Countries/Jurisdictions of Primary Concern - Belarus
Belarus is not a major financial center. Corruption and illegal narcotics trafficking are primary sources of illicit proceeds. According to the World Bank, some tax rates were reduced and simplified tax filing for some entities continued in 2013, thus reducing the potential for off-book cash transactions and underground markets. Dollarization and eurozation of the economy continues, and some foreign currency cash transactions elude the banking system. The concentration of power in the hands of the presidency and the lack of a system of checks and balances among the various branches of government are the greatest hindrances to the rule of law and transparency of governance. Economic decision-making in Belarus is highly concentrated within the top levels of government and, ultimately, in the presidency. Government financial institutions have little autonomy, and the financial sector is not sufficiently transparent and accountable.
Illicit proceeds and assets are sometimes laundered in Belarus through fake contracts, primarily between Russian and Belarusian businesses, to supply various products; deposits of illicit funds into operating accounts of businesses in the form of authorized capital contributions; the sale of illicitly acquired assets through retail networks; and the transfer of assets to balance sheets of front companies. Thus, often, funds are transferred for products that are never delivered.
There are many casinos, especially in the capital, Minsk, and foreign ownership is allowed. In 2013, the government introduced an automatic system to register winnings in legal gambling, which enables the real time registration of winnings. Up to one million Belarusian workers are employed abroad. Their remittances in 2013 totaled $1 billion, half in cash and half via bank wire transfers, according to press reports based on National Bank of Belarus (NBB) information; however, according to independent Belarusian experts, such remittances may total up to 50 percent more.
Since 2006, Belarus has been the subject of numerous U.S. sanctions, including: a 2006 advisory to U.S. financial institutions, alerting them to potential money laundering threats involving Belarusian government senior regime elements, including senior executives in state-owned enterprises, seeking to move misappropriated Belarusian state assets as well as proceeds from illicit arms sales to or through the U.S. financial system; targeted financial sanctions on Belarusian government senior regime elements; 2007 and 2011 economic sanctions against the Belneftekhim petrochemical conglomerate and four of its major state-owned enterprises; and a May 2012 U.S. Treasury designation of Belarus-based JSC CredexBank (renamed JSC InterPayBank) as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act.
Additionally, in January 2012, the United States enacted the Belarus Democracy and Human Rights Act of 2011 that includes a package of sanctions expanding the list of Belarusian officials and law enforcement representatives subject to visa bans and financial restrictions. The following August, the United States extended limitations on trade with Belarus under the International Emergency Economic Powers Act.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: NO civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks and non-bank financial credit institutions; professional operators of the securities market; persons engaged in exchange transactions, including commodity exchanges; insurance firms and brokers; postal service operators; and property leasing firms
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not available
STR covered entities: Banks and non-bank financial credit institutions; professional operators of the securities market; persons engaged in exchange transactions, including commodity exchanges; insurance firms and brokers; postal service operators; and property leasing firms
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: 9 in 2013
Convictions: Not available
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Belarus is a member of the Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.eurasiangroup.org/mers.php
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
In 2013, Belarus took steps to improve its legal and regulatory framework to fight money laundering and terrorism financing. In July, Belarus passed a resolution, which launched a mechanism for freezing funds intended for terrorism financing. In November, the government passed a resolution to reform the system of notaries and allow equal rights to both public and private notaries.
According to data provided by the NBB, the amended Banking Code came into effect in 2013, bringing all banking regulations in compliance with the country’s new AML/CFT laws. In addition, the Belarusian Code of Administrative Offenses now provides for sanctions against bank employees for any wrongdoing in collecting client identity information. In early 2013, the NBB sent an advisory letter to banks urging them not to provide banking services to businesses that create shell companies for purposes of illegal business activities. These recommendations are scheduled to become part of the law in 2014. The NBB also announced a plan to create a single database of persons denied banking services due to illegal activity.
Belarus’ Department of Financial Monitoring received 140,000 suspicious transaction reports (STRs) and currency transaction reports (CTRs) from Belarusian banks in 2013.
While Belarus has made progress in several areas, deficiencies remain, and in many instances, implementation falls below international standards. Enforcement problems are often caused by inadequate training, staffing, and funding of the relevant agencies, as well as insufficient national and international cooperation.
Belarus should take serious steps to combat corruption in commerce and government. The government also should take steps to ensure the AML/CFT framework operates more objectively and less as a political tool.