Report
Bureau of International Narcotics and Law Enforcement Affairs
May 30, 2012


Montenegro

Since its independence in 2006, Montenegro has struggled to improve its capacity to prevent and address money laundering, along with other aspects of organized crime and corruption. Legislative reforms have put in place a legal infrastructure, however, little action has been taken to proactively investigate and prosecute suspected cases of money laundering, raising concerns about the ability and will of the Government of Montenegro (GOM) to effectively combat this component of crime.

Criminal organizations, including sophisticated international narcotics trafficking enterprises, have a presence in Montenegro, and the country is also part of transit routes used to smuggle narcotics and other contraband. Within Montenegro there exists a significant black market for smuggled items such as stolen cars, narcotics, cigarettes, and counterfeit products. Many of these items are trafficked by organized criminal groups. This criminal activity, and the money laundering and corruption connected to it, is a cause of concern for both the GOM and the international community. Evidence exists that the proceeds of narcotics trafficking and other illegal activities are being laundered through businesses engaged in food service and gambling, along with construction and real estate transactions. Factors that increase Montenegro’s vulnerability to and facilitate money laundering are the high use of cash for purchases and Montenegro’s use of the euro without being within the Euro Zone.

Investigations by Montenegrin government agencies into organized crime operations and suspicious financial transactions show money moving from and through foreign off-shore financial institutions, including institutions located in the British Virgin Islands, Cyprus, the Seychelles, Panama, and Switzerland. Funds transferred from these institutions are being used to purchase real estate and luxury consumer goods, and to invest in businesses.

Proceeds of criminal enterprises fuel corruption which impacts law enforcement organizations and the judiciary in Montenegro. The origin of funds used to acquire companies or businesses during privatization is often unclear and the transactions lack transparency. In spite of the existence of a legislative framework and several anti-corruption bodies, the overall coordination and implementation of anti-corruption efforts remain insufficient.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: no

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, savings banks, savings and loan institutions, loan brokers, and other financial institutions; organizations performing payment, payment or credit card transactions, and post offices; stock brokers and investment and pension fund managers; insurance brokers and companies dealing with life assurance; organizers of lotteries and special games of chance; exchange offices; pawnshops; audit companies, independent auditors and tax advice services; institutions for issuing electronic money; humanitarian, nongovernmental and other non-profit organizations; and those engaged in: sale and purchase of claims; factoring, safekeeping and guaranty; property management; financial leasing; travel organization; real estate trade; motor vehicle, vessel and aircraft trade; credit agencies; and auctioneers and traders of works of art, precious metals and stones, and other high value goods

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 60 from January 1 to September 30, 2011

Number of CTRs received and time frame: 38,563 from January 1 to September 30, 2011

STR covered entities: Banks, savings banks, savings and loan institutions, loan brokers, and other financial institutions; organizations performing payment, payment or credit card transactions, and post offices; stock brokers and investment and pension fund managers; insurance brokers and companies dealing with life assurance; organizers of lotteries and special games of chance; exchange offices; pawnshops; audit companies, independent auditors and tax advice services; institutions for issuing electronic money; humanitarian, nongovernmental and other non-profit organizations; and those engaged in: sale and purchase of claims; factoring, safekeeping and guaranty; property management; financial leasing; travel organization; real estate trade; motor vehicle, vessel and aircraft trade; credit agencies; and auctioneers and traders of works of art, precious metals and stones, and other high value goods

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One during the first six months of 2011

Convictions: None from January 1 to November 1, 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Harmonization of Montenegro’s anti-money laundering/counter-terrorist financing (AML/CFT) laws with international standards is still pending completion. However, with Montenegro ready to start the EU negotiation process, added pressure will exist to adopt all the appropriate legislation. The basic legal and institutional framework to deal with ML/TF is in place and cooperation between the financial supervisory authorities and law enforcement has been established; however, the operational and investigative capacities of law enforcement and the judiciary need further enhancement. Police and prosecutors need to improve their collection and management of data and their capacity to investigate financial crimes. Financial investigations in two high-profile cases led to the temporary seizure of assets. Still, the number of financial investigations and criminal asset forfeitures remain low. During the first ten months of 2011, the financial intelligence unit (FIU) forwarded 25 suspicious transactions to the law enforcement agencies for further processing, but there were no convictions for ML or TF.

The system for reporting suspicious transactions also needs improvement, although the banking sector improved its STR reporting. The Administration for Prevention of Money Laundering, Montenegro’s FIU, lacks sufficient human resources (in spite of the slight increase of resources in 2011), workspace, and IT equipment to deal with its numerous assignments. The FIU is not completely independent from the Ministry of Finance, impeding its ability to investigate all claims of AML. Furthermore, remuneration is generally low in all AML/CFT-related agencies, and the staff turnover and limited technical capacity are hampering their effective functioning.

The framework for international judicial cooperation in ML/TF cases is generally comprehensive. Although the GOM has signed bilateral cooperation agreements with a number of countries, the country needs to strengthen their implementation. During 2011, Montenegro signed bilateral agreements on cooperation in ML/TF exchanges of financial intelligence data with Armenia, British Virgin Islands, Great Britain and Aruba.

In August 2010, the GOM announced that persons with a credible global reputation will be able to obtain Montenegrin citizenship if they directly invest at least 500,000 euros (approximately $689,100) in Montenegro and its economy. This economic citizenship or citizenship-by-investment program was suspended at the end of 2010 but was never formally overturned.

Although legal and institutional mechanisms to fight corruption were strengthened, the perception of corruption remains widespread, due to the lack of convictions, which potentially affects efforts to combat money laundering. A Joint Investigative Team, consisting of representatives of law enforcement bodies and headed by the Special Prosecutor, was formally re-established on June 18, 2011. A National Commission for implementing the 2010 Strategy for Prevention of Money Laundering and Terrorist Finance has been established, made up of representatives from the relevant institutions. Although it may be argued there is still no clear division of competencies among the different anti-corruption bodies, some efforts were made in the fight against organized crime and enhancing regional cooperation.

Montenegrin authorities do not consider Montenegro to be exposed to terrorism or a haven for terrorist finance. Unlike previous years, the FIU examined two possible cases of terrorist financing involving 26 non-residents and two non-resident business entities. According to the FIU, Montenegrin officials have not recognized the existence of informal systems of financial transfers or alternative remittance systems. In its 2011 progress report, the EU noted the country’s capacity to detect actions related to terrorism remained limited.

Montserrat

Montserrat has one of the smallest financial sectors of the Caribbean Overseas Territories of the United Kingdom (UK). The volcanic eruption in 1995 reduced the population and business activity on the island and disrupted the economy, which is still recovering. Less than 5,000 people remain resident on the island. Montserrat’s operating budget is largely supplied by the British government and administered through the Department for International Development.

There are few offenses committed in Montserrat that generate substantial profits from crime. The low level of transactions generated in the financial sector suggests that criminal monies are not entering the mainstream economy through financial institutions.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Montserrat is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.imf.org/external/pubs/ft/scr/2003/cr03371.pdf

Enforcement and implementation issues and comments:

Montserrat IBCs, LLCs and LPs, typically used for international business, are required to have a locally licensed company manager as registered agent, or in the case of trusts, a locally licensed trust company, with responsibility for undertaking KYC and monitoring the AML compliance of their clients.

The lack of resources and personnel may reduce the effectiveness of those regulations that are in place. Recent evaluations note the Financial Services Commission is not adequately structured and staffed so as to effectively carry out its functions; there are insufficient human resources; the staff for money laundering investigations also performs other policing functions; and there is a need for additional training in AML/CFT issues for customs officials.

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

Morocco

Morocco is not a regional financial center but is well integrated into the international financial system. Money laundering is a concern due to Morocco’s international narcotics trade, vast informal sector, trafficking in persons, and large level of remittances from Moroccans living abroad. Cash-based transactions in connection with Morocco’s substantial trade in cannabis are of particular concern. While some of the narcotics proceeds are laundered in Morocco, most proceeds are thought to be laundered in Europe. Approximately three of ten Moroccans use banks, while credible estimates of Morocco’s informal financial sector place it at nearly 15% of GDP. The predominant use of cash, money/value transfer systems (MVTS) and remittances from abroad help fuel Morocco’s informal financial sector. In 2010, remittances from Moroccans living abroad were approximately 7% of GDP and drove household consumption by large segments of the population.

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

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 86 from July 2010 - June 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Six from November 2010 - October 2011

Convictions: One from November 2010 - October 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Overall, the Government of Morocco (GOM) has made considerable progress since the promulgation of the 2007 AML law. Morocco has taken significant action in an effort to address the majority of the deficiencies included in its action plan but is still working to criminalize terrorist financing adequately. Morocco continues to refine and expand its AML/CFT legal framework. In January 2011, Morocco expanded the list of entities required to report suspicious transactions in order to close many of the gaps in existing regulations and bring them into line with international standards. Moroccan authorities should continue to develop regulatory oversight and investigative expertise that targets Morocco’s large MVTS sector, especially money remittance networks. Morocco should also work to address trade-based money laundering.

Although not explicitly stated, the FIU considers PEPs, both local and foreign, to be high-risk.

Morocco’s FIU more than doubled its staff between the middle of 2010 and the end of 2011 and joined the Egmont Group of FIUs in July 2011. Morocco’s ability to enforce its anti-money laundering statutes should improve as the FIU continues to build capacity.

Mozambique

Mozambique is not a regional financial center. Money laundering is believed to be fairly common and is linked principally to customs fraud and narcotics trafficking. Most narcotics are believed to be destined for South African and European markets although consumption is on the rise in Mozambique, mainly of cannabis and mandrax. Mozambique is not a primary transshipment point of drugs to the United States. Local organized crime groups control narcotics trafficking operations in the country, and are thought to involve networks with links to Pakistani and Indian nationals and immigrants. Other common predicate offenses for money laundering include: corruption, human trafficking, car theft, robbery, cash smuggling, illicit trade in precious metals and stones, and general smuggling. Most of the illegal activities have manifestations of organized crime, and are transnational in nature. Authorities believe the proceeds from these illicit activities have helped finance commercial real estate developments, particularly in the capital.

While money laundering in the banking sector is considered to be a serious problem, foreign currency exchange houses, cash couriers, and the hawala remittance system play more significant roles in financial crimes and money laundering. For instance, much of the laundering is believed to be happening behind the scenes at foreign currency exchange houses, and the number of exchange houses operating in Mozambique surpasses the number required for normal business. Black markets for smuggled goods and informal financial services are widespread, dwarfing the formal retail and banking sectors in most parts of the country.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Mozambique is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.esaamlg.org/userfiles/Mozambique_Mutual_Evaluation_Detail_Report(5).pdf

Enforcement and implementation issues and comments:

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

Drug trafficking and related money laundering are serious issues in Mozambique. The Financial Intelligence Office (FIO) was established in 2007, but only hired its initial staff in 2010. It was not clear if the FIO was operational in 2011. In 2011, the Central Office to Combat Corruption opened new offices and added additional staff.

Authorities acknowledge that alternative remittance systems are common in Mozambique. Many operate in exchange houses that, on paper, are heavily regulated but in fact can easily avoid reporting requirements. New foreign currency regulations adopted in 2011, aimed in part at restricting transactions at these foreign exchange houses, are intended to reduce money laundering by requiring customers with foreign currency accounts at local banks to change that foreign currency into meticais, the local currency, rather than receiving foreign currency for domestic use.

In September 2011, the GOM completed its investigation of prominent businessman, Mohamed Bachir Suleman, who was placed on the Department of Treasury’s Drug Kingpin list in 2010. While the GOM found insufficient evidence of drug trafficking, it found extensive tax, customs and foreign exchange violations, and commenced administrative action against him for payment of back taxes and fines.

Namibia

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 297 from May 2009 to November 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Namibia is revising its anti-money laundering (AML) framework to change from a rules-based to a risk-based approach. In certain subsectors regulatory bodies cannot impose sanctions, such as the withdrawal of licenses, for those entities that are not complying with Namibia’s AML framework. There are separate draft bills to cover gambling and estate agents that would augment the powers of regulatory authorities to monitor and enforce Namibia’s AML framework.

Four arrests were made for money laundering, but prosecution is still pending. The Office of the Prosecutor General has successfully applied for ten Preservation/Provisional Forfeiture orders, pending the criminal litigation. No asset forfeitures have taken place.

Although enhanced due diligence requirements for PEPs are not specified by law, the Financial Intelligence Center has issued guidance to accountable institutions instructing them to conduct enhanced due diligence on high-risk clients, which includes PEPs.

Namibia has not reached a bilateral agreement with United States authorities on a mechanism for exchange of records in criminal matters. However, Namibia has made substantial efforts to cooperate with the United States in the area of law enforcement, especially in the area of extradition, and has provided four intelligence reports to its U.S. counterparts. Namibia has cooperative agreements with countries in the Southern African Development Community.

Namibia should continue to implement its AML laws and should pass the pending anti-terrorism bill. As part of the implementation process, the Government of Namibia (GON) should ensure sufficient resources and training are provided to supervisory, analytical, investigative, prosecutorial and judicial entities with responsibilities under the laws. Namibia should establish and implement procedures to freeze terrorist assets. The GON also should take steps to ensure a fully operational and effectively functioning financial intelligence unit (FIU), in particular addressing the operational autonomy of the FIU. Cross-border currency reporting should be implemented and further measures taken to enforce Namibia’s porous borders. The GON should become a party to the UN Convention for the Suppression of the Financing of Terrorism.

Nauru

Nauru is a small Central Pacific island nation with a population of approximately 10,000. A member of the British Commonwealth, Nauru is an independent republic but uses Australian currency. Nauru is an established “zero” tax haven, as it does not levy any income, corporate, capital gains, real estate, inheritance, estate, gift, sales, or stamp taxes. Only a 7% value added tax on all goods and an airport departure tax imposed on all departing passengers are in place. There are no commercial banks on Nauru. Nauru’s loose legal, supervisory, and regulatory framework has provided significant money laundering opportunities for offshore syndicates in the past decade. There is no known domestic criminal activity in Nauru that generates laundered funds.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Not available

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: None in 2011

Number of CTRs received and time frame: None in 2011

STR covered entities: Banks and non-bank financial institutions, money remitters, securities and investment businesses, insurance, real estate agents, dealers in precious metals and stones, trust or company service providers, and legal entities

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

Nauru is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. The APG is undertaking a mutual evaluation on Nauru and completed an on-site review in early November 2011. Once finalized, the mutual evaluation report may be found here: http://www.apgml.org/documents/default.aspx?DocumentCategoryID=17

Enforcement and implementation issues and comments:

In line with its National Sustainable Development Strategy 2005–2025, the government has undertaken some major initiatives. These include enacting and enforcing legislation to abolish offshore banks used for money laundering by criminal syndicates.

In 2011, the Government of Nauru (GON) began work on a new Crimes Act which is expected to be completed by 2013. The Crimes Act will cover money laundering and corruption crimes. Concurrently, the GON’s interagency working group that makes recommendations to the cabinet on international agreements and obligations has prioritized the ratification of UN conventions. Recommendations to the cabinet are expected to be submitted in 2012 concerning the UN Convention against Corruption and the 1988 UN Drug Convention. Nauru also should become a party to the UN Convention against Transnational Organized Crime.

Nepal

Nepal is not a regional financial center. Government corruption, poorly regulated trade, weak financial sector regulation, and a large informal economy make the country vulnerable to money laundering and terrorist financing. The major sources of laundered proceeds stem from tax evasion, corruption, counterfeit currency, smuggling, and invoice manipulation. Nepal has a large, unregulated, informal remittance system, which is also vulnerable to money laundering and terrorist finance.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, securities agents, insurance agents, casinos, money remitters and changers, cooperatives, some government agencies, lawyers and notaries, auditors, trust and company service providers, and high value metals and stone traders

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Over 200 from January to October 2011

Number of CTRs received and time frame: Over one million from January to October 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three from January to October 2011

Convictions: Two from January to October 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Nepal is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/NEPAL%20ME2.pdf

Enforcement and implementation issues and comments:

Nepal has taken several steps to bring its laws into compliance with international standards, including amending its AML/CFT laws to improve enforcement. Nepal has developed an action plan to address strategic deficiencies, including adequately criminalizing money laundering and terrorist financing; implementing adequate procedures to identify and freeze terrorist assets and confiscate money laundering assets; implementing appropriate mutual legal assistance legislation; and improving the FIU and suspicious transaction reporting obligations. However, lack of resources and enforcement capacity continue to present significant anti-money laundering/counter-terrorist financing challenges, as does low awareness of reporting requirements and procedures.

On May 24, 2011, Parliament endorsed the Anti-Money Laundering Act (First Amendment), which incorporates major amendments in the Asset (Money) Laundering Prevention Act, as per the international AML commitments made by the government of Nepal. However, the 2011 amendments still have broad deficiencies in the criminalization of money laundering, including the coverage of predicate and ancillary offenses. The Government of Nepal lacks human resource expertise and skills in the responsible agencies, particularly in investigation techniques. Nepal also lacks a comprehensive anti-terrorism law, complicating enforcement efforts.

Coordination among the key government agencies is weak. The Department of Revenue Investigation was responsible for money laundering enforcement, but pursuant to the recent AML amendment, in June 2011 Nepal created a separate AML Investigation Department under the Ministry of Finance to handle money laundering cases. The effectiveness of the newly established department cannot yet be determined.

FIU officials have identified under- and over-invoicing as a major money laundering challenge, and the recent discovery of a value added tax (VAT) scam highlights the widespread problem of tax evasion and money laundering. The FIU is in the process of developing an e-reporting system to help improve data collection, but the system will not be functional for another one to two years. Nepal’s overall data management system remains outdated, but improvements are being made, especially in tax collection. Nepal should ensure disclosure protection provisions and requirements to maintain records over time are part of new regulations.

Despite these challenges, Nepal has taken a number of steps to bring its legislation into compliance with international standards, such as passing the national strategy on AML/CFT and amending the AML/CFT law to include enhanced enforcement provisions. On March 31, 2011, Nepal became a party to the UN Convention against Corruption. On December 23, 2011, Nepal became party to the UN Convention for the Suppression of the Financing of Terrorism and to the UN Convention against Transnational Organized Crime.

The FIU seeks greater cooperation with other countries, especially in information sharing, and has applied for membership in the Egmont Group. The FIU has signed memoranda of understanding with Bangladesh, Malaysia, Mongolia, Sri Lanka, and Thailand.

Netherlands

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

Six islands in the Caribbean fall under the jurisdiction of the Netherlands. Bonaire, St. Eustasius, and Saba are special municipalities of the country the Netherlands. Aruba, Curacao, and St. Maarten are countries within the Kingdom of the Netherlands.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 117,000 in 2010

Number of CTRs received and time frame: 66,000 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 1,300 in 2010

Convictions: 812 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

The Netherlands is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/document/50/0,3746,en_32250379_32236963_47221490_1_1_1_1,00.html

Enforcement and implementation issues and comments:

In June 2008, the Netherlands Court of Audit published its investigation of the Government of the Netherland’s policy for combating money laundering and terrorist financing. The report criticizes the Ministries of Interior, Finance, and Justice for: lack of information sharing among them; too little use of asset seizure powers; limited financial crime expertise and capacity within law enforcement; and light supervision of notaries, lawyers, and accountants. Similar deficiencies were seen during the more recent mutual evaluation of the Netherlands. The ministries agreed in large part with these conclusions and have taken steps to address them, including hiring financial crime experts in law enforcement and introducing new laws to strengthen the ability of law enforcement to tackle money laundering.

The Netherlands has established an “unusual transaction” reporting system. Designated entities are required to file unusual transaction reports (UTRs) with the FIU on any transaction that appears unusual (applying a broader standard than “suspicious”) or when there is reason to believe that a transaction is connected with money laundering or terrorist financing. The FIU investigates UTRs and forwards them to law enforcement for criminal investigation; once the FIU forwards the report, the report is then classified as a STR. Draft legislation is pending to strengthen the reporting regime and enact stronger KYC rules.

In response to criticisms concerning the operational independence and effectiveness of the Dutch financial intelligence unit (FIU), a discussion on how to ensure FIU operational independence is underway. The FIU is currently part of the police, which itself is undergoing reforms.

In September 2011 the Dutch parliament passed a bill modernizing the supervision of notaries. Comprehensive supervision will be conducted by an independent supervisory body with investigative powers, with the use of confidential information about clients strictly limited to action against notaries. A similar legislative proposal is being prepared concerning the supervision of lawyers and is expected to be introduced in parliament in 2012.

The United States enjoys strong cooperation with the Netherlands in fighting international crime, including money laundering. One provision included in the U.S.-EU mutual legal assistance agreement, which the Netherlands has ratified, will facilitate the exchange of information on bank accounts. The Dutch Ministry of Security and Justice and the National Police work together with U.S. law enforcement authorities in the Netherlands on operational money laundering initiatives.

Due to legal and political changes, asset seizure has become a priority in money laundering cases. The assignment of dedicated money laundering prosecutors is bringing change to historically low asset seizure rates. A Steering Committee has been created to discuss and assign cases to the appropriate investigative unit. To further increase the confiscation of criminal assets, the Dutch Minister of Security and Justice introduced a new law including confiscation as a standard procedure of any money-driven criminal case, aimed at increasing law enforcement agencies’ capacity to take such action.

A Rotterdam Court sentenced seven people in February 2011 for involvement in international drug trafficking and money laundering. The main suspect was sentenced to three years and nine months, and €4.5 million (approximately $5.927 million) cash was forfeited. The convicted group had direct connections with Colombian drug cartels. In April 2011, a court in The Hague sentenced a Dutch man to six years and four months for money laundering, blackmailing, violent robbery, and other serious crimes. Eleven other people in the same case received sentences of from 30 months to five years.

New Zealand

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

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

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 4,357 in 2010

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 156 in 2009

Convictions: 55 in 2009

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

New Zealand is a member of the Financial Action Task Force (FATF) and the Asia/Pacific Group on Money Laundering (APG), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/document/28/0,3746,en_32250379_32236963_43998044_1_1_1_1,00.html

Enforcement and implementation issues and comments:

The Government of New Zealand (GONZ) is actively taking measures to comply with international standards and strengthening its ability to detect and deter money laundering and terrorist financing. New Zealand’s Anti-Money Laundering/Counter-Terrorist Financing Act of 2009 sets reporting requirements for financial service providers and casinos and establishes a risk-based approach to tracking potential money laundering and terrorism financing activities. However, while the Act is in force, the Ministry of Justice is still finalizing regulations, and enforcement will not begin until 2013, in part to give covered entities more time to accommodate the changes. The New Zealand FIU anticipates an increase in reporting in 2014, and has hired additional personnel to manage the workload.

The GONZ is considering proposed amendments to the Companies Act, which will address the vulnerabilities created by foreign-owned shell companies.

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

Nicaragua

The Republic of Nicaragua is not considered a regional financial center. It continues to be a strategic transshipment route for South American cocaine and heroin destined for the United States and cash returning to South America. Because of these activities, Nicaragua’s financial system is highly vulnerable to money laundering. Money laundering is primarily related to proceeds from illegal narcotics and political corruption. Reportedly, the narcotics trade is increasingly linked to arms trafficking.

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

As of March 2011, a total of 148 companies operated in 34 designated free trade zones (FTZs). The National Free Trade Zone Commission (CNZF), a government agency, regulates all FTZs and the companies operating in them. The Nicaraguan Customs Agency monitors all FTZ imports and exports. It is suspected that money laundering occurs via traditional mechanisms such as legal businesses; however, some evidence exists of informal “cash and carry” networks for delivering remittances from abroad that may be indicative of money laundering There have been no convictions for money laundering in either sector.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, credit unions, financial companies, credit institutions, stock exchange systems, insurance companies, savings and loan cooperatives, brokerage firms, money exchangers, casinos, non-profit organizations, and pawn shops

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 368 in 2010

Number of CTRs received and time frame: Not available

STR covered entities: Banks, credit unions, financial companies, credit institutions, stock exchange systems, savings and loan cooperatives, brokerage firms, money exchangers, casinos, non-profit organizations, and pawn shops

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 17 in 2011

Convictions: Three in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Nicaragua is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Nicaragua_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

Statutes enacted to criminalize money laundering and terrorist financing lack sufficient implementation due to weak enforcement mechanisms and a corrupt judicial system. There have been cases when money laundering/drug trafficking sentences were reduced or dismissed by appellate judges under suspicious circumstances. Further, legislation against organized crime has many enforcement deficiencies that should be improved by the Nicaraguan National Assembly.

While the law grants the Financial Analysis Committee (CAF) the ability to monitor other financial institutions, the CAF does not have the resources or the power to enforce regulations.

Niger

Niger is not a regional financial center, and its banking sector is rudimentary. It is a member of the Central Bank of West African States (BCEAO), and shares its central bank and currency with other countries in the region. High transaction costs deter businesses from placing large amounts of cash in the banking system. Most economic activity takes place in the informal financial sector.

Money laundering and financial crimes are commonplace in Niger. The country is primarily a transit country for funds related to the trafficking of narcotics and other forms of contraband. Niger is one of the poorest and least developed countries in the world and is not a significant source of criminal proceeds. Since 2008, kidnapping for ransom has become a preferred fundraising method for terrorist groups.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: One in 2010

Number of CTRs received and time frame: None

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Two in 2007

Convictions: One in 2008

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Niger is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found at: http://www.giaba.org/index.php?type=c&id=48&mod=2&men=3

Enforcement and implementation issues and comments:

Niger’s money laundering and terrorist financing laws are not in full compliance with international standards. Although addressed in the AML/CFT laws, customer due diligence procedures for designated non-financial businesses and professions have not been implemented.

Niger participates in international law enforcement cooperation, mutual legal assistance, and asset sharing groups within the region.

The National Center for the Treatment of Financial Information (CENTIF) is Niger’s FIU. Only two of the eight reports of suspicious activities received since CENTIF’s 2004 creation resulted in legal action, leading to one conviction. CENTIF has suffered numerous setbacks, including a fire in 2010. It has had to move locations twice and is still in rented quarters. Since October 2011, under the transition government of President Salou Djibo, CENTIF has been headed by a new director who plans to reshape the organization, including by building capacity and securing Government of Niger funding for an appropriate building.

In July 2011, former President Issoufou named an eight-member High Authority to Combat Corruption that will work closely with CENTIF to investigate suspicious activities. In August, the Ministry of Justice installed an anti-corruption hotline.

Nigeria

Nigeria remains a major drug trans-shipment point and a significant center for criminal financial activity. Individuals and criminal and terrorist organizations take advantage of the country's location, porous borders, weak laws, corruption, lack of enforcement, and poor socio-economic conditions to launder the proceeds of crime. The proceeds of illicit drugs in Nigeria derive largely from foreign criminal activity rather than domestic activities. One of the schemes used by drug traffickers to repatriate and launder their proceeds involves the importation of various commodities, predominantly luxury cars and other items such as textiles, computers, and mobile telephone units. Drug traffickers reportedly also use Nigerian financial institutions for currency transactions involving U.S. dollars derived from illicit drugs.

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

Nigeria’s AML/CFT progress in 2011 relative to its action plan was not considered sufficient by the Financial Action Task Force (FATF), which highlighted Nigeria’s lack of adequate progress by adding Nigeria to its October 2011 Public Statement.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,306 from October 1, 2010 – September 30, 2011

Number of CTRs received and time frame: 11,580,836 from October 1, 2010 – September 30, 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 639 from October 1, 2010 – September 30, 2011

Convictions: 73 from October 1, 2010 – September 30, 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdiction: YES

Nigeria is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=49&mod=2&men=2

Enforcement and implementation issues and comments:

Nigerian authorities should work toward full implementation of a regime capable of thwarting money laundering and terrorist financing. In 2011, Nigeria enacted a new Money Laundering (Prohibition) Act (MLPA), which introduces the concept of corporate criminal liability (“offenses of a body corporate”), and a new Terrorism (Prevention) Act (TPA), which includes some new provisions on terrorist financing and the freezing and seizure of assets. The Government of Nigeria (GON) should ensure its anti-money laundering legislation comports with international standards and covers all the recommended predicate offenses, including terrorist financing. Currently, terrorist financing is not listed as a predicate offense for money laundering. The new TPA represents progress toward criminalizing terrorist financing, but it may not do so consistent with international standards. The GON should amend the law as needed to bring it into compliance.

Weak law enforcement and justice sector issues have hindered the progress of and thwarted many prosecutions and investigations. The GON should ensure the autonomy and independence of the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) from political pressures. The GON also should strengthen its supervision of designated non-financial businesses and professions. Moreover, the GON should ensure the range of agencies that pursue money laundering cases, including the EFCC, Nigerian Drug Law Enforcement Agency, Independent Corrupt Practices and Other Related Offences Commission, Nigerian Agency for the Prevention of Trafficking in Persons, and National Police Force have the capacity to function as investigative partners in financial crimes cases, as well as work to eradicate any corruption existing within law enforcement bodies. The National Assembly should amend the 2011 MLPA to provide for increased autonomy of the NFIU and adopt safe harbor provisions to protect STR reporting entities. The GON should consider developing a cadre of specially trained judges with dedicated portfolios in order to handle financial crime cases effectively, and the National Assembly also should adopt a non-conviction based asset forfeiture bill.

Niue

Niue is not a regional financial center and has no free trade zones. Niue is a self-governing democracy, operating in free association with New Zealand. The Government of Niue (GON) relies heavily on New Zealand to assist with external and economic affairs. The country has experienced a significant decline in population, largely from the emigration of its population to New Zealand.

In recent years Niue has tightened its legislation and formed a financial intelligence unit (FIU) to comply with international standards against money laundering and terrorist financing.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: Not available

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: None

Number of CTRs received and time frame: One in 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Niue is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. A copy of its most recent evaluation is not available. The next mutual evaluation is scheduled for late 2011.

Enforcement and implementation issues and comments:

The Niue FIU exchanges financial intelligence related to money laundering and financing of terrorism with the New Zealand FIU. The Niue Crown Law office reports it has received a small number of cash transaction reports. However, it is not apparent that any prosecutions or asset seizures have occurred under its anti-money laundering/counter-terrorist financing (AML/CFT) legislation.

Niue is not a member of the United Nations. It generally complies with international AML/CFT standards, and AML/CFT legislation includes the 2004 United Nations Sanctions Regulations (Terrorism Suppression and Afghanistan Measures).

Norway

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, the Central Bank, finance companies, e-money institutions, pension funds, postal operators, auditors, asset managers, securities dealers, credit agents, money exchangers, insurance companies, accountants, lawyers, notaries, auction houses, realtors, money transporters, holding houses, and dealers in autos and high value goods

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 6,660 in 2010

Number of CTRs received and time frame: 3,734 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Norwegian financial intelligence unit (FIU) voices some concern over the low number and poor quality of reports from certain entities covered by the reporting obligation. Banks, auditors, insurance companies and payment transfer entities maintain high levels of reporting, while reports from other industries, such as dealers in cars and other expensive items, are few and decreasing. Reporting from attorneys is up, but is low compared to the high number of transactions conducted by this sector. Given the overall transaction volume, the FIU suspects considerable underreporting in these sectors. The FIU is attempting to improve the quality of STR reporting by providing specific guidance and follow up to obligated entities. In 2010, the FIU reported 122 incidents to the National Police Intelligence System and submitted 23 formal complaints and reports to be used in criminal cases. Although aggregate data is not available, the number of money laundering prosecutions and convictions is believed to be low given the size of the Norwegian economy.

In addition to Norway’s large currency transaction reporting requirement a purpose declaration is required for currency transactions over NOK 100,000 (approximately $17,900).

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

Oman

Oman is not a regional or offshore financial center and does not have significant money laundering or terrorist financing concerns. Due to its location on the tip of the Strait of Hormuz, Oman is home to a small number of smugglers operating between Musandam, the northern-most exclave of Oman, and Iran. Omani authorities are aware that growing Iranian overtures toward Oman for increased trade and engagement may create conditions for AML/CFT concerns. Trade is generally financed in small amounts of cash and features mainly consumer goods. There is no indication this activity is tied to terrorist financing. There is also a small amount of narcotics trafficking in Oman, although the government is proactive in tracking and prosecuting drug traffickers. Sources of illegal proceeds are generally small and derived from smuggling or drug trafficking activities. Smugglers are generally Iranian while drugs are trafficked by Omani citizens. Oman-based hawaladars that have been involved with illicit transfers for terrorist financing purposes have been closed down by Omani authorities. Corruption, primarily in the form of cronyism or insider operations, remains a concern.

Money laundering is centered in the formal financial system, rather than in the port free zones or informal sector. In 2011 the Central Bank of Oman licensed Islamic Banking. There is no offshore financial center in Oman.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks; foreign exchange companies; investment and credit companies; insurance companies; companies and individuals providing financial services; stock and securities brokers; real estate brokers; dealers in precious metals and stones; notary publics; lawyers and accountants

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

STR covered entities: Banks; foreign exchange companies; investment and credit companies; insurance companies; companies and individuals providing financial services; stock and securities brokers; real estate brokers; dealers in precious metals and stones; notary publics; lawyers and accountants

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Government of Oman (GOO) has been improving its AML/CFT regime, beginning with a 2010 overhaul of its legislation. To implement the 2010 law, Oman has retooled its legal, regulatory and enforcement mechanisms. In response to corruption issues, the government empowered the State Audit office with greater investigatory power.

Currently Oman’s financial intelligence unit (FIU), located within the Royal Oman Police, receives few STRs from non-bank entities. In practice, about 95% of STRs are received from banks, mostly foreign. The FIU does not have access to daily transaction flows via the Central Bank database. The FIU recognizes its lack of capacity in forensic analysis, compromising its ability to analyze financial data and seriously pursue AML cases. The Omani government openly discusses its AML/CFT enforcement efforts, although it does not publish information regarding suspicious transactions and criminal prosecutions. The Financial Investigations Unit in the Royal Oman Police is the responsible entity for enforcing AML/CFT laws and regulations, and law enforcement authorities generally respond to requests for assistance from foreign counterparts.

Under the 2010 AML/CFT law, Oman introduced a declaration system for bulk cash, bearer negotiable financial instruments, and precious metals and stones, requiring all amounts over OMR 6,000 (approximately $15,600) or its equivalent to be declared to the authorities. However, Omani authorities, from the FIU to law enforcement, have no central database; more than 70 databases currently receive and analyze different data sets with no connectivity.

Oman issued Royal Decree 104/2011 on October 23, 2011 ratifying the International Convention for the Suppression of the Financing of Terrorism; Oman became a party to this convention on November 10, 2011.

To enhance their operational capabilities, the Omani authorities should hasten efforts to finalize steps aimed at empowering the FIU and law enforcement authorities. These authorities should undertake training to improve analytical and investigatory capacity. The FIU should perform outreach to non-bank financial institutions to improve reporting from the non-bank sectors. It is critical that the GOO enhance and integrate its databases to ensure access by the Omani interagency authorities to the information stored in them. The GOO also should require enhanced due diligence procedures for politically exposed persons, and collect and publish statistics indicating numbers of STRs, prosecutions, investigations and convictions in line with international standards. The GOO should ratify the UN Convention against Corruption.

Pakistan

Pakistan continues to suffer from financial crimes related to narcotics trafficking, terrorism, smuggling, tax evasion, corruption, counterfeit goods and fraud. Pakistani criminal networks play a central role in the transshipment of narcotics and smuggled goods from Afghanistan to international markets. The abuse of the charitable sector, trade-based money laundering, money exchange companies, hawala/hundi, and bulk cash smuggling are common methods used to launder money in Pakistan and the region. Pakistan’s real estate sector is also a popular destination for illicit funds, as many real estate transactions are poorly documented. Pakistan does not have firm control of its borders with Afghanistan, Iran or China, which facilitates the flow of smuggled goods to and from the Federally Administered Tribal Areas and Baluchistan.

Money laundering often occurs in Pakistan in both the formal and informal systems. Fraudulent invoicing is typical in hawala/hundi counter-valuation schemes. Legitimate remittances from Pakistani expatriates residing abroad flow through the formal banking sector, licensed money exchange businesses, and hawalas. Since the start of the calendar year through October remittances totaled $14 billion, and since March have averaged roughly $1 billion per month. The authorities do not provide an estimate of remittances that flowed through informal channels.

Pakistan was first publicly identified by the Financial Action Task Force (FATF) in February 2008 for deficiencies in its anti-money laundering/counter terrorist financing (AML/CFT) regime. While Pakistan has taken some steps to improve its AML regime, the FATF continues to note Pakistan’s failure to adequately implement its action plan and correct AML/CFT deficiencies, particularly its terrorism finance law.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

Know-your-customer (KyC) rules:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 535 from July 2010 to May 31, 2011

Number of CTRs received and time frame: 138 from January 2009 through December 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Four from January 2009 to October 2010

Convictions: None in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

To gain more oversight of the informal money transfer sector, the State Bank of Pakistan (SBP) requires all money exchange companies to obtain licenses and meet minimum capital requirements. As a result, it is illegal for money exchange companies, referred to as hawala/hundi, to operate without a license; however, few hawalas have been registered by the authorities, and unlicensed hawaladars continue to operate illegally throughout Pakistan (particularly in Peshawar and Karachi). While the SBP has implemented the licensing of all money exchange companies and hawalas, the enforcement environment is not commensurate with SBP’s regulations. Shortcomings in the enforcement of the regulations, particularly in the movement of cash, makes Pakistan’s informal financial sector consistently vulnerable to abuse by illicit actors.

Pakistan continues to have serious deficiencies in its AML regime. To address these it must: remove remaining inadequacies with regard to the criminalization of money laundering; demonstrate effective regulation of money service providers, including an appropriate sanctions regime and increasing the range of ML preventive measures for these services; and improve and implement effective controls for cross-border cash transactions. Pakistan needs to demonstrate that not only does it have AML laws on the books, but that these laws are enforced. To date, Pakistan has a poor track record. Between January 2009 and October 2010 there have been only four prosecutions and zero convictions under the AML law due to limited resources and lack of capacity.

Palau

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three from 2006 through 2011

Convictions: Three from January through December 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Palau is a member of the Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Palau%202008.pdf

Enforcement and implementation issues and comments:

The Money Laundering Prevention and Control Act (MLPCA), amended in 2007, does not include all predicate crimes prescribed in the international standards and currently lacks implementing regulations. Nor does it cover the designated non-financial businesses and professions operating in Palau. Significant deficiencies remain in the areas of customer due diligence, record keeping, monitoring of transactions, and supervision. The Financial Institutions Commission is the AML/CFT supervisor, but it does not have the resources to ensure AML/CFT compliance nor to issue any regulations.

The Palau Financial Intelligence Unit (FIU) is responsible for receiving and analyzing STRs, along with tracing, seizing, and freezing assets, but lacks a dedicated budget and staff. The Government of Palau (GOP), with donor assistance, organized a multi-agency STR review team to review the reports and help identify and initiate investigations. The multi-agency approach has enabled the FIU to function given its limitations of manpower and funding, and has fostered information sharing and joint investigations among the relevant law enforcement agencies. It is not, however, a long-term solution, and the GOP should dedicate funds and permanent staff to the FIU.

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

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

Panama

Panama’s strategic geographic location and status as a regional financial center make it an attractive jurisdiction for money launderers. Panama’s success in establishing itself as a regional business and logistics hub, based on the success of its ports, airport and the Colon Free Zone – the second largest free trade zone in the world – have enhanced its attractiveness for organizations engaged in illicit financial activities. Money laundering in Panama is believed to be primarily related to the laundering of the proceeds of drug trafficking, and the country sits along major drug trafficking routes. The work of launderers is facilitated by weaknesses in the regulatory framework, notably the existence of bearer share corporations, but more importantly by uneven enforcement of anti-money laundering measures and the weak judicial system, which is susceptible to corruption and favoritism.

After negotiating and signing 13 Double Taxation Treaties with OECD members, and ratifying the Tax Information Exchange Agreement with the United States in 2010, Panama achieved removal from the OECD’s gray list of tax havens in July 2011.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 563 in 2010

Number of CTRs received and time frame: 495,546 in 2010

STR covered entities: Banks, cooperatives, and money exchanges; casinos; fiduciaries; insurance companies; government entities focused on the lottery: and investment houses

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: 22 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Panama is a member of the Financial Action Task Force on Money Laundering in South America (GAFISUD), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Panama_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

Panama cooperates well with U.S. law enforcement agencies. However, the notable successes the Government of Panama (GOP) has had in interdicting flows of illegal drugs have not been matched by similar success in addressing money laundering concerns. The various government agencies tasked with addressing money laundering remain fractured and under-resourced, and communicate poorly with one another. Panama’s financial intelligence unit, the UAF, in particular, lacks the resources to process and investigate, let alone enforce, reporting requirements on suspicious transactions. The judicial branch’s capacity to successfully try and convict money launderers remains weak, and judges remain susceptible to corruption. Although the GOP took a step forward with the introduction of know-your-client legislation requiring lawyers to conduct due diligence into the beneficial owners of the companies they incorporate, the continued existence of bearer shares corporations remains a vulnerability of the anti-money laundering regulatory framework.

Panama, through its Customs Authority, is taking steps to reduce the use of Tocumen Airport as an artery for cash couriers to move cash into Panama. More targeted enforcement action, in collaboration with U.S. law enforcement agencies, has led to increased scrutiny of passengers and notable seizures of undeclared cash at the airport.

Customs also has been effective in disrupting trade-based money laundering through the partnership of the Panamanian and U.S. trade transparency units (TTU). Established in 2010 by U.S. Immigration and Customs Enforcement and Panama’s Customs authority, the Panamanian TTU has had significant success. Despite these advances, Customs lacks sufficient resources to fulfill its mandate.

The Colon Free Trade Zone (CFZ) continues to be vulnerable to abuse by criminal groups through illicit financial activities, due primarily to insufficient enforcement of existing controls. The new electronic transaction recording information system, when fully implemented, will improve capacity to trace transactions. Bulk cash is relatively easily introduced into the country by declaring it is for use in the CFZ. A new resolution, published December 14, 2011, improves the AML/CFT framework in the CFZ. The resolution has 25 articles that supersede and include all the provisions of law 42 of 2000 and Decree JD-008 of 2008. It will enter into force 60 days after publication. Among the items addressed are the requirement to have a compliance officer in each company; implementation of preventative measures, supervision, inspection and sanctions; STR and CTR reporting; and know your customer policies.

During 2011, the GOP took steps to continue to improve the legislative framework governing anti-money laundering and financial sector transparency. In 2011, Panama passed legislation (Law 2 of 2011) requiring lawyers to know their clients, conduct due diligence on the beneficial ownership of corporations they establish and share that information with the authorities upon request. These steps have strengthened Panama’s regulatory framework. Panama also is drafting new anti-money laundering legislation, which would strengthen the UAF’s authority and increase the number of sectors required to report suspicious transactions.

If the GOP continues its efforts to improve its anti-money laundering legal framework, particularly eliminating bearer shares, criminalizing “tipping off,” improving the strength of the prosecutor’s office and the judicial system, and creating a more transparent financial network, money laundering will become more difficult within Panama’s borders.

Papua New Guinea

Papua New Guinea (PNG) is not considered a major financial center. It has a relatively stable banking system closely integrated with the financial systems of Australia and New Zealand. Smuggling is a major problem in PNG. Corruption is one of the main sources of illegal proceeds in PNG, especially related to misappropriation of public funds linked to the extraction industries and related licensing procedures as well as through fraudulent compensation claims. Corruption is also a serious issue in party politics. Transshipment of drugs and other illegal goods en route to Australia is increasingly considered an emerging risk. Limited PNG capacity in border control and the presence of organized crime groups pose significant risks for money laundering. PNG relies on assistance from Australia to deter illegal cross-border activities primarily from Indonesia, including illegal narcotics trafficking.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,094 in 2010

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2010

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Papua New Guinea is a member of Asia/Pacific Group on Money Laundering (APG), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/PNG%20MER_July%202011.pdf

Enforcement and implementation issues and comments:

Papua New Guinea’s legal system is still developing and transitioning from a traditional law and order system based on tribal seniority and indigenous customs. Western-style legislation is being generated, but enforcing agencies significantly lack the training, funding, assets, experience, and, in many cases, education to successfully combat sophisticated organized crime. Australian authorities partner closely with PNG counterparts to advise and build capacity in these regards. PNG interagency cooperation also needs improvement.

Papua New Guinea has criminalized terrorist financing in the form of “support” to a terrorist act. The law does not fully meet international standards.

In practice, only the banking sector has been made aware of STR and CTR reporting obligations. No financial intelligence reporting is taking place beyond the banking sector nor is there a clear obligation to perform customer due diligence procedures for any institutions. While the financial intelligence unit (FIU) is building its capacity, there is no clear political commitment to ‘follow the money’ to tackle corruption and other crimes, and no demonstrated commitment to regulate and supervise anti-money laundering/counter-terrorist financing (AML/CFT) obligations by financial sector regulators, which severely hampers the authorities’ ability to tackle financial aspects of corruption.

The Government of Papua New Guinea should continue its work to develop procedures to conform to international AML/CFT standards. Papua New Guinea should become a party to the UN Convention against Transnational Organized Crime and the 1988 UN Drug Convention.

Paraguay

Paraguay is a major drug transit country and money laundering center. A multi-billion dollar contraband trade, fed in part by endemic, institutional corruption, occurs in the border region shared with Argentina and Brazil (the tri-border area, or TBA) and facilitates much of the money laundering in Paraguay. While the Government of Paraguay (GOP) suspects proceeds from narcotics trafficking are often laundered in the country, it is difficult to determine what percentage of the total amount of laundered funds is generated from narcotics sales or is controlled by domestic and/or international drug trafficking organizations, organized crime, or terrorist groups. Weak controls in the financial sector, open borders, bearer shares, casinos, a surfeit of unregulated exchange houses, lax or non-enforcement of cross-border transportation of currency and negotiable instruments, ineffective and/or corrupt customs inspectors and police, and minimal enforcement activity for financial crimes allows money launderers, transnational criminal syndicates, and possible terrorist financiers to take advantage of Paraguay’s financial system.

Ciudad del Este, on Paraguay’s border with Brazil and Argentina, represents the heart of Paraguay’s “informal” economy, estimated to be double Paraguay’s $18 billion GDP. The area is well known for arms and narcotics trafficking, document forging, smuggling, counterfeiting, and violations of intellectual property rights, with the illicit proceeds from these crimes a source of laundered funds. Some proceeds of these illicit activities have been supplied to terrorist organizations, and trade-based money laundering occurs in the region.

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

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 279 - January 2011 to November 2011

Number of CTRs received and time frame: 1,341,162 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Five in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

For reporting entities that do not have a natural supervisory authority, the Secretariat for the Prevention of Laundering of Money or Assets (SEPRELAD) is the competent supervisor. SEPRELAD’s budget has increased by 166% from 2008 to 2011. SEPRELAD increased its staff approximately 20% in 2011 and has made considerable investment in infrastructure, software up-dates and equipment. The 2011 STR numbers dropped significantly from the 812 reported in 2010 due to the implementation of new software at SEPRELAD that better establishes the requirements for an STR for obligated institutions.

The GOP took a welcomed step forward in regard to implementation of UNSCR 1267 in October 2011 when it passed a long-awaited asset freezing law that enables SEPRELAD to freeze the assets of designated terrorist financiers, or those conducting transactions with UN designated terrorists or terrorist financiers, indefinitely in as little as 36 hours once notification of UN designation is sent or a request from a foreign country relating to UNSCR 1373 is received. The new law complements the June 2010 anti-terrorism legislation criminalizing terrorist financing.

Prosecutors handling financial crimes have limited resources to investigate and prosecute. In addition, the selection of judges, prosecutors and public defenders is largely based on politics, nepotism, and influence peddling. The lack of interagency cooperation throughout Paraguay, and particularly within law enforcement, is an impediment to effective enforcement, prosecution, and reporting efforts.

Asset forfeiture legislation is desperately needed in Paraguay. Apart from the new asset freezing law, Paraguayan law does not provide for freezing or seizure of many criminally derived assets. Law enforcement can only freeze assets of persons under investigation for a crime in which the state risks loss of revenue from furtherance of a criminal act, such as tax evasion. Enforcement agencies have limited authority to seize or forfeit assets of suspected money launderers and do not include bank accounts. When a seizure does occur, law enforcement authorities cannot dispose of these assets until a defendant is convicted, which frequently takes years.

The non-bank financial sector operates in a weak regulatory environment with limited supervision. The organization responsible for regulating and supervising credit unions, the National Institute of Cooperatives, lacks the capacity to enforce compliance. Exchange houses are another non-bank sector where enforcement of compliance requirements remains limited, though following the implementation of additional supervisory measures two currency exchange houses were closed in 2011.

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

Although Paraguay has made overall progress to improve its AML/CFT regime, and Paraguay’s efforts and political commitment have been reflected in the issuance of proper legislation, the authorities’ broader coordination capacity and the strengthening of their institutional frameworks need work. Paraguayan authorities will have to demonstrate the effectiveness of the legislation in force and of several mechanisms put in place.

Peru

Peru is not a major regional financial center, nor is it an offshore financial center. Peru has the world’s highest potential production of pure cocaine and the second highest potential production of export quality cocaine. Money laundering is often used as a tool to integrate significant illegal earnings from drug trafficking into the Peruvian economy. As the Peruvian economy has grown, financial crimes have also increased. The most common methods of money laundering in Peru involve real estate sales, casinos, business investments, high interest loans, construction, export businesses, hotels, and restaurants. Other factors which facilitate money laundering include Peru’s cash-based and heavily dollarized economy, a large informal sector, pervasive corruption, and deficient regulatory supervision of designated non-financial businesses and professions (DNFBPs), such as the informal money exchange and wire transfer services. A large black market for pirated and smuggled goods exists. Corruption remains a serious concern.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,650 from January to September 2011

Number of CTRs received and time frame: 2.57 million from January to September 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 159 from 2002 to July of 2011

Convictions: 13 from 2009 to 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

In May 2011, with donor support, the Government of Peru (GOP) announced a “National Plan to Combat Money Laundering and Terrorist Financing” (National Plan). The GOP expressed its commitment to implement this National Plan and to close cooperation with the United States to fight money laundering and financial crimes.

Casinos are a serious money laundering concern. Much of this concern originates in the gaming industry’s oversight authority. The Ministry of Foreign Commerce and Tourism (MINCETUR) regulates casinos. Although MINCETUR is a participant in the National Plan, provides information to the FIU, and requires that casinos report suspicious transactions, oversight and enforcement of anti-money laundering regulations remain weak. Casinos do not generate currency transaction reports, and there are no restrictions on cash-to-cash, cash-to-check, or cash-to-wire transfer transactions in casinos.

Informal remittance businesses remain unsupervised and vulnerable to money laundering. These businesses include travel agencies and small wire transfer businesses. Peru should expand supervision and regulation of financial institutions and DNFBPs.

Peru’s bank secrecy law remains a primary obstacle to effective investigation and enforcement. A number of bills under review in the Peruvian Congress would, if enacted, lift bank secrecy provisions and allow the FIU to access all financial transactions in a timely fashion. The National Plan emphasizes the importance of adopting this legislation so the FIU would have greater access to information that is currently not available to it because of banking and tax secrecy laws.

Depending on the predicate offense, specialized prosecutors from the Public Ministry’s Coordinating Office on Organized Crime or Office on Drug Trafficking are responsible for dealing with the majority of money laundering cases. Out of the 1,650 STRs filed with the FIU from January to September 2011, 54 financial intelligence reports including 114 STRs were submitted to the Public Ministry. The prosecutorial system for financial crimes needs improvements in investigative and prosecutorial capacity, and presentation of investigative results to prosecutors, including writing investigative results in clearer language. Prosecutors claim they cannot understand the format or language of many of the FIU’s investigative results, and the 120-day time frame for prosecutors to investigate results is insufficient. Compounding the problem, many judges have not received sufficient training to manage the technical elements of money laundering cases, and banks often delay providing information to judges and prosecutors. Convictions tend to be for lesser offenses such as tax evasion, which is to prosecute successfully.

Although any form of collaboration with terrorism, including economic collaboration, is criminalized, the GOP has not established terrorist financing as a crime under Peruvian legislation in a manner that conforms to international standards. Peru does not have the ability to freeze terrorist assets without delay.

In April 2011, the U.S. Financial Crimes Enforcement Network suspended the exchange of information related to money laundering and terrorist financing with the FIU because of a leak of sensitive information the Peruvian press later published. The FIU and the Peruvian government are working to reestablish the relationship with FinCEN.

Philippines

The Republic of the Philippines is not a regional financial center. The Philippines continues to experience an increase in foreign organized criminal activity from China, Hong Kong, and Taiwan. Insurgency groups operating in the Philippines partially fund their activities through local crime, kidnapping for ransom and the trafficking of narcotics and arms, and engage in money laundering through ties to organized crime. The proceeds of corruption are also a source of laundered funds. Smuggling, including bulk cash smuggling, continues to be a major problem. The Philippines has a large expatriate community, and remittances are also channels for money laundering. There are free trade zones and four offshore banking units (OBUs). The Central Bank exercises regulatory supervision over OBUs and requires them to meet reporting provisions and other banking rules and regulations.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, non-bank institutions acting as quasi banks, and trust entities; insurance companies and pre-need companies; securities dealers, brokers/sales representatives, investment houses, mutual funds, and other entities managing securities as agent/consultant; foreign exchange dealers, money changers, remittance/transfer agents; pawnshops and entities dealing in valuable objects, currency, financial derivatives, cash substitutes, and similar monetary instruments

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 38,478 as of August 31, 2011

Number of CTRs received and time frame: 253,583,611 as of August 31, 2011

STR covered entities: Banks, non-bank institutions acting as quasi banks, trust entities; insurance companies and pre-need companies; securities dealers, brokers/sales representatives, investment houses, mutual funds, and other entities managing securities as agent/consultant; foreign exchange dealers, money changers, remittance/transfer agents; entities dealing in valuable objects, currency, financial derivatives, cash substitutes, and similar monetary instruments

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 50 as of August 31, 2011

Convictions: One as of August 31, 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

The Philippines is a member of the Asia/Pacific Group on Money Laundering, a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/The%20Philippines%20DAR%20-%20Final%20%20210809.pdf

Enforcement and implementation issues and comments:

Investigations by the financial intelligence unit (FIU) continue to be constrained by limited authority to access bank information. Except in instances of serious offenses such as kidnapping for ransom, drugs and terrorism-related activities, the FIU is required to secure a court order to examine bank deposit accounts related to unlawful activities enumerated in the Anti-Money Laundering Act. In addition, a Supreme Court ruling prevents ex parte inquiry into bank accounts. The FIU can, however, seek an ex parte freeze order from the Court of Appeals before seeking authorization to inquire into bank deposits. The FIU also must obtain a court order to freeze assets, including those of terrorists and terrorist organizations placed on the UN 1267 Sanctions Committee’s consolidated list and the lists of foreign governments. This requirement is inconsistent with the international standard, which calls for the preventative freezing of terrorist assets “without delay” from the time of designation. The Government of the Philippines (GOP) should enhance the FIU’s access to financial records, and ensure it can rapidly freeze terrorist assets. The Philippines has a Customs Mutual Assistance Agreement with US Customs.

Terrorist financing is not a stand-alone offense under Philippine law and therefore not a predicate crime under the Anti-Money Laundering Act. A person who finances the commission of terrorism may be prosecuted as a terrorist either as a principal by inducement pursuant to Article 17 of the Revised Penal Code or as an accomplice pursuant to Section 5 of the Human Security Act. However, this approach requires a terrorist act to have occurred and does not encompass general financial support to terrorist entities for other purposes (recruiting, training, social welfare projects, etc.). Limited human and financial resources also constrain tighter monitoring and enforcement. The GOP should criminalize terrorist financing as a stand-alone offense.

The Philippines has developed an action plan to address its strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies. The strategic deficiencies that The Philippines has committed to address include adequately criminalizing money laundering and terrorist financing; implementing adequate procedures to identify and freeze terrorist assets; enhancing financial transparency; and extending suspicious activity reporting requirements to additional entities. Legislation pending in the Philippine Congress would address cited deficiencies. The Philippine Government committed to pass this legislation that would address the deficiencies with respect to terrorist financing, freezing of terrorist assets and bank secrecy by December 2011.

Poland

Poland lies directly along one of the main routes used by narcotics traffickers and organized crime groups between the former Soviet Union republics and Western Europe. According to Polish government estimates, narcotics trafficking, organized crime activity, auto theft (declining), smuggling, extortion, counterfeiting, burglary, and other crimes generate criminal proceeds in the range of less than $2 billion each year. According to the Government of Poland (GOP), evasion of customs duties and taxes is the largest source of illegal income. Fuel smuggling, by which local companies and organized crime groups seek to avoid excise taxes by forging gasoline delivery documents, is a major source of laundered proceeds. Money laundering through trade in scrap metal and recyclable material is a growing trend, as is the increasing activity of organized crime in the financial services area (internet banking, credit cards and electronic systems for money transfers). It is also believed that some money laundered in Poland originates in Russia or other countries of the former Soviet Union. There are a declining number of cases involving entities located in tax haven countries. This is the result of agreements being signed on avoidance of double taxation (e.g., such an agreement with Cyprus will take effect in 2012).

The GOP estimates the gray economy, used primarily for tax evasion, may exceed 15% of Poland’s 2010 gross domestic product (GDP). The GOP estimates the black economy comprises only 1% of GDP. Poland is not considered a regional financial center, nor is it considered a particularly important international destination for money laundering. The GOP considers the nation’s banks, insurance companies, brokerage houses, and casinos to be the primary venues of money laundering.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, financial leasing and factoring companies, currency exchanges, investment companies and funds, the National Depository for Securities, gambling institutions, insurance companies, the National Bank of Poland, the Polish Post, foreign entities carrying out brokerage activities, electronic money institutions, credit unions, notaries, foundations, auctioneers, pawnshops, dealers of high value goods and precious metals and stones

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 19,279 from January to October 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 131 from January to June 2011

Convictions: Three from January to June 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The Finance Ministry maintains the effectiveness of actions against money laundering involving transfer of money to tax havens is improving with the increase in the number of cooperation agreements concluded with counterparts in such countries. There is also good and improving cooperation with international law enforcement agencies, while domestic efforts are focused on upgrading analytical tools and instruments.

Over the last few years, the GOP has gone to great lengths to strengthen and harmonize its anti-money laundering/counter-terrorist financing (AML/CFT) legal and regulatory tools and institutions with international standards. In 2011, cooperation among relevant authorities and institutions increased. However, work remains to ensure effective implementation. Poland should ensure promulgated regulations are fully effective. The GOP should promote additional capacity building in the private sector and continue to improve communication and coordination among the FIU and relevant law enforcement agencies.

Police and customs authorities, in particular, should continue to receive training on recognizing money laundering and terrorist financing methodologies, including trade-based money laundering and informal value transfer systems. A new technique used by money launderers in Poland is to put laundered money on a new variety of cash card that can be bought in stores. These cards are not registered to anyone, meaning they can be thrown away without leaving a trace. Criminals often use them to make transactions online. The FIU is looking for ways to upgrade analytical tools in order to be able to process data more comprehensively and efficiently.

Portugal

Portugal is an entry point for narcotics transiting into Europe. Officials of the Government of Portugal (GOP) indicate the majority of money laundered in Portugal is narcotics-related. Its long coastline, vast territorial waters and privileged relationships with countries in Latin America and Africa make it a gateway country for Latin American cocaine and a trans-shipment point for drugs coming from West Africa entering Europe. Portuguese authorities have also detected criminal funds being placed into the financial system from smuggled commodities, particularly tobacco products. Authorities also have noted significant criminal proceeds from corruption, traffic in works of art and cultural artifacts, extortion, embezzlement, tax offenses, and facilitating illegal immigration. Currency exchanges and real estate purchases are often used for laundering criminal proceeds.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,287 in 2010

Number of CTRs received and time frame: 9,336 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 80 in 2010

Convictions: 12 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Portugal is a member of the Financial Action Task Force (FATF). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/infobycountry/0,3380,en_32250379_32236963_1_70732_1_1_1,00.html

Enforcement and implementation issues and comments:

Although the general legal principle in Portugal is that only individuals are subject to criminal liability, there are exceptions. The criminal code, as revised in 2007, provides for criminal corporate liability for money laundering and certain other crimes.

Qatar

Qatar has become an increasingly important Gulf banking and financial services center. Despite the growth of the banking sector and increasing options for financial services, Qatar still has a largely cash economy. Qatar has had low rates of crime, although crime rates have increased in recent years. There are several trends which make Qatar increasingly vulnerable to money laundering, including: a large number of expatriate laborers who send remittances to their home countries; the growth in trade and the financial sector’s expansion; liberalization and growth in the real estate sector; uneven corporate oversight; and Iran’s efforts to bypass sanctions through Gulf economies.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 182 from December 2010 – November 15, 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three from May 2010 - December 2011

Convictions: One in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Qatar is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.menafatf.org/images/UploadFiles/QatarMER1.pdf

Enforcement and implementation issues and comments:

With its 2010 AML/CFT law and accompanying regulations, the Government of Qatar (GOQ) demonstrated its commitment to improving its AML/CFT regime. However, some weaknesses remain. Trafficking in persons is still not a predicate offense for money laundering. Qatar lacks a law mandating the declaration of bulk cash or bearer-negotiable instruments entering or transiting the country. Qatar should continue its efforts to effectively implement AML/CFT regulations and procedures and should be sure sufficient resources and training are provided to develop the necessary institutional capacity.

The Qatar Financial Information Unit has issued new guidelines on STR reporting obligations and engaged in outreach and workshops with financial institutions. Despite these efforts, the current rate of STR filings remains largely unchanged, while only one STR was disseminated to the Public Prosecutor’s Office (PPO) in 2010.

The AML/CFT law includes a provision which authorizes the National Anti-Terrorism Committee (NATC), located in the Ministry of Interior, to designate by resolution those who finance terrorism, terrorists and terrorist organizations, independently of lists forwarded to the GOQ pursuant to UNSCRs 1276 and 1373. No designations had yet been made and no terrorist financing STRs had been filed as of year-end 2011. In the spring of 2011, the National Anti-Money Laundering Committee adopted steps to identify, investigate, and refer for prosecution transactions involving entities included under UNSCR 1373. In October 2011, the NATC incorporated obligations pursuant to UNSCR 1373, which set forth the procedures for identifying and freezing terrorist assets for persons or organizations suspected of terror finance but not designated under UNSCR 1267. These procedures have been incorporated into the NATC’s area of oversight responsibilities and require the PPO to issue a freezing order when the NATC makes such a request.

Qatar should work to increase the rate of investigations and prosecutions by building capacity within its law enforcement authorities. Qatar should also pursue outreach and enforcement activities to ensure terrorist financing-related STR reporting occurs, and ensure the 1267/1373 freezing regime is effectively implemented.

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

Romania

Romania is not a regional financial center but the country’s geographical location makes it a natural transit country for trafficking in narcotics, stolen vehicles, persons and arms by transnational organized criminal elements. As a result, Romania is vulnerable to financial activities associated with such crimes, including money laundering. Tax fraud, fraudulent claims in consumer lending, and trans-border smuggling of counterfeit goods are additional types of financial crimes prevalent in Romania. Laundered money comes primarily from international crime syndicates who conduct their criminal activity in Romania. Commercial transactions have been the main method of money laundering, primarily through use of shell and offshore companies; this principally involves fraudulent claims for value added tax (VAT) reimbursement. In a few cases, funds obtained from tax fraud have been transferred to offshore jurisdictions.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks; non-banking financial institutions; financial investment service providers; insurers and reinsurers; securities brokers; private pension funds; accounting, consulting, audit and law firms; notaries; casinos; persons responsible for privatizations; non-governmental organizations; real estate brokers; and high value goods dealers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 3,237 from January to November 2011

Number of CTRs received and time frame: 37,332 from January to November 2011

STR covered entities: Banks; non-banking financial institutions; insurers and reinsurers; securities brokers; private pension funds; accounting, consulting, audit and law firms; notaries; and real estate brokers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 48 from January to October 2011

Convictions: Seven, all under appeal; timeframe unknown

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Romania is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.coe.int/t/dghl/monitoring/moneyval/Evaluations/round3/MONEYVAL%282008%2906Rep-ROM3_en.pdf

Enforcement and implementation issues and comments:

A review of STRs filed from January to October 2011 shows that 75% of all cases were related to tax fraud. During the same time period, only 16 STRs (less than 0.5% of the total filed) were related to narcotics trafficking; of the 16 reports, the financial intelligence unit (FIU) referred 11 to the General Prosecutor’s Office.

Romania’s FIU faces the continual challenge of limited financial, human, and technical resources. The Government of Romania (GOR) should continue its efforts to ensure non-bank financial institutions are adequately supervised. Additionally, the knowledge level of this sector should be increased regarding its reporting and record keeping responsibilities and the identification of suspicious transactions. The GOR should continue to improve communication between reporting and monitoring entities, as well as among prosecutors, investigators, and the FIU. In 2011, Romania's FIU continued to strengthen its relationships with other FIUs.

Romania has adopted the National Strategy for the Prevention and Combat of Money Laundering and Terrorism Financing. Decision 603/2011 establishes the technical procedures necessary for the FIU to supervise international sanctions implementation; and the FIU issued Order 95/2011, which defines the terms for authorizing financial transactions to and from sanctioned entities.

In order to improve the rate of money laundering prosecutions and convictions, Romania should not become overly reliant on STRs and other forms of financial intelligence but instead empower law enforcement and customs authorities to detect and investigate money laundering at borders and ports and the street level. Romania should improve implementation of existing procedures for the timely freezing, seizure and forfeiture of criminal or terrorist-related assets. Romania should continue to make progress in combating corruption in public procurement.

In 2011, a Romanian national was found guilty in a Washington, D.C. federal court of leading an international money laundering network for a transnational crime network based in Romania and other countries in Eastern Europe. The scheme involved the posting of fraudulent ads on eBay and other websites offering expensive vehicles and boats that the conspirators didn’t possess. Victims seeking to purchase the items were directed to wire money to an entity that appeared to be affiliated with eBay but wasn’t. Instead, the money was wired directly to bank accounts controlled by the conspirators in Hungary, Slovakia, Czech Republic and Poland. Similar cases were investigated in Romania.

Russia

The current Russian administration aspires to establish Moscow as one of the key international financial centers. However, despite significant progress in improving the legal and enforcement framework, the prevalence of money laundering (ML) in Russia, where there is a high level of organized crime and corruption, stands out as one of the major obstacles to this goal. Domestic sources of laundered funds include organized crime, evasion of tax and customs duties, fraud, public corruption, and smuggling operations. Criminal elements from Russia and neighboring countries continue to use Russia’s financial system and foreign legal entities to launder money. Criminals invest and launder their proceeds in securities instruments, real estate, and luxury consumer goods. Despite making progress in combating financial crimes, Russia remains vulnerable to such activities. Russia’s risk factors include the many large-scale financial transactions associated with its vast natural resources; the state’s major role in the economy; the country’s porous borders and its role as a geographic gateway between Europe and Asia; and chronic under-funding and lack of capacity of regulatory and law enforcement agencies. These factors help create an environment in which corruption and financial crimes flourish.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: Yes

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,508,718 in the first half of 2011

Number of CTRs received and time frame: 1,242,459 in the first half of 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 141 in the first half of 2011

Convictions: 113 in the first half of 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Russia is a member of the Financial Action Task Force (FATF) and two FATF-style regional bodies: the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) and the Eurasian Group on Combating Money Laundering and the Financing of Terrorism (EAG). Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/31/6/41415981.pdf?bcsi_scan_E6B5D3DA0AAC65B7=0&bcsi_scan_filename=41415981.pdf

Enforcement and implementation issues and comments:

Through aggressive enactment and implementation of comprehensive anti-money laundering (AML) legislation, Russia has established a legal and enforcement framework to deal with money laundering and terrorist financing. In 2010, Russia adopted amendments to expand AML coverage to subsidiary branches, representative offices, and affiliates of financial institutions located outside the Russian Federation; make microfinance and short-term loans, which have grown significantly in Russia, subject to AML laws; and clarify definitions critical to enforcement. Amendments to the Code of Administrative Infringements improve regulatory oversight related to AML legislation and broaden the authority of Rosfinmonitoring, Russia’s financial intelligence unit (FIU), and the Central Bank of Russia to conduct investigations of ML violations. AML law now makes it clear that identification is defined as the entirety of measures whereby the information about clients, their representatives and beneficiaries is established and the reliability of such information is confirmed. Order 59, issued by Rosfinmonitoring on February 17, 2011, requires customer due diligence where there are doubts about the veracity of previous identification.

While the Russian Federation has made steady progress overall in its AML/CFT implementation, some important issues remain. Russia needs to make sure that obligated entities are able to report every type of suspicious activity related to money laundering. Though the overall STR regime is working well in practice, presently there is no legal basis for reporting attempted occasional transactions. Furthermore, implementing regulations have not been issued for critical components of the 2010 amendments, such as monitoring of affiliates’ operations outside the Russian Federation. For years Russian banks did not properly understand the concept of beneficial owner, partly due to a lack of clarity in the law. While the term has now been better defined, private sector entities are still incorporating clarified definitions of beneficial owner into their AML practices.

While most international standards are applied in Russian legislation, several important discrepancies remain between the standards of international and local domestic banks. Some identification requirements are absent. Also, Russian AML law lacks more specific requirements pertaining to sanctions screening (like frequency of updates, screening of fields of transactions, transliterations, requirement for certain logic, etc). In addition, banks still are not able to refuse to carry out a transaction or to open an account when they have strong AML concerns regarding the transaction or prospective clients. Further attempts should be made to bring the AML efforts of all Russian banks to a more sophisticated level, including continued enhancement of the compliance training and certification process.

Current Russian law does not include insider trading as a predicate offense to money laundering. To address this deficiency, Law 224-FZ was adopted by the Russian Parliament in July 2010. Included in this law is an amendment to the Criminal Code to criminalize the deliberate use of insider information when carrying out transactions and giving recommendations to third persons; however, this provision will not take effect until 2014.

Russia also has made some recent progress regarding new technologies and non-face-to-face financial transactions. On June 27, 2011, Federal Laws No. 161-FZ and No. 162-FZ “On the National Payment System” and its amendments were adopted, which among other issues address the regulation of new technologies used by financial institutions. Transactions under 15,000 rubles (approximately $500) are not subject to client identification requirements. Thus non-bank payment service providers can act as payment agents or bank payment agents and are exempt from AML/CFT identification requirements provided the payment amount is 15,000 rubles (approximately $500) or less. In other words, money can be remitted under this amount without opening a bank account, and non-face-to-face electronic payment facilities are permitted, provided the monthly sum total of remittances does not exceed 40,000 rubles (approximately $1,650). According to Rosfinmonitoring Order No. 103, which applies only to non-credit institutions, such client transactions executed remotely by payment service providers, as well as the issuance of orders to execute transactions requiring no personal contact with an institution, constitute a basis for submitting an STR to the FIU.

Although Russia continues to establish and develop anti-corruption measures, corruption continues to be a problem. The Government of Russia should continue to aggressively pursue corruption; similarly, it should continue to pursue increased transparency in the financial sector and ensure that domestic PEPs are monitored with the same scrutiny as foreign PEPs.

Russia hosts and funds the Secretariat of the EAG, and through this effort has contributed to improving the region’s AML/CFT capacity. Russia should continue to play a leadership role through sustained involvement in regional and international bodies focusing on AML regime implementation.

Rwanda

Rwanda is not a major or offshore financial center. The Rwandan financial system remains relatively unsophisticated with limited use of electronic funds transfers or credit card transactions. Fraud, smuggling, and trafficking in persons are areas of concern for money laundering.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Two in 2010

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Rwanda’s Law 48/2008 “Prevention and Suppression of Money Laundering and Financing of Terrorism” published in March 2009, establishes a comprehensive legislative framework. With the establishment of the Financial Investigations Unit in March 2011, the legislation has been fully implemented. However, in general, relevant agencies of the government of Rwanda need significant additional training, resources and technical expertise to effectively investigate and enforce laws concerning money laundering and terrorist financing.

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

Rwanda should provide protection for entities and their employees who file STRs and should also criminalize tipping off.

San Marino

In the last several years, the Republic of San Marino has been aggressively combating the image of a fiscal haven. It has taken steps to improve its anti-money laundering regime and increase the transparency of its financial sector.

While there is no significant market for illegal or smuggled goods in San Marino, money laundering occurs in both the formal and non-bank financial sectors, unrelated to narcotics-trafficking. Money laundering is mainly trade-based and is perpetrated by foreigners to avoid higher taxes in their countries. However, the country has recently adopted stricter monitoring regulations and there appears to be a decrease overall in financial crimes. There are no free trade zones in San Marino.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 261 in 2011

Number of CTRs received and time frame: None

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

San Marino is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here:

http://www.coe.int/t/dghl/monitoring/moneyval/Countries/San%20Marino_en.asp

Enforcement and implementation issues and comments:

In the past, the lack of appropriate legislation and resources to enforce AML regulations made San Marino vulnerable to money laundering, especially from tax evasion and fraudulent financial activities such as false invoicing by Italian individuals and companies. In recent years, however, the country has made dramatic improvements to meet international financial standards, both by updating legislation and signing international agreements.

In 2011 San Marino signed a Memorandum of Understanding with the U.S. Financial Crimes Enforcement Network (FinCEN) for cooperation in the exchange of information related to money laundering and terrorist financing and also arranged for the sharing of terrorism screening information with the U.S. Terrorism Screening Center. San Marino also has signed Tax Information Exchange Agreements with 36 countries, including all major European Union member states.

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

Sao Tome & Principe

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

STP’s lack of progress in establishing an anti-money laundering/counter-terrorist financing (AML/CFT) regime results in significant vulnerability. Sao Tome and Principe is included in the Financial Action Task Force’s (FATF) October 2011 Public Statement because of this continuing lack of progress in correcting strategic deficiencies.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: The FIU (Financial Intelligence Unit), the Central Bank, commercial banks and the Public Ministry

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: None

Number of CTRs received and time frame: None

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

Sao Tome is an observer of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body. Sao Tome is currently in the process of becoming a GIABA member and has not yet been evaluated.

Enforcement and implementation issues and comments:

The Government of Sao Tome and Principe (GOSTP) amended its anti-money laundering law in 2010. These changes were primarily directed toward meeting international standards and criminalizing terrorism financing, but they do not provide a legal framework that comports with international standards. As 2011 closed, the National Assembly discussed the introduction of a revised criminal code to address additional predicate offenses. However, neither the National Assembly nor the President had given official approval by year end. The Minister of Justice has been working directly with the National Assembly in order to get the new criminal code approved.

While STP is working to address the remaining deficiencies, full implementation of STP’s action plan to correct shortcomings will be a challenge, given the country’s scarce resources and capacity within the government, national security forces, and the judiciary. Implementation is dependent on the country’s fiscal situation. STP depends on donors for 93% of its budget.

The AML Law states all STRs must be sent to the Public Prosecutor. The GOSTP is working to change the law to require STRs to go directly to the newly-created FIU, which lacks resources and capacity and is not yet fully operational. The government is committed to providing the FIU with what it needs to operate effectively. The FIU conducted an awareness training session for financial and non-financial institutions in October 2011.

Sao Tome and Principe lacks an effective AML/CFT regime on almost all sides. Its legal framework does not meet the international standards, and its regulatory and supervisory regime is lacking in capacity as well as coverage – not all covered entities have a regulator and there are no effective sanctions for lack of compliance with existing requirements. The GOSTP is working to address these deficiencies.

Saudi Arabia

The Kingdom of Saudi Arabia (KSA) is a growing financial center in the Gulf Region. Money laundering and terrorist financing are known to originate from Saudi criminal enterprises, private individuals, and Saudi-based charities. Based on media reports and discussions with Saudi officials, there is no indication of significant narcotics-related money laundering. Saudi bulk cash smuggling from individual donors and charities has reportedly been a major source of financing to extremist and terrorist groups over the past 25 years. With the advent of tighter bank regulations, funds are reportedly collected and illicitly transferred in cash, often via pilgrims performing Hajj and Umrah. Despite serious and effective efforts to counter the funding of terrorism originating from within its borders, entities in Saudi Arabia likely continue to serve as an important source of cash flowing to Sunni-based extremist groups. Saudi officials acknowledge difficulty in following the money trail with regard to illicit finance due to the preference for cash transactions in the country and the regulatory challenge posed by hawalas. The government does not regularly publish official criminal statistics.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, money exchangers, real estate agents, dealers in precious metals and stones, lawyers, and accountants

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 1,368 in 2010

Number of CTRs received and time frame: Not publicly available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 237 (2004 – 2008)

Convictions: 162 (2004 – 2008)

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

The Kingdom of Saudi Arabia is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/47/59/45727237.pdf

Enforcement and implementation issues and comments:

Money-service businesses operating outside of banks and licensed money changers are illegal in Saudi Arabia. To help counteract the appeal of these types of unlicensed money services, particularly to many of the approximately eight million expatriates living in Saudi Arabia, Saudi banks have taken the initiative to create fast, efficient, high-quality, and cost-effective fund-transfer systems that have proven capable of attracting customers accustomed to using other, non-sanctioned methods.

Saudi Arabia's Council of Senior Scholars (the Kingdom's highest judicial body and equivalent to the U.S. Supreme Court) issued an edict (fatwa) declaring that financing terrorism, knowingly or unknowingly, was illegal and punishable under Islamic law. Nevertheless, Saudi Arabia should enact a full statutory criminalization of terrorist financing and structure it separately from the money-laundering offense to explicitly demonstrate that it has been criminalized.

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

Saudi Arabia’s capacity to monitor compliance with and enforce its banking rules has improved and helped to stem the flow of illicit funds through Saudi financial institutions. The Saudis’ ability to stop bulk cash smuggling has also improved. However, cash illicitly collected and transferred via pilgrims on Hajj or Umrah continues to flow.

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

Senegal

A regional financial center with a largely cash-based economy, Senegal is vulnerable to money laundering. One estimate puts the amount of proceeds laundered annually at 200 billion CFA (approximately $390 million). Various reports indicate Senegal is vulnerable to the activities of organized criminal activity, including money laundering and drug trafficking; but public officials, including CEOs and directors of public entities, are also reportedly engaged in money laundering. The lack of understanding and enforcement of relevant laws constitute an attraction for illegal proceeds. Reportedly, most money laundering involves domestically generated proceeds from corruption and embezzlement. There is also evidence of increasing criminal activity by foreigners, such as narcotics trafficking by Latin American groups that consider Senegal a hub for exporting drugs to Europe. Also of concern are organized crime figures from a growing West Africa narcotics trade that launder and invest their personal and their organizations’ proceeds.

Dakar’s active real estate market is largely financed by cash, and the construction industry appears to be a popular vehicle for criminals’ illicit funds. Property ownership and transfer are not transparent. The continued building boom and high property prices suggest there is an increasing amount of funds with uncertain origin circulating in Senegal. The number of real estate and construction agents in Senegal continues to increase and prices continue to skyrocket. The increasing numbers of used imported vehicles suggest the existence of both value transfer via trade goods and illicit cash couriers. Trade-based money laundering is centered in the region of Touba, a largely autonomous and unregulated free trade zone under the jurisdiction of the Mouride religious authority. Touba reportedly receives between $550 and $800 million per year in funds repatriated by networks of Senegalese traders and vendors abroad. The presence of hawala and other money and value transfer systems also presents money laundering vulnerabilities for Senegal. Other areas of concern include the transportation of cash, gold and gems through Senegal’s airport and across its porous borders.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 83 in 2010

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 45 in 2010

Convictions: Three in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Senegal is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force-style regional body. Its most recent mutual evaluation report can be found here:http://www.giaba.org/index.php?type=c&id=37&mod=2&men=3

Enforcement and implementation issues and comments:

The Senegalese Government has taken steps to prevent financial crimes. With a 17% increase in STR reporting and a fivefold increase in money laundering prosecutions between 2009 and 2010, Senegal’s AML/CFT regime continues to tighten.

Unfortunately, the Senegalese police have limited logistics capabilities. Senegal’s financial intelligence unit, CENTIF, has worked with law enforcement and Ministry of Justice authorities to coordinate roles and responsibilities and to develop a deeper interagency understanding of terrorist financing. The sums of money recorded in the 2010 STRs equals CFA 1,119 billion (approximately $218 billion) or 17.6% of GDP. Fifteen cases were referred to judicial authorities in 2010 as opposed to 14 in 2009. Approximately 83% of STRs were generated by the formal financial sector – 75% came from banks.

On March 3, 2011, Senegal adopted an amendment initiated by President Wade to Article 29 of the Law of February 9, 2004 on the Fight against Money Laundering. The amendment provides prosecutorial discretion to discharge the obligation to open a criminal case following a CENTIF-disseminated report. According to critics, this law allows a level of protection for white collar offenders and dignitaries targeted by CENTIF, and violates the West African Economic and Monetary Union (WAEMU) legislation required to be in force among all members.

The Government of Senegal (GOS) should continue to work with its partners in GIABA, the WAEMU and the Economic Community of West African States (ECOWAS) to develop a comprehensive AML/CFT regime. Senegal should continue to battle corruption and increase the frequency, transparency, and effectiveness of financial reviews and audits of financial institutions. The GOS should establish better uniform control of the cross-border flow of currency and other bearer-negotiable instruments for both residents and nonresidents. Senegalese law enforcement and customs authorities need to develop their expertise in identifying and investigating both traditional money laundering and money laundering within the informal economy as well as value transfer via trade goods. CENTIF should perform more outreach to obligated non-bank financial institutions to ensure a better understanding of the content and filing requirements for STRs. CENTIF, law enforcement, and Ministry of Justice authorities should continue to work together to coordinate roles and responsibilities. The GOS should work with the international community to examine the new Article 29 amendment, and roll it back if it is determined to be in violation of the WAEMU legislation and/or presents a vulnerability to the AML/CFT regime.

Serbia

Serbia is not considered a regional financial center. However, Serbia is situated on a major trade corridor known as the “Balkan route,” and commonly confronts narcotics trafficking; smuggling of persons, weapons and pirated goods; money laundering; and other criminal activities. Corruption and organized crime also continue to be significant problems in Serbia.

Serbia has long been and continues to be a black market for smuggled goods. Illegal proceeds are generated from drug trafficking, corruption, tax evasion and organized crime, as well as other types of crimes. Proceeds from illegal activities are invested in all forms of real estate and into sports, particularly football (soccer) club operations. Some gray money flows to Cyprus, reportedly as payment for goods and services; although GOS officials believe these monetary flows have become less significant over the past few years. Banks in Macedonia, Hungary, Switzerland, Austria and China continue to be destinations for laundered funds. Trade-based transactions, in the form of over- and under-invoicing, are a commonly used method for laundering money. There are reports that purchases of some private and state-owned companies have been linked to money laundering activities.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks; licensed bureaux de change and money transfer services; investment fund management companies; voluntary pension fund management companies; guarantors and financial leasing and factoring providers; insurance companies, brokers, and agencies, and insurance agents with a license to perform life insurance business; persons dealing with postal communications; broker-dealer companies; casinos; organizers of games of chance operated on the Internet, by telephone, or using telecommunication networks; auditing companies; licensed auditors, accountants and tax advisors; real estate and credit intermediaries; and lawyers

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,257 from January 1 to October 27, 2011

Number of CTRs received and time frame: 179,516 from January 1 to October 27, 2011

STR covered entities: Banks; licensed bureaux de change and money transfer services; investment fund management companies; voluntary pension fund management companies; guarantors and financial leasing and factoring providers; insurance companies, brokers, and agencies, and insurance agents with a license to perform life insurance business; persons dealing with postal communications; broker-dealer companies; casinos; organizers of games of chance operated on the Internet, by telephone, or using telecommunication networks; auditing companies; licensed auditors, accountants and tax advisors; real estate and credit intermediaries; and lawyers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: As of May 2011, prosecutions were pending against 255 individuals

Convictions: 19 as of May 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The GOS has taken a number of steps to improve its anti-money laundering/counter-terrorist financing (AML/CFT) regime over the past year. In May 2011, the Law on Capital Markets came into effect. The law adds market manipulation and insider trading as money laundering predicate offenses.

Serbia has yet to adopt legislation governing administrative freezing of assets in accordance with international standards. The Serbian government continues to insist the major problem in freezing terrorist assets without delay is jurisdictional (i.e., who would legally seize the assets). In practice, however, there is good cooperation among the Serbian Administration for the Prevention of Money Laundering (APML), the prosecutor’s office, and police. This informal cooperation is effective, and APML officials anticipate that procedures formalizing the cooperative relationships will be codified in a draft law slated to be proposed in late 2011. This draft law has been in process for approximately 18 months, and it is unclear when, or if, this law will be adopted and implemented.

In late 2010, the AML/CFT law was amended to add wire transfer provisions to mandate that payer information accompany transfers of funds. Additionally, the amendment sets forth provisions for the licensing of compliance officers. The APML now holds organized exams for compliance officer certification and conducts training for compliance officers working in banks, insurance companies, brokers and dealers. In early 2012, the law is expected to be revised to expand coverage of the law to notaries. Although tipping off is prohibited, the AML/CFT law does not provide for any sanctions when the rule is breached by management or employees of obligors.

In cooperation with international partners the APML is working to improve its efficiency and operations, help reporting entities improve STRs, and improve the quality and quantity of ML indictments and convictions. In 2011, the APML began to utilize electronic exchanges of documents with obligors to enhance both security and efficiency. The APML is also studying the non-profit sector to analyze the legal framework. Additionally, with partner assistance, the APML, the National Bank of Serbia (NBS), the Securities Commission and other stakeholders are working to develop a national risk assessment for Serbia, as well as enhance the stakeholders’ capabilities in terms of legislation, operations and capacities.

The numbers of prosecutions and convictions are for unknown time frames because Serbian authorities are unable to provide clear and precise statistics due to bureaucratic issues and divisions of responsibility among the Ministries of Interior and Justice, and APML, which all cover various aspects of ML issues.

The GOS and U.S. Government are currently negotiating an extradition treaty. The GOS maintains bilateral agreements on mutual legal assistance with 31 countries. The FIU has signed information sharing agreements with 15 countries.

Serbia should continue to pursue measures to improve supervision of Serbian securities firms and designated non-financial businesses and professions, and to provide these institutions with sufficient guidance to ensure they understand and are able to comply with their responsibilities under the AML/CFT law. The NBS and other supervisory bodies, as well as investigative agencies, the FIU, prosecutors, and judges require additional resources to build their professional capabilities. Law enforcement and prosecutors also need to make increased use of criminal money laundering charges.

Seychelles

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

Seychelles is a consumer country for narcotics. To diversify its economy beyond tourism and fisheries, the Government of Seychelles (GOS) developed an offshore financial sector to increase foreign exchange earnings. Seychelles actively markets itself as an offshore financial and business center that allows the registration of nonresident business companies. These activities make the country vulnerable to money laundering. In its 2007-2017 strategic plan, the GOS proposes to facilitate the further development of the financial services sector through active promotion of Seychelles as an offshore jurisdiction, with emphasis on international business companies (IBCs), mutual funds, special license companies, insurance companies, and private foundations. The Seychelles International Business Authority, which regulates the offshore financial sector, provides training in such areas as company and trust administration, international tax planning, compliance and anti-money laundering. Seychelles also is seeking to establish a securities exchange to further diversify its product offerings in the financial sector. As of 2008, there were over 30,000 IBCs registered in the country. At the time, the Seychelles offshore sector was estimated to be generating over $25 million annually.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 43 from January to 0ctober 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None from January to October 2011

Convictions: None from January to October 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

Sierra Leone

Sierra Leone is not a regional financial center, but loose oversight of financial institutions, weak regulations, pervasive corruption and porous borders contribute to an atmosphere conducive to money laundering. Although drug smuggling is a problem in Sierra Leone, and Sierra Leone is a potentially attractive trans-shipment point for illegal drugs, there is reportedly little evidence that drug smuggling is a significant source of laundered money. Rather, money laundering activities are pervasive primarily in the diamond sector, in which diamonds themselves are often laundered. Due to the small-scale artisanal nature of the diamond mining industry, criminal activity is perpetrated primarily by individual domestic entities, as opposed to transnational cartels. Smuggling of goods, primarily pharmaceuticals, foodstuffs, gold, and diamonds, is rampant. Most transactions, money exchanges, and remittances are very informal and are, therefore, also vulnerable to money laundering. There is no indication money laundering activity in Sierra Leone is tied to terrorist financing.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: nO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Nine from January - November 2010

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Sierra Leone is a member of the Inter Governmental Action Group against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.giaba.org/index.php?type=c&id=24&mod=2&men=1#

Enforcement and implementation issues and comments:

Although the Government of Sierra Leone (GOSL) has made progress by passing the AML/CFT bill that had been stalled since April 2009, the GOSL needs to take action to ensure the legislation is enacted and its AML/CFT regime effectively implemented. In November 2011, the lack of progress prompted GIABA to publish a statement regarding Sierra Leone’s failure to progress.

At the end of 2011, the revised Anti-Money Laundering and Combating of Financing of Terrorism Act (AMLCFTA) was pending. Once enacted, the AMLCFTA will provide that any person who leaves or arrives in Sierra Leone with more than 30 million leones (approx. $6900), or equivalent, in unreported foreign currency or negotiable bearer instruments will be subject to fines. It also addresses the freezing of proceeds of a crime, the power to identify and trace tainted property, voidable transfers, and enhancement of suspicious activity information sharing.

The Bank of Sierra Leone is looking to improve its ability to use financial forensics and intelligence to monitor PEPs and other “sensitive” people, as well as assist in determining suspicious transactions. The Bank of Sierra Leone Act, 2011 defines the powers of the financial intelligence unit (FIU). While the FIU may request and obtain information it considers relevant to an unlawful activity, money laundering activities, or financing of terrorism, and has the authority to disclose any report to an institution or agency of a foreign state or an international organization if relevant to investigating or prosecuting a money laundering or terrorist financing offense, it lacks the capacity to monitor and regulate financial institution operations effectively. There is a low rate of compliance throughout the financial sector, particularly the recently licensed commercial banks headquartered in Nigeria. The Transnational Organized Crime Unit (TOCU) and the Attorney General’s Office investigate reports made by the FIU. TOCU is authorized to undertake complete investigations and effect arrests, but general policing ability and understanding of the use of financial investigation and intelligence is still low. The Sierra Leone Police, National Revenue Authority, and Anti-Corruption Commission have very limited abilities to investigate money laundering crimes. The Attorney General’s Office has limited investigative and arrest powers in its mandate. Limited resources and lack of training hamper law enforcement efforts in all arenas, including prosecutions.

The GOSL should criminalize terrorist financing, continue its efforts to counter smuggling, tighten its borders, and regulate sectors which are vulnerable to money laundering. The GOSL should ratify the UN Convention against Transnational Organized Crime.

Singapore

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

As of December 5, 2011, there were 39 offshore banks in operation, all foreign-owned. Singapore is a center for offshore private banking and asset management. Assets under management in Singapore total approximately S$1.4 trillion (approximately $1.09 trillion). As of June 2010, Singapore had at least $300 billion in foreign funds under management. Singapore does not permit shell banks or anonymous accounts.

Singapore has nine free trade zones (FTZs), six for seaborne cargo and three for airfreight, regulated under the Free Trade Zone Act. The FTZs may be used for storage, repackaging of import and export cargo, assembly and other manufacturing activities approved by the Director General of Customs in conjunction with the Ministry of Finance.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 11,934 in 2010

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 14 in 2010

Convictions: 18 in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

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

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

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

Slovak Republic

Slovakia is a transit and destination country for counterfeit and smuggled goods, stolen autos, value-added tax (VAT) fraud, and trafficking in persons, weapons and illegal drugs. Criminal activity is characterized by a high level of domestic and foreign organized crime, mainly from eastern and south-eastern Europe. A number of the same groups are also involved in laundering funds raised from these criminal activities. Trade-based money laundering and possible terrorist financing also occur in Slovakia. Funds from public corruption are not seen as a significant part of money laundering/terrorist financing. There are no offshore or free trade zones in Slovakia. Slovak authorities consider the transfer of undeclared cash across the borders to be a money laundering vulnerability. No alternative remittance systems are known to be widely used in Slovakia.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 2,379 as of November 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 35 in 2010

Convictions: Six in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdiction: YES

The Slovak Republic is a member of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation report can be found here:

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

Enforcement and implementation issues and comments:

Act No. 101/2010 Coll. on the Proof of Origin of Property, effective January 1, 2011, introduces the tool of non-conviction based confiscation within civil procedures, and stipulates conditions and procedures for public authorities in forfeiture of property.

In December 2011, amendment to Act No. 492/2009 Coll. on payment systems introduces several changes to AML/CFT Law No. 297/2008 Coll. on the Prevention of Legalization of Proceeds of Criminal Activity and Terrorist Financing, including specification and expansion of reporting entities. Although suspicious transaction reporting relating to terrorist financing is supported in current legislation, it is only mandated at a minimum level. The current definition needs to be expanded and further specified in legislation. In addition, it appears that law enforcement efforts are not sufficiently focused on serious money laundering offenses, as recent cases demonstrate a considerable focus on stolen car investigations. Rather, there is little evidence showing that money laundering investigations are being used to prosecute organized crime, which is a significant problem in Slovakia.

Slovakia should also provide capacity enhancing materials to non-financial businesses and professions and improve supervision of these entities to ensure they meet their obligations.

Slovenia

Slovenia is not a major narcotics producer, but is a transit country for drugs moving via the Balkans to Western Europe. The Government of Slovenia (GOS), aware of Slovenia’s geographic attractiveness as a potential transit country for drug smugglers, continues to pursue active counter-narcotics policies. Other predicate offenses of concern include business and tax fraud.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 233 in 2010

Number of CTRs received and time frame: 15,400 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: 55 in 2010

Convictions: None in 2010

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

The bases of Slovenia’s anti-money laundering measures are the Slovenian Criminal Code, the Act on the Prevention of Money Laundering and Financing of Terrorism and sector-specific laws. There are no major deficiencies in key preventive standards. Slovenia has systems and procedures in place to facilitate both national and international cooperation. Weak supervision and lack of guidance to certain non-banking sectors could have an impact on the effectiveness of the anti-money laundering/counter-terrorist finance regime.

Solomon Islands

Solomon Islands (SI) is not considered a major financial center. It has a relatively stable banking system closely integrated with the financial systems of Australia and New Zealand. Smuggling, environmental crimes, public corruption, and the proliferation of counterfeit goods are problems in SI. According to a risk assessment conducted by the Royal Solomon Islands Financial Intelligence Unit, money laundering is most often associated with the following crimes in order of frequency of the crime: corruption, fraud, logging, fishing, forgery, sex trade, revenue evasion, drugs, organized crime and counterfeit currency. SI is developing its anti-money laundering/counter-terrorist financing (AML/CFT) countermeasures.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, credit or lending services, currency exchanges, remittance services, insurers and insurance intermediaries, securities dealers, futures brokers, and trustees and managers of unit trusts

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

STR covered entities: Banks, credit or lending services, currency exchanges, remittance services, insurers and insurance intermediaries, securities dealers, futures brokers, and trustees and managers of unit trusts

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

http://www.apgml.org/documents/docs/17/SOLOMON%20ISLANDS%20DAR_FINAL.pdf

Enforcement and implementation issues and comments:

The Government of the Solomon Islands should continue its work to develop procedures to conform to international AML/CFT standards. The SI should become party to the UN Convention against Transnational Organized Crime and the 1988 UN Drug Convention.

Somalia

Somalia has essentially been without a functioning central government since 1991 and continues to be viewed as the world’s quintessential failed state. The Transitional Federal Government (TFG) now largely controls almost all of the country’s capital as well as pockets of some regions. Many ministries exist in name only or have non-functioning, mostly unpaid staff. Due to its lack of a public regulatory system and its inaccessibility, little is known about money laundering in Somalia. No anti-money laundering/counter-terrorist financing (AML/CFT) laws exist. There is some evidence that piracy proceeds from Somalia make their way to Dubai and Nairobi. Piracy ransoms, much of which reportedly remains as cash, are delivered through cash drops to pirates off Somalia’s coast. Anecdotal reports indicate ransom payments finance real estate, luxury goods and businesses.

Public corruption is rampant and significantly facilitates money laundering. For example, some government officials in Somalia’s northern region of Puntland are reportedly benefiting from pirate ransoms. They may facilitate ransom laundering or the transfer of ransom money to neighboring countries or globally.

The financial system in Somalia operates almost completely outside of government oversight, either on the black market or via money/value transfer services (MVTS), particularly hawalas. Smuggling is rampant. Somalia has one of the longest land borders as well as the longest coastline in Africa. The TFG and local officials are unable to maintain control over these points of entry, and goods flow in and out of Somalia unchecked.

Somalia is also a center for terrorist financing. Al-Shabaab, a U.S.-designated international terrorist organization, maintains headquarters in the country. Its insurgency against the TFG is financed externally, including by the global Somali diaspora and business community. Some funds enter as cash, but a significant portion reportedly passes through hawalas and other MVTS. There are also occasional reports of U.S. dollar counterfeiting in al-Shabaab-controlled areas as well as reports of al-Shabaab extorting ransom payments from pirates. Al-Shabaab operations are also financed through extortion schemes targeting private citizens, local businesses, seaports under the group’s control, and diversion of development and humanitarian assistance funds.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: Not applicable civilly: Not applicable

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Not applicable

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not applicable

Number of CTRs received and time frame: Not applicable

STR covered entities: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

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

Enforcement and implementation issues and comments:

The legal system in Somalia is composed of traditional courts (“xeer”), a variety of local and regional court systems as well as a system with both civilian and military courts under the TFG. There are no AML/CFT laws, and the financial regulations that do exist are unenforceable given the lack of policing and investigative capacity and Somalia’s insecurity.

Somalia essentially lacks a formal financial sector, and there are no functioning government regulatory agencies. Consequently, formal financial institutions and the MVTS sector in Somalia are not subject to KYC programs under Somali law. There are virtually no financial record keeping requirements enforced by the Somali government, nor are there suspicious transaction or large currency transaction reporting requirements. International standards, to the extent they exist, are self-imposed in Somalia by hawalas and other financial entities that must meet international rules and regulations to do business elsewhere in the world.

The Ministry of Finance and Treasury lacks the capacity, including financial, technical and human resources, to investigate money laundering and terrorist financing. There were no arrests for money laundering in 2011. In one 2010 case, a suspected terrorist financier bringing bulk cash into Somalia was interdicted; in another, incoming counterfeit U.S. dollars were seized at Mogadishu International Airport. It is not clear what happened to the perpetrators; either indefinite detentions or quick releases are endemic, given Somalia’s inadequate judicial system.

Somalia has no laws requiring forfeiture of criminal proceeds or terrorist funds. No government entities are charged with, or capable of tracking, seizing, or freezing illegal assets. Somali businesses do not coordinate with the government with regard to illegal transactions. The TFG has called on regional governments to help stem the flow of terrorist financing, including requesting local governments to trace, freeze, and seize funds and finances related to and in support of al-Shabaab.

Somalia does not have any mechanisms in place under which to share information related to financial crimes, money laundering, and terrorist financing with the U.S. or with other developed countries. The lack of AML/CFT laws, regulatory bodies, and enforcement mechanisms to counter money laundering and financial crimes is due to a lack of capacity within the TFG, and not the lack of political will. Obstacles to enacting and implementing AML/CFT laws include the TFG’s limited territorial control, threats to the government by the al-Shabaab insurgency, lack of capacity at all levels of government, and insufficient policing and investigative capacity.

South Africa

South Africa’s position as the major financial center in the region, its sophisticated banking and financial sector, and its large, cash-based market make it vulnerable to exploitation by transnational and domestic crime syndicates. The largest source of laundered funds in the country is proceeds from the narcotics trade. Fraud, theft, racketeering, corruption, currency speculation, credit card skimming, poaching, theft of precious metals and minerals, human trafficking, stolen cars, and smuggling are also sources of laundered funds. Many criminal organizations are also involved in legitimate business operations. There is a significant black market for smuggled and stolen goods. In addition to criminal activity by South African nationals, observers note criminal activity by Nigerian, Pakistani, Andean and Indian drug traffickers, Chinese triads, Taiwanese groups, Bulgarian credit card skimmers, Lebanese trading syndicates, and the Russian mafia.

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

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 36,990 - April 1, 2010 - March 31, 2011

Number of CTRs received and time frame: 4,227,253 - October 4, 2010 - October 4, 2011

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

South Africa’s AML/CFT regime has a solid legal and regulatory framework. However, there are gaps in enforcement of the reporting requirements, due in part to South Africa’s large informal and cash-based economy. Over recent years, South Africa has recognized the vulnerability posed by this, and has embarked upon financial inclusion initiatives.

South Africa’s FIU, known as the Financial Intelligence Centre (FIC), is a capable authority working to enhance its effectiveness by providing high-quality, timely and actionable financial intelligence rather than larger volumes of lower-quality intelligence, much of which cannot be acted upon. During 2010/11, the Financial Intelligence Centre (FIC) identified various direct connections between criminal conduct and financial benefit, and froze just over R6.7 million (approx. $844,380) in bank accounts.

The capacity of South Africa’s law enforcement authorities needs improvement. While money laundering is a specific offense under the South African penal code, it is not often charged as a stand-alone offense. Instead, prosecutors typically include money laundering as a secondary charge in conjunction with other offenses. Accordingly, South Africa does not generally keep separate statistics for money laundering-related prosecutions, convictions, or forfeited assets.

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

South Sudan

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: NO civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Not applicable

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not applicable

Number of CTRs received and time frame: Not applicable

STR covered entities: Not applicable

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: NO

South Sudan is not a member of a Financial Action Task Force (FATF)-style regional body.

Enforcement and implementation issues and comments:

The GOSS is working to address capacity issues generally and has embarked upon anticorruption initiatives, but money laundering and terrorist financing have not yet been part of South Sudan’s current agenda. Neither money laundering nor terrorist financing have been criminalized. There are no laws or regulations currently in place to address fundamental banking issues, and no law enforcement mechanisms or authorities to address financial crimes, including money laundering. These issues may surface in 2012 when the Banking Act and Foreign Exchange Business Act is expected to be considered for adoption. The Bank of South Sudan also may adopt a new circular requiring all financial institutions to regularly submit information on domestic and foreign exchange transactions over a threshold amount. However, it has not been determined whether such a circular would be enforceable, or who would have the necessary tools to enforce it. The issuance of such a circular would at best be a temporary measure and not comprehensive by any means. A segment of the South Sudanese security forces has been tentatively identified to work on financial crimes but lacks staff and has had little training on not only financial crimes, but also police procedure in general. The Judiciary is significantly understaffed, and is in the process of preparing to adopt a common law system. There are no courts or prosecutors currently assigned to work on financial crimes.

Spain

Spain is a major European center of money laundering activities as well as an important gateway for illicit narcotics entering Europe, although the serious focus of Spanish law enforcement on combating organized crime, drug trafficking, and money laundering during the past five years has reduced the country’s attractiveness as an entry point. Drug proceeds from other regions enter Spain as well, particularly proceeds from hashish from Morocco and cocaine from Latin America. Passengers traveling from Spain to Latin America reportedly smuggle sizeable sums of bulk cash. Informal money transfer services facilitate cash transfers between Latin America, particularly Colombia, and Spain. Spanish security forces reportedly discovered at least 119 organized crime groups (including Russian, Eurasian, Chinese, and Italian groups) operating in the country that were engaging in money laundering during 2010. Of the 175 police investigations against money laundering in 2010, 58% were linked to drug trafficking, particularly of cocaine, heroin, and hashish; 17% involved political corruption; while 12% were related to value added tax fraud, mainly involving vehicle trafficking. Tax evasion in internal markets also continues to be a source of illicit funds in Spain.

An unknown percentage of drug trafficking proceeds are invested in Spanish real estate, particularly in the once-booming coastal areas in the south and east of the country, though less so since the speculative real estate bubble burst in 2008. Criminal groups also place money in other sectors, including services, communications, automobiles, art work, and the financial sector.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: YES

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 3,172 in 2010

Number of CTRs received and time frame: 707,968 in 2010

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Spain is a member of the Financial Action Task Force (FATF) and a cooperating and supporting nation to the Caribbean Financial Action Task Force, a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.fatf-gafi.org/dataoecd/59/15/46253063.pdf

Enforcement and implementation issues and comments:

Spain has long been dedicated to fighting terrorist organizations, including ETA, GRAPO, and more recently, al-Qaida. Spanish law enforcement entities have identified several methods of terrorist financing: donations to finance nonprofit organizations (including ETA and Islamic groups); establishment of publishing companies that print and distribute books or periodicals for the purposes of propaganda, which then serve as a means for depositing funds obtained through kidnapping or extortion; fraudulent tax and financial assistance collections; the establishment of “cultural associations” used to facilitate the opening of accounts and provide a cover for terrorist financing activity; and alternative remittance system transfers.

Spanish authorities recognize the presence of alternative remittance systems. Informal non-bank outlets such as “locutorios” (communication centers that often offer wire transfer services) are used to move money in and out of Spain by making small international transfers for members of the immigrant community. Spanish regulators also note the presence of hawala networks in the Islamic community.

Spanish law does not allow civil forfeiture. The Finance Ministry, as the sanctioning organ, opened 580 investigations in 2010 for cash movements. Forty million euros (approximately $52.7 million) were initially confiscated; 20 million euros (approximately $26.3 million) were ultimately retained as fines. During the first half of 2011, 250 cases were opened and over 10 million euros (approximately $13.2 million) were confiscated. Carrying more than 100,000 euros (approximately $131,700) in cash within the country is not allowed. If the authorities discover an amount larger than that, they can seize and hold it until proof of legal origin is provided. According to press reports, the police and civil guard opened 175 investigations in 2010.

On April 29, 2010, Spain enacted Law 10/2010, on preventing money laundering and terrorist financing. The law introduces a risk-based approach to preventing money laundering and terrorist financing and imposes stringent requirements on financial institutions as well as designated non-financial businesses and professionals. Additionally, the law greatly enhances authorities’ capacity to combat terrorist financing by placing greater requirements on financial institutions and other businesses, and by strengthening penalties and monitoring and oversight. The new law entered into force immediately; however, implementing regulations will not be approved until 2012; until then, many of its provisions are not being implemented. The Spanish government is waiting for the approval of the new FATF Recommendations to develop the implementing regulations in conformity with international standards. In the interim, the implementing regulations for Law 19/1993, updated in 2005, remain in force.

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

A working group has been created within the Commission for the Prevention of Money Laundering to promote the collection of statistics. Currently this information is not centrally collected. Spain should maintain and disseminate statistics on investigations and prosecutions.

Sri Lanka

Sri Lanka is neither an important regional financial center nor a preferred center for money laundering. However, the lack of transparent tender mechanisms in government projects, past experience with terrorism, tax evasion, and a large informal economy make the country vulnerable to money laundering and terrorist finance. The Government of Sri Lanka (GOSL) is aware of terrorism financing risks.

As noted in the October 2011 Financial Action Task Force (FATF) Public Statement, Sri Lanka still has certain strategic AML/CFT deficiencies, despite its enactment of AML/CFT legislative amendments. Sri Lanka’s action plan includes adequately criminalizing terrorist financing, addressing remaining deficiencies with regard to the criminalization of money laundering, and establishing and implementing adequate procedures to identify and freeze terrorist assets.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Banks, registered finance companies, insurance companies, securities industry entities

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 246 from January – December 2010

Number of CTRs received and time frame: Over 3 million from January – December 2010

STR covered entities: Banks, registered finance companies, insurance companies, securities industry entities

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three from January to December 2011

Convictions: Not Available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Sri Lanka is a member of Asia/Pacific Group on Money Laundering, a FATF-style regional body. Its most recent mutual evaluation can be found here: http://www.apgml.org/documents/docs/17/Sri%20Lanka%20MER%20-%20Final%2010August06.pdf

Enforcement and implementation issues and comments:

The GOSL has demonstrated a high-level political commitment to address deficiencies in its AML/CFT regime. The GOSL amended the Prevention of Money Laundering Act and the Convention on the Suppression of Terrorist Financing Act in September 2011, which strengthens the legal regime by removing several deficiencies in the criminalization of money laundering, although the predicate offense of piracy is not addressed. While the terrorist financing amendment provides adequate procedures to identify and freeze terrorist assets, it exempts the financing of terrorists and terrorist organizations for humanitarian reasons from the list of offenses.

Although AML/CFT laws cover non-financial entities such as casinos, real estate agents, dealers in precious metal and stones, lawyers and trusts or company service providers, no regulator has issued KYC or CTR policies covering these institutions. These entities are not required to maintain customer information or report suspicious activity. Politically exposed persons (PEPs) are addressed in new customer due diligence regulations published in March 2011.

St. Kitts and Nevis

St. Kitts and Nevis (St. Kitts) is a federation composed of two islands in the Eastern Caribbean. While law enforcement appears competent, the federation is at major risk for corruption and money laundering due to the high volume of narcotics trafficking activity through and around the island, and the presence of known traffickers on the islands. The growth of its offshore sector (with unusually strong secrecy laws) and an inadequately regulated economic citizenship program further contribute to the federation’s money laundering vulnerabilities.

St. Kitts uses the East Caribbean dollar, and its monetary authority is the Eastern Caribbean Central Bank (ECCB). The ECCB has direct responsibility for regulating and supervising the entire domestic sector of St. Kitts and Nevis and the offshore banks in Nevis, and for making recommendations regarding approval of offshore banking licenses. By law, all offshore banks are required to have a physical presence in the federation; shell banks are not permitted. Seven other island economies are also members of the ECCB: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St Lucia, and St Vincent and the Grenadines. The existence of the common currency may raise the risk of money laundering, but there is little evidence that the EC dollar is a primary vehicle for money laundering.

As a federation, the anti-money laundering (AML), counter-terrorist financing (CFT), and offshore legislation covers both St. Kitts and Nevis; however, each island has the authority to organize its own financial structure. With most of the offshore financial activity concentrated in Nevis, it has independently developed its own offshore legislation. Information about the scale of the financial services is difficult to obtain, but 2010 numbers may be illustrative: St. Kitts had licensed approximately 36 corporate service providers, three trust providers, 116 captive insurance companies and over 2,100 companies and foundations. By contrast, Nevis had over 11,000 international business companies (IBC), 4,200 limited liability companies, over 1,000 trusts and over 110 insurance companies. Nevis can form an IBC in under 24 hours, and bearer shares are allowed though “discouraged”. Internet gaming entities must apply for a license as an IBC.

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

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 131 for 2011

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

St. Kitts and Nevis is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/St.Kitts_Nevis_3rd_Round_MER_(Final)_English.pd

Enforcement and implementation issues and comments:

In 2011, the Proceeds of Crime Act was amended to expand the time for which law enforcement could detain funds seized on suspicion of money laundering. Additionally, provision is made in the law to allow proceeds of money laundering, drug trafficking or some other unlawful activity to be forfeited to the Crown even where no actual conviction in the matter has occurred. The amendments also criminalize tipping off when it concerns an investigation into money laundering, the proceeds of crime or some related activity, or the filing of a STR. Similar amendments were made to the Anti-Terrorism Act.

The GOSKN also improved its law on terrorist designations and increased the power of law enforcement with regard to different forms of electronic and other surveillance techniques. Changes were also made to expand the definition of property to specifically include instrumentalities used in or intended for use in the commission of a money laundering, terrorist financing or other offense.

In September, through new regulations added to the Financial Services Regulations, the Financial Services Regulatory Commission was given overall supervision authority for both money laundering and terrorist financing matters.

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

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

St. Lucia

Money laundering in St. Lucia is primarily related to the proceeds from illegal narcotics and to some extent the proceeds from financial and commercial crimes. Government officials believe most of the criminal proceeds laundered in the jurisdiction derive from both domestic and foreign criminal activity and are controlled by drug trafficking organizations and organized criminal groups who operate both locally and abroad.

A significant black market exists for smuggled goods in St. Lucia, mostly gold, silver and other jewelry smuggled into St. Lucia from Guyana and sold by precious metals dealers without customs documentation for their importation. There is also a black market of high quality jewelry being purchased by locals and others from duty free establishments in St. Lucia. Black market and contraband smuggling generate huge profits to smugglers and duty free stores. These funds are deposited into the financial system as emanating from legitimate trade and are used to purchase real estate and vehicles through the financial system.

Trade based money laundering is also a significant concern and is used by drug trafficking and other illicit enterprises. There is no evidence such activities are tied to terrorism financing. There is a free trade zone and this is suspected to be a considerable source of vulnerability as financial institutions may wittingly or unwittingly engage in currency transactions involving international narcotics trafficking proceeds.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: NO

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 99 from January to October 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: One in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

St. Lucia is a member of Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here:

http://www.cfatf-gafic.org/downloadables/mer/Saint_Lucia_3rd_Round_MER_(Final)_English.pdf

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

In May 2011, the Government of St Lucia (GOSL) amended its money laundering acts to allow the Board of the Financial Intelligence Authority to appoint a Director and such other support personnel as the Authority considers necessary and to permit the Financial Intelligence Authority to disseminate information to the Customs and Excise Department, the Inland Revenue Department, the Commissioner of Police and the Director of Public Prosecutions. Additional amendments to the Proceeds of Crime Act allow police officers to seize and detain cash where there are reasonable grounds for suspecting the cash represents proceeds of criminal conduct or is intended for use in criminal conduct. It is too early to ascertain the effects of these changes.

On November 18, 2011, St. Lucia became party to the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.

The GOSL should continue its White Collar Crime Task Force under the auspices of the Office of the Attorney General. The GOSL also should become a party to the UN Convention against Transnational Organized Crime.

St. Maarten

In late 2010, Sint Maarten (St. Maarten) became an autonomous entity within the Kingdom of the Netherlands (KON). St. Maarten enjoys autonomy on most internal matters and defers to the Kingdom of the Netherlands in matters of defense, foreign policy, final judicial review, human rights, and good governance.

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

The scale of the offshore banking and business sector is unknown. There are several casinos on the island and online gambling is legal.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: No

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

KYC covered entities: Not available

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 5095 – January - October 2011

Number of CTRs received and time frame: Not available

STR covered entities: Banks, law offices, insurance companies, casinos, Customs, money remitters, Central Bank, trust companies, accountants, car dealers, administrative offices, Tax Office, jewelers, credit unions, real estate businesses, notaries, exchange offices (Change point), effects agents

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

St. Maarten is a member of the Caribbean Financial Action Task Force, a Financial Action Task Force (FATF)-style regional body. No evaluations have taken place since it became an autonomous entity.

Enforcement and implementation issues and comments:

Until a mutual evaluation is completed, it is difficult to evaluate the effectiveness of St. Maarten’s anti-money laundering/counter- terrorist financing regime.

Under the former Netherlands Antilles jurisdiction, most governmental organizations were based in Curacao. Following the dissolution of the Netherland Antilles, Sint Maarten created its own FIU under the Ministry of Justice. The FIU has begun to seek out international partners who would be willing to sign memoranda of understanding for information exchange and is pursuing membership in the Egmont Group of FIUs. St. Maarten is in the process of establishing new organizations such as a Central Bank, Tax Office Criminal Investigation Unit, and Financial Investigation Department. The St. Maarten government has begun the process of setting up these institutions.

The previous Government of the Netherlands Antilles demonstrated a commitment to combating money laundering. The new St. Maarten Government should ensure it follows up on that commitment. It therefore should see to the continuous enforcement of regulations and supervision of the off-shore sector and casinos, as well as pursuing money laundering investigations and prosecutions. The Government should work to improve the local police force (e.g., including financial specialists), the Intelligence Service and the FIU to provide them the capacity to investigate and successfully prosecute money laundering and terrorist financing cases.

The Mutual Legal Assistance Treaty between the KON and the U.S. applies to St. Maarten.

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

St. Vincent and the Grenadines

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

In some instances United States currency has been smuggled into the jurisdiction using couriers, go-fast vessels and yachts. In several cases these monies have been intercepted, and it was found that the operations generating these illicit proceeds have more of a regional rather than an international origin. Originating jurisdictions include Venezuelan nationals, Bermuda, and the US Virgin Islands.

The offshore sector includes four offshore banks, 9,601 IBCs, eight offshore insurance companies, 103 mutual funds, 23 registered agents, and 119 international trusts. There are no offshore casinos, and no Internet gaming licenses have been issued. No physical presence is required for offshore sector entities and businesses, with the exception of offshore banks. Nominee directors are not mandatory except when an IBC is formed to carry on banking business. Bearer shares are permitted for IBCs but not for banks. The Government of St. Vincent and the Grenadines (GOSVG) requires registration and custody of bearer share certificates by a registered agent who must also keep a record of each bearer certificate issued or deposited in its custody. The Offshore Finance Inspector has the ability to access the name or title of a customer account and confidential information about a customer in possession of a license. There are no free trade zones in SVG.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF U.S. CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received for 2011: 244 as of October 31, 2011

Number of CTRs received for 2011: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Three in 2011

Convictions: None in 2011

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

St. Vincent and the Grenadines is a member of the Caribbean Financial Action Task Force (CFATF), a Financial Action Task Force (FATF)-style regional body. Its most recent mutual evaluation can be found here: http://www.cfatf-gafic.org/downloadables/mer/Saint_Vincent_&_the_Grenadines_3rd_Round_MER_(Final)_English.pdf

Enforcement and implementation issues and comments:

Officials should pass pending amendments to the Proceeds of Crime and Money laundering (Prevention) Act in order to strengthen STR reporting, prohibit tipping off and criminalize self-laundering. In addition, amendments to the Financial Intelligence Unit Act should be passed to allow the FIU to obtain appropriate law enforcement and other governmental information needed to develop intelligence and analysis.

In addition, officials should address civil forfeiture, strengthen provisions dealing with enhanced due diligence for PEPs, raise the capacity of those in the financial sector, and provide clearer guidance to designated non-financial businesses and professions on how to keep records and identify suspicious transactions.

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

Sudan

Sudan became two states on July 09, 2011, resulting in Sudan (rump Sudan) and a new country, South Sudan. Ongoing conflicts in South Kordofan, Blue Nile, and Darfur states, a lack of basic infrastructure in many rural areas, and a reliance by much of the population on subsistence agriculture, ensures that much of the population will remain at or below the poverty level for years to come. Sudan currently has limited access to international financial markets and institutions because of comprehensive U.S. economic sanctions. Traders and other legitimate business persons often carry large sums of cash because electronic transfer of money outside of Sudan is challenging. This dependence on large amounts of cash can complicate enforcement efforts.

Sudan has been designated a State Sponsor of Terrorism by the United States.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: 16 as of July 9, 2011

Number of CTRs received and time frame: Not available

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: None in 2011

Convictions: None

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

Sudan is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a Financial Action Task Force (FATF)-style regional body. A MENAFATF mutual evaluation on-site visit took place in December 2011. Once finalized, the report can be found here: www.menafatf.org

Enforcement and implementation issues and comments:

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

In 2011, the Government of Sudan continued its efforts to raise its approach to combating money laundering and other financial crimes to international standards. The financial intelligence unit and the Central Bank of Sudan concentrated on implementation of the Money Laundering and Terrorism Financing Act (MLFTA) of 2010. The Central Bank published a circular in January 2011 with updated know your customer regulations. It is unclear whether all of the implementing regulations for the MLFTA are enforceable. In March 2011, the Central Bank held the first meeting of the compliance officers network with representatives from commercial banks and other financial institutions.

Still, shortcomings exist. Investigatory capacity is limited, and enforcement can be subject to political pressures. After the split between South Sudan and Sudan, both countries introduced new currencies, accompanied by inconsistent and, at times contradictory, guidance for redeeming the old currencies. Large volumes of cash transactions in the period between July and September were commonplace and overwhelmed attempts to police the nature of the dealings.

Going forward, Sudan must focus on full implementation of the new law, and establishing and empowering effective enforcement institutions, particularly the financial intelligence unit. Sudan should become a party to the UN Convention against Corruption.

Suriname

Suriname is not a regional financial center. Narcotics-related money laundering is closely linked to transnational criminal activity related to the transshipment of cocaine to the United States, Europe, and Africa. Domestic drug trafficking organizations and organized crime, with links to international groups, are thought to control much of the money laundering proceeds, which are invested in casinos, real estate, cambios (foreign exchange companies), the construction sector and car dealerships.

Goods are smuggled into Suriname over the land/river borders with Guyana, Brazil, and French Guiana, as well as via vessels. Other goods are “smuggled” into Suriname via deceptive bills of lading, via the shipping ports. This is done mainly to avoid paying higher import duties. There is little evidence to suggest this is significantly funded by narcotics proceeds or other illicit proceeds. Contraband smuggling is not believed to generate funds that are laundered through the financial system.

Suriname is not an offshore financial center and has no free trade zones. Offshore banks and shell companies are not permitted. There is a thriving informal sector fueled by large profits from a growing small-scale gold mining sector and the industries that support it that may be vulnerable to money laundering. Suriname’s significant informal economy is not linked to the majority of money laundering proceeds; rather, they are moved through various corporate entities within the formal economy.

DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO

CRIMINALIZATION OF MONEY LAUNDERING:

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

Legal persons covered: criminally: YES civilly: YES

KNOW-YOUR-CUSTOMER (KYC) RULES:

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

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

SUSPICIOUS TRANSACTION REPORTING (STR) REQUIREMENTS:

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not applicable

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

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

Prosecutions: Not available

Convictions: Not available

RECORDS EXCHANGE MECHANISM:

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

With other governments/jurisdictions: YES

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

Enforcement and implementation issues and comments:

Concerns have been raised about the effectiveness and speed with which the Government of Suriname (GOS) is addressing international concerns about its money laundering and terrorist financing legislation. The government should swiftly work to address these concerns and provide additional data about its actions. The country should move quickly to fully implement customer identification (especially for politically exposed persons) and unusual transaction reporting procedures. Additionally, Suriname should ensure covered entities are subject to adequate supervision and enforcement programs. Additional efforts need to be made to ensure border enforcement. Customs and appropriate law enforcement need to investigate trade fraud and illicit value transfer. The GOS should become party to the International Convention for the Suppression of the Financing of Terrorism and the UN Convention against Corruption.