanges, money transfer companies, casinos, betting and gaming companies, fiduciaries, insurance and insurance brokerage companies, the national lottery, investment and brokerage houses, real estate companies, pawnshops, the CFZ, Panama Pacifico Special Economic Zone, Baru Free Trade Zone and other free trade zones

money laundering criminal Prosecutions/convictions:

Prosecutions: 25: January 1 – October 1, 2012

Convictions: 26 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Panama 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#informes_evaluaciones_mutuas

Enforcement and implementation issues and comments:

Panama cooperates well with U.S. law enforcement agencies. However, the GOP’s success in interdicting illegal drug flows is not matched by success in addressing money laundering concerns. There is limited cooperation and communication among the various government agencies tasked with addressing money laundering. Agencies are under-resourced, often lacking the personnel and training to investigate and prosecute complex money laundering schemes.

Panama’s financial intelligence unit, the UAF, is responsible for analyzing suspicious financial transactions; however, it is ineffective due to a lack of resources and political independence. The UAF does not have the capability to receive STRs in an electronic format, hindering analysis and timely investigations. The UAF reports to the Ministry of the Presidency and, according to a broad range of sources, inquiries initiated by the UAF mainly concern political figures, leading to questions about its independence.

The judicial branch’s capacity to successfully prosecute and convict money launderers remains weak, and judges remain susceptible to corruption. The transition to an accusatory penal system, which began in September 2010, is expected to be fully implemented by 2015, but has not yet had a noticeable effect on money laundering prosecutions.

Panama’s Customs Authority is taking steps to reduce the use of Tocumen Airport as an artery for couriers to move cash into Panama. More-targeted enforcement action, in collaboration with U.S. law enforcement agencies, has led to increased scrutiny of passengers and notable seizures of undeclared cash at the airport. Panamanian Customs has also been effective in identifying potential trade-based money laundering (TBML) with information from the Trade Transparency Unit (TTU), a multi-national trade data-sharing entity. The trade information is analyzed to identify anomalies indicative of TBML, trade fraud and other financial crimes. Despite these advances, Customs lacks sufficient resources to fulfill its mandate. Although Customs generates significant revenue for the government, its limited budget constrains its ability to hire skilled personnel and purchase necessary equipment.

As of November 2012, Panama has 14 double taxation treaties and eight tax information exchange agreements, including one with the United States signed in 2010.

The CFZ continues to be vulnerable to illicit financial activities and abuse by criminal groups, due primarily to weak customs, trade and financial transactions oversight. Bulk cash is easily introduced into the country by declaring it is for use in the CFZ. If the CFZ’s electronic transaction recording information system is fully integrated with the TTU, better identification of potential TBML activity will be possible.

The continued existence of bearer share corporations remains a vulnerability of the anti-money laundering (AML) regulatory framework. Additionally, only banks have enhanced due diligence procedures for foreign and domestic PEPs. Executive Decree 55 of February 1, 2012 expands the list of supervision entities, which now includes the Superintendent of Banks; the Panamanian Institute of Autonomous Cooperatives; the Superintendent of Securities Markets; the Colon Free Zone Management; the National Lottery; the Panama Pacifico Agency; the Free Zone of Baru Management; and five offices under the Ministry of Industry and Commerce: the Gaming Control Board, Directorate General of Financial Companies, Real Estate Board, National Directorate of Investments, and Superintendent of Insurance and Reinsurance. Cabinet Decree, Number 43 of November 13, 2012, sets the framework for Panama to become a participant in the Kimberley Process and allows the import and export of rough diamonds. This has raised concerns that rough diamonds could become a new channel for TBML. A new AML law, which has been in process since 2011, would strengthen the UAF’s authority and further increase the number of sectors required to report suspicious transactions. The government has not announced a time frame for enactment.

The GOP must improve its AML legal framework, strengthen the prosecutor’s office and the judicial system, and create a more transparent financial network so that money laundering will become more difficult within Panama’s borders.

Papua New Guinea

Papua New Guinea (PNG) is not considered a major financial center. It has a relatively stable banking system closely integrated with the financial systems of Australia and New Zealand.

Smuggling and public corruption are problems in PNG. Corruption is one of the main sources of illegal proceeds, especially related to misappropriation of public funds linked to the extraction industries, related licensing procedures, and through fraudulent compensation claims. The risk of domestic corruption is likely to be enhanced as PNG’s rapid economic growth continues, fueled by large scale foreign investment in the mining and petroleum sectors. Corruption is also a serious issue in party politics. Transshipment of drugs and other illegal goods en route to Australia is an emerging risk. The financial intelligence unit (FIU) reports that criminals are increasingly using corporate entities to hide funds and move them offshore. Limited PNG capacity in border control and the presence of organized criminal groups pose significant risks for money laundering. PNG relies on assistance from Australia to deter illegal cross-border activities primarily from Indonesia, including illegal narcotics trafficking.

In PNG, the financial sector is small and provides little reach to the very large informal, rural, and self-employed segments of the population. Approximately 85 percent of the adult population (about 3.9 million people) lacks access to the formal sector.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, finance companies, savings and loans, and microfinance entities; superannuation funds; insurance and securities companies; gambling houses, casinos, and lotteries; lawyers and accountants; dealers of precious metals and stones; real estate agents; and money changers and 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, finance companies, savings and loans, and microfinance entities; superannuation funds; gambling houses, casinos, and lotteries; investment managers and insurance companies; real estate agents; dealers in precious metals and stones; money exchanges and remitters; lawyers; and accountants

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Papua New Guinea is a member of the Asia/Pacific Group on Money Laundering, 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/PNG%20MER_July%202011.pdf.

Enforcement and implementation issues and comments:

Suspicious transaction reporting is implemented only in the banking sector. Banks must report transactions above 10,000K (approximately $4,000) to the FIU.

PNG’s FIU believes that close to half of the PNG budget is lost to fraud and laundered through PNG’s banks. Much of this is done by check with little attempt to hide the source of the funds because of the low perceived risk of penalty. The FIU has adopted a proactive approach to combating this activity, focusing its efforts on crime prevention using financial intelligence. As part of this program, the FIU has issued new guidelines on government checks and payments to prevent criminals from being able to process those checks at financial institutions.

PNG and the Solomon Islands have a memorandum of understanding in place to share information on money laundering, transnational crime, and criminal/terrorist financing. PNG is consulting with Taiwan, the Philippines, Singapore, Japan, and Malaysia to develop similar arrangements. However, the FIU claims it is inadequately staffed and resourced to fully address money laundering in Papua New Guinea. The Government of Papua New Guinea (GOPNG) should continue to build the capacity of the FIU.

The government’s recent actions have suggested additional momentum to combat corruption and tackle money laundering. The “Task Force Sweep” has led to arrests for the misuse of government funds, including of several current and former government officials; but the GOPNG has had difficulties recovering stolen government funds in Australian bank accounts or invested in Australian real estate.

Legislatively, PNG authorities should criminalize terrorist financing, and the Ministry of Foreign Affairs and implementing agencies should develop and implement policies and procedures to implement the relevant UNSCRs. The GOPNG also should establish a legislative framework to ensure the immediate freezing of funds belonging to persons or entities designated under UNSCR 1267 and to ensure that lists of persons and entities so designated are distributed among financial institutions. PNG also should develop and implement a comprehensive system for the declaration or disclosure of cross border transportation of cash.

The GOPNG should continue to develop procedures that conform to international anti-money laundering/counter-terrorist financing standards. Domestically, the FIU and Prosecutor’s office should work to identify, disrupt, and prosecute suspected money laundering operations. The GOPNG should ensure these agencies, as well as the National Fraud and Anti-Corruption Directorate, are sufficiently resourced to be able to gather evidence, mount investigations, and bring charges. In the international arena, Papua New Guinea should become a party to the UN Convention against Transnational Organized Crime and the 1988 UN Drug Convention.

Paraguay

Paraguay is a major drug transit country and money laundering center. A multi-billion dollar contraband trade, fed in part by endemic institutional corruption, occurs in the border region shared with Argentina and Brazil (the tri-border area, or TBA) and facilitates much of the money laundering in Paraguay. While the Government of Paraguay (GOP) suspects proceeds from narcotics trafficking are often laundered in the country, it is difficult to determine what percentage of the total amount of laundered funds is generated from narcotics sales or is controlled by domestic and/or international drug trafficking organizations, organized crime, or terrorist groups. Weak controls in the financial sector, open borders, bearer shares, casinos, a surfeit of unregulated exchange houses, lax or no enforcement of cross-border transportation of currency and negotiable instruments, ineffective and/or corrupt customs inspectors and police, and minimal enforcement activity for financial crimes allow money launderers, transnational criminal syndicates, and possible terrorist financiers to take advantage of Paraguay’s financial system.

Ciudad del Este, on Paraguay’s border with Brazil and Argentina, and nearby Salto del Guairá and Pedro Juan Caballero represent the heart of Paraguay’s “informal” economy. The area is well known for arms and narcotics trafficking, document forging, smuggling, counterfeiting, and violations of intellectual property rights, with the illicit proceeds from these crimes a source of laundered funds. Some proceeds of these illicit activities have been supplied to terrorist organizations, and trade-based money laundering occurs in the region.

Paraguay does not have an offshore sector. Paraguay’s port authority manages free trade ports and warehouses in Argentina (Buenos Aires and Rosario); Brazil (Paranagua, Santos, and Rio Grande do Sul); Chile (Antofagasta and Mejillones); and Uruguay (Montevideo and Nueva Palmira).

Money laundering likely occurs in the formal financial sector and definitely occurs in the non-bank financial sector, particularly in exchange houses, which are often used to move illicit proceeds both from within and outside Paraguay into the U.S. banking system. Large sums of dollars generated from normal commercial activity and suspected illicit commercial activity are also transported physically from Paraguay to Uruguay and Brazil, with onward transfers likely to destinations including banking centers in the United States.

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: NO Domestic: YES

KYC covered entities: Banks, credit and consumer cooperatives, and finance companies; insurance companies; exchange houses, stock exchanges, securities dealers, investment and trust companies; mutual and pension fund administrators; gaming entities; real estate brokers; nongovernmental organizations; pawn shops, and dealers in precious stones, metals, art, and antiques

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,487 in 2012

Number of CTRs received and time frame: 2,073,289 in 2012

STR covered entities: Banks, credit and consumer cooperatives, and finance companies; insurance companies; exchange houses, stock exchanges, securities dealers, investment and trust companies; mutual and pension fund administrators; gaming entities; real estate brokers; nongovernmental organizations; pawn shops, and dealers in precious stones, metals, art, and antiques

money laundering criminal Prosecutions/convictions:

Prosecutions: 8 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Paraguay is a member of the Financial Action Task Force against Money Laundering in South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation, conducted by the International Monetary Fund (IMF), can be found here: http://www.imf.org/external/pubs/ft/scr/2009/cr09235.pdf

Enforcement and implementation issues and comments:

For reporting entities that do not have a natural supervisory authority, the Secretariat for the Prevention of Laundering of Money or Assets (SEPRELAD) is the competent supervisor. Both SEPRELAD’s budget and staff increased in 2012. In January, SEPRELAD began using software to collect suspicious transaction reports (STR) directly from obligated institutions. The software better establishes the requirements for a STR for obligated institutions and provides a streamlined workflow for collecting supporting documentation. STRs increased 180 percent compared to the average of the previous two years, with a marked increase in reports from exchange houses (98 in 2011; 891 in 2012) and from banks (293 in 2011; 518 in 2012). In 2012, SEPRELAD continued extensive money laundering investigations of four banks and one exchange house in Ciudad del Este that began in late 2011.

The non-bank financial sector operates in a weak regulatory environment with limited supervision. The non-governmental organization responsible for regulating and supervising credit unions, the National Institute of Cooperatives, lacks the capacity to enforce compliance. Exchange houses are another critical non-bank sector where enforcement of compliance requirements remains limited. A 2012 law requires that politically exposed persons (PEPs) of foreign nationality be subject to enhanced due diligence procedures, as is required of domestic PEPs. SEPRELAD is still developing procedures to implement this expanded requirement.

Prosecutors handling financial crimes have limited resources to investigate and prosecute. In addition, the selection of judges, prosecutors and public defenders is largely based on politics, nepotism, and influence peddling. The lack of interagency cooperation throughout Paraguay, and particularly within law enforcement, is an impediment to effective enforcement, prosecution, and reporting efforts. Money laundering criminal prosecutions/convictions data only represents cases prosecuted by the Attorney General’s Economic Crimes Office. Paraguay does not have a centralized system for tracking money laundering cases prosecuted by other offices or by local prosecutors outside of Asuncion.

In 2012, the GOP enacted a law and implementing regulations that require obligated institutions to freeze preemptively any financial assets they suspect of being linked to terrorism, including terrorism financing and acts of terrorism. This law complements the 2011 terrorist asset freezing law. Paraguay needs to enact effective asset forfeiture legislation. Apart from the terrorist asset freezing laws, Paraguayan law does not provide for freezing or seizure of many criminally-derived assets. Law enforcement can only freeze assets of persons under investigation for a crime in which the state risks loss of revenue from furtherance of a criminal act, such as tax evasion. Enforcement agencies have limited authority to seize or forfeit assets of suspected money launderers and do not include bank accounts. When a seizure does occur, law enforcement authorities cannot dispose of these assets until a defendant is convicted, which frequently takes years.

People entering or leaving the country are required to declare to Customs values exceeding $10,000 or its equivalent in other currencies. However, Customs operations at the airports or overland entry points provide little control of cross-border cash movements. Customs officials are often absent from major border crossings, and required customs declaration reports are seldom checked.

Although Paraguay has made overall progress in improving its anti-money laundering/counter-terrorism financing regime, and Paraguay’s efforts and political commitment are reflected in the issuance of new legislation, the authorities’ broader coordination capacity and the strengthening of the institutional frameworks should be enhanced. The GOP should demonstrate the effectiveness of the legislation in force and of mechanisms it has put in place.

Peru

Peru is not a major regional financial center, nor is it an offshore financial center. According to the most recent U.S. Government statistics, Peru is the world’s highest potential producer of both pure cocaine and export-quality cocaine. Significant illegal earnings from drug trafficking are integrated into the Peruvian economy. As the Peruvian economy grows, financial crimes also increase. The most common methods of money laundering in Peru are believed to be via illegal mining, real estate sales, casinos, business investments, high interest loans, construction, export businesses, hotels, and restaurants. Other factors which facilitate money laundering include Peru’s cash-based and heavily dollarized economy, a large informal sector, and deficient regulatory supervision of designated non-financial businesses and professions (DNFBPs), such as the informal money exchange and wire transfer services. A large black market for pirated and smuggled goods exists, flush with cash transactions. Corruption remains an issue of concern in Peru.

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, insurance companies, stock funds and brokers, stock and commodities exchanges, credit and debit card companies, money exchange houses, mail and courier services, travel and tourism agencies, hotels and restaurants, notaries, the customs agency, casinos, auto dealers, construction or real estate firms, and dealers in precious metals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 2,605: January 1 – September 30, 2012

Number of CTRs received and time frame: 2.36 million: January 1 – September 30, 2012

STR covered entities: Banks; casinos; investment houses; dealers of arms, antiques, precious metals and stones; warehouses, construction and real estate firms; financial and insurance companies; travel agents; vehicle dealerships, import and export agents; credit card companies, courier and postal services, money lenders and money exchanges; customs; mining companies; individuals and enterprises that manufacture and commercialize explosives or chemical components used in drugs and explosives; and public entities that receive funds from other than the national treasury

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

Peru is a member of the Financial Action Task Force (FATF) for South America (GAFISUD), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.gafisud.info/actividades.asp?offset=-1

Enforcement and implementation issues and comments:

In 2012, the Government of Peru (GOP) made significant strides in the implementation of its “National Plan to Combat Money Laundering and Terrorist Financing” (National Plan). The most notable advancements include the passage of two pieces of legislation revamping asset forfeiture and anti-money laundering laws. The passage of these two legislative decrees achieves the majority of the legislative reform benchmarks set in the National Plan. While the legislation grants the Public Ministry and Financial Intelligence Unit (FIU) access to information covered by bank and tax secrecy laws, these new powers will likely be challenged, which will prevent effective investigation and enforcement.

Casinos remain an area of serious money laundering concern. Oversight of the gaming sector is very weak. The Ministry of Foreign Commerce and Tourism (MINCETUR), a participant in the National Plan, is the principal regulator of casinos. The FIU cannot monitor or investigate casinos for money laundering independently from MINCETUR. MINCETUR provides information to the FIU by requiring casinos to report suspicious transactions. The GOP needs to strengthen its oversight of casinos if it wishes to address potential money laundering in these entities by, for example, establishing restrictions on cash-to-cash, cash-to-check, and cash-to-wire transfer transactions in casinos.

Businesses involved in the transfer of funds only need prior authorization by the Superintendencia de Banca, Seguros y AFP (SBS), while cash couriers need a signed agreement with the Ministry of Transportation and Communication. Informal remittance businesses remain unsupervised and vulnerable to money laundering. These businesses include travel agencies and small wire transfer businesses. In August, the SBS issued a special regulation (5709-2012) on anti-money laundering/counter-terrorist financing prevention for notaries. The regulation provides a legal framework and guidelines for notaries to detect unusual or suspicious activities by their clients. Additionally, a special regulation was passed (Res SBS 6338-2012) which requires money exchange houses and pawn shops to register with authorities prior to starting a business. Peru should adequately supervise and regulate its financial institutions and DNFBPs.

Depending on the predicate offense, specialized prosecutors from the Public Ministry’s Coordinating Office on Organized Crime or its Office on Drug Trafficking are responsible for dealing with the majority of money laundering cases. Peru would benefit from reforms in the prosecutorial system – including in the conduct of investigations, presenting investigative results to prosecutors, writing investigative results in clearer language, and improving prosecutorial capacity. Out of over 2,600 STRs filed during the first nine months of 2012 totaling over $7 billion, only 72 FIU reports were submitted to the Public Ministry. Prosecutors complain they cannot understand the format or language of many of the FIU’s investigative results, and the 120-day time frame for prosecutors to investigate results is insufficient. The prosecutors’ office has added two forensic accountants to its staff to analyze incoming reports from the FIU, but it is unlikely this will be sufficient. Compounding the problem, many judges do not have adequate training to manage the technical elements of money laundering cases, and banks often delay providing information to judges and prosecutors. Convictions tend to be for lesser offenses or predicate crimes such as tax evasion or drug trafficking, which are easier offenses to prosecute successfully. GOP agencies and ministries involved in anti-money laundering criminal enforcement and proceedings should share a common definition and categorization of “money laundering conviction.” Combined with enhanced interagency information sharing practices, the GOP could then provide more accurate annual statistics.

Under Legislative Decree 25475, terrorist financing is established as a collaborative crime with terrorism and is criminalized in and of itself. On November 21, the GOP issued Legislative Decree 29936 to modify Legislative Decree 25475. Most importantly, it defines terrorist financing as an autonomous crime independent of predicate offenses.

While the GOP can freeze and seize accounts in the course of a traditional criminal case, Legislative Decree 1106 – “Legislation to Fight against Money Laundering and other crimes linked with Illegal Mining and Organized Crime” – specifically empowers the FIU and SBS to freeze bank accounts in cases suspected of links to money laundering or terrorist financing within 24 hours of a request made by a judge, regardless of whether a criminal case has been filed.

Since April 2011, due to a leak of sensitive information published by the Peruvian press, the U.S. Financial Crimes Enforcement Network (FinCEN) has continued to suspend its exchange of information related to money laundering and terrorist financing with the FIU. FinCEN is working with the Peruvian FIU on measures to prevent information leaks in the future and has set conditions for the resumption of information sharing with the Peruvian FIU.

Philippines

The Republic of the Philippines is not a regional financial center, but with a growing economy it is increasingly becoming an important player in Asia. Corruption is a source of laundered funds, and smuggling, particularly bulk cash smuggling, is a major problem. The Philippines continues to experience foreign organized criminal activity from players in China, Hong Kong, and Taiwan. In addition, insurgent groups operating in the Philippines engage in money laundering through ties to organized crime, and criminal activities are partially funded through kidnapping for ransom as well as narcotics and arms trafficking. In terms of narcotics trafficking, methamphetamine use is particularly high in the Philippines. While there are significant domestic clandestine methamphetamine laboratories, the drug also enters the country through bulk importation/smuggling via maritime vessels as well as air passenger couriers.

Casinos currently are not covered institutions under the Anti-Money Laundering Act (AMLA), although the laws surrounding online gaming are less clear. In 2011, gaming generated $1.3 billion and the revenue streams will expand further with a large, new casino slated to open soon in Manila. The Philippine Amusement and Gaming Corporation, a fully owned government entity, regulates the gaming industry.

Remittances sent to the Philippines by its large expatriate community also provide a channel for money laundering. However, banks and money remitters are now able to capture the bulk of remittances, approximately 80 - 90 percent, sent by overseas foreign workers to the Philippines.

The Philippines, dubbed the “world’s texting capital,” is a leader in the use of cell phone technology for funds transfers. Although less prevalent, the Government of the Philippines (GOP) has also started using this technology for government-to-persons (G2P) payments, such as through its Conditional Cash Transfer Program. The technology/systems used by telecom firms for facilitating financial transfers are subject to study and approval by the Philippine Central Bank.

The Philippine Economic Zone Authority (PEZA) regulates the 273 economic zones that are established throughout the country, and a handful of other zones are regulated locally or by the Bases Conversion Development Authority. Overall, the PEZA economic zones are properly regulated, but smuggling can be a problem in locally regulated zones. In addition, the Central Bank exercises regulatory supervision over four offshore banking units and requires them to meet reporting provisions and other banking rules and regulations.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks (universal, commercial, thrift, rural, and Islamic) and quasi banks; pawn shops and dealers in precious metals and stones; life insurance and pre-need companies, agents and brokers; mutual benefit associations; professional reinsurers and reinsurance brokers; holding companies; trusts for charitable uses; securities dealers and brokers/sales representatives, investment houses, mutual funds, trusts, and other entities managing securities as agent/consultant; foreign exchange dealers, money changers, and remittance/transfer agents; entities dealing in currency, financial derivatives, cash substitutes, and similar monetary instruments; and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 17,711 in 2012

Number of CTRs received and time frame: 49,061,986 in 2012

STR covered entities: Banks (universal, commercial, thrift, rural, and Islamic) and quasi banks; pawn shops and dealers in precious metals and stones; life insurance and pre-need companies, agents and brokers; mutual benefit associations; professional reinsurers and reinsurance brokers; holding companies; trusts for charitable uses; securities dealers and brokers/sales representatives, investment houses, mutual funds, trusts, and other entities managing securities as agent/consultant; foreign exchange dealers, money changers, and remittance/transfer agents; entities dealing in currency, financial derivatives, cash substitutes, and similar monetary instruments; and accountants

money laundering criminal Prosecutions/convictions:

Prosecutions: 13 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Philippines is a member of the Asia/Pacific Group on Money Laundering, 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/The%20Philippines%20DAR%20-%20Final%20%20210809.pdf

Enforcement and implementation issues and comments:

In June 2012, the Philippines enacted legislation to address some noted major deficiencies. The changes authorize the Anti-Money Laundering Council (AMLC) to apply to the courts for ex parte inquiry into deposits and investments in relation to all unlawful activities enumerated under the AMLA. The changes also make terrorism financing a stand-alone crime and empower the AMLC to freeze funds and properties of designated terrorists and terrorist organizations, without delay, for cases involving terrorist financing.

Revised Implementing Rules and Regulations issued in August 2012 now define a politically exposed person (PEP) and require covered institutions to take reasonable measures to determine whether a customer or beneficial owner is a PEP. The rules call for enhanced due diligence only for domestic PEPs assessed as high risk for money laundering and terrorist financing, including obtaining senior management approval for establishing or continuing business relationships and establishing their source of wealth/source of funds. Foreign PEPs are automatically subject to enhanced due diligence.

Legislation pending in the Philippine Senate seeks to address other deficiencies by expanding the definition of a money laundering offense according to standards specified by international conventions to which the Philippines is a party, and expanding the lists of covered institutions and predicate crimes. The country should pass this legislation. In addition, the country should seek to include casinos in the proposed list of covered institutions.

While the GOP has made notable progress in enacting legislation and issuing regulations, limited human and financial resources constrain tighter monitoring and enforcement.

Poland

Poland lies directly along one of the main routes used by narcotics traffickers and organized crime groups between the former Soviet Union republics and Western Europe. Poland is not considered a regional financial center, nor is it considered a particularly important international destination for money laundering. According to Polish government 2011 estimates, narcotics trafficking, organized crime activity, auto theft, smuggling, extortion, counterfeiting, burglary, and other crimes generate criminal proceeds in the range of approximately $2 billion a year.

Evasion of customs duties and taxes by organized Polish criminal elements is the largest source of illegal income. Authorities report a new trend in 2012, where Asian (primarily Chinese and Vietnamese) organized criminal elements are increasingly remitting profits from tax evasion and the sale of counterfeit goods via money transfers and couriers. The majority of Asian organized crime activity occurs at the Chinese Trade Center located in Wolka Kosowska, approximately 25 kilometers from Warsaw. There are also smaller Asian shopping centers located in Rzgow (near Lodz) and Jaworzno (near Katowice) where organized crime activity is suspected. The principal scheme involves the extreme undervaluing of imported goods through the falsification of invoices which are used to determine the Customs value of products and the value added tax. Illegal drug trafficking also is suspected to occur at these markets.

Fuel and cigarette smuggling, by which local companies and organized crime groups seek to avoid excise taxes by forging delivery documents, is a major source of laundered proceeds. The practice is particularly significant along the Kaliningrad border. Money laundering through trade in scrap metal and recyclable material continues to occur, as does organized criminal activity in the financial services area (internet banking, credit cards, and electronic systems for money transfers). Some money laundered in Poland is believed to originate in Russia or other countries of the former Soviet Union. The Government of Poland (GOP) estimates the gray economy, used primarily for tax evasion, may exceed approximately 15 percent of Poland’s gross domestic product. The GOP considers the nation’s banks, insurance companies, brokerage houses, and casinos to be important venues of 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, financial leasing and factoring companies, currency exchanges, investment companies and funds, the National Depository for Securities, gambling institutions, insurance companies, the National Bank of Poland, the Polish Post, foreign legal entities carrying out brokerage activities, electronic money institutions, credit unions, notaries, foundations, auctioneers, pawnshops, dealers of high value goods and precious metals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 24,408 in 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, financial leasing and factoring companies, currency exchanges, investment companies and funds, the National Depository for Securities, gambling institutions, insurance companies, the National Bank of Poland, the Polish Post, electronic money institutions, credit unions, notaries, foundations, real estate agents, lawyers, auctioneers, pawnshops, dealers of high value goods and precious metals and stones, and new payment services entities/agents

money laundering criminal Prosecutions/convictions:

Prosecutions: 192 in 2011

Convictions: 26 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Poland 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/Poland_en.asp

Enforcement and implementation issues and comments:

The GOP continues to strengthen and harmonize its anti-money laundering/counter-terrorist financing legal and regulatory tools and institutions. In recent years, cooperation among relevant authorities and institutions has increased. The Finance Ministry maintains the effectiveness of actions against money laundering involving transfer of money to tax havens is improving with the increase in the number of cooperation agreements concluded with counterparts in such countries. There is also good and improving cooperation with international law enforcement agencies.

Poland should ensure promulgating regulations are fully effective. The GOP should promote additional capacity building in the private sector and continue to improve communication and coordination among the financial intelligence unit (FIU) and relevant law enforcement agencies. Police and customs authorities should continue to receive training on recognizing money laundering and tax evasion schemes, including trade-based money laundering and informal value transfer systems, particularly as practiced by organized Asian criminal groups. As in previous years, the FIU is looking for ways to upgrade analytical tools in order to be able to process data more comprehensively and efficiently.

Portugal

Portugal is an entry point for narcotics transiting into Europe, and officials of the Government of Portugal (GOP) indicate the majority of money laundered in Portugal is narcotics-related. Its long coastline, vast territorial waters and privileged relationships with countries in Latin America and Africa make it a gateway country for Latin American cocaine and a transshipment point for drugs coming from West Africa entering Europe.

Portuguese authorities have detected criminal funds being placed into the financial system from smuggled commodities, particularly tobacco products. Authorities also have noted significant criminal proceeds from corruption, traffic in works of art and cultural artifacts, extortion, embezzlement, tax offenses, and aiding or facilitating illegal immigration. Currency exchanges and real estate purchases often are used for laundering criminal proceeds.

There are 11 casinos in Portugal managed by eight public cooperatives licensed by the Ministry of Economy. Business interests from China (Macau) have significant involvement in some of the cooperatives. The Turismo de Portugal (Tourism office) supervises and monitors casinos. Online casinos are 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: 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 institutions, and investment companies; financial leasing, factoring, and mutual guarantee companies; electronic money institutions; life insurance, pension fund management, and credit securitization companies; venture capital and venture capital funds management companies; collective investment entities; postal service entities; casinos and lotteries; property dealers; lawyers, accountants, and auditors; and dealers in high value goods

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,699 in 2011

Number of CTRs received and time frame: 8,976 in 2011

STR covered entities: Banks and credit institutions; investment companies; life insurance companies; financial leasing, factoring, and mutual guarantee companies; electronic money institutions; pension fund management, credit securitization, venture capital, and venture capital funds management companies; collective investment entities; postal service entities; casinos and lotteries; property dealers; lawyers, accountants, and auditors; traders in high value goods

money laundering criminal Prosecutions/convictions:

Prosecutions: 8 in 2011

Convictions: 4 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Portugal is a member of the Financial Action Task Force. Its most recent mutual evaluation can be found here:

http://www.fatf-gafi.org/countries/n-r/portugal/documents/mutualevaluationofportugal.html

Enforcement and implementation issues and comments:

Although the general legal principle in Portugal is that only individuals are subject to criminal liability, there are exceptions. Paragraph 2 of Article 11 of the Criminal Code, as revised in 2007, provides for criminal corporate liability for money laundering and certain other crimes.

Qatar

Qatar has become an increasingly important banking and financial services center in the Gulf region. Despite the growth of the banking sector and increasing options for financial services, Qatar still has a largely cash economy. Rising crime rates; a large number of expatriate laborers who send remittances to their home countries; the expansion of both trade and the financial sector; the liberalization and growth in the real estate sector; uneven corporate oversight; and Iran’s efforts to bypass sanctions through Gulf economies make Qatar increasingly vulnerable to the threat of money laundering.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, real estate brokers, dealers of precious metals or stones, lawyers and notaries, trust funds and company service providers, and non-profit organizations (NPOs)

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 210 in 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, real estate brokers, dealers of precious metals or stones, lawyers and notaries, trust funds and company service providers, and NPOs

money laundering criminal Prosecutions/convictions:

Prosecutions: 4: January 1 – April 30, 2012

Convictions: 2: January 1 – April 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Qatar is a member of the Middle East & North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/TopicList.asp?cType=train

Enforcement and implementation issues and comments:

The Government of Qatar (GOQ) improved its anti-money laundering/counter-terrorist financing (AML/CFT) regime with the passage of its October 2011 trafficking in persons (TIP) law, which made TIP a predicate offense for money laundering. The Qatar Financial Information Unit (QFIU) issued guidelines on suspicious transaction reporting (STR) obligations and conducted outreach and workshops with financial institutions. In 2012, the QFIU launched its “2013-2017 Strategy: Financial Transparency to Promote Stability.”

The National Anti-Terrorism Committee, located in the Ministry of Interior, has the authority by resolution to designate as terrorists and terrorist organizations those who finance terrorism independently of lists forwarded to the GOQ pursuant to UNSCRs 1276 and 1373. No designations have yet been made. As of April 2012, the QFIU had received 11 STRs related to terrorist financing, none of which were disseminated to law enforcement or to the Public Prosecutor.

Qatar should continue its efforts to effectively implement AML/CFT regulations and procedures and should ensure sufficient resources and training are provided to develop the necessary institutional capacity. Qatar should continue to work to increase the rate of investigations and prosecutions by building capacity within its law enforcement authorities. Qatar also should pursue outreach and enforcement activities to ensure terrorist financing-related STR reporting occurs, and ensure the 1267/1373 freezing regime is effectively implemented. Qatar should mandate the declaration of cross-border movements of bulk cash or negotiable instruments.

Regarding Iran-related terrorism and proliferation transactions, the Central Bank ordered financial institutions to freeze any assets of entities listed in UNSCRs 1737, 1747, 1803, and 1929 and prohibited transactions with listed entities. Bank Saderat is the only active Iranian financial entity, with two small branches in Doha. As a foreign bank, Saderat cannot open new branches or expand its activities in Qatar. Reflecting general concerns in the Gulf about Iranian financial institutions, many Qatari banks no longer clear checks for Bank Saderat, and Qatari banks have ended all correspondent relations with Saderat.

Romania

Romania’s geographical location makes it a natural transit country for trafficking in narcotics, arms, stolen vehicles and persons by transnational organized criminal groups. As a result, Romania is vulnerable to financial activities associated with such crimes, including money laundering. Tax fraud, fraudulent claims in consumer lending, and trans-border smuggling of people, counterfeit goods, vehicles and cigarettes are additional types of crimes prevalent in Romania that generate illicit proceeds. Laundered money comes primarily from international crime syndicates that conduct their criminal activity in Romania, and subsequently launder their illicit proceeds through illegitimate front companies. Commercial transactions have been the main method of money laundering, mainly through use of shell and offshore companies; this primarily involves fraudulent claims for value added tax reimbursement.

Romania also has some of the highest rates of cybercrime and online credit card fraud in the world. Studies have found Romanian servers to be the second largest source of cybercrime transactions worldwide. Although a majority of their victims reside in the United States, Romanian cybercriminals are increasingly targeting victims elsewhere in Europe, as well as in Romania itself.

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; institutions issuing consumer, commercial, and specialized credit; mortgage/real estate lenders; micro-lenders; factors, forfeiture agents, and financial leasing firms; guarantors; financial investment service providers; insurers and re-insurers; securities brokers; private pension funds; accounting, consulting, audit and law firms; notaries; casinos; persons responsible for privatizations; non-governmental organizations; real estate brokers; and individuals or corporate traders of goods and/or services with a minimum 15,000 euro (approximately $19,822) cash turnover

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 2,488: January 1 to November 12, 2012

Number of CTRs received and time frame: 8,580: January 1 to November 12, 2012

STR covered entities: Banks; institutions issuing consumer, commercial, and specialized credit; mortgage/real estate lenders; micro-lenders; factors, forfeiture agents, and financial leasing firms; guarantors; insurers and re-insurers; securities brokers; private pension funds; accounting, consulting, audit and law firms; notaries; and real estate brokers

money laundering criminal Prosecutions/convictions:

Prosecutions: 219: January 1 – May 31, 2012

Convictions: 129: January 1 – November 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Romania 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 report can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Countries/Romania_en.asp

Enforcement and implementation issues and comments:

Romania’s financial intelligence unit (FIU) faces the continual challenge of limited financial, human, and technical resources. The Government of Romania (GOR) should continue to improve communication between reporting and monitoring entities, as well as between prosecutors and the FIU. Legislative changes during 2012 include updating the list of third countries with similar requirements on the prevention and combat of money laundering and terrorism financing as well as the adoption of a cash declaration form format stipulated by the European Union. In 2012, the GOR also signed two new memoranda of understanding, with France and Turkmenistan, on exchanging information on money laundering and terrorism financing cases.

In order to improve the rate of money laundering prosecutions and convictions, the Romanian authorities should not become overly reliant on STRs and other forms of financial intelligence but instead empower law enforcement and customs authorities to detect and investigate money laundering at the street level including borders and ports. The GOR should improve implementation of existing procedures for the timely freezing, seizure and forfeiture of criminal or terrorist-related assets. Romania also should continue to improve combating corruption in public procurement. For 2012, the GOR reported at least one case in which corruption was identified as a predicate offense contributing to money laundering.

Russia

The Russian financial sector is considered large, but not in relation to the size of the large corporations that dominate the economy. The current Russian administration aspires to transform Moscow into an international financial center. While there has been significant progress in improving the legal and enforcement framework, the prevalence of money laundering in Russia, high levels of organized crime, and corruption stand as major obstacles to this goal. A lack of transparency in the financial sector generally helps to enable corruption.

Domestic sources of laundered funds include organized crime, evasion of tax and customs duties, fraud, public corruption, and smuggling operations. The country is considered a significant transit and destination country for international narcotics traffickers who also use the country to launder the proceeds of their crimes. Criminal elements from Russia and neighboring countries continue to use Russia’s financial system and foreign legal entities to launder money. Criminals invest and launder their proceeds in securities instruments, both domestic and foreign real estate, and luxury consumer goods.

Russia’s money laundering risk factors include an economic environment conducive to fraud; many large-scale financial transactions associated with its vast natural resources; the state’s major role in the economy; and chronic under-funding and lack of capacity of regulatory and law enforcement agencies. These factors help create an enabling environment for corruption and financial criminality. The country’s vast territory means that relations with both its regions and quasi-autonomous regions, especially in the Caucasus region, have relatively low oversight. Considerable vulnerabilities exist in relation to money laundering and the funding of terrorism in these areas.

Gaming is only allowed in particular regions, with regulation shared across multiple agencies, including the Ministries of Finance and Internal Affairs. Russian gaming regulations are strict, although it is difficult to make broad conclusions about the effectiveness of enforcement beyond a few high profile cases. Online gaming is not allowed. Cybercrime is also a problem. Russia’s highly skilled hackers and traditional organized crime structures have followed the global trend of increasingly combining forces, resulting in an increased threat to the financial sector.

There is a large migrant worker population in Russia. While the majority of workers likely use formal banking mechanisms, there is likely to be a considerable amount of transfers through informal value transfer systems that may pose a vulnerability.

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 crimes approach

Are legal persons covered: criminally: NO civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks and credit institutions; Russian Post; payment acceptance and money transfer services; securities, insurance and leasing companies; investment and non-state pension funds; casinos and gaming outlets; dealers in precious metals and stones; real estate agents; pawnshops, microfinance organizations, and consumer credit cooperatives; and persons providing legal or accounting services

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 1,316,872: January 1 – March 31, 2012

Number of CTRs received and time frame: 826,444: January 1 - March 31, 2012

STR covered entities: Banks and credit institutions; securities markets, investment and pension funds; Russian Post; insurance sector; leasing companies; dealers in precious metals and stones; casinos; real estate agents; lawyers, notaries, and persons providing legal or accounting services; microfinance organizations; consumer credit cooperatives; and non-commercial organizations receiving funds from certain foreign entities

money laundering criminal Prosecutions/convictions:

Prosecutions: 81: January 1 – March 31, 2012

Convictions: 173 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Russia is a member of the Financial Action Task Force (FATF) and two FATF-style regional bodies: the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), and the Eurasian Group on Combating Money Laundering and the Financing of Terrorism (EAG). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/countries/n-r/russianfederation/

Enforcement and implementation issues and comments:

The Government of Russia (GOR) has an effective legal and enforcement framework to deal with money laundering and terrorist financing. While amendments to the law are being proposed they have not yet been taken up for consideration by the Duma. The amendments are expected to contain several positive measures, including establishment of beneficial ownership requirements, such as criteria under which a person might be deemed a beneficial owner, and identification requirements. The amendments also are expected to expand the list of entities subject to anti-money laundering/countering the financing of terrorism (AML/CFT) requirements and the scope of transactions falling under the financial intelligence unit’s control. The GOR should pass these legislative changes.

In 2010, self-laundering of amounts lower than RUB 6 million (approximately $196,800) was decriminalized with the rationale being it would allow authorities to better focus on third party laundering. This contradicts international standards, however; and Russian authorities have been encouraged to reconsider this limit. Russia also should ensure that obligated entities are able to report every type of suspicious activity related to money laundering.

Though the overall STR regime is working well in practice, presently there is no legal basis for reporting attempted transactions by occasional customers. There is also no prohibition on maintaining existing accounts under fictitious names, even in cases where bona fide identification was shown at the time of opening the account. The Central Bank requires banks to conduct repeat identification of customers when there is doubt over previously submitted identification, but other financial institutions are not subject to such requirements. Banks also lack the authority to refuse to carry out a transaction or to open an account when they have strong AML concerns regarding the transaction or prospective clients. The above proposed amendments may address some of these issues, including allowing banks to refuse to open accounts when there is suspicion of fraud as well as prohibiting accounts for anonymous owners or those using pseudonyms. Further attempts should be made to bring the AML efforts of all Russian banks to a more sophisticated level, including continued enhancement of the compliance training and certification process.

Although the GOR continues to establish and develop anti-corruption measures, corruption continues to be a problem. Domestic PEPs still are not monitored with the same scrutiny as foreign PEPs. The government should ensure that domestic PEPs are put under the same scrutiny as foreign PEPs.

Rwanda

Rwanda is not a major or offshore financial center. The Rwandan financial system remains relatively unsophisticated, although the number of electronic fund transfers and credit card transactions is rising. Money transfers by cell phone are becoming common. While the black market for smuggled goods is limited, the smuggling of tin, tantalum, tungsten, and gold from neighboring Democratic Republic of Congo generates funds which may be laundered through Rwanda’s financial system. The scope of this smuggling is difficult to quantify.

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, private legal practitioners, auditors, real estate agents, high-value traders, casino and lottery owners, travel agencies, and non-governmental organizations

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, private legal practitioners, auditors, real estate agents, high-value traders, casino and lottery owners, travel agencies, and non-governmental organizations

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Rwanda’s Law 48/2008, “Prevention and Suppression of Money Laundering and the Financing of Terrorism,” establishes a legislative anti-money laundering/counter-terrorist financing regime. Law 01/2012, “Instituting the Penal Code,” passed in June 2012, updates the established legal framework. With this new legislation, Rwanda moves from a list-based approach to a broader “serious crimes” approach for money laundering and terrorism financing offenses. The new penal code also criminalizes tipping off for the first time. The establishment of a financial intelligence unit (FIU) within the Rwanda National Police has improved monitoring of the financial system. This improvement, however, has not yet led to an increase in financial prosecutions and convictions. In general, relevant agencies of the Government of Rwanda need significant further training, resources, and technical expertise to effectively investigate and enforce laws concerning money laundering and terrorist financing.

Under Rwandan law, all foreign currency transactions in excess of $20,000 or its equivalent are documented and reported to the Central Bank. Any transaction of any type in excess of $1 million must be reported as a suspicious transaction.

Rwanda should provide safe harbor protections for its reporting entities and gatekeepers, seek to provide training and resources for its competent authorities, ensure its FIU’s autonomy, and take steps toward becoming a member of a FSRB.

Samoa

The Independent State of Samoa is not known to have major organized crime, fraud, or drug problems, and due to the small size of the local economy and the banking sector, Samoa has not become a haven for money laundering or terrorist financing. There is also no significant evidence of large scale public corruption or black market activity. The most common financial crimes within the jurisdiction appear to be low-level fraud and theft.

According to law enforcement, criminal organizations based in Hawaii and California are involved in the trafficking of cocaine, MDMA, and crystal methamphetamine into the island nations, including Samoa. Additionally, South American and Australian based organizations use the South Pacific islands as transshipment locations for cocaine being shipped from South America into Australia and New Zealand.

Samoa is an offshore financial jurisdiction administered by the Samoa International Finance Authority (SIFA). According to a June 2011 report, there are eight international banks, eight trustee companies, four private international mutual fund companies, and four international insurance companies. SIFA reported that from June 2010 through 2011, 4,421 international business companies (IBCs) were registered; there is no clear indication of the total number registered. SIFA’s annual report indicates that, in recent years, approximately 4,000 IBCs per year were registered. For entities registered or licensed under the various Offshore Finance Centre Acts, there are no currency or exchange controls, and no foreign exchange levies payable on foreign currency transactions. No income tax or other duties, nor any other direct or indirect tax or stamp duty is payable by registered/licensed entities.

There are four locally incorporated commercial banks, supervised by the Central Bank. There are no casinos, but licenses recently have been given to two private entities to operate casinos in the future. In addition, two local lotteries are in operation.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, money remitters, casinos, real estate agents, lawyers, accountants, trust and company service providers, credit unions, foreign exchange dealers, dealers of precious metals and stones, and insurance companies

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 11 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, casinos, real estate agents, lawyers, accountants, foreign exchange dealers, money remitters, credit unions, dealers of precious metals and stones, trust and company service providers, and insurance companies

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

http://www.apgml.org/documents/default.aspx?DocumentCategoryID=17

Enforcement and implementation issues and comments:

The Money Laundering Prevention Task Force (MLPTF) meets quarterly to advise or make recommendations to the Money Laundering Prevention Authority (MLPA), which houses Samoa’s financial intelligence unit (FIU). The task force consists of heads from the Central Bank, Attorney General, Police Force, SIFA, Ministry of the Prime Minister, and FIU. More importantly, the MLPTF is tasked to ensure close liaison, cooperation and coordination among various Government of Samoa departments and corporations. To ensure this, the task force established a memorandum of understanding among the FIU and all members of the task force with respect to formal exchange and sharing of relevant information to counter money laundering offenses and terrorist financing activities. The Central Bank of Samoa, SIFA, and the MLPA regulate the financial system.

An independent and permanent Transnational Crime Unit (TCU) is established under the authority of the Ministry of the Prime Minister. The TCU is staffed by personnel from the Samoa Police Service, Immigration Division of the Ministry of the Prime Minister, and Division of Customs. The TCU is responsible for intelligence gathering and analysis and investigating transnational crimes, including money laundering, terrorist financing and the smuggling of narcotics and people.

While legal structures are in place to combat both money laundering and terrorist financing, resource constraints continue to limit investigatory and prosecutorial capacity. Reporting and oversight mechanisms appear to be under-funded and the government should consider expanding their resources, particularly in light of the risks associated with the offshore sector. The addition of gaming operations in Samoa will require increased regulatory oversight and management to limit money laundering risk and criminal exposure. Particular aspects of the country’s anti-money laundering law should be strengthened, such as requiring enhanced due diligence for politically exposed persons (PEPs) and ascertaining beneficial ownership.

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

San Marino

The Republic of San Marino is an extremely small country surrounded by Italy. San Marino continues to take steps to improve its anti-money laundering regime and increase the transparency of its financial sector.

Money laundering occurs in both the formal and non-bank financial sectors, unrelated to narcotics trafficking. Money laundering is mainly trade-based and is perpetrated by foreigners to avoid higher taxes in their home countries. However, stricter monitoring regulations appear to have resulted in a decrease overall in financial crimes. There are no free trade zones or casinos in San Marino, nor is there a significant market for illegal or smuggled goods.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks and financial companies, the postal service, electronic money institutions, investment firms, insurance companies, lawyers, trust companies, accountants, auditors, gaming centers, and money exchangers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 204: January 1 - November 10, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks and financial companies, insurance and reinsurance companies, accountants and tax advisors, real estate agents, notaries, lawyers, gaming centers, and dealers in precious stones and metals

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

San Marino is a member of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and 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/San%20Marino_en.asp

Enforcement and implementation issues and comments:

In recent years, San Marino has continued to make improvements to its legislation and anti-money laundering/counter-terrorist financing regime. San Marino has signed memorandums of understanding with a number of countries, including the U.S., Denmark, and Guernsey. It also has signed tax information exchange agreements or double taxation agreements with 41 countries, including all major European Union member states.

San Marino should become a party to the UN Convention against Corruption.

Sao Tome & Principe

Sao Tome and Principe (STP) is not a regional financial center and has an extremely small banking sector. The economy is almost entirely cash-based, though limited automated teller machine service was introduced in 2011. There is no evidence that significant money laundering/terrorist financing activity linked to the drug trade, contraband smuggling, or terrorism occurs in STP.

STP’s lack of progress in establishing an anti-money laundering/counter-terrorist financing (AML/CFT) regime results in significant vulnerability. The Financial Action Task Force (FATF) included STP in its October 19, 2012 Public Statement because of this continuing lack of progress in correcting strategic 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: List approach

Are legal persons covered: criminally: NO civilly: NO

Know-your-customer (KYC) rules:

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

KYC covered entities: The Central Bank, commercial banks and the Public Ministry

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 64: January 1 - July 31, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: The Central Bank, commercial banks, the Public Ministry, insurance companies, casinos, and real estate companies

money laundering criminal Prosecutions/convictions:

Prosecutions: 0 in 2012

Convictions: 0 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: NO

In May 2012 STP became a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body. STP underwent its first mutual evaluation in December 2012; once published, the report will be available here: http://www.giaba.org/about-giaba/25_mutual-evaluation.html

Enforcement and implementation issues and comments:

The Government of Sao Tome and Principe (GOSTP) lacks an effective AML/CFT regime. Its legal framework does not meet international standards, and its regulatory and supervisory regime is lacking in capacity as well as coverage – not all entities covered under the law have a regulator and there are no effective sanctions for lack of compliance. While the GOSTP is working to address these deficiencies, full implementation of the action plan to correct shortcomings will be a challenge, given the country’s scarce resources and low capacity within the government, national security forces, and the judiciary. Implementation is dependent on the country’s fiscal situation. STP depends on donors for 93 percent of its budget.

The new criminal code addressing additional predicate offenses, as well as criminalizing tipping off, came into effect in August 2012. Authorities also are working on a new AML law. Counterfeiting, piracy of products, insider trading and market manipulation still will not be included as predicate offenses in the new law because of conflicts with STP’s domestic legal framework. In December 2012, the new AML law was under review by the National Assembly. The proposed new law states all STRs must be sent to the financial intelligence unit (FIU) instead of the Public Prosecutor. The FIU, which lacks resources and capacity, is not fully operational. The government has committed to providing the FIU with what it needs to operate effectively.

Saudi Arabia

The Kingdom of Saudi Arabia is a growing financial center in the Gulf Region. With a large expatriate labor community and a predominantly cash-based society, it is susceptible to money laundering and terrorist financing originating from Saudi criminal enterprises, private individuals, and Saudi-based charities. There are no available statistics indicating the size and scope of drug-linked money laundering. Saudi bulk cash smuggling from individual donors and charities has reportedly been a major source of financing to extremist and terrorist groups over the past 25 years. As one way of addressing the potential diversion of charitable giving, the Saudi government has attempted to consolidate charitable campaigns under Ministry of Interior supervision. With the advent of tighter bank regulations, funds are reportedly collected and illicitly transferred in cash, often via pilgrims performing Hajj or Umrah. Underground remittance systems such as hawala are also present in Saudi Arabia and have been used to finance terrorism. Despite serious and effective efforts to counter the funding of terrorism originating from within its borders, entities in Saudi Arabia continue to serve as an important source of funds flowing to Sunni-based extremist groups. Saudi officials acknowledge difficulty in following the money trail with regard to illicit finance due to the preference for cash transactions in the country. The government does not regularly publish official criminal statistics.

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, money exchangers, real estate agents, dealers in precious metals and stones, lawyers, and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 2,200: January 1 – October 31, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, insurance companies, exchange companies and institutions, investment and insurance companies, commercial companies, sole proprietorships, law firms, and vocational activities

money laundering criminal Prosecutions/convictions:

Prosecutions: 317: January 1 - November 30, 2012

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Saudi Arabia is a member of the Middle East & North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/MER/MER_SaudiArabia_English.pdf

Enforcement and implementation issues and comments:

Money service businesses operating outside of banks and licensed money changers are illegal in Saudi Arabia. To help counteract the appeal of these types of unlicensed money services, particularly to many of the approximately eight million expatriates living in Saudi Arabia, Saudi banks have taken the initiative to create fast, efficient, and cost-effective funds transfer systems that have proven capable of attracting customers accustomed to using other, non-sanctioned methods. As of November 2012, the government was considering a law forcing employers to pay expatriate laborers via reloadable debit cards linked to bank accounts in an effort to reduce cash usage and increase oversight capabilities.

Saudi Arabia’s Council of Senior Scholars (the Kingdom’s highest religious body and functional equivalent to the U.S. Supreme Court) issued an edict (fatwa) specifically defining acts of terrorism, specifying that committing such acts was illegal both in Muslim and non-Muslim countries, and declaring that financing terrorism, knowingly or unknowingly, was illegal and punishable under Islamic law. Fatwas from the Council of Senior Scholars constitute the most definitive interpretations of Islamic Sharia. Nevertheless, Saudi Arabia should enact a full statutory criminalization of terrorist financing and structure it as separate from the money laundering offense.

Sweeping counter-terrorism operations and resulting arrests have demonstrated Saudi Arabia’s effectiveness at disrupting planning and financing within the Kingdom. Contributions to charities are subject to strict guidelines, including that they must be in Saudi riyals, adhere to enhanced identification requirements, and be made only by checks payable to the first beneficiary, which then must be deposited in a Saudi bank. Regulations also forbid charities from using ATMs and credit cards for charitable purposes, from making cash contributions, and from making money transfers outside of Saudi Arabia.

Saudi Arabia has the highest per capita gold consumption in the world. The misuse of the gold trade to launder money and finance terror should be examined by Saudi authorities. Saudi Arabia’s capacity to monitor compliance with and enforce its banking rules has improved and helped to stem the flow of illicit funds through Saudi financial institutions. The Saudis’ ability to stop bulk cash smuggling also has improved. However, cash illicitly collected and transferred via pilgrims on Hajj or Umrah continues to flow.

The Kingdom of Saudi Arabia should become a party to the UN Convention against Corruption.

Senegal

A regional financial center with a largely cash-based economy, Senegal has proven vulnerable to money laundering. Various reports, as well as Senegalese officials, indicate that Senegal is vulnerable to the activities of organized crime, drug trafficking, internet fraud, bank and deposit fraud, document forgery, and ponzi schemes. There is evidence of increasing criminal activity by foreigners, including narcotics trafficking by Latin American groups. Many foreign traffickers use Senegal as a hub to export drugs to Europe and other destinations. Inadequate enforcement of relevant laws creates a permissive environment for criminals seeking to launder money.

Reportedly, most domestically generated laundered funds derive from corruption and embezzlement. Corruption permeates all levels of government and commerce. Also of concern are organized crime figures who launder and invest in Senegal their personal and their organizations’ proceeds from the growing West African narcotics trade. The increasing numbers of used imported vehicles suggest the existence of both trade-based money laundering (TBML) and regional stolen car networks. Many stolen U.S. vehicles are routed to West Africa.

Dakar’s active real estate market is largely financed by cash, and the construction industry appears to be a popular vehicle for laundering illicit funds. The continued building boom and high property prices suggest there is an increasing amount of funds of uncertain or dubious origin circulating in Senegal. Ownership and transfer of property are not transparent.

TBML is centered in the region of Touba, a largely autonomous and unregulated free trade zone under the jurisdiction of the Mouride religious authority. Touba reportedly receives between $550 and $800 million per year in funds repatriated by networks of Senegalese traders and vendors abroad. Other areas of concern include the transportation of cash, gold, and gems through Senegal’s airport and across its porous borders. The widespread use of cash, hawaladars, and new payment methods also presents money laundering vulnerabilities. Mobile wallets cater to the needs of the Senegalese unbanked, which make up 94 percent of the population, but are not always subject to anti-money laundering/combating the financing of terrorism (AML/CFT) controls.

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; money exchanges; postal services; lawyers; securities and insurance brokers; auditors; real estate agents; dealers of high value goods such as art objects, precious stones, and metals; transporters of funds; casinos and gaming establishments, including state lotteries; travel agencies; non-governmental organizations; and the Public Treasury

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 58: January 1 – September 30, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks; money exchanges; postal services; lawyers; securities and insurance brokers; auditors; real estate agents; dealers of high value goods such as art objects, precious stones, and metals; transporters of funds; casinos and gaming establishments, including state lotteries; travel agencies; non-governmental organizations

money laundering criminal Prosecutions/convictions:

Prosecutions: 74 in 2011

Convictions: 1: January 1 – September 30, 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Senegal 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 report can be found here:

http://www.giaba.org/reports/mutual-evaluation/Senegal.html

Enforcement and implementation issues and comments:

The Government of Senegal (GOS) has taken steps to prevent financial crimes. Although the aggregate numbers are still small, with a 9.5 percent increase in STR reporting and a threefold increase in money laundering prosecutions between 2010 and 2011, Senegal’s AML/CFT regime continues to tighten. By the end of 2011, 859 stakeholders had been trained on AML/CFT requirements through computer-based training. Senegal’s financial intelligence unit, CENTIF, believes this indicates a trend toward increased use of the formal financial sector. Senegal is taking steps to computerize land registration to increase the transparency of the real estate sector.

According to critics, the Law of February 9, 2004 on the Fight against Money Laundering, as amended, allows a level of protection for white collar offenders and dignitaries and violates the West African Economic and Monetary Union (WAEMU) legislation all WAEMU members are required to have in force. The general opinion is that the GOS is trying to protect white collar offenders and those with ties to the government.

Senegalese police have limited logistics capabilities and little expertise in investigating financial crimes. Senegalese law enforcement authorities should be trained to identify and investigate suspected money laundering in both the formal and informal financial sectors. The CENTIF should improve outreach and better monitor non-bank financial institutions and money service businesses.

CENTIF, law enforcement, and Ministry of Justice authorities should work together to coordinate roles and responsibilities with regard to case investigation and assembly, and develop a deeper interagency understanding of money laundering and terrorist financing. CENTIF has been working to achieve this goal regarding terrorist financing.

The GOS should continue to work to bring its AML/CFT regime into full compliance with international standards. Senegal should continue to battle corruption and increase the frequency, transparency, and effectiveness of financial reviews and audits of financial institutions. The GOS should establish better uniform control of the cross-border flow of currency and other bearer negotiable instruments for both residents and nonresidents. The GOS should work with the international community to review its amended AML law, and revise it as necessary to bring it into conformity with the applicable WAEMU legislation and/or to address new or persistent vulnerabilities in the AML/CFT regime.

Serbia

Serbia is not considered a regional financial center. However, Serbia is situated on a major trade corridor known as the Balkan route and commonly confronts narcotics trafficking; smuggling of persons, weapons, cigarettes, vehicles, and pirated goods; tax evasion; and other criminal activities. While the bulk of narcotics seizures are of heroin, it has become apparent in recent years that Serbian organized criminal groups or organized criminal groups which include Serbian citizens increasingly are trafficking cocaine originating in South America to Western European countries. Serbia has long been and continues to be a black market for smuggled goods. Corruption and organized crime also continue to be significant problems in Serbia.

Proceeds from illegal activities are invested in real estate and, increasingly, into sports, particularly football (soccer) club operations. Cyprus, Macedonia, Hungary, Switzerland, Austria, Netherlands, and China are destinations for laundered funds. Trade and service based transactions, particularly through the use of over- or under-invoicing, are a commonly used method for laundering money and transferring value. Purchases of some private and state-owned companies have been linked to money laundering 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: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks; licensed money exchanges and remitters; investment and pension fund management companies; financial leasing providers; insurance companies, brokers, agents, and life insurance businesses; persons dealing with postal communications; broker-dealer companies; casinos and organizers of games of chance; auditors; real estate intermediaries; accountants; tax advisers; intermediaries in credit, lending, factoring and forfeiting; guarantors; and lawyers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 811 in 2012

Number of CTRs received and time frame: 266,436 in 2012

STR covered entities: Banks; licensed money exchanges and remitters; investment and pension fund management companies; financial leasing providers; insurance companies, brokers, agents, and life insurance businesses; persons dealing with postal communications; broker-dealer companies; casinos and organizers of games of chance; auditors; real estate intermediaries; accountants; tax advisers; intermediaries in credit, lending, factoring and forfeiting; guarantors; and lawyers

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

Serbia 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/Serbia_en.asp

Enforcement and implementation issues and comments:

The Government of Serbia (GOS) has taken a number of steps to improve its anti-money laundering/counter-terrorist financing (AML/CFT) regime in recent years. At the end of 2012 Serbia passed amendments to the Criminal Code which, among other things, address terrorist financing. According to the 2012 amendments, the terrorist financing offense is no longer linked to a specific terrorist act and covers a range of activities listed in the annex to the UN Terrorist Financing Convention. Furthermore, a new offense of conspiring with the intention to finance terrorist activities also has been introduced.

Serbia has no law that establishes procedures for administrative freezing of assets. A draft Law on Restrictive Measures that will authorize use of this procedure is with the Administration for Prevention of Money Laundering, Serbia’s financial intelligence unit (FIU).

The GOS maintains bilateral agreements on mutual legal assistance with 31 countries, but not the United States. The FIU has signed information sharing agreements with 15 countries.

Serbia should continue to pursue measures to improve supervision of securities firms, money service businesses, and designated non-financial businesses and professions (DNFBPs) and to provide them with sufficient guidance to ensure they understand and are able to comply with their responsibilities under the law. The National Bank of Serbia and other supervisory bodies, as well as investigative agencies, the FIU, prosecutors, and judges require additional resources, in particular for building their professional capabilities. Law enforcement and prosecutors also need to make increased use of criminal money laundering charges. Serbia should establish procedures for the administrative freezing of assets without delay.

Seychelles

Seychelles is not a major financial center. The Seychellois authorities consider drug trafficking, parallel market operations, theft and fraud as the major sources of illegal proceeds. Seychelles also has been negatively affected by piracy off the coast of Somalia.

Seychelles is a consumer country for narcotics. To diversify its economy beyond tourism and fisheries, the Government of Seychelles (GOS) developed an offshore financial sector to increase foreign exchange earnings. Seychelles actively markets itself as an offshore financial and business center that allows the registration of nonresident business companies. These activities make the country vulnerable to money laundering. In its 2007 - 2017 strategic plan, the GOS proposes to facilitate the further development of the financial services sector through active promotion of Seychelles as an offshore jurisdiction, with emphasis on international business companies (IBCs), mutual funds, special license companies, insurance companies, and private foundations. The Seychelles International Business Authority, which regulates the offshore financial sector, provides training in such areas as company and trust administration, international tax planning, compliance and anti-money laundering. At the beginning of 2012, there were 100,863 registered IBCs. At the time, the Seychelles offshore sector was estimated to be generating $101 million annually.

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, offshore banks, credit unions, insurance companies, trust and company service providers, casinos, real estate agents, money exchangers, notaries, lawyers, accountants, auditors, and dealers in precious metals and stones

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 39 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, offshore banks, credit unions, insurance companies, trust and company service providers, casinos, real estate agents, money exchangers, notaries, lawyers, accountants, auditors, and dealers in precious metals and stones

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

Seychelles is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/reports/view_me.php?id=189

Enforcement and implementation issues and comments:

In December 2011, the Financial Institutions Act 2004 was amended to provide for a single license for both domestic and offshore banks, and the AML Act Amendment of 2011 came into force, amending the AML Act of 2006. The amended AML Act increases the investigative powers and duties of the Financial Intelligence and Assets Recovery Unit, the Seychelles financial intelligence unit (FIU). The increase in powers and responsibilities ensures that officers of the FIU have the legal authority and empowerment to undertake in depth investigations. The AML Regulations of 2012, which essentially provide for the implementation of customer due diligence measures, were enacted in April 2012. The GOS is seeking to establish a securities exchange to further diversify its product offerings in the financial sector.

The GOS indicated the FIU has undertaken on-site examinations of reporting entities to determine compliance with the AML Act Amendment of 2011 and Prevention of Terrorism Act of 2004. The FIU has completed the on-site examinations of 69 corporate service providers, six domestic banks, two offshore banks, three money service providers, 22 bureaux de change, ten real estate agents, three insurance companies, one credit union and six insurance brokers. The FIU also has facilitated AML/CFT training for staff from the Attorney General’s Office, the Police, Customs, Revenue Commission, the Seychelles International Business Authority, and the Central Bank.

The GOS should continue to improve the implementation of its anti-money laundering/counter-terrorist financing (AML/CFT) framework, including its analysis of STRs and the pursuit of AML/CFT investigations and prosecutions. Seychelles should continue to work with its FIU to ensure it has the training and resources needed for outreach, analysis and dissemination. The GOS should prohibit bearer shares, anonymous accounts and accounts in fictitious names, and clarify its law regarding the complete identification of beneficial owners. Additionally, it should mandate enhanced due diligence procedures when appropriate. The GOS also should amend its AML laws to state explicitly that all offshore activity is regulated in the same manner and to the same degree as that onshore. The GOS should actively enforce its regulations. The GOS also should consider codifying the ability to freeze assets rather than issuing restraining orders, and develop a cross-border currency reporting requirement that adheres to international norms. The GOS should adequately criminalize terrorist financing.

Sierra Leone

Sierra Leone is not a regional financial center. Loose oversight of financial institutions, weak regulations, a large seaport, pervasive corruption, and porous borders make it conducive to money laundering. Sierra Leone is a potentially attractive trans-sea shipment point for illegal drugs or other forms of illegal commerce. Smuggling of pharmaceuticals, foodstuffs, gold, and diamonds occurs across porous ground borders. To date, there is little evidence that drug smuggling is a significant source of laundered money. Where money laundering occurs, it is most often in the small-scale artisanal diamond mining industry by domestic groups and individuals rather than by transnational cartels. Transactions at most levels, money exchanges, and remittances are very informal and vulnerable to money laundering. There is no indication money laundering activity in Sierra Leone is tied to terrorist financing.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks; financial leasing firms; money and currency exchanges; credit card, traveler’s check, and other financial instrument dealers; investment companies; insurance, merchant, and investment banks; and securities and commodities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 7: January 1 – November 30, 2012

Number of CTRs received and time frame: 39,583: April 1 – September 30, 2012

STR covered entities: Banks; financial leasing firms; money and currency exchanges; credit card, traveler’s check, and other financial instrument dealers; investment companies; insurance, merchant, and investment banks; and securities and commodities 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

Sierra Leone 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/Sierra%20Leone.html

Enforcement and implementation issues and comments:

On March 15, 2012, Sierra Leone’s Parliament enacted the Anti-Money Laundering and Combating of Financing of Terrorism Act (AMLCFTA). The AMLCFTA provides legal and policy guidance, but enforcement of the act will be a challenge due to the limited resources of the government. Although the Government of Sierra Leone (GOSL) has made progress, the GOSL needs to take further action to ensure its anti-money laundering/combating of financing of terrorism regime complies with international standards and is effectively implemented.

According to the AMLCFTA, any person who leaves or arrives in Sierra Leone with more than 30 million leones (approximately $6,900), or equivalent, in unreported foreign currency or negotiable bearer instruments will be subject to fines. In the second half of 2012, the GOSL issued, and held a series of workshops to introduce, currency declaration forms to monitor cross-border movements of cash and other negotiable bearer instruments. The new law also addresses the freezing of criminal proceeds, the power to identify and trace tainted property, voidable transfers, and enhancement of suspicious activity information sharing.

The Bank of Sierra Leone is seeking to improve its ability to use financial forensics and intelligence to monitor PEPs and other “sensitive” people and to assist in determining suspicious transactions. The financial intelligence unit (FIU) may request and obtain information it considers relevant to an unlawful activity, money laundering activities, or terrorism financing. It has the authority to disclose any report to an institution or agency of a foreign state or an international organization if relevant to investigating or prosecuting a money laundering or terrorist financing offense. However, it lacks the capacity to monitor and regulate financial institution operations effectively. There is a low rate of compliance throughout the financial sector, particularly among the recently licensed commercial banks headquartered in Nigeria.

The Transnational Organized Crime Unit is authorized to undertake complete investigations and effect arrests, but general policing ability and understanding of the use of financial investigation and intelligence is still low. The Sierra Leone Police, National Revenue Authority, and Anti-Corruption Commission have very limited abilities to investigate money laundering crimes. The Attorney General’s Office has limited investigative and arrest powers in its mandate. Limited resources and lack of training hamper law enforcement efforts in all arenas, including prosecutions.

The GOSL should seek to implement the AMLCFTA, continue its efforts to counter smuggling, tighten its borders, and regulate sectors which are vulnerable to money laundering. It should fully operationalize its FIU, including by appointing a director; institute effective supervision of both designated non-financial businesses and professions and non-profit organizations; work to ensure foreign exchange dealers implement customer due diligence measures and comply with record keeping requirements; criminalize the financing of terrorism for any purpose, i.e., regardless of a link to the planning or commission of a terrorist act; and establish procedures and mechanisms to implement UNSCRs 1267 and 1373. The GOSL should ratify the UN Convention against Transnational Organized Crime.

Singapore

Singapore is a major international financial and investment center as well as a major offshore financial center. Secrecy protections, a lack of routine large currency reporting requirements, and the size and growth of Singapore’s private banking and asset management sectors pose significant risks and make the jurisdiction a potentially attractive money laundering/terrorist financing destination for drug traffickers, transnational criminals, foreign corrupt officials, terrorist organizations and their supporters. Authorities have taken action against Jemaah Islamiyah and its members and have identified and frozen terrorist assets held in Singapore. Terrorist financing in general remains a risk.

As of December 1, 2012, there were 37 offshore banks in operation, all foreign-owned. Singapore is a center for offshore private banking and asset management. Assets under management in Singapore total approximately S$1.34 trillion (approximately $1.03 trillion). As of December 2011, Singapore had at least $700 billion in foreign funds under management. Singapore does not permit shell banks or anonymous accounts.

There are two casinos in Singapore with estimated combined annual revenue of $3.98 billion, but online gaming is illegal. Casinos are regulated by the Casino Regulatory Authority. Given the scale of the financial flows associated with the casinos, there are concerns that casinos could be targeted for money laundering purposes.

Singapore has nine free trade zones (FTZs) which may be used for storage, repackaging of import and export cargo, assembly and other manufacturing activities approved by the Director General of Customs in conjunction with the Ministry of Finance.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: YES civilly: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks, financial institutions, finance companies, merchant banks, life insurers, brokers, securities dealers, investment advisors, futures brokers and advisors, trust companies, approved trustees, and money changers and remitters

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13,557 in 2011

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, auditors, financial advisors, capital market service licensees and exempt persons, finance companies, lawyers, notaries, merchant banks, life insurers, trust companies, approved trustees, real estate agents and money changers and remitters

money laundering criminal Prosecutions/convictions:

Prosecutions: 32 in 2011

Convictions: 26 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Singapore is a member of the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering, a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/36/42/40453164.pdf

Enforcement and implementation issues and comments:

Singapore has a comprehensive STR regime and applies AML/CFT requirements to a broad range of entities. Currently, there is no requirement for reporting large currency transactions, which limits the ability to track significant financial movements. Singapore should consider the adoption of such reporting.

Singapore’s legal system generally provides for the investigation and prosecution of money laundering offenses. However, the implementation of these laws is uneven, particularly in prosecuting money laundering as a stand-alone offense, and investigating foreign-sourced cases. Singaporean police are fairly successful at identifying domestic predicate offenses, and include ancillary money laundering charges as appropriate. Singapore should more aggressively pursue domestic stand-alone money laundering offenses as well.

Singapore’s large, stable, and sophisticated financial center may be attractive as a conduit for laundering proceeds generated by foreign criminal activities, including official corruption. The Suspicious Transaction Reporting Office and criminal investigators are encouraged to identify money laundering that originates from foreign predicate offenses, and use stand-alone money laundering charges to prosecute foreign offenders in Singapore.

Slovak Republic

The Slovak Republic is a transit and destination country for counterfeit and smuggled goods; auto theft; value-added tax fraud; and trafficking in persons, weapons and illegal drugs. Criminal activity is characterized by a high level of domestic and foreign organized crime, mainly originating from eastern and southeastern Europe. Many of these same groups are involved in laundering funds raised from these criminal activities. Trade-based money laundering and possible terrorist financing also occur in Slovakia. Funds from public corruption are not seen as a significant component of money laundering/terrorist financing in Slovakia. Slovakia has no offshore or free trade zones. Slovak authorities see the transfer of undeclared cash across borders as a possible money laundering vulnerability. Alternative remittance systems are not known to be widely used in Slovakia.

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, the Export-Import Bank of the Slovak Republic, credit institutions, insurance companies, pension asset management companies, foreign currency exchanges, gambling/gaming operators, bankruptcy administrators, accountants, tax advisors, real estate agents, postal operators, real estate intermediaries, foundations, non-profit organizations, non-investment funds, and other special corporations managing and distributing funds

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 3,353 in 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, the Export-Import Bank of the Slovak Republic, credit institutions, insurance companies, pension asset management companies, foreign currency exchanges, gambling/gaming operators, bankruptcy administrators, accountants, tax advisors, real estate agents, postal operators, real estate intermediaries, foundations, non-profit organizations, non-investment funds, and other special corporations managing and distributing funds

money laundering criminal Prosecutions/convictions:

Prosecutions: 17 in 2011

Convictions: 16 in 2011

Records exchange mechanism:

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

With other governments/jurisdictions: YES

The Slovak Republic 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 report can be found here:

www.coe.int/t/dghl/monitoring/moneyval/Countries/Slovakia_en.asp

Enforcement and implementation issues and comments:

The law enacting “Quasi Criminal Liability of Corporations” allows for confiscation of property and monies from corporations for actions taken by employees. However, Slovak courts have never executed the law. Legal pundits suggest the law was written in a fashion that is too difficult to implement, perhaps intentionally.

There is little evidence showing money laundering investigations are being used to prosecute organized crime, which is a significant problem. Slovakia should provide capacity-enhancing training and materials to non-financial businesses and professions and improve supervision of these entities to ensure they meet their obligations.

Slovenia

Slovenia is not a major drug producer, but is a transit country for drugs moving via the Balkan route to Western Europe. The Government of Slovenia (GOS) is aware that Slovenia’s geographic position makes it an attractive potential transit country for drug smugglers, and it continues to pursue active counternarcotics policies. Other predicate offenses of concern include business and tax fraud.

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, agricultural credit institutions, lawyers, money changers, notaries, gaming centers, and securities dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 558 in 2012

Number of CTRs received and time frame: 16,465 in 2012

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

money laundering criminal Prosecutions/convictions:

Prosecutions: 247 in 2012

Convictions: 1 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Slovenia 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/Slovenia_en.asp

Enforcement and implementation issues and comments:

There are no major deficiencies in Slovenia’s key anti-money laundering/counter-terrorist financing (AML/CFT) preventive standards. Weak supervision and lack of guidance to certain non-banking sectors could have an impact on the effectiveness of the AML/CFT regime.

The GOS has systems and procedures in place to facilitate both national and international cooperation. Banks have automatic name checks and the Office of Money Laundering Prevention (OMLP) checks the names against global blacklists provided by the Central Bank.

The OMLP has a right to stop a suspicious transaction for 72 hours. In that time period, the courts investigate the transaction and decide on its legitimacy. If the courts also find the transaction suspicious, they can temporarily block funds for three months. In 2012, this happened in 20 cases.

Slovenia adheres to all Schengen border control requirements. In Slovenia, law enforcement can only confiscate funds or seize assets related to money laundering under criminal law. During 2012, the GOS temporarily seized assets equaling approximately 57 million euros (approximately $74 million).

Solomon Islands

Solomon Islands is not considered a major financial center. It has a relatively stable banking system closely integrated with the financial systems of Australia and New Zealand. In general, the risk of money laundering and terrorism financing in the Solomon Islands is very low given the country’s isolated geographic location and very small community, which precludes anonymity. Corruption continues to be the main source of illegal proceeds. Smuggling, environmental crimes, and the proliferation of counterfeit goods also are problems in the country. A 2009 risk assessment conducted by the Solomon Islands Financial Intelligence Unit (SIFIU) found that money laundering is most often associated with fraud, illegal logging and fishing, and robbery. Foreign destinations for the laundered proceeds include China, Australia, Malaysia, and Singapore. The SIFIU suspects that Asian logging vessels (particularly Malaysian) bring counterfeit currency into the Solomon Islands to finance forestry 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: 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, credit institutions, credit unions, insurance and securities companies, casinos and bullion dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 49 in 2012

Number of CTRs received and time frame: 22,707 in 2012

STR covered entities: Banks, credit institutions, bullion dealers, credit unions, casinos, insurance companies and intermediaries

money laundering criminal Prosecutions/convictions:

Prosecutions: 1 in 2012

Convictions: 2 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

Solomon Islands is a member of the Asia/Pacific Group on Money Laundering, a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/SOLOMON%20ISLANDS%20DAR_FINAL.pdf

ENFOREMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Over the last four years, the Government of the Solomon Islands (GOSI) has enacted several key reforms to strengthen its anti-money laundering/counter-terrorist financing (AML/CFT) regime. The GOSI also has taken positive steps to combat corruption, including the formation of an anti-corruption task force in 2012. Yet vulnerabilities remain within the Solomon Islands’ AML/CFT systems. The SIFIU lacks capacity and continues to be understaffed, and the Royal Solomon Islands Police Force lacks the training and personnel to investigate and prosecute money laundering and terrorist financing cases. There has been only one successful conviction for money laundering, and no incidents of terrorist financing. The GOSI also is not party to several key international agreements on these topics and lacks the ability to freeze terrorist assets in accordance with UNSCRs 1267 and 1373.

On January 6, 2012, Solomon Islands became a party to the UN Convention against Corruption.

The GOSI should continue to develop its AML/CFT programs and procedures. The GOSI also should develop and implement a comprehensive system for the declaration or disclosure of the cross-border transportation of cash. Currently, a declarations system is in place only for passengers traveling by air. This system should be extended to passengers traveling by sea, and applied to postal cargo as well. The Solomon Islands should become a party to the UN Convention against Transnational Organized Crime and the 1988 UN Drug Convention.

Somalia

In 2012, Somalia made significant progress in recovery from its status as a failed state by completing its political transition. In September 2012, a new Parliament elected a new President, who named a Prime Minister and Cabinet. Somali National Army forces, alongside troops from the African Union Mission in Somalia (AMISOM), made significant gains against the U.S.-designated terrorist group al-Shabaab, pushing the extremist militia out of all major cities it previously held. The new government struggles with weak institutions, and the country is in the initial stages of stabilization efforts.

Somalia does not have a formal financial system, and the majority of financial entities operating in Somalia, such as money transmitters and hawaladars, are not supervised or monitored by regulatory or enforcement agencies. Smuggling is rampant. Somalia has one of the longest land borders as well as the longest coastline in Africa. Officials are unable to maintain control over most points of entry, and legitimate and illicit goods flow in and out of Somalia unchecked.

Public and private sector corruption, mainly carried out by the misappropriation of public assets and national financial flows, remains a significant challenge for the new government. Allegations of corrupt practices have included Somali government officials and elite businessmen involved in systematic misappropriation, embezzlement, and theft of public revenues and foreign aid. Additionally, some government officials in Somalia’s northern region of Puntland have reportedly benefitted from pirate ransoms. Somalia ranks 176 of 176 countries on Transparency International’s 2012 Corruption Perception Index, although the new government is taking important steps to improve its public financial management and appears more committed to transparency than the transitional government that preceded it.

Somalia is also a center for terrorist financing. Al-Shabaab remains the most significant threat to Somalia and the region. Its insurgency against the Government of Somalia (GOS) receives financing from multiple sources, mainly from the illicit trade in charcoal from its controlled territories and from the AMISOM-controlled port of Kismaayo. Other sources of revenue include donations from non-Somali and Somali sympathizers both inside Somalia and abroad, and taxation of and extortion targeting local businesses and private citizens. Some funds enter Somalia as cash, but a portion reportedly passes through hawaladars and other money or value transfer services. There also are occasional reports of U.S. dollar counterfeiting in al-Shabaab-controlled areas as well as reports of al-Shabaab extorting ransom payments from pirates. There are concerns money is laundered into the country in support of al-Shabaab. Both the GOS and the United Nations have banned the import and export of charcoal from Somalia, as a means of depriving al-Shabaab of its primary source of revenue.

Although acts of piracy off the coast of Somalia have decreased significantly over the past 18 months, proceeds from ransom payments still contribute to Somalia’s illicit activity. Piracy ransom payments are reportedly laundered, especially in northern Somalia, and perhaps in neighboring countries, the Middle East, or Europe. The ransoms are delivered through cash drops to pirates holding ships off Somalia’s coast. They are divided among the pirates themselves, their support networks on shore, and possibly national and international sponsors. Much of the ransom reportedly remains in cash.

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

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

criminalizATION OF money laundering:

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

Are legal persons covered: criminally: Not applicable civilly: Not applicable

Know-your-customer (KYC) rules:

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

KYC covered entities: None

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not applicable

Number of CTRs received and time frame: Not applicable

STR covered entities: None

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

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

Enforcement and implementation issues and comments:

Until the completion of its political transition in September 2012, Somalia was essentially without a functioning central government since 1991. While the new government is identifying priority areas for new legislation and working with the international community to enhance its institutional capacity and create regulatory bodies, existing laws – anti-money laundering/counter-terrorism financing (AML/CFT), or otherwise – are currently unenforceable.

The lack of credible AML/CFT laws, regulatory bodies, and enforcement mechanisms to counter money laundering and financial crimes, including terrorist financing, is believed to be due to a lack of capacity within the federal government, not a lack of political will. Obstacles to enacting AML/CFT laws include the federal government’s limited territorial control over parts of southern and central Somalia beyond Mogadishu, threats to the government by the al-Shabaab insurgency, lack of capacity at all levels of government, and insufficient policing and investigative capacity.

Somalia essentially lacks a formal financial sector; however there has been a reported increase in the establishment of “banks” throughout Somalia, which includes two unregulated commercial banks, one operating in Somaliland and the other in Mogadishu. There are no functioning government regulatory agencies to oversee the financial sector. As such, formal financial institutions and hawaladars in Somalia are not subject to KYC or suspicious transaction reporting programs under Somali law. These entities have no credible government authority to which to report these types of transactions. There are virtually no financial record-keeping requirements enforced by the GOS. International standards, to the extent they exist, are self-imposed in Somalia by hawaladars and other financial entities that must meet international rules and regulations to do business elsewhere in the world. Money remittance companies, for example, almost all use electronic AML/CFT compliance software systems which flag names listed on the UN 1267 Sanctions Committee’s consolidated list.

The legal system in Somalia is composed of traditional courts (“xeer”) as well as a variety of local and regional court systems. A legal system with both civilian and military courts operates under the federal government, but the laws that exist are difficult to enforce given the weak capacity of judicial and law enforcement institutions and general instability.

In theory, the Ministry of Finance and Treasury would be responsible for investigating financial crimes. The ministry lacks the capacity, including financial, technical, and human resources, to investigate money laundering and terror financing. There are no government entities charged with, or capable of, tracking, seizing, or freezing illegal assets. Somalia has no modern laws requiring forfeiture of terrorist or laundered assets, and laws that may lend themselves to AML/CFT are not being enforced. The GOS has called on regional governments to help stem the flow of terrorist financing, including requesting local governments to trace, freeze, and seize al-Shabaab financing.

The Ministry of Finance and Treasury, and the wider government, still struggle to combat internal corruption and the embezzlement of public funds. While government corruption was rampant in the previous transitional administration, the new government has taken steps to combat corruption, including public declarations against corruption. The GOS has already increased transparency in government revenues, requiring that donations to the government be deposited directly to the Central Bank of Somalia. The new constitution provides for the establishment of an Anti-Corruption Commission to investigate allegations of corruption in the public sector. Somalia has not yet established the Commission.

The GOS has cooperated with foreign law enforcement on investigations concerning suspected terrorists, kidnapping, piracy, and terrorist acts committed both inside and outside Somalia. Somalia has no mechanisms in place under which to share information with other countries related to financial crimes, money laundering, and terrorist financing but has said it welcomes collaboration.

Somalia should continue taking steps to combat corruption and cooperate internationally, and begin to give itself the legal authorities to combat money laundering and terrorist financing domestically, including by criminalizing both. The GOS should work toward equipping its law enforcement and judicial authorities with the resources and capacity – staffing, budget and training – to investigate and prosecute financial crimes. The GOS also should pursue membership in a FSRB.

South Africa

South Africa’s position as the major financial center in the region, its sophisticated banking and financial sector, and its large, cash-based market make it vulnerable to exploitation by transnational and domestic crime syndicates. The largest source of laundered funds in the country is proceeds from the narcotics trade. Fraud (advance fee scams, beneficiary maintenance fraud, and deposit refund scams), theft, racketeering, corruption, currency speculation, credit card skimming, poaching, theft of precious metals and minerals, human trafficking, stolen cars, and smuggling of goods are also sources of laundered funds. Many criminal organizations also are involved in legitimate business operations. In addition to criminal activity by South African nationals, observers note criminal activity by Nigerian, Pakistani, Andean, and Indian drug traffickers; Chinese triads; Taiwanese groups; Bulgarian credit card skimmers; Lebanese trading syndicates; and the Russian mafia. Analysis indicates that foreign nationals are using South African nationals, mostly women, to help them send money gained from illegal activities to foreign countries. Investment clubs, known as stokvels, have been used as cover for pyramid schemes. In some instances, nominee structures have been exploited by criminals who intend to launder illicit funds by mixing them with legitimate assets held on someone else’s behalf. There is a significant black market for smuggled and stolen goods.

South Africa is not an offshore financial center, nor does it have free trade zones. South Africa does operate Industrial Development Zones (IDZs). Imports and exports related to manufacturing or processing in the zones are duty free, provided the finished product is exported. IDZs are located in Port Elizabeth, East London, Richards Bay, and Johannesburg International Airport. The South African Revenue Service monitors the customs control of these zones.

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

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

criminalizATION OF money laundering:

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

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 institutions, post office banks, foreign exchange dealers, securities traders and brokers, entities that issue travelers checks, real estate agents, gambling institutions, gold dealers, attorneys, second hand car dealers, and money lenders

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 53,506: April 1, 2011 - March 31, 2012

Number of CTRs received and time frame: 5.5 million: April 1, 2011 - March 31, 2012

STR covered entities: Banks, credit institutions, post office banks, foreign exchange dealers, securities traders and brokers, entities that issue travelers checks, real estate agents, gambling institutions, gold dealers, attorneys, second hand car dealers, and money lenders

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

South Africa is a member of the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/60/15/42432085.pdf

Enforcement and implementation issues and comments:

The Government of South Africa’s (GOSA) anti-money laundering/counter-terrorist financing (AML/CFT) regime has a solid legal and regulatory framework. The Financial Intelligence Centre (FIC), South Africa’s financial intelligence unit (FIU), is working to enhance its effectiveness by providing high-quality, timely and actionable financial intelligence rather than larger volumes of lower-quality intelligence. During the year, FIC honed its analysis to identify geographic and other patterns associated with crimes such as tax evasion and narcotics trade. During 2011/12, the FIC evaluated about 15,000 suspicious transaction reports (STRs) and 4 million electronic funds transfers, and froze 482 bank accounts. FIC’s work played an integral role in several prosecutions for rhino poaching and organized crime, including armed robbery. The FIC established an internal sanctions communications response committee and dedicated a portion of its website to these issues. During the year, the FIC signed memoranda of understanding with the FIUs of Singapore, Albania, Angola, Botswana, Mali, Canada, Ghana, Lesotho, and Tanzania.

While money laundering is a specific offense under the South African penal code, it is not often charged as a stand-alone offense. Instead, prosecutors typically include money laundering as a secondary charge in conjunction with other offenses. Accordingly, the GOSA does not generally keep separate statistics for money laundering-related prosecutions, convictions, or forfeited assets.

The GOSA has been working to improve its AML/CFT regime. Its focus on the risk-based approach (RBA) is designed to target high-impact cases involving large amounts of money and greater numbers of people. South Africa should continue to implement its initiatives on financial inclusion, its application of the RBA, and enhancing the FIC. The GOSA also should work to improve its law enforcement and prosecutorial capacity and ensure its relevant AML/CFT authorities keep statistics, as required by international standards.

South Sudan

On July 9, 2011, the Republic of South Sudan became the world’s 193rd country. South Sudan borders a number of jurisdictions in various states of conflict or lacking strong authorities. While the Government of South Sudan (GOSS) has developed in many areas, much remains to be accomplished in this fledgling state. South Sudan is not a major financial center, and as such, there is little major financial crime; however, corruption is widespread in this oil rich state. The GOSS does not yet have significant laws, regulations, or enforcement capacity in place to address financial crimes. South Sudan has a cash-based economy. With no anti-money laundering/counter-terrorist financing (AML/CFT) regime, and its large and porous borders, South Sudan is vulnerable to exploitation by criminals of every type, including those seeking illicit routes to transport money via bulk cash smuggling and those wishing to perpetrate other forms of financial crime.

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: Financial institutions; cash dealers; accountants; dealers in precious stones or metals; regulators; customs officers; attorneys, notaries and other independent legal professionals; and real estate agents

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

STR covered entities: Financial institutions; cash dealers; accountants, real estate agents, and dealers in precious stones or metals; regulators; customs officers; attorneys, notaries and other independent legal professionals

money laundering criminal Prosecutions/convictions:

Prosecutions: 0

Convictions: 0

Records exchange mechanism:

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

With other governments/jurisdictions: NO

South Sudan is not a member of a Financial Action Task Force-style regional body. It has not undergone a mutual evaluation.

Enforcement and implementation issues and comments:

In March, 2012 the GOSS criminalized money laundering. No enabling regulations or steps towards implementation have been put in place. The GOSS is working to address capacity issues generally and has embarked upon anticorruption initiatives, but money laundering and terrorist financing have only recently been part of South Sudan’s current agenda. Despite taking steps to criminalize money laundering, no law enforcement mechanisms exist to combat financial crimes in general. A segment of the South Sudanese security forces has been tentatively identified to work on financial crimes but lacks staff and has had little training in financial investigations and law enforcement procedures. The Judiciary is significantly understaffed, and is in the process of preparing to adopt a common law system. There are no courts or prosecutors currently assigned to work on financial crimes.

The Bank of South Sudan may adopt a new circular requiring all financial institutions to regularly submit information on domestic and foreign exchange transactions over a threshold amount. However, it has not been determined whether such a circular is enforceable, or who would have the necessary tools to enforce it.

Spain

Spain is a major European center of money laundering activities as well as an important gateway for illicit narcotics entering Europe from Central and South America and North Africa, although the serious focus of Spanish law enforcement on combating organized crime, drug trafficking, and money laundering during the past five years has reduced the country’s attractiveness as an entry point.

Money laundering is related to drug trafficking and organized crime, as well as financial support for terrorism and for tax evasion purposes. Proceeds continue to be invested in real estate in the once-booming coastal areas in the south and east of the country but criminal groups also place money in other sectors, including services, communications, automobiles, art work, and the financial sector. Access in Spain to European financial institutions allows for the introduction of illicit funds into the global financial system with diminished scrutiny.

Moroccan hashish and Latin American cocaine enter the country and are distributed and sold throughout Europe, with the resulting proceeds often returned to Spain. Passengers traveling from Spain to Latin America reportedly smuggle sizeable sums of bulk cash. Informal money transfer services also facilitate cash transfers between Spain and Latin America, particularly Colombia. Law enforcement cites an emerging trend in drugs and drug proceeds entering Spain from new European Union (EU) member states with less robust law enforcement capabilities.

Tax evasion in internal markets also continues to be a source of illicit funds in Spain. In a recent operation targeting a group of Chinese businesses, Spanish law enforcement discovered the systematic falsification of invoices for goods entering Spain, the sale of the goods, and an elaborate money laundering network that was used to repatriate the illicit proceeds back to the People’s Republic of China. The Spanish authorities estimated that the total amount of money laundered, and therefore associated tax revenue lost, was in the hundreds of millions of euros.

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; mutual savings associations; credit companies; insurance companies; financial advisers; brokerage and securities firms; pension fund managers; collective investment schemes; postal services; currency exchange outlets; individuals and unofficial financial institutions exchanging or transmitting money; realty agents; dealers in precious metals, stones, antiques and art; legal advisors and lawyers; accountants; auditors; notaries; and casinos

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 2,975 in 2011

Number of CTRs received and time frame: 644,006 in 2011

STR covered entities: Banks, professional money changers, credit intermediaries, payment systems and managers, and lending firms; life insurance entities and insurance companies that provide investment services; securities and investment service companies, collective investment, pension fund, and risk capital managers; mutual guarantee companies; postal wire services; real estate brokers, agents and developers; auditors, accountants, and tax advisors; notaries and registrars of commercial and personal property; lawyers, attorneys, or other independent professionals when acting on behalf of clients in financial or real estate transactions; company formation and business agents; trustees; casinos, gaming and lottery enterprises; dealers of jewelry, precious stones and metals, art, and antiques; safekeeping or guaranty services; and foundations and associations

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

Spain is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/59/15/46253063.pdf

Enforcement and implementation issues and comments:

Spain has long combated both domestic and foreign terrorist organizations and Spanish law enforcement entities have identified various vulnerabilities, including donations to finance nonprofit organizations; establishment of publishing companies that print and distribute books or periodicals for the purposes of propaganda, fraudulent tax and financial assistance collections; the establishment of “cultural associations”; and alternative remittance system transfers. Informal non-bank outlets such as locutorios (communication centers that often offer wire transfer services) are used to move money in and out of Spain by making small international transfers for members of the immigrant community. Spanish regulators also note the presence of hawala networks in the Muslim community.

In April 2010, Spain enacted a law to prevent money laundering and terrorist financing. The law introduces a risk-based approach to preventing money laundering and terrorist financing and imposes stringent requirements on financial institutions as well as designated non-financial businesses and professionals. Additionally, the law greatly enhances authorities’ capacity to combat terrorist financing by placing greater requirements on financial institutions and other businesses, and by strengthening penalties and monitoring and oversight. The law entered into force immediately; however, implementing regulations will not be approved until 2013. Until then, many of its provisions are not being implemented. In the interim, the implementing regulations for an earlier 2005 law remain in force. Spain should implement the provisions of the new law.

Spanish law does not allow civil forfeiture. Carrying more than 100,000 euros (approximately $131,700) in cash within the country is not allowed. If the authorities discover an amount larger than that, they can seize and hold it until proof of legal origin is provided.

The Spanish government has increased its efforts to combat fraud and tackle Spain’s large underground economy. An anti-fraud law, which entered into effect on October 31, 2012, restricts cash transactions between businesses and professionals to less than 2,500 euros (approximately $3,300). Failure to comply with the new norm can result in an administrative fine equivalent to 25 percent of the total value of the payment. The limit for cash transactions for non-resident individuals is €15,000 (approximately $19,950), to allow for tourists’ expenditures. The anti-fraud law also establishes a new obligation to report on foreign assets and expands the liability of successor corporations, among other measures.

In 2010, the Financial Crimes Enforcement Network (FinCEN), the financial intelligence unit of the U.S., suspended information sharing with its Spanish counterpart, the Executive Service for the Prevention of Money Laundering (SEPBLAC) due to an unauthorized disclosure of FinCEN information by Spanish authorities. SEPBLAC has addressed the improper disclosure issues and has taken steps to ensure the protection of FinCEN’s information, including negotiating an updated version of a memorandum of understanding (MOU) with FinCEN. FinCEN will resume information exchange with SEPBLAC after signing the MOU. The security forces and the judiciary exchange information with the U.S. related to money laundering.

A working group has been created within the Commission for the Prevention of Money Laundering to promote the collection of statistics. Spain currently does not track the total number of prosecutions and convictions for money laundering. When money laundering occurs in conjunction with a predicate offense, only the predicate offense is tracked in a central statistics database. The numbers tracked for money laundering crimes only include those cases in which the conviction was for money laundering alone, without another offense. Spain should maintain and disseminate statistics on investigations and prosecutions.

Sri Lanka

Sri Lanka is neither an important regional financial center nor a preferred center for money laundering. However, the lack of transparent tender mechanisms in government projects, past experience with terrorism, tax evasion, and a large informal economy make the country vulnerable to money laundering and terrorist finance. Sri Lanka is very aware of terrorism financing issues, since there were vast inflows of financing from abroad to the Liberation Tigers of Tamil Eelam (LTTE) in Sri Lanka during the conflict from 1983 to 2009. The United States has designated the LTTE as a Foreign Terrorist Organization.

The Financial Action Task Force (FATF) included Sri Lanka in its October 19, 2012 Public Statement because of continuing deficiencies in Sri Lanka’s anti-money laundering/counter-terrorist financing (AML/CFT) regime.

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

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

criminalizATION OF money laundering:

“All serious crimes” approach or “list” approach to predicate crimes: 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, registered finance companies, insurance companies, securities companies and brokers, money changers, casinos, real estate agents, dealers in precious metals and stones, lawyers, and trusts or company service providers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 539 in 2011

Number of CTRs received and time frame: 3.4 million in 2011

STR covered entities: Banks, registered finance companies, insurance companies, securities companies and brokers, money changers, casinos, real estate agents, dealers in precious metals and stones, lawyers, and trusts or company service providers

money laundering criminal Prosecutions/convictions:

Prosecutions: 3 in 2011

Convictions: Not available

Records exchange mechanism:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Sri Lanka amended the Prevention of Money Laundering Act and the Convention on the Suppression of Terrorist Financing Act in September 2011. The main objective was to strengthen the respective legal regimes. In late 2012 Sri Lanka proposed further amendments to Convention on the Suppression of Terrorist Financing Act to address the freezing of terrorist assets.

Although AML/CFT laws cover designated non-financial businesses and professions, no regulator has issued KYC or currency reporting policies covering these entities. They are not required to maintain customer information or report suspicious activity. Politically exposed persons (PEPs) are addressed in customer due diligence regulations published in March 2011.

The financial intelligence unit functions as a department of the Central Bank of Sri Lanka.

St. Kitts and Nevis

St. Kitts and Nevis (SKN) is a federation composed of two islands in the Eastern Caribbean. As a federation, the anti-money laundering/counter-terrorist financing (AML/CFT) and offshore legislation covers both St. Kitts and Nevis; however, each island has the authority to organize its own financial structure. With most of the offshore financial activity concentrated in Nevis, it has independently developed its own offshore legislation.

The federation is at major risk for corruption and money laundering due to the high volume of narcotics trafficking activity through and around the islands, and the presence of known traffickers. The growth of its offshore sector, with unusually strong secrecy laws, and an inadequately regulated economic citizenship program further contribute to the federation’s money laundering vulnerabilities.

SKN’s monetary authority is the Eastern Caribbean Central Bank (ECCB), and the SKN’s currency is the East Caribbean (EC) dollar, used by eight of the nine ECCB jurisdictions. The existence of the common currency may raise the risk of money laundering; however, there is little evidence the EC dollar is a primary vehicle for money laundering. The ECCB has direct responsibility for regulating and supervising the entire domestic sector of SKN and the offshore banks in Nevis, and for making recommendations regarding approval of offshore banking licenses. By law, all offshore banks are required to have a physical presence in the federation; shell banks are not permitted.

There is limited information on the scale of the financial services, but 2010 numbers may be illustrative: St. Kitts had licensed approximately 36 corporate service providers, three trust providers, 116 captive insurance companies and over 2,100 companies and foundations. By contrast, Nevis had over 11,000 international business companies (IBC), 4,200 limited liability companies, over 1,000 trusts and over 110 insurance companies. Nevis can form an IBC in less than 24 hours, and bearer shares are allowed though “discouraged.” Internet gaming entities must apply for a license as an IBC.

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: Money brokers, exchanges, and lenders; charities and other non-profit organizations; pawnshops, jewelers and dealers of precious metals and stones; banks (domestic and offshore); real estate businesses; insurance companies; credit unions and building societies; money transmission services; venture risk capital firms; accountants; casinos; trust businesses; business corporations; and lawyers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 66: January 1 – November 30, 2012

Number of CTRs received and time frame: Not applicable

STR covered entities: Money brokers, exchanges, and lenders; charities and other non-profit organizations; pawnshops, jewelers and dealers of precious metals and stones; banks (domestic and offshore); real estate businesses; insurance companies; credit unions and building societies; money transmission services; venture risk capital firms; accountants; casinos; trust businesses; business corporations; and lawyers

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

SKN 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=335&Itemid=418&lang=en

Enforcement and implementation issues and comments:

In 2012, a number of amendments were made to SKN’s legislation to strengthen the overall AML/CFT regime. Included are amendments to the Proceeds of Crime Act that provide for threshold reporting in the gaming and betting industries and for dealers in precious metals and stones. In addition, there is now a list of activities that warrant reporting by lawyers, accountants and other professionals who engage in certain activities for clients. An amendment to the Anti-Terrorism Act brought penalties more in line with best practices. The amendment also addresses forfeiture proceedings. Law enforcement appears competent; however, there are no guidelines to provide law enforcement the authority to conduct an investigation based on a foreign request for assistance.

SKN’s legislation includes provisions for civil sanctions; however, they are inconsistent and do not apply to all relevant financial sectors. The Government of St. Kitts and Nevis (GOSKN) should ensure all relevant entities covered under the AML/CFT laws and regulations are subject to sanctions that are proportionate and dissuasive.

Bearer shares are permitted provided the bearer share certificates are retained in the safe custody of persons or financial institutions authorized by the Minister of Finance. Legislation requires certain identifying information be maintained on bearer certificates, including the name and address of the bearer as well as the certificate’s beneficial owner. All authorized custodians are required by law to obtain proper documents on shareholders or beneficial owners before incorporating exempt or other offshore companies. This information is not publicly available, but is available to the regulator and other authorized persons.

The Ministry of Finance oversees SKN’s Citizenship by Investment Program. An individual may qualify for citizenship with a $350,000 minimum investment in real estate. In addition, the GOSKN created the Sugar Industry Diversification Foundation, after the closure of the federation’s sugar industry, as a special project approved for the purposes of citizenship by investment. To be eligible, an applicant must make a contribution ranging from $200,000 to $400,000 (based on the number of the applicant’s dependents). The GOSKN requires applicants to make a source of funds declaration and provide evidence supporting the declaration. According to the GOSKN, the Ministry of Finance has established a Citizenship Processing Unit to manage the screening and application process.

The secrecy laws, the allowance of anonymous accounts, the lack of transparency of beneficial ownership of legal entities, and the uncertain regulatory framework concerning customer due diligence make Nevis, in particular, a haven for criminals to conceal proceeds. The GOSKN should work toward reducing these vulnerabilities. St. Kitts and Nevis also should determine more precisely the exact number of Internet gaming companies present on the islands and provide the necessary oversight of these entities. The GOSKN should provide for close supervision of its economic citizenship programs or else consider discontinuing them.

St. Lucia

Organized crime-linked drug violence continues to plague St. Lucia. Money laundering in St. Lucia is primarily related to proceeds from illegal narcotics trafficking, and, to some extent, to proceeds from financial and commercial crimes. Government officials suspect criminal proceeds laundered in the jurisdiction derive from both domestic and foreign criminal activity and that the proceeds are controlled by drug trafficking organizations and organized criminals who operate both locally and abroad.

A significant black market exists for smuggled goods in St. Lucia, mostly gold, silver and other jewelry, predominantly smuggled in from Guyana. There is an ongoing leakage of revenue and a black market of high-quality jewelry being purchased from duty free establishments in St. Lucia by both local and foreign consumers.

There is a free trade zone where investors can establish businesses and conduct trade and commerce outside of the National Customs territory. Activities may be conducted entirely within the zone or between the St. Lucia free zone and foreign countries. It is suspected that financial institutions unwittingly engage in currency transactions involving international narcotics trafficking proceeds.

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, building societies, and credit unions; insurance companies; international financial services companies; finance and lending companies; factors, guarantors, and registered agents; exchange bureaus; investment advisers; cash remittance services; postal and other courier services; real estate businesses; car dealerships; casinos, gaming houses, and Internet gaming services; jewelers and bullion dealers; custodial, advice, and nominee services; check cashing services; financial leasing; venture risk capital; administrators and issuers of financial instruments, credit cards, travelers’ checks and bankers’ drafts; money brokers; financial intermediaries; securities brokers and underwriters; investment and merchant banks; trusts, asset management and fiduciary services; company formation and management services; collective investment schemes and mutual funds; lawyers; and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 87 in 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, building societies, and credit unions; insurance companies; international financial services companies; finance and lending companies; factors, guarantors, and registered agents; exchange bureaus; investment advisers; cash remittance services; postal and other courier services; real estate businesses; car dealerships; casinos, gaming houses, and Internet gaming services; jewelers and bullion dealers; custodial, advice, and nominee services; check cashing services; financial leasing; venture risk capital; administrators and issuers of financial instruments, credit cards, travelers’ checks and bankers’ drafts; money brokers; financial intermediaries; securities brokers and underwriters; investment and merchant banks; trusts, asset management and fiduciary services; company formation and management services; collective investment schemes and mutual funds; lawyers; and accountants

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

St. Lucia is a member of 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=334&Itemid=418&lang=en

Enforcement and implementation issues and comments:

Cooperation has increased between the Royal St. Lucia Police Force and the Financial Investigations Authority (FIA), and there is a robust approach to cash seizures and forfeitures. Since enactment of the Proceeds of Crime (Amendment) Act, May 2011, ten cash forfeiture matters have been filed in the High Court, two were successfully prosecuted and the additional eight are still pending. There are many early-stage cash seizure cases pending due to a general lack of understanding of the cash seizure/forfeiture process among the police and courts. The Government of St. Lucia should improve investigative capacity within the police and courts to prosecute cash seizure and forfeitures cases expeditiously and successfully.

On a daily basis, the Customs and Excise Department is confronted by false declarations, false invoicing and fraudulent evasion of duties and taxes on goods, including excess goods. Monies suspected to be derived from drug trafficking and other illicit enterprises are filtered into and washed through trading firms. Trade-based money laundering is evident in St. Lucia. Law enforcement and customs authorities should be given training on how to recognize and combat trade-based value transfer, which could be indicative of both customs fraud and money laundering.

St. Maarten

Sint Maarten (St. Maarten) is an autonomous entity within the Kingdom of the Netherlands (KON). St. Maarten enjoys sovereignty on most internal matters and defers to the KON in matters of defense, foreign policy, final judicial review, human rights, and good governance.

Drug trafficking is an ongoing concern for St. Maarten, and money laundering is primarily related to proceeds from illegal narcotics. Bulk cash smuggling and trade-based money laundering may be problems due to the close proximity of other Caribbean islands and Saint Martin, the French part of the shared island, which is also a free trade zone.

St. Maarten does not have an offshore banking industry. There are 14 casinos on the island and online gaming is legal and subject to supervision.

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, law offices, insurance companies, casinos, Customs, money remitters, the Central Bank, trust companies, accountants, car dealers, administrative offices, Tax Office, jewelers, credit unions, real estate businesses, notaries, currency exchange offices, and stock exchange brokers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, law offices, insurance companies, casinos, Customs, money remitters, Central Bank, trust companies, accountants, car dealers, administrative offices, Tax Office, jewelers, credit unions, real estate businesses, notaries, currency exchange offices, and stock exchange brokers

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

St. Maarten is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its first mutual evaluation was recently completed. Once published, it will be found here: https://www.cfatf-gafic.org/index.php?option=com_docman&Itemid=418&lang=en

Enforcement and implementation issues and comments:

The Government of St. Maarten’s (GOSM) anti-money laundering/counter-terrorist financing (AML/CFT) regime needs improvements in regard to KYC rules, STR collection, criminalizing terrorist financing in line with international standards, and general enhancement of AML/CFT supervision in all sectors. Additionally, shortcomings are noted within the financial intelligence unit (FIU).

Under the former Netherlands Antilles jurisdiction, most governmental organizations were based in Curacao. Following the dissolution of the Netherlands Antilles in 2010, St. Maarten created its own FIU under the Ministry of Justice. The FIU has signed memoranda of understanding for information exchange with several countries and is pursuing membership in the Egmont Group of FIUs.

While St. Maarten and Curacao have a joint Central Bank, St. Maarten has established a Tax Office Criminal Investigation Unit and a Financial Investigation Department.

The GOSM is amending legislation to provide for AML monitoring of casinos, and is pursuing money laundering investigations and prosecutions. In 2012, the GOSM conducted a major money laundering investigation, and in August, $687,000 was seized from suspected launderers. Two additional criminals were prosecuted for smuggling $15,000 into the country in September 2012.

The Mutual Legal Assistance Treaty between the KON and the United States extends to St. Maarten. As part of the KON, St. Maarten cannot sign or ratify international conventions in its own right. Rather, the KON may arrange for the ratification of any convention to be extended to St. Maarten. The 1988 Drug Convention was extended to St. Maarten in 1999. The International Convention for the Suppression of the Financing of Terrorism was extended to the Netherlands Antilles, and as successor, to St. Maarten in 2010. The UN Convention against Transnational Organized Crime and the UN Convention against Corruption have not yet been extended to St. Maarten.

St. Vincent and the Grenadines

St. Vincent and the Grenadines (SVG) is a small but active offshore financial center with a relatively large number of international business companies (IBCs). As a result of drug trafficking and its offshore financial sector, the country remains vulnerable to money laundering and other financial crimes. Money laundering is principally affiliated with the production and trafficking of marijuana in SVG, as well as the trafficking of other narcotics from within the Caribbean region. Money laundering occurs in various financial institutions such as domestic and offshore banks and through money remitters.

In some instances, United States currency was smuggled into the jurisdiction using couriers, go-fast vessels and yachts. In several cases, these monies were intercepted; the operations generating the illicit proceeds had regional origins, including Venezuela, Bermuda, and the U.S. Virgin Islands.

Per 2012 data, the offshore sector includes five offshore banks, 7,735 IBCs, 557 continued IBCs, five offshore insurance companies, 127 mutual funds (fund managers and administrators), 17 registered agents, and 125 international trusts. There are no offshore casinos and no Internet gaming licenses. No physical presence is required for offshore sector entities and businesses, with the exception of offshore banks. The regulatory body with the mandate to supervise the offshore financial sector is the International Financial Services Authority. Nominee directors are not mandatory except when an IBC is formed to carry on banking business. Bearer shares are permitted for IBCs, but not for banks. The Government of St. Vincent and the Grenadines (GOSVG) requires registration and custody of bearer share certificates by a registered agent who must also keep a record of each bearer certificate issued or deposited in its custody. There are no free trade zones in SVG.

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, lenders, and factoring firms; check cashing and money transmission services; financial leasing firms; venture risk capital; issuers and administrators of credit cards, travelers checks and bankers’ drafts; guarantors and underwriters; money market instrument, foreign exchange and bullion dealers; money brokers; financial intermediaries; securities brokers and underwriters; investment and merchant banks; asset management services; custody, trust and other fiduciary services; company formation and management services; collective investment schemes and mutual funds; car dealerships; jewelers; real estate agents; casinos, internet gambling, pool betting, and lottery agents; lawyers and accountants; and charities

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 413: January 1 – November 30, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Banks, lenders, and factoring firms; check cashing and money transmission services; financial leasing firms; venture risk capital; issuers and administrators of credit cards, travelers checks and bankers’ drafts; guarantors and underwriters; money market instrument, foreign exchange and bullion dealers; money brokers; financial intermediaries; securities brokers and underwriters; investment and merchant banks; asset
management services; custody, trust and other fiduciary services; company formation and management services; collective investment schemes and mutual funds; car dealerships; jewelers; real estate agents; casinos, internet gambling, pool betting, and lottery agents; lawyers and accountants; and charities

money laundering criminal Prosecutions/convictions:

Prosecutions: 5 in 2012

Convictions: 2 in 2012

Records exchange mechanism:

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

With other governments/jurisdictions: YES

SVG 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=333&Itemid=418&lang=en

Enforcement and implementation issues and comments:

In 2012, two people were convicted of money laundering offenses under the Proceeds of Crime and Money Laundering Prevention Act (PCMLPA). The case involved the cash seizure of $1,733,463. The cash was found concealed in the cabins of a yacht that was the subject of a controlled delivery between Bermuda and SVG.

Various amendments were made to the PCMLPA, including strengthening STR reporting, prohibiting tipping off, and criminalizing self-laundering.
 

The GOSVG should become a party to the UN Convention against Corruption. It should also adopt a provision to provide financial institutions and their employees who file STRs in good faith with a safe harbor against civil or criminal liability.

Sudan

Sudan has been designated a State Sponsor of Terrorism by the United States. Sudan currently has limited access to international financial markets and institutions because of comprehensive U.S. economic sanctions. Traders and other legitimate business persons often carry large sums of cash because Sudan is largely a cash-based society and electronic transfer of money outside of Sudan is challenging. This dependence on large amounts of cash complicates enforcement efforts and makes Sudan’s banking system vulnerable to money laundering. Comprehensive sanctions also contribute to a significant black market for smuggled goods, making Sudan vulnerable to trade-based money laundering.

Public corruption is believed to be widespread; however, the extent it contributes to money laundering is unknown.

Sudan has two free trade zones and a preliminary agreement with China for another. There are no known money laundering or terrorist financing activities through these zones.

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

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

criminalizATION OF money laundering:

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

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: Commercial banks, exchange and brokerage firms, securities firms, insurance companies, gambling clubs, estate brokerages, mineral and gem traders, attorneys, and accountants

REPORTING REQUIREMENTS:

Number of STRs received and time frame: 13: January 1 - November 8, 2012

Number of CTRs received and time frame: Not available

STR covered entities: Commercial banks, exchange and brokerage firms, securities firms, insurance companies, gambling clubs, estate brokerages, mineral and gem traders, attorneys, and accountants

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

Sudan 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/TopicList.asp?cType=train

Enforcement and implementation issues and comments:

Sudan’s links with international terrorist organizations contributed to Sudan’s 1993 designation as a State Sponsor of Terrorism. In November 1997, the U.S. imposed comprehensive economic, trade, and financial sanctions against Sudan.

The Government of Sudan (GOS) asserts that it is continuing to bolster its efforts to combat money laundering and other financial crimes. The Central Bank of Sudan (CBOS) and the Financial Intelligence Unit (FIU), an independent entity within the CBOS, make periodic field inspections of commercial banks and other financial institutions through the compliance officers’ network. The CBOS and FIU continue to concentrate on implementation of the Money Laundering and Terrorism Financing Act (MLFTA) of 2010. It is not clear whether all of the implementing regulations for MLFTA are enforceable. The GOS has limited investigative capacity, and enforcement can be subject to political pressures, with many government officials involved in business.

After a referendum led to the secession of South Sudan in 2011, Sudan and South Sudan signed a series of cooperation agreements in September 2012 that include agreements on banking and trade; these agreements have yet to be implemented. Because of the lack of an exchange policy with South Sudan, large volumes of cash transactions, usually employing a third currency, are commonplace and have overwhelmed attempts to police the nature of the dealings. Credit card transactions often are not possible due to the U.S. sanctions regime; this is another reason for large cash transactions.

Sudan should continue to work on implementing its action plan to address noted deficiencies, including by implementing adequate procedures for identifying and freezing terrorist assets, ensuring a fully operational and effectively functioning FIU, and ensuring an effective supervisory program for anti-money laundering/counter-terrorist financing compliance.

Sudan is ranked 173 of 176 countries on Transparency International’s 2012 Corruption Perception Index. Sudan should become a party to the UN Convention against Corruption; at this time there are no indications that Sudan is considering joining the convention. Going forward, Sudan must focus on full implementation of the money laundering law, and on establishing and empowering effective enforcement institutions, particularly the FIU. With active rebellions in a large part of the country; multiple internal conflicts, both within and without the ruling party; strained relations with the new Republic of South Sudan; and a deteriorating economy, Sudan is not expected to give money laundering investigations or prosecutions a high priority.

Suriname

Money laundering in Suriname is closely linked to transnational criminal activity related to the transshipment of cocaine, primarily to Europe and Africa. Both domestic and international drug trafficking organizations are believed to control most of the laundered proceeds, which are primarily invested locally in casinos, real estate, foreign exchange companies, the construction sector, and car dealerships. Public corruption also may contribute to money laundering, though the full extent is unknown. There is a thriving informal sector fueled by the large profits from growing small-scale gold mining and the industries that support it. Much of the money within this sector does not pass through formal banking system. In Suriname’s undeveloped interior, bartering with gold is the norm for financial transactions. Goods, from agricultural products to fuel and medicine, are smuggled into the country via Guyana and French Guiana and are sold below the normal price for similar goods imported legally. Other goods are smuggled into the country mainly to avoid paying higher import duties. There is little evidence to suggest this activity is significantly funded by narcotics or other illicit proceeds. Contraband smuggling is not thought to generate funds that are laundered through the 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: YES

Know-your-customer (KYC) rules:

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

KYC covered entities: Banks and credit unions; asset managers; securities brokers and dealers; insurance agents and companies; currency brokers, remitters, and exchanges; auditors, accountants, notaries, lawyers, and real estate agents; dealers in gold or other precious metals and stones; gaming entities and lotteries; and motor vehicle dealers

REPORTING REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks, credit unions, and financial asset managers; securities brokers and dealers; insurance agents and companies; currency brokers, remitters, and exchanges; auditors, accountants, lawyers, notaries, and real estate agents; dealers in gold or other precious metals and stones; gaming entities and lotteries; and motor vehicle dealers

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

Suriname is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force-style regional body. Its most recent mutual evaluation can be found here: https://www.cfatf-gafic.org/index.php?option=com_content&view=category&layout=blog&id=375&Itemid=560&lang=en

Enforcement and implementation issues and comments:

The Government of Suriname (GOS) has a legal framework in place to combat money laundering; however, enforcement remains weak and inconsistent. Inadequate training, government corruption, and an overall lack of resources significantly diminish the government’s investigative and prosecutorial abilities, as local institutions and personnel lack the capacity to fully enforce the law and its attendant regulations. Additionally, a lack of political will prevents aggressive enforcement. The police’s Financial Investigative Unit opened 20 investigations in 2012; however, there is no information available on the number of prosecutions or convictions.

Surinamese authorities should move quickly to fully implement customer identification requirements (especially for politically exposed persons) and unusual transaction reporting procedures. The GOS should ensure covered entities are subject to adequate supervision and enforcement programs. Additional efforts also need to be made to ensure border enforcement. Customs and appropriate law enforcement need to investigate trade fraud and illicit value transfer. The GOS should become party to the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.



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