In 2002, the Federal Republic of Germany (FRG) enacted a number of laws to improve law enforcement’s ability to combat money laundering and terrorist financing. The measures brought German laws into line with the first and second European Union (EU) Money Laundering Directives, which mandate suspicious activity reporting by a variety of entities, including notaries, accountants, tax consultants, casinos, luxury item retailers, and attorneys.

In May 2002, the German banking, securities, and insurance industry regulators merged into a single financial sector regulator known as the Federal Financial Supervisory Authority (BaFIN). Germany’s anti-money laundering (AML) legislation requires that BaFIN maintain a centralized register of all bank accounts with electronic access to all key account data held by banks in Germany. Banks cooperate with German authorities. Many have independently developed risk assessment software to screen potential and existing clients and their financial activity, and to monitor transactions for suspicious activity.

Germany’s Money Laundering Act, amended by the Act on the Improvement of the Suppression of Money Laundering and Combating the Financing of Terrorism of August 8, 2002, criminalizes money laundering related to narcotics trafficking, fraud, forgery, embezzlement, and membership in a terrorist organization. It also increases due diligence and reporting requirements for banks and financial institutions and requires financial institutions to obtain customer identification for transactions conducted in cash or precious metals exceeding 15,000 euros (approximately U.S. $22,000). The legislation mandates more comprehensive background checks for owners of financial institutions and tighter rules for credit card companies. Banks must report suspected money laundering to the FIU as well as to the State Attorney (Staatsanwaltschaft).

The Federal Interior Ministry has drafted new legislation to implement the third EU Money Laundering Directive. The legislation is expected to be adopted in mid-2008. In addition to requiring that EU member states implement the Financial Action Task Force’s (FATF) 40 Recommendations, the directive contains further provisions on customer due diligence and other internal risk-management measures to prevent money laundering and terrorist financing. The new regulations will apply to banks, insurance companies, and a number of professional groups (e.g., financial services providers, lawyers, notaries public, tax advisors, and other business operators). The directive calls for improved integrity and transparency to help prevent financial crime and improve information exchange between the public and private sectors. According to the draft legislation, suitable control structures must ensure that proper, accurate and current information is available about the contracting party, to ensure transparency. The EU requirement also expands reporting requirements to encompass transactions that support the financing of terrorism. The EU regulation on wire transfers (EC 1781/2006) entered into force on January 1, 2007.

As of June 15, 2007, travelers entering Germany from a nonEU country or traveling to a nonEU country with 10,000 euros (approximately U.S. $14,500) or more in cash must declare their cash in writing. The definition of “cash” includes currency, checks, traveler’s checks, money orders, bills of exchange, promissory notes, shares, debentures, and due interest warrants (coupons). The written declaration must also include personal data, travel itinerary and means of transport as well as the total amount of money being transported, where the money originated from, what it is to be used for, who the owner of the money is and who is the payee. If authorities doubt the information given, or if there are other grounds to suspect money laundering or the funding of a terrorist organization, the cash will be placed under customs custody until the matter has been investigated. Penalties for nondeclaration or false declaration include a fine of up to one million euros (U.S. $1.46 million). During the period between January and September 2007 the Federal Customs Criminal Office identified 998 cases of individual cross-border cash movements that required further clarification and review. In December 2007 the new Schengen countries were enveloped within EU borders, making it possible to travel across Europe from Estonia through Germany to Portugal without border controls.

Germany established a single, centralized, federal financial intelligence unit (FIU) within the Federal Office of Criminal Investigation (Bundeskriminalamt or BKA). Staffed with financial market supervision, customs, and legal experts, the FIU is responsible for analyzing cases, responding to reports of suspicious transactions, and developing and maintaining a central database of this information. Another unit under the BKA, the Federal Financial Crimes Investigation Task Force, houses twenty BKA officers and customs agents.

Information for 2007 was unavailable, but in 2006, obligated entities filed 10,051 suspicious transaction reports (STRs) pursuant to the Money Laundering Act. According to the German Financial Intelligence Unit’s (FIU’s) 2006 annual report, 80 percent of the STRs filed pursuant to the Money Laundering Act and other notifications of money laundering activity forwarded to the FIU in 2006 cited fraud, including “phishing” and the use of “financial agents”, as a possible criminal offense from the perspective of the reporting party. The individuals recruited in phishing schemes may be liable for money laundering penalties as well as for the illegal provision of financial services. Document forgery and tax offenses were the next most frequently cited offenses.

In 2006, approximately fifty-seven percent of the persons cited in German STRs were German nationals. Of the forty-three percent of the STRs that referenced nonGerman nationals, suspects with Turkish citizenship comprised the greatest proportion followed by Russian, Chinese, Italian and Kazakh. The 2006 statistics on STRs concerning transfers of assets to and from foreign countries displayed a number of significant trends. Russia and the Ukraine were the top two destinations for asset transfers that generated STRs. The United States is the eighth most frequently listed destination for asset transfers that are cited by STRs. When entities file STRs on transfers of assets from foreign countries, the USA is the most frequently cited source nation.

As with other crimes, actual enforcement of money laundering laws under the German federal system takes place at the state (sub-federal) level. Each state has a joint customs/police/financial investigations unit (GFG), which works closely with the federal FIU. The State Attorney can order a freeze of accounts when warranted.

As an EU member, Germany complies with a recent EU regulation requiring accurate originator information on funds transfers for transfers into or out of the EU. However, this does not place Germany into compliance with FATF Special Recommendation Seven (SR VII) on Terrorist Financing, which governs wire transfers. SR VII requires such information on all cross-border transfers, including transfers between EU member countries.

Germany moved quickly after September 11, 2001, to identify and correct the weaknesses in its laws that had permitted terrorists to live and study in Germany. One reform package closed loopholes that had permitted members of foreign terrorist organizations to engage in fundraising in Germany (e.g., through charitable organizations), which extremists had exploited to advocate violence. Subsequently, Germany increased its law enforcement efforts to prevent misuse of charitable entities. Germany has used its Vereingesetz, or Law on Associations, to take administrative action to ban extremist associations that “threaten the democratic constitutional order.”

A second reform package enhances the capabilities of federal law enforcement agencies and improves the ability of intelligence and law enforcement authorities to coordinate efforts and to share information on suspected terrorists. The law also provides Germany’s internal intelligence service with access to information from banks and financial institutions, postal service providers, airlines, and telecommunication and Internet service providers. Another proposed counterterrorism reform, will further streamline and simplify security agencies’ access to German financial, travel, and telephone records. In 2002, the FRG also added terrorism and terrorist financing to its list of predicate offenses for money laundering, as defined by Section 261 of the Federal Criminal Code. The Criminal Code allows prosecution of members in terrorist organizations based outside Germany.

An amendment to the Banking Act institutes a broad legal basis for BaFIN to order frozen assets of EU residents suspected as terrorists. Authorities primarily concentrate on financial assets. BaFIN’s system allows immediate identification of financial assets that can be potentially frozen, and German law enforcement authorities can freeze accounts for up to nine months. However, unless the assets belong to an individual or entity designated by the UNSCR 1267 Sanctions Committee, the FRG cannot seize money until authorities prove in court that the funds were derived from criminal activity or intended for terrorist activity.

Germany participates in United Nations and EU processes to monitor and freeze the assets of terrorists. The names of suspected terrorists and terrorist organizations listed on the UNSCR 1267 Sanctions Committee’s consolidated list and those designated by EU or German authorities are regularly disseminated to German financial institutions. A court can order the freezing of nonfinancial assets. Germany and several other EU member states have taken the view that the EU Council Common Position requires, at a minimum, a criminal investigation to establish a sufficient legal basis for freezes under the EU Clearinghouse process. Proceeds from asset seizures and forfeitures go into the federal government treasury.

Since 1998, the FRG has licensed and supervised money transmitters, shut down thousands of unlicensed money remitters, and issued AML guidelines to the industry. German law considers the activities of alternative remittance systems such as hawala to be banking activities. Accordingly, German authorities require bank licenses for money transfer services, thus allowing authorities to prosecute unlicensed operations and maintain close surveillance over authorized transfer agents.

German law enforcement authorities cooperate closely at the EU level, such as through Europol. Germany has mutual legal assistance treaties (MLATs) with numerous countries. Germany exchanges law enforcement information with the United States through bilateral law enforcement agreements and informal mechanisms. United States and German authorities have conducted joint investigations. The U.S. and Germany signed a Mutual Legal Assistance Treaty in Criminal Matters on October 14, 2003. On July 27, 2006, the U.S. Senate ratified the MLAT and the German legislative bodies approved the implementing legislation in July and September 2007. Germany published the implementing legislation in the Federal Gazette on November 2, 2007, and the MLAT will come into effect once the parties formally exchange the instruments of ratification. Additionally, the U.S. and Germany signed bilateral instruments to implement the U.S.-EU Extradition and Mutual Legal Assistance Agreements on April 18, 2006. These instruments, as well as the underlying U.S.-EU Agreements, have not yet been ratified. German authorities cooperate with U.S. authorities to trace and seize assets to the full extent allowed under German laws. German law does not currently permit the sharing of forfeited assets with other countries.

Germany is a member of the FATF, the EU and the Council of Europe. The FIU is a member of the Egmont Group. Germany is party to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Transnational Organized Crime. Germany has signed, but not yet ratified, the UN Convention against Corruption.

The Government of Germany’s AML laws and its ratification of international instruments underline Germany’s continued efforts to combat money laundering and terrorist finance. Germany should amend its wire transfer legislation to ensure that origination information applies to all cross-border transfers, including those within the EU. It should also amend legislation to waive the asset freezing restrictions in the EU Clearinghouse for financial crime and terrorist financing, so that the freezing process does not require a criminal investigation as well as amend its legislation to allow asset sharing with other countries. Germany should ratify the UN Convention against Corruption.

Ghana

Ghana is not a regional financial center, but due to continuing turmoil in the region, Ghana’s financial sector is likely to become more important regionally as it develops. Most of the money laundering found in Ghana involves narcotics and public corruption. Ghana is a significant transshipment point for cocaine and heroin. Police suspect that criminals use nonbank financial institutions, such as foreign exchange bureaus, to launder the proceeds of narcotics trafficking. Criminals can also launder their illicit proceeds through investment in banking, insurance, real estate, automotive import, and general import businesses. Reportedly, donations to religious institutions have been used as a vehicle to launder money. The number of “advance fee” or 419 fraud letters, known as Sakawa in Ghana, that originate from Ghana continues to increase, as do other related financial crimes, such as use of stolen credit and ATM cards.

Informal activity accounts for about 45 percent of the total Ghanaian economy. Ghana’s 2000 census found that 80 percent of employment was in the informal sector. Only a small percentage of the informal economy, however, relies on the banking sector. Because some traders smuggle goods to evade tax and import counterfeit goods, black market activity in smuggled goods is a concern. In most cases the smugglers bring the goods into the country in small quantities, and Ghanaian authorities have no indication that these smugglers have links to criminals who want to launder money gained through narcotics or corruption.

Ghana has designated four free trade zone areas, but the Tema Export Processing Zone is currently the only active free trade zone. Ghana also licenses factories outside the free zone area as free zone companies. Free zone companies must export at least 70 percent of their output. Most of the companies produce garment and processed foods. The Ghana Free Zone Board and the immigration and customs authorities monitor these companies. Immigration and customs officials do not suspect that trade-based money laundering (TBML) schemes are a major problem in the free trade zones. Although the Government of Ghana (GOG) has instituted identification requirements for companies, individuals, and their vehicles in the free zone, monitoring and due diligence procedures are lax.

The GOG has developed new laws to stimulate financial sector growth, including the revision of the banking law to strengthen the operational independence of the Central Bank (Bank of Ghana). The government is promoting efforts to model Ghana’s financial system on that of the regional financial hub in Mauritius. In line with this, the GOG passed the Banking (Amendment) Act, 2007 Act 738, on June 18, 2007. The law establishes the basis for the provision of international financial services in Ghana and requires the Bank of Ghana to authorize offshore banks. Prior to this law, the Bank of Ghana licensed only reputable and internationally active banks. On September 7, 2007, Barclays Bank of Ghana Ltd., a subsidiary of Barclays Bank PLC, UK became the first to start operating as an offshore bank. The Bank of Ghana is in the process of drafting regulations for offshore banks.

Nearly six years after drafting began, the Parliament passed the Anti-Money Laundering (AML) Bill on November 2, 2007. The President signed it on January 22, 2008, and it was gazetted on January 25, 2008. The law covers obliged institutions and their reporting and disclosure requirements; the role of supervisory authorities; preventive measures; customer identification and record keeping requirements; and rules for suspicious transaction reporting. Ghana has bank secrecy laws, but allows the sharing of information with relevant law enforcement agencies. Law enforcement officials can compel disclosure of bank records for drug-related offenses. Bank officials have protection from liability when they cooperate with law enforcement investigations. The new AML law requires banks and individuals to report suspicious transactions.

The banking sector lacks a strong regulatory framework to prevent money laundering and report suspicious transactions, although entities recognize the importance of such a framework. The Bank of Ghana allows two types of foreign currency bank accounts: the foreign exchange (FE) account and the foreign currency (FC) account. The FE account is tailored to foreign currency sourced within Ghana while the FC account targets transfers from abroad. Bank of Ghana regulations instituted in December 2006 under the Foreign Exchange Act allow U.S. $10,000 per year to be transferred from an FE account without documentation and approval from the Bank of Ghana. The regulations also allow import transactions of up to $25,000 without initial documentation for FE accounts. There are no limits on the number of such transactions made on each account or on the number of such accounts that an individual can hold. The law does not permit foreign exchange bureaus to make outward transfers. Local banks strictly follow “know your customer” rules. Ghana has no effective system to obtain data on an individual’s dealings with all the banks in Ghana.

Ghana has a cross-border currency reporting requirement. However, Ghanaian authorities have difficulty monitoring cross-border movement of currency.

The new AML bill calls for establishment of a Financial Intelligence Unit (FIU), overseen by the Minister of Finance. Ghana plans to fund the FIU through government grants and donations. The FIU will not investigate crime but will gather and analyze intelligence to help in identifying proceeds of unlawful activity and the perpetrators of the crimes. The FIU will have the authority to obtain information from other government regulatory authorities and from financial institutions. The GOG made no arrests, nor did it pursue any prosecutions related to money laundering or terrorist finance in 2007.

The Narcotic Drug Law of 1990 provides for the forfeiture of assets upon conviction of a drug trafficking offense. A February 2007 court order compelled authorities to release seized assets in a 1991 landmark narcotics trafficking case which resulted in a ten-year jail sentence of the convict, and return the assets to the owners. The ex-convict had appealed the seizure, arguing that the assets did not belong to him. The draft Proceeds of Crime Bill, pending since 2006, contains provisions dealing with pre-emptive measures, confiscation and pecuniary penalty orders, search and seizure, and restraining orders and realization of property. The draft Proceeds of Crime bill will merge with the existing Serious Fraud Office Law, 1993 (Act 466). The Serious Fraud Office, established by this law, investigates corruption and crimes that have the potential to cause economic loss to the state.

Ghana has not yet criminalized the financing of terrorism, as required by United Nations Security Council Resolution 1373. A draft Anti-Terrorism Bill, incorporating terrorist financing provisions, came before Parliament in 2005. The Bill is under examination by members of the Constitutional, Legal, and Parliamentary Affairs Committee and the Defense and Interior Committee. The draft bill addresses terrorist acts, support for terrorist offenses, specific entities associated with acts of terrorism, and search, seizure, and forfeiture of property relating to acts of terrorism. The Central Bank has circulated the list of individuals and entities on the UNSCR 1267 Sanctions Committee’s consolidated list to local banks, but no Ghanaian entities have identified assets belonging to any of the designees.

Although current Ghanaian law does not allow for the sharing of seized narcotics assets with other governments, the Narcotic Drug Law of 1990 includes provisions for the sharing of information, documents, and records with other governments. It also provides for extradition between Ghana and foreign countries for drug-related offenses. The United States has not requested financial investigative assistance from Ghanaian authorities.

Ghana is a member of the Inter-Governmental Action Group Against Money Laundering and Terrorist Financing in West Africa (GIABA), a regional body modeled after the Financial Action Task Force (FATF). Ghana has bilateral agreements for the exchange of money laundering-related information with the United Kingdom, Germany, Brazil, and Italy. Ghana is a party to the twelve UN conventions on terrorism, including the UN International Convention for the Suppression of the Financing of Terrorism. Ghana is a party to the 1988 UN Drug Convention, and the African Union Convention on Preventing and Combating Corruption. In June 2007, Ghana ratified the UN Convention against Corruption. Ghana has not signed the UN Convention against Transnational Organized Crime. Ghana has endorsed the Basel Committee’s “Core Principles for Effective Banking Supervision.”

Although the Government of Ghana (GOG) became a party to the UN International Convention for the Suppression of the Financing of Terrorism in 2002, it has not criminalized terrorist financing. It should do so. The GOG should move swiftly to implement the AML Bill, and should expand the list of predicate crimes to comply with international standards. The GOG should issue promulgating regulations, improve capacity among the agencies impacted, and establish its FIU. The GOG should make every effort to pass asset seizure and forfeiture legislation that comports with international standards as soon as possible. Once the laws are in place, Ghana should take the necessary steps to promote public awareness and understanding of financial crime, money laundering and financing of terrorist activities. The GOG should reconsider establishing the offshore center altogether. Ghana should immediately release regulations and guidance for its new offshore entities, and draft legislation to ensure that offshore entities are treated identically to the onshore sector under the AML Bill. Additionally, the GOG should require that the true names of all offshore entities are held in a registry, accessible to law enforcement. The GOG should increase cooperation and information sharing with other governments. Ghana should also become a party to the UN Convention against Transnational Organized Crime.

Gibraltar

Gibraltar is an overseas territory of the United Kingdom. A November 2006 referendum resulted in constitutional reforms transferring powers exercised by the U.K. government to Gibraltar. Gibraltar is a significant international financial center with strong ties to London, the Channel Islands, Israel, Cyprus, and other financial centers. Located at the southern tip of Spain, near the north coast of Africa, Gibraltar is adjacent to known drug-trafficking and human smuggling routes. It is also a retail banking centre for northern European expatriates with property in southern Spain. All of these factors reportedly contribute to money laundering and terrorist financing vulnerabilities in Gibraltar.

Gibraltar was one of the first jurisdictions to introduce and implement money laundering legislation that covered all crimes. The Gibraltar Criminal Justice Ordinance to Combat Money Laundering, which related to all crimes, entered into effect in 1996. The Drug Offenses Ordinance (DOO) of 1995 and Criminal Justice Ordinance of 1995, amended in June 2007 as the Criminal Justice Act, criminalize money laundering related to all crimes. The laws mandate reporting of suspicious transactions by any obliged entity or individual therein. The DOO obliges banks, mutual savings companies, insurance companies, financial consultants, postal services, exchange bureaus, attorneys, accountants, financial regulatory agencies, unions, casinos, charities, lotteries, car dealerships, yacht brokers, company formation agents, dealers in gold bullion, and political parties.

Authorities issued comprehensive anti-money laundering (AML) Guidance Notes, which have the force of law, to clarify the obligations of Gibraltar’s financial service providers. Gibraltar issued its most recent Guidance Notes in December 2007 with amendments based on the Criminal Justice (Amendment) Act 2007 and Terrorist (Amendment) Act 2007. The 2007 Guidance Notes apply to banks and building societies, the Gibraltar Saving Bank, investment business and controlled activities, life insurance companies, currency exchangers/bureaux de change, and money transmission/remittance offices. In transposing the EU’s Third Money Laundering Directive to include nonfinancial sectors, Gibraltar extended the Criminal Justice Act.

Gibraltar established the Financial Services Commission (FSC), the unified regulatory and supervisory authority for financial services, under the FSC Ordinance (FSCO) 1989. Required by statute to match the supervisory standards of the United Kingdom, the FSC is the supervisory body for banks and building societies, investment businesses, insurance companies, and controlled activities, which include investment services, company management, professional trusteeship, insurance management and insurance intermediation. The main legal instruments governing the regulation and supervision of the financial system, in addition to the FSCO, are: the Banking Ordinance (1992) that provides powers to license and supervise banking and other deposit-taking business in Gibraltar; the Insurance Ordinance (1987) that provides powers to regulate and restrict the conduct of the business of insurance; and the Financial Services (Collective Investment Schemes) Ordinance that provide for the licensing and supervision of investment business.

Legislation requires that all businesses establish the beneficial owner of any companies or assets before undertaking a relationship or incorporating any company or asset. Onshore and offshore banks are subject to the same legal and supervisory requirements. Institutions must retain financial records for at least five years from the date of completion of the business. If the obligated institution has submitted a suspicious transaction report (STR) to the Gibraltar financial intelligence unit (FIU) or when it knows that a client or transaction is under investigation, it is required to maintain any relevant record even if the five year interval has expired. If a law enforcement agency investigating a money laundering case cannot link the funds passing through the financial system with the original criminal money, then the funds cannot be confiscated.

The Financial Services Commission Act 2007 (FSCA) became effective in May 2007. This act repeals and replaces the Financial Services Commission Act of 1989. With this legislation, the FSC modernized and restructured itself. One of the most significant changes arising from the FSCA is in respect to the appointment of members of the Commission, who will be selected by the minister with responsibility for financial services (presently the Chief Minister) from a short list of three suitable persons provided to him by existing members. The FSC has also received expanded statutory functions. The FSC now holds formal licensing, supervisory, and regulatory powers over all firms authorized under the Supervisory Acts. The FSC authority also ensures compliance with legislation, rules and guidance notes in general as well as those specific to combating financial crime. The FSC is now able to issue Rules and Guidance, which enables the FSC to draft practical guidance for compliance with legislative measures, and regulatory expectations to supplement legislative provisions. As a safeguard against inappropriate or overregulation, the rules and guidance undergo a public consultation process and are subject to final veto of the Minister.

The Government of Gibraltar (GOG) permits Internet gaming that is subject to a licensing regime. Gibraltar has guidelines for correspondent banking, politically exposed persons (PEPs), bearer securities, and “know your customer” (KYC) procedures. In 2006, Gibraltar underwent a mutual evaluation by the International Monetary Fund (IMF). The IMF rated Gibraltar “largely compliant” or “better” with 32 of the Financial Action Task Force’s (FATF’s) 40 Recommendations and nine Special Recommendations.

In 1996, Gibraltar established the Gibraltar Coordinating Center for Criminal Intelligence and Drugs (GCID) to receive, analyze, and disseminate financial information and disclosures filed by obliged institutions. The GCID serves as Gibraltar’s FIU (GFIU) and is a sub-unit of the Gibraltar Criminal Intelligence Department. The GCID consists mainly of police and customs officers but is independent of law enforcement. The GFIU has responded to over 40 international requests for information and has initiated ten requests to counterpart FIUs. The GFIU receives approximately 100 STRs per year.

Gibraltar’s 2001 Terrorism (United Nations Measures) (Overseas Territories) Order criminalizes the financing of terrorism. The Order requires banks to report any knowledge that a present, past or potential client or customer is a terrorist, or receives funds in relation to terrorism, or makes funds available for terrorism. Gibraltar also addresses terrorist financing through the Terrorism Ordinance (2005).

Application of the 1988 U.S.-UK Agreement Concerning the Investigation of Drug Trafficking Offenses and the Seizure and Forfeiture of Proceeds and Instrumentalities of Drug Trafficking was extended to Gibraltar in 1992. The DOO of 1995 provides for mutual legal assistance with foreign jurisdictions on matters related to narcotics trafficking and related proceeds. Gibraltar has passed legislation to update mutual legal assistance arrangements with its EU and Council of Europe partners. Gibraltar is a member of the Offshore Group of Banking Supervisors (OGBS) and the International Organization of Securities Commissions (IOSC). The GFIU is a member of the Egmont Group. The GOG has implemented the 1988 UN Drug Convention.

The Government of Gibraltar should continue its efforts to implement a comprehensive anti-money laundering and counter-terrorist financing (AML/CTF) regime. The criminal laws on money laundering should be consolidated, and powers presently available only in drug-related money laundering cases should be extended to money laundering cases involving the proceeds of other crimes. The GOG should introduce legislative provisions to its asset seizure and confiscation regime allowing authorities to confiscate assets, including cash, even without a link to the original criminal proceeds. Gibraltar needs to conduct risk assessment of those designated nonfinancial businesses and professions that are unsupervised and determine and extend the necessary authority to conduct AML/CTF compliance examinations of these entities.

Greece

Greece is becoming a regional financial center in the rapidly developing Balkans as well as a bridge between Europe and the Middle East Anecdotal evidence of illicit transactions suggests an increase in financial crimes in the past two years. Greek law enforcement proceedings indicate that Greece is vulnerable to narcotics trafficking, trafficking in persons and illegal immigration, prostitution, cigarette, and other forms of smuggling, large scale tax evasion, serious fraud or theft, and illicit gambling activities. The widespread use of cash facilitates a gray economy and tax evasion. Due to the gray economy, it is difficult to determine the amount of smuggled goods in the country. Crimes are often carried out by criminal organizations from Southeastern Europe and the Balkans.

U.S. law enforcement agencies believe that criminally derived proceeds are not typically laundered through the Greek banking system. Instead, they are most commonly invested in real estate, the lottery, and a growing stock market. U.S. law enforcement agencies also believe Greece’s geographic location has led to a moderate increase in cross-border movements of illicit currency and monetary instruments due to the increasing interconnection of financial services companies operating in Southeastern Europe and the Balkans. Reportedly, currency transactions involving international narcotics-trafficking proceeds do not appear to include significant amounts of U.S. currency.

The June 2007 Financial Action Task Force (FATF) mutual evaluation report (MER) of Greece found its legal requirements in place to combat money laundering and terrorist financing generally inadequate to meet the FATF standards. The report articulated concerns about the overall effectiveness of the AML/CTF system, including inadequate customer identification preventative systems, lack of adequate legal systems to prevent money laundering and terrorist financing, and a lack of adequate preventive measures and regulatory oversight. Of the FATF 40 Recommendations and Nine Special Recommendations on Terrorist Financing, Greece received 12 ratings of “largely compliant” or better and 13 ratings of “noncompliant.” Of the 5 core FATF recommendations (Recommendations 1, 5, 10, and 13, SR II and IV), Greece’s Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) regime was only deemed “partially compliant”.

The Government of Greece has criminalized money laundering through a series of laws that have expanded the list of predicate offenses for money laundering that now includes terrorist financing, trafficking in persons, electronic fraud, and stock market manipulation. However evidence indicates that the ML provisions have not been effectively implemented. The laws also empower supervisory authorities to block transactions when money laundering is suspected and authorizes the financial intelligence unit (FIU) director to temporarily freeze assets without a court order. With its Act 25779/2006, the Bank of Greece has applied the main provisions of the Third European Union (EU) Money Laundering Directive to all financial institutions. The Greek government anticipates it will take steps to formally transpose the Directive into national law in 2008.

The Bank of Greece (BOG), through its Banking Supervision Department and the Ministry of National Economy and Finance, through its Capital Market Commission, supervise and monitor credit and financial institutions. Both the BOG and the Hellenic Capital Markets Commission (HCMC) have extensive supervisory programs. Each entity has internal departments focused on AML/CTF staffed with auditors and examiners. Supervision includes the issuance of guidelines and circulars, and on-site audits with a component assessing compliance with AML legislation. The Central Bank conducts on-site examinations for banks located in Greece as well as of Greek banks located in the Balkans. The HCMC conducts on-site examinations on a routine basis for its supervised entities and off-cycle examinations of supervised entities when HCMC internal surveillance activities uncover possible noncompliance with regulations. In addition to their supervisory programs, both the BOG and HCMC conduct continuing education seminars for stakeholders inside and outside of the financial industry, to further heighten awareness of AML/CTF. While the BOG and HCMC have been granted sufficient powers and authorities to monitor financial institutions for AML/CTF requirements, according to the MER, these organizations may not be able to effectively carry out their supervisory functions due to a lack of resources.

Supervised institutions must send to their competent authority a description of the internal control and communications procedures they have implemented to prevent money laundering. In addition, banks must undergo internal audits. Bureaux de Change must send the BOG a monthly report on their daily purchases and sales of foreign currency. Infrequent audits of such companies also occur. However, there is reportedly weak implementation of regulatory requirements documenting the flow of large sums of cash through financial and other institutions.

Law 3148 incorporates EU directives regarding the operation of credit institutions and the operation and supervision of electronic transfers. Under this legislation, the BOG has direct scrutiny and control over transactions by credit institutions and entities involved in providing services for funds transfers. The BOG issues operating licenses after assessing the institutions, their management, and their capacity to ensure the transparency of transactions. The Ministry of Development, through its Directorate of Insurance Companies, supervises the insurance sector, but supervisory authority will soon shift to the Hellenic Private Insurance Supervisory Committee. The Directorate of Insurance Companies has not established a regulatory authority.

Under Decree 2181/93, banks in Greece must demand customer identification information when a customer opens an account or conducts transactions exceeding 15,000 euros (approximately U.S. $22,000). If there is suspicion of illegal activities, banks may take measures to gather more information on the identification of the person involved in the transaction, but, reportedly, do not normally do so. The BOG has taken steps to change this. Newly enacted legislation now requires banks to obtain specific documents from both natural and legal persons. Furthermore, credit institutions are now required to obtain identification documents in money changing transactions exceeding 500 euros (U.S. $735). The law requires that banks and financial institutions maintain adequate records and supporting documents for at least five years after ending a relationship with a customer, or, in the case of occasional transactions, for five years after the date of the transaction. According to the MER, customer due diligence (CDD) and other preventative measures lack both sufficient requirements on collecting beneficial ownership information and adequate measures relating to ongoing CDD requirements on existing clients and account holders.

Current AML laws do not adequately prevent anonymous accounts or accounts in fictitious names. Greek law does not prohibit financial institutions from engaging in business with foreign financial institutions that allow their accounts to be used by shell companies.

Both banks and nonbank financial institutions must report suspicious transactions, though in practice, the latter rarely do so. The law requires every financial institution to appoint a compliance officer to whom all other branches or other officers must report suspicious transactions. Reporting obligations also apply to government employees involved in auditing, including employees of the BOG, the Ministry of Economy and Finance, and the Capital Markets Commission. Those who report individuals must furnish all relevant information to the prosecuting authorities. In 2007, the FIU formalized the standard information required on the suspicious transaction reports (STRs), so that the information provided on the form is consistent. Safe harbor provisions in Greek law protect individuals reporting violations of AML laws and statutes.

Greece has adopted banker negligence laws under which individual bankers face liability if their institutions launder money. Authorities levy “fines” on banks and credit institutions if they breach their obligations to report instances of money laundering, and bank officers can receive fines and a prison term of up to two years. In 2007, the BOG “fined” approximately 14 institutions for failure to supervise general compliance regulations. The fines totaled approximately 20 million euros (approximately U.S. $30 million). The credit institution deposits the “fines” with the Central Bank in a separate, interest free account. After a designated period of time, the Central Bank returns the money to the credit institution. In 2007, the HCMC “fined” two supervised entities for failure to supervise in relation to AML/CTF regulations. The “fines” ranged from 5,000 to 10,000 euros (U.S. $7,350-$14,700). Some believe this sanction is not sufficiently prohibitive.

Law 2331/1995 established the Competent Committee (CC), which functions as Greece’s FIU. Law 3424 makes the CC a statutorily independent authority with access to public and private files and removes tax confidentiality restrictions. The law also broadens the CC’s authority with respect to evaluating information it receives from various organizations. The CC has, on paper, broad authority; however the FATF MER raised concerns about the CC, including its current structure, insufficient staff and technical resources to properly perform its tasks and functions and inadequate security measures to effectively protect information. A senior retired judge chairs the CC, which includes eleven senior representatives from the BOG, various government ministries and law enforcement agencies, the Hellenic Bankers Association, and the securities commission. The CC employs few or no financial analysts or experienced specialized AML/CTF personnel, and is significantly understaffed.

The CC has responsibility for receiving and processing all STRs, of which it receives approximately 1,000 per year. Although the CC recently established a database to track STR submissions, it still lacks other elements of a technology-savvy modern organization. STRs are hand delivered to the CC, where, upon receipt, the committee (comprised of only senior officials) reviews the STRs to determine whether further investigation is necessary. If the committee seeks more information from the reporting institution, the CC mails its questions to the institution. When it receives the reply, the committee reviews the file again to determine whether the report warrants further investigation. When the CC considers an STR to warrant further investigation, it forwards the case to the Special Control Service (YPEE), which functions as the CC’s investigative arm.

The YPEE is under the direct supervision of the Ministry of Economy and Finance and has formal investigative authority over cases that, broadly defined, involve smuggling and high-worth tax evasion. The CC is responsible for preparing money laundering cases on behalf of the Public Prosecutor’s Office and the YPEE has its own in-house prosecutor to facilitate confidentiality and speed of action. The director of the FIU can temporarily freeze funds.

Although the CC has the authority to impose heavy penalties on those who fail to report suspicious transactions, it has not done so. Reportedly, staff limitations have hampered effective communication with Greece’s broader financial community, as well as with its international counterparts. The lack of adequate personal and fiscal resources and political support for its mission limits its effectiveness.

Authorities do not frequently prosecute money laundering cases independent of a predicate crime, and according to the MER, limited data indicates a low rate of convictions on ML prosecutions. There are no prosecutors specifically assigned to prosecute financial crimes and all prosecutors carry a very large caseload. Furthermore, the Greek judicial system has only one court handling all judicial activity related to money laundering and terrorist financing. Greek authorities do not have an effective information technology (IT) system in place to track money laundering prosecution statistics. Despite requests by the CC and Greek Bar Association to do so, the Ministry of Justice has yet to compile statistics related to arrests or prosecutions for money laundering or terrorist financing offenses.

The Government of Greece does not provide guidance to institutions on freezing assets without delay and does not monitor compliance with requests. Furthermore, there are no sanctions for failure to follow freezing requests. The current process for notifying ministries and the financial sector to freeze or confiscate funds is lengthy. Therefore, these entities are unable to comply with requests to freeze assets without delay. Greek law allows for the seizure of assets upon conviction for a money laundering offense with a jail term of three years or greater. The director of the CC can temporarily freeze assets, but must prepare a report and forward it to an investigating magistrate and prosecutor, who conduct further investigation and who, upon conclusion of the investigation, can issue a freezing order, pending the outcome of the criminal case. The YPEE has established a mechanism for identifying, tracing, freezing, seizing, and forfeiting assets of narcotics-related and other serious crimes, the proceeds of which are turned over to the government. YPEE investigators have authorization to immediately seize property pending court review and seize property purchased with proceeds of narcotics trafficking or used to facilitate narcotics trafficking. However, official forfeiture requires a court order. If the basis for the forfeiture is facilitation proceeds, the Government of Greece need not prove that the property was purchased with narcotics-related proceeds. It must only demonstrate that it was used in furtherance of narcotics trafficking. Even legitimate businesses can be seized if they have laundered narcotics money.

Greek authorities maintain that Greece is not an offshore financial center. However, Greek law 89/1967 provides for the establishment of offshore entities of any legal form which may be registered in Greece but engage exclusively in commercial activities outside of Greece—a typical identifying restriction of offshore centers. “Law 89” companies reportedly operate in the shipping industry and are known for their complex corporate and ownership structures which are frequently designed to hide the the identity of the true beneficial owners of the companies.

Offshore entities must provide a bank letter of guarantee for U.S. $50,000 to the Ministry of Economy and Finance. If it is a shipping company, it must cover its annual operating expenses in Greece. It must keep a receipts and expenses book, though it has no obligation to publish any financial statements. These firms fall under the authority of nonGreek jurisdictions and often operate through a large number of intermediaries. As such, these entities can serve as a catalyst for money laundering. Although Greek law allows banking authorities to check these companies’ transactions, other Greek jurisdictions must work with the banking authorities for audits to be effective. There is no separate regulatory authority for the offshore sector and there is no longer a tax exemption for offshore companies.

Greek law does not provide for nominee directors or trustees in Greek companies. Although the government has abolished bearer shares for banks and a limited number of other companies, most companies may still issue bearer shares. The information available in the Companies Registries maintained by several authorities relates solely to the Board of Directors at the time of the incorporation of the company and does not log changes of directors, or the true beneficial owners of the company. Rather, regional registries keep this information in a paper format.

Authorities have recently targeted the gaming industry to restrain money launderers from using Greece’s nine casinos to launder illicit funds, however there is little regulatory oversight of the gaming industry. Greece has three free trade zones, located at the ports of Piraeus, Thessalonica, and Heraklion, where foreign goods may be brought in without payment of customs duties or other taxes if they are subsequently transshipped or re-exported. There is no specific information regarding whether these zones are being used in trade-based money laundering (TBML) or in the financing of terrorism

The BOG maintains that alternative remittance systems do not exist in Greece and has no plans to introduce initiatives for their regulation. Foundations in Greece are self-governing, nonmembership organizations with an endowment that serves public or private purposes and which receive legal capacity by state approval. Types of foundations include private law foundations, public benefit foundations, public foundations, and nonautonomous foundations. Nonprofit organizations fall within the purview of YPEE. The Greek government does not view charitable organizations as vulnerable to terrorist financing or money laundering and does not actively monitor such entities for these crimes.

Laws criminalizing terrorism, organized crime, money laundering and corruption have been in effect since July 2002. In 2004, Law 3251 was enacted criminalizing the financing of, the joining, or the forming of a terrorist group with a penalty of up to ten years imprisonment. If a private legal entity is implicated in terrorist financing, it faces fines of between 20,000 and 3 million euros (approximately U.S. $44,000 and U.S. $4.5 million), closure for a period of two months to two years, and ineligibility for state subsidies. However, some have described the law as poorly drafted. The law is not comprehensive as it is not illegal in Greece to fund an already established terrorist group and it is only considered a terrorist financing crime if a person funds a specific attack executed by three or more people. As a consequence, the financing of an individual terrorist act conducted by an individual terrorist or the financing of an individual terrorist is not an offense.

The BOG has circulated to all financial institutions under its supervisory jurisdiction the list of individuals and entities on the United Nations Security Council Resolution (UNSCR) 1267 Sanctions Committee’s consolidated list as being linked to Usama Bin Laden, the Al-Qaida organization, or the Taliban, as well as the EU’s list of designees. The BOG now includes Office of Foreign Asset Control lists for circulation to its supervised entities. The Greek government does not routinely circulate lists disseminated by the U.S. government, but it does circulate EU lists. In most instances, there must be an active investigation by Greek authorities before the Government of Greece can seize assets, thus hindering its ability to freeze assets without delay. The government has not found any accounts belonging to anyone on the circulated lists.

Greece is a member of the FATF. Its FIU is a member of the Egmont Group. The government is a party to the 1988 UN Drug Convention and the UN International Convention for the Suppression of the Financing of Terrorism. Greece is a signatory to the UN Convention against Transnational Organized Crime and to the UN Convention against Corruption, but has not yet ratified them. Greece exchanges information on money laundering through its mutual legal assistance treaty (MLAT) with the United States, which entered into force November 20, 2001. The Bilateral Police Cooperation Protocol provides a mechanism for exchanging records with U.S. authorities in connection with investigations and proceedings related to narcotics trafficking, terrorism, and terrorist financing. Cooperation between the U.S. Drug Enforcement Administration and YPEE has been extensive. Greece has signed bilateral police cooperation agreements with twenty countries, including the United States. It also has a trilateral police cooperation agreement with Bulgaria and Romania, and a bilateral agreement with Ukraine to combat terrorism, drug trafficking, organized crime, and other criminal activities. Despite the existing mechanisms for information exchange, the FATF report highlighted a lack of cooperation between Greek national and international authorities.

To meet its stated goal of effectively addressing money laundering, the Greek government should implement all recommendations of the June 2007 FATF mutual evaluation report on Greece. Greece should accelerate its efforts to realize new laws and regulations aimed at upgrading its FIU. This includes fully staffing with experienced analysts and improving its IT standards and capabilities so that analysts can effectively use its database. These IT upgrades should allow Greek authorities to implement a system to track statistics on money laundering prosecutions and convictions, as well as asset freezes and forfeitures. The Greek government should improve its asset freezing capabilities and develop a clear and effective system for identifying and freezing terrorist assets within its jurisdiction. The government should also publicize its system for appealing assets frozen in accordance with its UN obligations.

Greece should ensure uniform enforcement of its cross-border currency reporting requirements and take steps to deter the smuggling of currency across its borders. The government should abolish company-issued bearer shares, so that all bearer shares are legally prohibited. It should also ensure that its “Law 89” offshore companies and companies operating within its free trade zones are subject to the same AML requirements and gatekeeper and due diligence provisions, including know your customer rules and the identification of the beneficial owner, as in other sectors. The GOG should dedicate additional resources to the investigation and prosecution of ML cases, as well as increase specialization and training on AML/CTF for law enforcement and judicial authorities. The GOG should also amend the existing legislative and regulatory framework to ensure that appropriate CDD requirements are implemented. Finally, it should ratify the UN Convention against Transnational Organized Crime and the UN Convention against Corruption.

Grenada

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

As of December 2007, Grenada’s domestic financial sector is comprised of six commercial banks, 26 registered domestic insurance companies, two credit unions, and five money remitters. Grenada has one trust company and 1,580 international business companies (IBCs), a significant, if unexplained, decrease from the reported 6,000 IBCs in 2006. There are no casinos or Internet gaming sites operating in Grenada. There are no free trade zones in Grenada, although the Government of Grenada (GOG) has indicated that it may create one in the future. The GOG has repealed its economic citizenship legislation.

Bearer shares are not permitted for offshore banks. Registered agents are required by law to verify the identity of the beneficial owners of all shares. In addition, the International Companies Act requires registered agents to maintain records of the names and addresses of directors and beneficial owners of all shares. There is an U.S. $11,500 penalty and possible revocation of the registered agent’s license for failure to maintain records. Grenada has not enacted laws preventing disclosure of client and ownership information by domestic and offshore services companies to bank supervisors and law enforcement authorities.

The Grenada Authority for the Regulation of Financial Institutions (GARFIN) became operational in early 2007. The GARFIN was created to consolidate supervision of all nonbank financial institutions, and effectively replace the Grenada International Financial Services Authority (GIFSA). Institutions supervised by GARFIN include insurance companies, credit unions, offshore financial services, the building and loan society, money service businesses, and other such services. The Eastern Caribbean Central Bank (ECCB) retains supervision responsibility for Grenada’s commercial banks.

The Money Laundering Prevention Act (MLPA), enacted in 1999, and the Proceeds of Crime Act (POCA) No. 3 of 2003 criminalize money laundering in Grenada. Under the MLPA, the laundering of the proceeds of narcotics trafficking and all serious crimes is an offense. Under the POCA, the predicate offenses for money laundering extend to all criminal conduct, which includes illicit drug trafficking, trafficking of firearms, kidnapping, extortion, corruption, terrorism and its financing, and fraud. According to the POCA, a conviction on a predicate offense is not required to prove that certain goods are the proceeds of crime, and subsequently convict a person for laundering those proceeds. The POCA establishes a penalty three to ten years in prison and fines of $18,500 or more. This legislation applies to banks and nonbank financial institutions, as well as the offshore sector.

Established under the MLPA, the Supervisory Authority supervises the compliance of banks and nonbank financial institutions (including money remitters, stock exchange, insurance, casinos, precious gem dealers, real estate, lawyers, notaries, and accountants) with money laundering and terrorist financing laws and regulations. These institutions are required to know, record, and report the identity of customers engaging in significant transactions. This applies to large currency transactions over the threshold of $3,700. Records must be maintained for seven years. In addition, a reporting entity must monitor all complex, unusual or large business transactions, or unusual patterns of transactions, whether completed or not. Once a transaction is determined to be suspicious or potentially indicative of money laundering, the reporting entity must forward a suspicious transaction report (STR) to the Supervisory Authority within 14 days. Reporting individuals are protected by law with respect to their cooperation with law enforcement entities.

The Supervisory Authority issued its Anti-Money Laundering Guidelines in 2001. The guidelines direct financial institutions to maintain records, train staff, identify suspicious transactions, and designate reporting officers. The guidelines also provide examples to help institutions recognize and report suspicious transactions. The Supervisory Authority is authorized to conduct anti-money laundering inspections and investigations. The Supervisory Authority can also conduct investigations and inquiries on behalf of foreign counterparts and provide corresponding information. Financial institutions may be fined for not granting access to Supervisory Authority personnel.

In June 2001, the GOG established a police-style financial intelligence unit (FIU). The FIU is charged with receiving and analyzing suspicious transaction reports (STRs) from the Supervisory Authority, and with investigating alleged money laundering offenses. The FIU has access to the records and databases of all government entities and financial institutions and is empowered to request any documents it considers necessary to its investigations. From January to November 2007, the FIU received 25 STRs and investigations commenced for all STRs received. The FIU has the authority to exchange information with its foreign counterparts without a memorandum of understanding (MOU).

Two foreign nationals were arrested by GOG authorities for money laundering in October 2007. These individuals came to Grenada with a large number of fraudulent credit cards and over a short period of time, withdrew in excess of $40,000 from automatic teller machines (ATMs) from several local banks. Half of the amount stolen was sent out to a number of different destinations via a legitimate money remittance company, which agreed to freeze the transaction. Local authorities are working with the company to repatriate those funds. The two perpetrators were arrested and charged with money laundering and fraud by false pretense. The case is currently ongoing.

The FIU and the Director of Public Prosecution’s Office are responsible for tracing, seizing and freezing assets. Under current law, all assets can be seized, including legitimate businesses if they are used in the commission of a crime. The banking community cooperates with law enforcement efforts to trace funds and seize or freeze bank accounts. The time period for restraint of property is determined by the High Court. Presently, only criminal forfeiture is allowed by law. Proceeds from asset seizures and forfeitures can either be placed in the consolidated fund or the confiscated asset fund, which is supervised by the Supervisory Authority or the Cabinet for use in the development of law enforcement. The approximate dollar amount seized in the past year was U.S. $62,000, with approximately U.S. $22,000 forfeited. The Civil Forfeiture Bill, Cash Forfeiture Act, and Confiscation of the Proceeds of Crime Bill were introduced in 2006 and remain under discussion.

Grenada is not engaged in bilateral or multilateral negotiations with other governments to enhance asset tracing, freezing, and seizure. However, the GOG works actively with other governments to ensure tracing, freezing, and seizures take place, if and when necessary, regardless of the status of existing agreements.

The GOG regulates the cross-border movement of currency. However, there is no threshold requirement for currency reporting. Law enforcement and Customs officers have the powers to seize and detain cash that is imported or exported from Grenada. Cash seizure reports are shared between government agencies, particularly between Customs and the FIU.

The GOG criminalized terrorist financing through the Terrorism Act No. 5 2003. Grenada has the authority to identify, freeze, seize, and/or forfeit terrorist finance-related assets under the POCA and the Terrorism Act. The GOG circulates to the appropriate institutions the lists of individuals and entities that have been included on the UN 1267 Sanctions Committee’s consolidated list. There has been no known identified evidence of terrorist financing in Grenada. It is suspected that alternative remittance systems are used in Grenada, though none have been positively identified.

In 2003, the GOG passed the Exchange of Information Act No. 2, which strengthens Grenada’s ability to share information with foreign regulators. Grenada has a Mutual Legal Assistance Treaty (MLAT), Tax Information Exchange Agreement (TIEA) and an Extradition Treaty with the United States. The GOG cooperates fully with MLAT requests and responds rapidly to U.S. Government requests for information involving money laundering cases.

Grenada is a member of the Caribbean Financial Action Task Force (CFATF), and is expected to undergo a mutual evaluation in 2008. The GOG is also a member of the OAS Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering. Grenada’s FIU is a member of the Egmont Group. Grenada is a party to the 1988 UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, the UN Convention against Transnational Organized Crime, and the Inter-American Convention against Terrorism. The GOG has not yet signed the UN Convention against Corruption.

Although the Government of Grenada has strengthened the regulation and oversight of its financial sector, it must remain alert to potential abuses and must steadfastly implement the laws and regulations it has adopted. The GOG should also move forward in adopting civil forfeiture legislation, and establish mechanisms to identify and regulate alternative remittance systems. Law enforcement and customs authorities should initiate money laundering investigations based on regional smuggling. Grenada should also become a party to the UN Convention against Corruption.

Guatemala

Guatemala is a major transit country for illegal narcotics from Colombia and precursor chemicals from Europe. Those factors, combined with historically weak law enforcement and judicial regimes, corruption, and increasing organized crime activity, contribute to a favorable climate for significant money laundering in Guatemala. According to law enforcement agencies, narcotics trafficking and corruption are the primary sources of money laundered in Guatemala; however, the laundering of proceeds from other illicit activities, such as human trafficking, contraband, kidnapping, tax evasion, and vehicle theft, is substantial. Officials of the Government of Guatemala (GOG) believe that the sources of the criminal proceeds laundered in Guatemala are derived from both domestic sources (primarily corruption cases) and foreign criminal activities. GOG officials also believe that cash couriers, offshore accounts, and wire transfers are used to launder funds, which are subsequently invested in real estate, capital goods, large commercial projects, and shell companies, or are otherwise transferred through the financial system.

Guatemala is not considered a regional financial center, but it is an offshore center. Exchange controls have been lifted and dollar accounts are common, but some larger banks conduct significant business through their offshore subsidiaries. The Guatemalan financial services industry is comprised of 22 commercial banks; ten offshore banks, all of which are affiliated, as required by law, with a domestic financial group (including affiliated credit card, insurance, finance, commercial banking, leasing, and related companies); two licensed money exchangers; 27 money remitters, including wire remitters and remittance-targeting courier services; 17 insurance companies; 17 financial societies; 15 bonded warehouses; 325 savings and loan cooperatives; eight credit card issuers; nine leasing entities; 11 financial guarantors; and one check-clearing entity run by the Central Bank. There are also hundreds of unlicensed money exchangers that exist informally.

The Superintendence of Banks (SIB), which is directed by the Monetary Board, has oversight and inspection authority over the Central Bank (Bank of Guatemala), as well as over banks, credit institutions, financial enterprises, securities entities, insurance companies, currency exchange houses and other institutions as may be designated by the Bank of Guatemala Act. Guatemala’s relatively small free trade zones target regional maquila (assembly line industry) and logistic center operations, and are not considered by GOG officials to be a major money laundering concern, although some proceeds from tax-related contraband may be laundered through them.

The offshore financial sector initially offered a way to circumvent currency controls and other costly financial regulations. However, financial sector liberalization has largely removed incentives for legitimate businesses to conduct offshore operations. All offshore institutions are subject to the same requirements as onshore institutions and are regulated by the Superintendence of Banks. In June 2002, Guatemala enacted the Banks and Financial Groups Law (No. 19-2002), which places offshore banks under the oversight of the SIB. The law requires offshore banks to be authorized by the Monetary Board and to maintain an affiliation with a domestic institution. It also prohibits an offshore bank that is authorized in Guatemala from doing business in another jurisdiction; however, banks authorized by other jurisdictions may do business in Guatemala under certain limited conditions.

To authorize an offshore bank, the financial group to which it belongs must first be authorized, under a 2003 resolution of the Monetary Board. By law, no offshore financial services businesses, other than banks, are allowed. In 2004, the SIB and Guatemala’s financial intelligence unit (FIU), the Intendencia de Verificación Especial (IVE), concluded a process of reviewing and licensing all offshore entities, a process which resulted in the closure of two operations. No offshore trusts have been authorized. Offshore casinos and Internet gaming sites are not regulated.

There is continuing concern over the volume of money passing informally through Guatemala. Much of the more than U.S. $4.1 billion in 2007 remittance flows passed through informal channels, although sector reforms led to an increased use of banks and other formal means of transmission. Terrorist finance legislation enacted in August 2005 requires remitters to maintain name and address information on senders (principally U. S. based) on transfers equal to or over an amount to be determined by implementing regulations. Increasing financial sector competition should continue to expand services and bring more people into the formal banking sector, isolating those who abuse informal channels.

Decree 67-2001, or the “Law Against Money and Asset Laundering,” criminalizes money laundering in Guatemala. This law specifies that individuals convicted of money or asset laundering are subject to a noncommutable prison term ranging from six to 20 years, and fines equal to the value of the assets, instruments or products resulting from the crime. Convicted foreigners are deported from Guatemala. Conspiracy and attempt to commit money laundering are also penalized. The law applies to money laundering from any crime and does not require a minimum threshold to be invoked. It also holds institutions and individuals responsible for failure to prevent money laundering or allowing money laundering to occur, regardless of personal culpability. Bank and financial institution directors or other employees can lose their banking licenses and face criminal charges if they are found guilty of failure to prevent money laundering. This law also applies to the offshore entities that operate in Guatemala but are registered under the laws of another jurisdiction.

Decree 67-2001 also obligates individuals to declare the cross-border movement of currency in excess of approximately U.S. $10,000 at the port of entry. The declaration forms are provided and collected by the tax authority at land borders, airports, and ports. The tax authority sends a copy of the sworn declaration to IVE for its database. The IVE can share this information with other countries under the terms and conditions specified by mutual agreement. In addition, the Law Against the Financing of Terrorism penalizes the omission of declaration with a sentence from one to three years in prison. At Guatemala City’s international airport, a special unit was formed in 2003 to enforce the use of customs declarations upon entry to and exit from Guatemala. Money seized at the airports—approximately U.S. $1.8 million in 2007—suggests that proceeds from illicit activity are regularly hand-carried over Guatemalan borders. However, apart from a cursory check of a self-reporting customs form, there is little monitoring of compliance at the airport. Compliance is not regularly monitored at land borders.

In addition to the requirements of Decree 67-2001, the Guatemalan Monetary Board’s Resolution JM-191, which approves the “Regulation to Prevent and Detect the Laundering of Assets” (RPDLA), establishes anti-money laundering requirements for financial institutions. The RPDLA required all financial institutions under the oversight and inspection of the SIB to establish anti-money laundering measures, and introduced requirements for transaction reporting and record keeping. The Guatemalan financial sector has largely complied with these requirements and has a generally cooperative relationship with the SIB.

Financial institutions are prohibited from maintaining anonymous accounts or accounts that appear under fictitious or inexact names. Nonbank financial institutions, however, may issue bearer shares, and there is limited banking secrecy. However, Guatemalan law prohibits banking secrecy or privacy laws from being used to prevent the disclosure of financial information to bank supervisors and law enforcement authorities. Financial institutions are required to keep a registry of their customers as well as some types of transactions, such as the opening of new accounts or the leasing of safety deposit boxes. Financial institutions must also keep records of the execution of cash transactions exceeding $10,000 or more per day, and report these transactions to the IVE. Under Decree 67-2001, financial institutions must maintain records of these registries and transactions for five years. Financial institutions are also mandated by law to report all suspicious transactions to the IVE. The law also exonerates financial institutions and their employees of any criminal, civil or administrative penalty for their cooperation with law enforcement and supervisory authorities with regards to the information they provide.

Decree 67-2001 established the IVE within the Superintendence of Banks to supervise financial institutions and ensure their compliance with the law. The IVE began operations in 2002 and in 2007 had a staff of 32. The IVE has the authority to obtain all information related to financial, commercial, or business transactions that may be connected to money laundering. The IVE conducts inspections of financial institution management, compliance officers, anti-money laundering training programs, “know-your-client” policies, and auditing programs. From January 2001 to December 2007, the IVE imposed over U.S. $115,000 in administrative penalties for institutional failure to comply with anti-money laundering regulations.

Since its inception, the IVE has received approximately 2,302 suspicious transaction reports (STRs) from the 400 obligated entities in Guatemala. All STRs are received electronically, and the IVE has developed a system of prioritizing them for analysis. After determining that an STR is highly suspicious, the IVE gathers further information from public records and databases, other covered entities and foreign FIUs, and assembles a case. Once the IVE has determined a case warrants further investigation, the case must receive the approval of the SIB before being sent to the Anti-Money or Other Assets Laundering Unit (AML Unit) within the Public Ministry. Under current regulations, the IVE cannot directly share the information it provides to the AML Unit with any other special prosecutors (principally the anticorruption or counternarcotics units) in the Public Ministry. The IVE also assists the Public Ministry by providing information upon request for other cases the prosecutors are investigating.

The AML Unit is in charge of directing the investigation and prosecution of money laundering cases. This unit has a staff of 14 officials, and an investigative support group of 16 law enforcement officers and investigators. Both the prosecutors and investigators receive yearly ad hoc training in various investigative and legal issues. In 2006, Guatemala created a money laundering task force. The money laundering task force is a joint unit comprised of individuals from the Guatemalan Tax Authority (SAT), the IVE, Public Ministry, Prosecutor’s Office, Government Ministry, National Police and Drug Police. Together they work on investigating financial crimes, building evidence and bringing the cases to prosecution. In late 2007, the task force was working on four major money laundering investigations and a number of smaller money laundering and drug-related cases. Under the Anti-Organized Crime Law of 2006, the use of undercover operations, controlled deliveries, and wire taps is permitted to investigate many forms of organized crime activity, including money laundering crimes.

Twenty-seven cases have been referred by the IVE to the AML Unit. In several cases, assets have been frozen. Sixteen money laundering prosecutions have been concluded, fifteen of which resulted in convictions. The Public Ministry’s AML Unit had initiated 63 cases as of January 2007, five of which have been transferred to other offices (such as the anticorruption unit) for investigation and prosecution, due to the nature of the particular crime. The seizures were made possible by information supplied by cooperating financial institutions.

Current law permits the seizure of any assets linked to money laundering. The IVE, the National Civil Police, and the Public Ministry have the authority to trace assets; the Public Ministry can seize assets temporarily in urgent circumstances, and the Courts of Justice have the authority to permanently seize assets. In 2003, the Guatemalan Congress approved reforms to allow seized money to be shared among several GOG agencies, including police and the IVE. Nevertheless, the Constitutional Court ruled that forfeited currency remains under the jurisdiction of the Supreme Court of Justice. The Anti-Organized Crime Law provides the possibility for a summary procedure to forfeit the seized assets and allows both civil and criminal forfeiture.

The courts do not allow seized currency to be used by enforcement agencies while cases remain open. For money laundering and narcotics cases, any seized money is deposited in a bank safe and all material evidence is sent to the warehouse of the Public Ministry. There is no central tracking system for seized assets, and it is currently impossible for the GOG to provide an accurate listing of the seized assets in custody. In 2006, Guatemalan authorities seized approximately U.S. $222,000 in bulk currency. No statistics are currently on the amount of assets seized in 2007. The lack of access to the resources of seized assets outside of the judiciary has made sustaining seizure levels difficult for the resource-strapped enforcement agencies.

In June 2005, the Guatemalan Congress passed legislation criminalizing terrorist financing, the Law Against the Financing of Terrorism. Implementing regulations were enacted by the Monetary Board in December 2005. The counter-terrorist financing legislation also clarifies the legality of freezing assets in the absence of a conviction where the assets were destined to support terrorists or terrorist acts. The legislation brings Guatemala into compliance with the FATF Special Recommendations on terrorist financing and the United Nations Security Council Resolution 1373.The GOG has cooperated fully with U.S. efforts to track terrorist financing funds.

Guatemala is a party to the UN Drug Convention, the UN International Convention for the Suppression of the Financing of Terrorism, the UN Convention against Transnational Organized Crime, and the UN Convention against Corruption. Guatemala is also a party to the Inter-American Convention against Terrorism and the Central American Convention for the Prevention of Money Laundering and Related Crimes. The GOG is a member of the OAS Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering and the Caribbean Financial Action Task Force (CFATF). In 2003, the IVE became a member of the Egmont Group. The IVE has signed a number of Memoranda of Understanding regarding the exchange of information on money laundering issues, seventeen of which also include the exchange of information regarding the financing of terrorism.

Corruption and organized crime remain endemic in Guatemala and are the biggest long-term challenges to the rule of law in Guatemala. The Government of Guatemala has made efforts to comply with international standards and improve its anti-money laundering and counter-terrorist financing regime; however, Guatemala should eliminate the use of bearer shares as well as identify and regulate offshore financial services and gaming establishments. The GOG should also continue efforts to improve enforcement of existing regulations and implement needed reforms. Cooperation between the IVE and the Public Ministry has improved in recent years, and several investigations have led to prosecutions. However, Guatemala should increase its capacity to successfully investigate and prosecute money laundering cases. Additionally, the GOG should identify or create a centralized agency to manage and dispose of seized and forfeited assets, create an assets forfeiture fund which would distribute forfeited assets to law enforcement agencies to assist in the fight against money laundering, terrorist financing, and other financial crime.

Guernsey

The Bailiwick of Guernsey (the Bailiwick) encompasses a number of the Channel Islands (Guernsey, Alderney, Sark, and Herm). A Crown Dependency of the United Kingdom, it relies on the United Kingdom for its defense and international relations. However, the Bailiwick is not part of the UK. Alderney and Sark have their own separate parliaments and civil law systems. Guernsey’s parliament legislates in matters of criminal justice for all of the islands in the Bailiwick. Guernsey is a sophisticated financial center and, as such, it continues to be vulnerable to money laundering at the layering and integration stages.

The approximately 18,800 companies registered in the Bailiwick do not fall within the standard definition of an international business company (IBC). Guernsey and Alderney incorporate companies, but Sark, which has no company legislation, does not. Companies in Guernsey must disclose beneficial ownership to the Guernsey Financial Services Commission (FSC) before legal formation or acquisition.

Guernsey has 47 banks, all of which have offices, records, and a substantial presence in the Bailiwick. The banks are licensed to conduct business with residents and nonresidents alike. There are 632 international insurance companies and 851 collective investment funds. There are also 18 bureaux de change, ten of which are part of a licensed bank. Bureaux de change and other money service providers must register their information with the FSC.

Guernsey has a comprehensive legal framework to counter money laundering and the financing of terrorism. Guernsey had further honed its anti-money laundering and counter-terrorist financing (AML/CTF) legislation with the Criminal Justice (Proceeds of Crime) (Financial Services Businesses) (Bailiwick of Guernsey) Regulations, 2007. The legislation criminalizes money laundering for all crimes except drug trafficking, which the Drug Trafficking (Bailiwick of Guernsey) Law, 2000, as amended, covers in identical terms. The Disclosure (Bailiwick of Guernsey) Law 2007 makes failure to disclose the knowledge or suspicion of money laundering a criminal offense. The duty to disclose suspicious activity extends to all businesses, not only financial services businesses. The original 1999 money laundering law creates a system of suspicious transaction reporting (including suspicion of tax evasion) to Guernsey’s financial intelligence unit (FIU), the Financial Intelligence Service (FIS). In 2007, the FSC issued companion guidance entitled “Handbook for Financial Services Businesses on Countering Financial Crime and Terrorist Financing” which replaced the Guidance Notes on the Prevention of Money Laundering and Countering the Financing of Terrorism.

Guernsey’s legal framework contains additional legislative provisions aimed at assisting in the detection of money laundering and terrorist financing. These include search and seizure powers, customer information orders and account monitoring orders. The Transfer of Funds (Guernsey) Ordinance 2007 requires any parties that offer funds transfer services to provide verified identification information for any person transferring funds electronically.

Guernsey authorities have approved further measures to strengthen the existing AML/CTF regime that should be in force by the middle of 2008. These include a comprehensive civil forfeiture law, new regulations for certain entities involved in high value transactions, and legislation governing charities and other nonprofit organizations.

Guernsey enacted the Prevention of Corruption (Bailiwick of Guernsey) Law of 2003 and the Regulation of Fiduciaries, Administration Businesses, and Company Directors, etc. (Bailiwick of Guernsey) Law of 2000 (“the Fiduciary Law”) to license, regulate and supervise company and trust service providers. Pursuant to Section 35 of the Fiduciary Law, the FSC must license all fiduciaries, corporate service providers and persons acting as company directors on behalf of any business. The FSC creates Codes of Practice for corporate service providers, trust service providers and company directors. To receive licenses, these agencies must follow strict standards, including client identification and “know your customer” (KYC) requirements. These entities are subject to regular inspection, and an entity’s failure to comply could result in prosecution and revocation of its license. The Bailiwick is fully compliant with the Offshore Group of Banking Supervisors (OGBS) Statement of Best Practice for Company and Trust Service Providers.

The FSC regulates the Bailiwick’s financial banks, insurance companies, mutual funds and other collective investment schemes, investment firms, fiduciaries, company administrators and company directors. The Bailiwick does not permit bank accounts to be opened unless there has been a KYC inquiry and the customer provides verification details. Regulations contain penalties to be applied when financial services businesses do not follow their obligations. Upon a company’s application for incorporation, the FSC evaluates the request. The Royal Court maintains the registry of incorporated companies. The Court will not permit incorporation unless the FSC and the Attorney General or Solicitor General have given approval. The Commission conducts regular on-site inspections and analyzes the accounts of all regulated institutions.

On July 1, 2005, the European Union Savings Tax Directive (ESD) came into force. The ESD is an agreement between the Member States of the European Union (EU) to automatically exchange information with other Member States about EU tax resident individuals who earn income in one EU Member State but reside in another. Although not part of the EU, the three UK Crown Dependencies (Guernsey, Jersey, and the Isle of Man), have voluntarily agreed to apply the same measures to those in the ESD and have elected to implement the withholding tax option (also known as the “retention tax option”) within the Crown Dependencies.

Under the retention tax option, each financial services provider will automatically deduct tax from interest and other savings income paid to EU resident individuals. The tax will then be submitted to local and Member States tax authorities annually. The tax authorities receive a bulk payment but do not receive personal details of individual customers. If individuals elect the exchange of information option, then no tax is deducted from their interest payments but details of the customer’s identity, residence, paying agent, level and time period of savings income received by the financial services provider will be reported to local tax authorities where the account is held and then forwarded to the country where the customer resides.

The Guernsey authorities have established a forum, the Crown Dependencies Anti-Money Laundering Group, where the Attorneys General, Directors General, and representatives of Police, Customs, the regulatory community and FIUs from the Crown Dependencies meet to coordinate AML/CTF policies and strategy.

The FIS operates as the Bailiwick’s FIU, and is comprised of Police and Customs Officers. The Service Authority, a committee of senior Police and Customs Officers who coordinate the Bailiwick’s financial crime strategy, directs the FIS. With a mandate to focus on money laundering and terrorist financing issues, the FIS serves as the central point within the Bailiwick for the receipt, collation, analysis, and dissemination of all financial crime intelligence. Much of this information comes from suspicious transaction report (STR) filings. In 2007, the FIS received 539 STRs.

The Bailiwick narcotics trafficking, money laundering, and terrorism laws designate the same foreign countries as the UK to enforce foreign restraint and confiscation orders.

In 2008, Guernsey will be the subject of an assessment regarding its compliance with internationally accepted standards and measures of good practice relative to its regulatory and supervisory arrangements for the financial sector. The International Monetary Fund (IMF) will conduct this assessment. The previous IMF assessment, conducted in 2002, determined that Guernsey had developed a legal and institutional AML/CTF framework and had a high level of compliance with what was then the Financial Action Task Force (FATF) Forty Recommendations.

There has been counterterrorism legislation covering the Bailiwick since 1974. The Terrorism and Crime (Bailiwick of Guernsey) Law, 2002, replicates equivalent UK legislation. The Terrorism Law criminalizes the failure to report suspicion or knowledge of terrorist financing.

Guernsey cooperates with international law enforcement on money laundering cases. The FSC also cooperates with regulatory/supervisory and law enforcement bodies. The Criminal Justice (International Cooperation) (Bailiwick of Guernsey) Law, 2000, furthers cooperation between Guernsey and other jurisdictions by allowing certain investigative information concerning financial transactions to be exchanged. In cases of serious or complex fraud, Guernsey’s Attorney General can provide assistance under the Criminal Justice (Fraud Investigation) (Bailiwick of Guernsey) Law 1991.

On September 19, 2002, the United States and Guernsey signed a Tax Information Exchange Agreement, which came fully into force in 2006. The agreement provides for the exchange of information on a variety of tax investigations, paving the way for audits that could uncover tax evasion or money laundering activities. Guernsey is negotiating similar agreements with other countries. The 1988 U.S.-UK Agreement Concerning the Investigation of Drug Trafficking Offenses and the Seizure and Forfeiture of Proceeds and Instrumentalities of Drug Trafficking, as amended in 1994, was extended to the Bailiwick in 1996.

Guernsey enacted the necessary legislation to implement the Council of Europe Convention on Mutual Assistance in Criminal Matters, the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime, and the 1988 UN Drug Convention, upon their extension to the Bailiwick in 2002. The Bailiwick has requested that the UK Government seek the extension to the Bailiwick of the UN International Convention for the Suppression of the Financing of Terrorism.

Guernsey is a member of the Offshore Group of Insurance Supervisors and the Offshore Group of Banking Supervisors. The FIS has been a member of the Egmont Group since 1997 and represents the jurisdiction within The Camden Assets Recovery Inter-Agency Network (CARIN), an informal network of European Union (EU) member state contacts convened to work on asset recovery.

Guernsey continues to amend current legislation to stay current with international standards. Guernsey should ensure passage of its new 2008 legislation, and enact it, as soon as possible. It should integrate civil forfeiture into its legal framework. Guernsey should also work to ensure that the obliged entities uphold their legal obligations, and that the regulatory authorities have the tools they need to provide supervisory functions, especially with regard to nonfinancial businesses and professions. Guernsey should likewise ensure that all obliged entities receive the UN 1267 Sanctions Committee’s consolidated list of suspected terrorists and terrorist organizations.

Guinea-Bissau

Guinea-Bissau is not a regional financial center. Guinea-Bissau’s instability and tiny economy make it an unlikely site for major money laundering. Increased drug trafficking and the prospect of oil production, however, increase its vulnerability to money laundering and financial crime. Drug traffickers transiting between Latin America and Europe have increased their use of the country. Often, Guinea-Bissau is the placement point for proceeds from drug payoffs, theft of foreign aid, and corrupt diversion of oil and other state resources headed for investment abroad. A recent boom in construction of luxury homes, hotels and businesses, and the proliferation of expensive vehicles stands in sharp contrast with the conditions in the poor local economy. It is likely that at least some of the new wealth derives from money laundered from drug trafficking. Banking officials also think the country is vulnerable to trade-based money laundering (TBML).

The Central Bank of West African States (BCEAO), based in Dakar, is the Central Bank for the eight countries in the West African Economic and Monetary Union (WAEMU or UEMOA), including Guinea-Bissau, and uses the CFA franc currency. The Commission Bancaire, the BCEAO division responsible for bank inspections, is based in Abidjan. However, it does not execute a full AML examination during its standard banking compliance examinations.

The legal basis for Guinea-Bissau’s AML/CTF framework is the Loi Uniforme Relative a Lutte Contre le Blanchiment de Capiteaux No. 2004-09 of February 6, 2004, or the Anti-Money Laundering Uniform Law (Uniform Law). As the common law passed by the members of UEMOA/WAEMU, all member states are required to enact and implement the legislation. On November 2, 2004, Guinea-Bissau became the third WAEMU/UEMOA country to enact the Uniform Law. The new legislation largely meets international standards with respect to money laundering. Guinea-Bissau has an “all crimes” approach to money laundering. The law requires banks and other financial institutions to know their customers and record and report the identity of any person who engages in significant transactions, including the recording of large currency transactions. Covered institutions include financial institutions and nonbank financial institutions such as exchange houses, brokerages, cash couriers, casinos, insurance companies, charities, nongovernmental organizations (NGOs), and intermediaries such as lawyers, accountants, notaries and broker/dealers. All obliged entities must report all suspicious transactions to the financial intelligence unit (FIU). There is no threshold amount triggering a report. Safe harbor provisions give reporting individuals and their supervisors civil and criminal immunity and immunity from professional sanctions for providing information to the FIU in good faith. There is no exemption for “self laundering”. It is not necessary to have a conviction for the predicate offense before prosecuting or obtaining a conviction for money laundering. Criminal liability applies to all legal persons as well as natural persons. The new legislation meets many international standards with respect to money laundering, and goes beyond, by covering the microfinance sector, but does not comply with all Financial Action Task Force (FATF) recommendations concerning politically-exposed persons (PEPs), and lacks certain compliance provisions for nonfinancial institutions. All three banks operating in the country report that they have anti-money laundering (AML) compliance programs in place. However, Article 26 of National Assembly Resolution No. 4 of 2004 stipulates that if a bank suspects money laundering, it must obtain a declaration of all properties and assets from the subject and notify the Attorney General, who must then appoint a judge to investigate. The bank solicitation of an asset list from its client could amount to “tipping off” the subject. The WAEMU/UEMOA Uniform Law does not deal with terrorist financing.

Western Union and MoneyGram function under the auspices of the banks. Unlicensed money remitters and currency exchangers, although prevalent, are illegal. Authorities report problems with porous borders and cash smuggling; reportedly, corruption in the Customs agency exacerbates this situation.

The Uniform Law provides for the establishment of an FIU, and a 2006 Directive to establish it is in place. However, no operational FIU exists in the country. Guinea-Bissau is working with external donors to establish a functioning FIU, which will be housed within the Ministry of Economy and Finance. A senior Ministry of Finance official will administer the FIU. The FIU’s mandate will be to receive and analyze suspicious transaction reports (STRs) and, when it deems appropriate, to refer files to the Prosecutor General. The FIU will rely on counterparts in law enforcement and other governmental institutions to provide information upon request for the FIU’s investigations. Lack of capacity, corruption, instability, and distrust (particularly of the judicial sector), could significantly hamper progress in the FIU’s development. Reportedly, banks are reluctant to file STRs because of the fear of “tipping off” by an allegedly indiscrete judiciary. The FIU, when operational, can legally share information with any other FIU in the WAEMU/UEMOA countries.

The Judicial Police and Prosecutors investigate money laundering as well as terrorist financing. The Attorney General’s office houses a small unit to investigate corruption and economic crimes. In November 2007, Guinea-Bissau’s government Audit Office created a commission to investigate illegal acquisition of wealth by present and former government officials. However, a lack of training and capacity, as well as endemic corruption and reported lack of cooperation from banks, impede investigations. Official statistics regarding the prosecution of financial crimes are unavailable. There are no known prosecutions of money laundering.

Although the current AML legislation obliges NGOs and nonprofits, including charities, to file STRs, the current regulatory regime is unknown.

Article 203, Title VI of Guinea-Bissau’s penal code criminalizes terrorist financing. However, there are no reporting requirements or attendant regulations. In addition, because the penal code only criminalizes the financing of terrorist groups or organizations, it does not address financing of a single or individual terrorist. The penal code also does not criminalize the financing of terrorist organizations when the money is not used to commit terrorist acts. The BCEAO has released Directive No. 04/2007/CM/UEMOA, obliging member states to pass domestic counter-terrorist financing legislation. Member states must enact a law against terrorist financing, which will likely be a Uniform Law to be adopted by all WAEMU/UEMOA members in the same manner as the AML law. Each national assembly must then enact the law. In July 2007, UEMOA/WAEMU released attendant guidance on terrorist financing for member states. In addition, the FATF-style regional body for the Economic Community of Western African States (ECOWAS), the African Anti-Money Laundering Inter-governmental Group (GIABA) has drafted a uniform law, which it has recommended that all of its member states adopt and enact.

The Ministry of Finance and the BCEAO circulate the UN 1267 Sanctions Committee consolidated list to commercial financial institutions. To date, no entity has identified assets relating to terrorist entities. The WAEMU/UEMOA Council of Ministers has issued a directive requiring banks to freeze assets of entities designated by the Sanctions Committee.

Multilateral ECOWAS treaties deal with extradition and legal assistance. Under the Uniform Law, once established, the FIU may share information freely with other FIUs in the union. Guinea-Bissau is a party to the 1988 UN Drug Convention, and has signed but not ratified the UN International Convention for the Suppression of the Financing of Terrorism, the UN Convention against Transnational Organized Crime, or the African Union (AU) Anticorruption Convention. Guinea-Bissau is a member of ECOWAS and GIABA. It has not signed or ratified the UN Convention against Corruption. Transparency International’s 2007 Corruption Perception Index ranks Guinea Bissau 147 out of 180 countries.

The Government of Guinea-Bissau (GOGB) should continue to work with its partners in GIABA, WAEMU/UEMOA and ECOWAS to establish and implement a comprehensive AML/CTF regime that comports with all international standards. GOGB should ensure that the sectors covered by its AML law have implementing regulations and supervisory authorities to ensure compliance with the law’s requirements. The GOGB should clarify, amend or eliminate Article 26 of the 2004 National Assembly Resolution that appears to mandate actions resulting in the tipping off of suspects. It should also adopt and enact the uniform terrorist financing law when it is presented to the WAEMU/UEMOA states. Guinea-Bissau should amend the definitions in its penal code to comport with the international standards regarding financing of individual terrorists and terrorist groups engaging in acts other than terrorism. It should establish, staff and train, its FIU, and ensure that resources are available to sustain its capacity. It should work to improve the training and capacity of its police and judiciary to combat financial crimes, and address any issues resulting from a lack of understanding of money laundering and terrorist financing. Guinea-Bissau should undertake efforts to eradicate systemic corruption and become a party to the UN International Convention for the Suppression of the Financing of Terrorism, the UN Conventions against Corruption and Transnational Organized Crime, and the African Union (AU) Anti-corruption Convention.

Guyana

Guyana is neither an important regional nor an offshore financial center, nor does it have any free trade zones. Money laundering is perceived as a serious problem, and has been linked to trafficking in drugs, firearms, and persons, as well as to corruption and fraud. The Government of Guyana (GOG) made no arrests or prosecutions for money laundering in 2007. Guyana currently has inadequate legal and enforcement mechanisms to combat money laundering, although legislation tabled in Parliament would enhance the GOG’s anti-money laundering regime.

The Money Laundering Prevention Act (MLPA) of 2000 criminalizes money laundering related to narcotics trafficking, illicit trafficking of firearms, extortion, corruption, bribery, fraud, counterfeiting, and forgery. The MLPA does not specifically cover the financing of terrorism or all serious crimes in its list of offenses. Banks, finance companies, factoring companies, leasing companies, trust companies, and securities and loan brokers are required to report suspicious transactions to the GOG’s financial intelligence unit (FIU), and records of suspicious transaction reports (STRs) must be kept for six years. However, the GOG does not release statistics on the number of STRs received by the FIU, despite the requirement to make these statistics available to relevant authorities as mandated by the Financial Action Task Force (FATF). The MLPA also requires that the cross-border transportation of currency exceeding U.S. $10,000 be reported to the Customs Administration, but does not allow for the provision of this information to the FIU or other law enforcement bodies. The MLPA establishes the Guyana Revenue Authority, the Customs Anti-Narcotics Unit, the Attorney General, the Director for Public Prosecutions, and the FIU as the authorities responsible for investigating financial crimes.

The GOG’s anti-money laundering regime is rendered ineffective by other major structural weaknesses of the MLPA. While the MLPA provides for the seizure of assets derived as proceeds of crime, guidelines for implementing seizures and forfeitures have never been established. Conviction for a predicate offense is considered necessary before a money laundering conviction can be obtained, and the list of such predicate offenses is cursory. While the FIU may request additional information from obligated entities, it does not have access to law enforcement information or the authority to exchange information with its foreign counterparts. These limitations collectively stifle the analytical and investigative capabilities of the FIU and law enforcement agencies. As a result of these legislative weaknesses, there have been no money laundering prosecutions or convictions to date.

To augment the tools available to the GOG’s anti-money laundering authorities, the FIU drafted legislation entitled the Anti-Money Laundering and Countering the Financing of Terrorism Bill 2007. The bill provides for the identification, freezing, and seizure of proceeds of crime and terrorism; establishes comprehensive powers for the prosecution of money laundering, terrorist financing, and other financial crimes; requires reporting entities to take preventive measures to help combat money laundering and terrorist financing; provides for the civil forfeiture of assets; expands the scope of the money laundering offense; and mandates the accessibility of all relevant data among law enforcement agencies. The legislation provides for oversight of export industries, the insurance industry, real estate, and alternative remittance systems, and sets forth the penalties for noncompliance. The bill also establishes the FIU as an independent body that answers only to the President, and defines in detail its role and powers. The draft legislation was tabled in Parliament in late 2007, but its passage in the near future is uncertain.

In January 2007, the National Assembly passed the Gambling Prevention (Amendment) Bill, which legalizes casino gambling. The bill establishes a Gaming Authority authorized to issue casino licenses to new luxury hotel or resort complexes with a minimum of 150 rooms. Vocal opposition to the bill from religious groups, opposition parties, and the public included concerns that casino gambling would provide a front for money launderers. No casinos have opened in Guyana to date.

The Ministry of Foreign Affairs and the Bank of Guyana continue to assist U.S. efforts to combat terrorist financing by working towards compliance with relevant United Nations Security Council Resolutions (UNSCRs). In 2001, the Bank of Guyana, the sole financial regulator as designated by the Financial Institutions Act of March 1995, issued orders to all licensed financial institutions expressly instructing the freezing of all financial assets of terrorists, terrorist organizations, and individuals and entities associated with terrorists and their organizations. Guyana has no domestic laws authorizing the freezing of terrorist assets, but the government created a special committee on the implementation of UNSCRs, co-chaired by the Head of the Presidential Secretariat and the Director General of the Ministry of Foreign Affairs. To date the procedures have not been tested, as no terrorist assets have been identified in Guyana. The FIU director also disseminates the names of suspected terrorists and terrorist organizations listed on the UN 1267 Sanctions Committee’s consolidated list to relevant financial institutions.

Guyana is a member of the OAS Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering and the Caribbean Financial Action Task Force (CFATF). Guyana is a party to the 1988 UN Drug Convention and the UN Convention against Transnational Organized Crime. On September 12, 2007, the GOG became a party to the International Convention for the Suppression of the Financing of Terrorism, and on June 5, 2007, Guyana ratified the Inter-American Convention against Terrorism. The GOG has not signed the UN Convention against Corruption. Guyana’s FIU is one of the few in the region that is not a member of the Egmont Group, and no change in that status is anticipated until Guyana’s anti-money laundering laws have been modernized and the financing of terrorism is criminalized. Guyana does not have a Mutual Legal Assistance Treaty (MLAT) with the United States.

The Government of Guyana should pass the draft legislation on money laundering and terrorist financing that is currently before the Parliament. The passage of this legislation would extend preventive measures to a far wider range of reporting entities, including casinos and designated nonfinancial businesses and professions. The draft legislation would also provide greater resources and critical autonomy for the FIU, enable the FIU to access law enforcement data, and ensure that the FIU has the operational capacity to meet the membership requirements of the Egmont Group. In short, the passage of this legislation is essential in enhancing the GOG’s compliance with international standards and ensuring that its anti-money laundering and counter-terrorist financing regime is operational and effective. In the interim, Guyana should provide appropriate resources and awareness training to its regulatory, law enforcement, and prosecutorial personnel, and establish procedures for asset seizure and forfeiture. The GOG should also become a party to the UN Convention against Corruption.

Haiti

Haiti is not a major financial center. Haiti’s dire economic condition and unstable political situation inhibit the country from advancing its formal financial sector. Nevertheless, Haiti is a major drug-transit country with money laundering activity linked to the drug trade. Money laundering and other financial crimes are facilitated through the banks and casinos, and through foreign currency transactions and real estate transactions. While the informal economy in Haiti is significant and partly funded by illicit narcotics proceeds, smuggling is historically prevalent and predates narcotics trafficking.

Flights to Panama City, Panama, remain the main identifiable mode of transportation for money couriers. Suspected drug flights from Venezuela continue, where a permissive environment allows smuggling aircraft to operate with impunity. Travelers, predominantly Haitian citizens, usually hide large sums ranging from U.S. $30,000 to $100,000 on their persons. There is low confidence in the efforts of Haitian customs and narcotics personnel to interdict these outbound funds. Suspicions that clandestine fees are collected to facilitate the couriers continuing without arrest appear to be well-founded. In addition, those persons that are actually interdicted are frequently released by the courts and the funds are ordered to be returned.

During interviews, couriers usually declare that they intend to use the large amounts of U.S. currency to purchase clothing and other items to be sold upon their return to Haiti, a common practice in the informal economic sector. Cash that is routinely transported to Haiti from Haitians and their relatives in the United States in the form of remittances represented over 21.2 percent of Haiti’s gross domestic product in 2006, according to the World Bank. The Inter-American Development Bank estimated the flow of remittances through official channels to Haiti at $1.65 billion in fiscal year 2006.

The Government of Haiti (GOH) has made progress in recent years to improve its legal framework, create and strengthen core public institutions, and enhance financial management processes and procedures. The constitutional government of President René Préval and Prime Minister Jacques Edouard Alexis continued the monetary, fiscal and foreign exchange policies initiated under the past Interim Government of Haiti with the assistance of the International Monetary Fund and the World Bank. Continued insecurity and a lack of personnel expertise, however, have reduced the impact of the Government’s initiatives and hampered its ability to modernize its regulatory and legal framework.

Despite political instability, Haiti has taken steps to address its money laundering and financial crimes problems. President Preval has openly affirmed his commitment to fight corruption, drug trafficking, and money laundering. He is actively seeking technical assistance and cooperation with countries in the region to reinforce Haiti’s institutional capacity to fight financial crime. In March 2007, the GOH participated in a Summit on Drug and Money Laundering in the Dominican Republic to identify synergies between countries in the region (Haiti, Dominican Republic, Jamaica and Colombia) to fight organized crime. Preparations are underway for a subsequent meeting to be held by the end of December 2007 in Cartagena, Colombia.

Since 2001, Haiti has used the Law on Money Laundering from Illicit Drug Trafficking and other Crimes and Punishable Offenses (AML Law) as its primary anti-money laundering legislation. Although the government has publicly committed to combat corruption, the court system is slow to move forward with pending cases. None of the investigations initiated under the interim government have led to any prosecutions, and the Financial Crimes Task Force (FCTF), which is charged with conducting financial investigations, is currently inoperative.

The AML Law criminalizes money laundering and establishes a wide range of financial institutions as obligated entities, including banks, money remitters, exchange houses, casinos, and real estate agents. Insurance companies, which are only nominally represented in Haiti, are not covered. The AML Law requires financial institutions to establish money laundering prevention programs and to verify the identity