U.S. DEPARTMENT OF STATE
INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT MARCH 1996:
FINANCIAL CRIMES AND MONEY LAUNDERING
United States Department of State
Bureau for International Narcotics and Law Enforcement Affairs
INCSR 1996 COUNTRY CHAPTERS
Cambodia. (Low Medium) Cambodia shares borders with Thailand, Laos and
Vietnam, the Golden Triangle of Southeast Asian heroin production and
trafficking, a factor which, with indications of an emergent involvement
in the movement of narcotics proceeds, prompts raising the priority from
Low to Low-Medium.
Cambodia to Dominican Republic
Cambodia's two year old democracy, installed after elections in 1993,
still faces an active, although diminishing Khmer Rouge insurgency.
Laws and legal institutions are still being developed. Enforcement
agencies are also in the initial stages of operation. National and
municipal police charged with anti-narcotics (and indeed all) law
enforcement activities lack basic training in basic law enforcement
techniques and drug enforcement measures, including drug identification.
They have no communications equipment and few facilities.
Cambodia has approximately 33 banks, but the national bank only recently
received legal authority to regulate them. Previous attempts by the
central bank to audit local banks are reported simply to have been
thwarted by private guards hired by those banks. The Royal Cambodian
Government, recovering from over twenty years of warfare and internal
strife, is heavily dependent on external assistance, and most
ministries, including those charged with police functions, have funds
sufficient only to cover salaries. The lack of funds for training and
operations, coupled with the newness of Cambodia's democratic
institutions, make Cambodia a vulnerable target for drug traffickers and
money launderers operating in Southeast Asia.
There are no empirical data about the current extent of drug trafficking
and money laundering in Cambodia, but the size of one heroin seizure,
coupled with anecdotal evidence, indicates a growing problem.
Cambodia's constitutional monarch signed a decree establishing a
national counternarcotics authority whose chairmen are Cambodia's two
prime ministers and whose vice-chairman is the minister of justice.
The ministry of justice, with assistance of an advisor from the UNDCP,
concluded a draft of anti-narcotics legislation which was recently
reviewed by the council of ministers, and is expected to be sent shortly
to the national assembly. The legislation contains a provision
outlawing the laundering of drug proceeds. The legislation commits the
government to becoming a party to the 1961 Single Convention on Narcotic
Drugs, the 1971 Convention on Psychotropic Substances and the 1988 UN
Canada. (High) GOC officials estimate 80 percent of money laundering in
Canada is international, i.e., money laundering occurs either from
profits generated from drug sales in Canada, which must be laundered and
returned to the source countries, or from drug money generated abroad,
particularly in the US Canada's advanced financial sector, lack of
mandatory reporting requirements and proximity to the US make it
attractive to drug money launderers especially for the placement of
currency generated from the sale of drugs. Canada does not impose
cross-border currency reporting. Its bankers continue to oppose
mandatory reporting of suspicious transactions, although complying with
other international standards for bank recordkeeping. Canada reports a
high level of compliance with the voluntary reports.
According to a report issued by the Solicitor General, drug money
laundering in Canada takes place in banks and deposit-taking
institutions, currency exchange houses, front companies, real estate
transactions and gold shops. Banks are the most commonly used means to
launder and move drug money because of the prominence of their branches
in traditional tax haven countries, such as the Bahamas and other
Caribbean nations. Currency exchange houses, particularly those located
in cities along the US border, are suspected of moving large amounts of
drug money between the two countries. Currency exchanges, like banks
and other financial institutions, are not required to report large or
suspicious transactions to authorities although they are required to
maintain records of large cash transactions for five years.
Bulk currency shipments continue to be an alternative for money
launderers. In some cases, US dollars are smuggled in bulk across the
Canadian border, where they are deposited into local accounts where they
may then be wire transferred virtually anywhere in the world.
Canada and the United States have a tradition of close cooperation on
law enforcement matters, and signed an asset seizure agreement in March,
1995, that provides for mutual asset sharing in joint investigations.
In addition, Canada and the United States have a mutual legal assistance
treaty and a customs mutual assistance agreement. Canada has seized
record amounts of currency in successive years but actual forfeitures
are negligible by comparison because of laws requiring proof of a direct
link between seized property or currency and specific drug transactions.
Caribbean Dependent Territories. This chapter contains individual
summaries on Anguilla, the British Virgin Islands, Cayman Islands,
Montserrat and Turks and Caicos Islands, because, notwithstanding their
responding to a common policy, they have different degrees of
vulnerability. The numerous offshore facilities in each island group
may be abused by drug traffickers to launder money, although over recent
years the UK has taken steps to tighten regulatory regimes and improve
the quality of regulation in all of the territories.
Guidelines have been issued for new bank licenses, restricting such
licenses to subsidiaries of established banks with effective home
supervision. Given its tight secrecy laws and large offshore banking
sector, the Cayman Islands are considered especially vulnerable to money
launderers, particularly moving proceeds from the United States. The UK
has extended the 1988 UN Convention to all of the CDTs, and each is
subject to the US-UK mutual legal assistance and extradition treaties.
Each of the CDTs, led by the Caymans, is working on an all-crimes money
laundering statute to emulate recent British legislation. All of the
territories are introducing "gateway" provisions in their financial
services legislation to facilitate regulatory cooperation and to provide
greater transparency with respect to beneficial ownership. Finally, as
a further cooperative step, the UK is tentatively planning to move the
Dependent Territories regional crime intelligence system from Tortola,
BVI, to Miami, to facilitate increased liaison with US agencies. This
follows the successful joint US-UK white colalr crime team established
two years when Scotland Yard stationed an officer in Miami to work with
Cayman Islands. (High) The Cayman Islands have set the pace in the
Caribbean for legislation complying with the 1988 UN Convention and
other international standards, and, in 1995, adopted laws complying with
Convention standards on asset seizure and forfeiture and control of
chemicals. A dependent territory of the United Kingdom, the Caymans had
already adopted mandatory reporting of suspicious transactions, controls
on international transfers of currencies and other banking reforms,
following on its criminalization of drug money laundering. The Caymans
has also increased regulation of mutual funds and the insurance sector.
Still, Caymans is one of the largest offshore financial service centers
and remains attractive to money launderers because of its sophisticated
banking services, tradition of bank secrecy, and the ease with which
shell companies can be created. Shell companies are believed to play a
significant role in Cayman Islands money laundering; there are an
estimated 26,000 companies which, along with several hundred banks,
cannot be closely monitored given Caymans resources. Much of the money
entering the Caymans is believed to originate in the US and Cayman
authorities cooperate closely with USG officials.
Channel Islands & the Isle of Man. (Medium) The Channel Islands (Jersey
and Guernsey) and the Isle of Man are major tax havens. Offshore
banking centers and banking is their major industry. Money laundering
is a criminal offense as it relates to drug proceeds, and banks are
required to report suspicious transactions. Local laws also provide for
asset seizure and forfeiture, as well as asset sharing. The islands
banking systems are considered attractive to money launderers and are
vulnerable, given that the great majority of money is received by wire
transfers and large sums of money are sent to North and South American
as well as European destinations. Local authorities cooperate closely
with DEA in identifying possible traffickers and conducting
Chile. (Medium) The new counter-narcotics and anti-money laundering
laws went into effect in October 1995, a year after passage. The
initial legislation was invalidated by the Supreme Court because of
constitutional issues related to asset forfeiture. The GOC anti-money
laundering task force began operations shortly thereafter.
The question with Chile, as with numerous other governments with new
anti-money laundering laws, is how vigorously the government will
implement these measures. This question is especially pertinent in
Chile's case, given the dual aspect of a robust economy which has the
potential to attract drug dollars as well as legitimate investment and a
banking sector which is opposed to any incursions upon bank secrecy.
As the law is currently written, money laundering is illegal only if the
suspect financial transaction can be tied to drug proceeds. No
estimates are available on the volume of illicit proceeds from other
criminal activity. No evidence indicates corruption of senior public
officials as related to narcotics.
It is not yet clear whether if the new law will ensure the availability
of records to the USG or other governments. This law has yet to be
tested in the court system. Measures to open the veil of bank secrecy
are under consideration, but not widely supported by the public or
The new law allows banks to report suspicious activities, but it does
not require them to do so. Because of the newness of the law, it is
uncertain whether bankers and others are protected by law with respect
to their cooperation with law enforcement entities. On one hand, the
law attempts to protect sources of information, but on the other hand,
it tries to protect law-abiding businesses and investors from false
Chile has cooperated in a limited manner with the USG in investigating
financial crimes. Financial records are difficult to obtain without a
The new counter-narcotics law does not provide for the seizure and
forfeiture of narcotics-related assets. The law does provide for fines,
imprisonment, revocation of professional licenses, and temporary closing
of places of business.
China. (Medium) China is not yet a major money laundering country whose
activities in that sector impact the US. Chinese officials are aware
of, and concerned about, the possibility that some investors in China
may be engaged in money laundering. There is no money laundering law
per se in China, but Chinese officials cite a law prohibiting covering
up the source of assets and laws against fraud as also covering money
laundering offenses. Officials are very concerned about increasing
economic crimes and illicit flows of money across borders, and have
sought to strengthen both international ties and regulatory efforts.
PRC officials appear to be receptive to Financial Action Task Force
(FATF) information and recommendations. They have received four FATF
delegations in less than two years, and have actively participated in
FATF's Asian seminars. However, China has not adopted FATF
recommendations into law.
Colombia. (High) Money laundering is a natural corollary of the cocaine
trade in Colombia. Law 190 of 1995, enacted in June, makes money
laundering a crime, not limited to the proceeds of drug trafficking, but
inadequate regulation of the financial industry continues to facilitate
laundering of narcotics profits and investments in legitimate business.
The legislation must be strengthened and adequately enforced; the
legislation alone has no deterrent value and traffickers continue to
collect and enjoy their illegal profits. The GOC must prosecute money
launderers, shut down their operations, and institutionalize anti-money
Colombian financial institutions engage in currency transactions
involving international narcotics trafficking proceeds that include
significant amounts of United States currency. Money laundering occurs
both in the banking and non-bank financial system (exchange houses,
travel agencies) and contraband, real estate and front companies.
Law 190 stipulates a penalty of three to eight years in prison for any
person who "conceals, insures, transforms, invests, transfers, keeps in
his custody, transports, administers, buys the material objects of a
crime or the proceeds thereof, or makes such property/assets appear to
be legal." Article 31 sets the sentence at four to twelve years if the
value of the properties, the material object of the crime or the
proceeds thereof, exceeds 1,000 monthly salaries (approximately USD 1.4
million). It also prescribes an increased penalty of one half to three
fourths for cases involving kidnapping, extortion, or drug violations;
if a foreign monetary/banking exchange was used in committing the crime;
if property was introduced into the Colombian Customs territory; or if
the crime was committed by individuals entering into a contract with
individuals subject to inspection, control or supervision by the banking
There have been no prosecutions for money laundering in Colombia. In
December 1995 the Prosecutor General's Office (Fiscalia) established a
special unit to investigate cases under the new law. The Fiscalia
initiated an investigation of the finances of the Rodriguez-Orejuela
family for possible violations of money-laundering provisions.
Since July 1995 the banking superintendency has levied fines of 20
million pesos each (approximately usd 24,000) against five major
Colombian banks for failing to report suspicious transactions and
accounts. All cases involved accounts at the Cali branches of banks
showing high volume of activity involving large sums of money. The
banking superintendency has stated that it intends to conduct more
investigations of this nature, but that its personnel lack the technical
expertise to analyze complex transactions and movement of funds. The
superintendency has inquired into the possibility of US training
assistance. The Fiscalia and the banking association agreed in December
1995 on a mutual training program on legal and financial aspects of
Colombia's exchange control system requires that all financial
institutions file reports on cash transactions exceeding USD 10,000,
present a record of such transactions to the superintendent of banks
every three months identifying the customers involved, and notify the
authorities of suspicious activities. Bankers and others are protected
by law with respect to their cooperation with law enforcement entities.
Despite this protection, however, some bankers claim that failure to
report is based partly on fear of reprisal. Colombia's financial
statute requires due diligence and reporting to the banking
superintendency while the new anti-corruption statute requires reporting
to the Prosecutor General's Office (Fiscalia) and imposes criminal
sanctions on bankers. Although some banks have been fined, no bankers
have been prosecuted.
Colombia has not addressed the problem of international transportation
of illegal-source currency and monetary instruments through specific
legislation or policy, although laws regulating the international wire
transfer of funds apply and there are controls limiting the amount of
currency which can be brought into the country, but that law differs
between citizens and foreigners.
Colombia has not adopted laws or regulations that ensure the
availability of adequate records of narcotics investigations to
appropriate USG personnel and those of other governments.
Colombia is a signatory to the 1988 UN Convention, and adopted formal
articles of ratification. Due to reservations (in such key areas as
extradition, asset forfeiture and money laundering), Colombia is not
considered to be in compliance.
Money laundering controls are applied to non-banking financial
institutions, but enforcement in this area is weak.
The Colombian National Police have cooperated with USG enforcement
agencies on narcotics-related matters, within the constraints imposed by
internal resources and capabilities -- but also the constraints inherent
in a lack of legal authority, partially corrected by the 1995 law, the
restraints on evidence sharing, and the restraints implicit in the
uncertainties about the Colombian judicial process.
Colombia has not yet established effective systems for identifying,
seizing and forfeiting narcotics-related assets. The GOC signed an MOU
with the USG in July 1990 which is the basis for the United States to
transfer assets forfeited in the United States with the assistance of
the GOC. Asset seizure and forfeiture provisions embodied in Law 30 of
1974, amended in 1986, are inadequate. The GOC promised passage of
stronger asset seizure and forfeiture legislation during 1995, but did
not fulfill the promise. Obstacles in passing such legislation include
the efforts made by narcotics traffickers to suborn and intimidate
legislators. Under the current law, property rights are forfeited only
if the individual is convicted of a crime or if the owner does not
legally defend those rights within a year after being summoned.
However, the GOC's inability to compile evidence and to prosecute and
convict defendants on criminal charges brings into question the validity
of the entire process. Few cases result in conviction. There are also
legal loopholes which allow traffickers and others to shield assets. In
practice many assets are seized but few are forfeited. The following
assets can be seized and forfeited pursuant to judicial action:
instruments of crime (such as conveyances used to transport narcotics),
farms on which illicit crops are grown, and intangible property (such as
bank accounts). To date, no business has been seized permanently for
being used to launder drug money or other criminal proceeds.
In December 1995 the Colombian Senate passed a bill with an amendment
(the so-called "narco-mico") which would have made prosecution for the
crime of illicit enrichment virtually impossible, and would have
effectively derailed ongoing illicit enrichment cases such as the "Caso
8000." The Camara (lower house) unanimously rejected the amendment;
however, the Senate may attempt to reintroduce such a measure. Even in
the absence of the narco-mico, conviction for illicit enrichment is
nearly impossible. To date no such conviction for narcotics-related
illicit enrichment has been achieved. Legislative attempts spurred by
narco-traffickers to water down laws are not uncommon. Various
politicians and legislators have attempted to modify or abolish the
regional "faceless" justice system, which provides prosecutors or judges
The Colombian bankers association has declared its support for money
laundering countermeasures. The banking community cooperates with
enforcement efforts to trace funds and seize bank accounts to some
extent. However, there is still general reluctance to be forthcoming.
Traffickers have taken retaliatory actions related to money laundering
investigations, government cooperation with the USG, and seizures of
assets in the form of legislative challenges as well as threats and
intimidation of GOC officials.
Costa Rica. (Medium High) Money laundering remains a serious problem in
this busy banking center, giving rise both to mercurial accounts and
fraudulent schemes. Costa Rica has yet to fully address the challenge
posed by money laundering activity. Some launderers smuggle funds into
the country and convert them into Costa Rican currency before depositing
them into bank accounts. In the past, others, posing as entrepreneurs,
apparently laundered dollars through purchases of tax payment
certificates (CAT) which were designed to promote exports. While CAT
certificates are no longer being issued, there is suspicion that
revenues from drug trafficking are finding their way into real estate
and tourism developments. Recent liberalization of the banking system
facilitates money laundering by allowing virtually unrestricted exchange
of the colon at near market rates through commercial banks and certain
other financial institutions. No allegations have arisen regarding
encouragement, facilitation, or involvement of senior officials in money
In 1995, Costa Rica established a national money laundering commission
comprised of officials from government ministries and the banking
sector. The GOCR is considering amendments to this law to incorporate
the CICAD Model Regulations with appropriate changes to avoid
constitutional problems. Officials are also considering changes to laws
governing banking secrecy and access to information. Costa Rica joined
the Caribbean Financial Action Task Force (CFATF) and ratified various
international accords on money laundering. Three CFATF experts conducted
a "mutual evaluation" of money-laundering controls in October. Costa
Rica plans to host the 1996 CFATF Ministerial Level Meeting.
Costa Rican law establishes drug related money laundering as a criminal
offense. Prosecutors, however, must prove that a defendant knew the
funds came from drug trafficking, thereby making convictions difficult.
Nonetheless, a Costa Rican court convicted drug trafficker Ricardo Alem
of a 1988 money laundering offense in April after several trials.
Banking secrecy exists, but courts may order national banks to reveal
information on specific accounts. Laws require banks to maintain
records, report suspicious transactions, and file large cash transaction
Costa Rica has not yet signed bilateral agreements to share in the
proceeds of successful money laundering or narcotics trafficking
investigations. The GOCR has passed legislation and implementing
regulations to facilitate the freezing and seizure of assets. The
National Drug Council, under the Ministry of Justice, enforces Costa
Rica's asset seizure law. The council is scrupulous in ensuring that
the assets of traffickers are seized and either are sold or put at the
disposal of drug related enforcement entities.
Cote D'Ivoire. (Low Medium) Cote D'Ivoire is an important financial
center in West Africa. To the extent money laundering occurs, a
significant portion is related to narcotics proceeds, and involves the
banking system. Illicit activities are primarily related to heroin and
cocaine, and money laundering proceeds are typically foreign owned,
rather than owned by local trafficking organizations. The GOCI's
financial institutions do not engage in currency transactions involving
international narcotics trafficking proceeds that include significant
amounts of US currency or currency derived from illegal drug sales in
There is no formal mechanism for exchanging adequate records in
connection with narcotics investigations and proceedings. Nonetheless,
to the extent feasible, the GOCI has indicated willingness to respond
favorably to any request. The GOCI has not adopted any laws or
regulations that ensure the availability of adequate records of
narcotics investigations to appropriate usg personnel and those of other
governments. Cote D'Ivoire is a signatory to the 1988 Vienna convention
and has adopted the formal articles of ratification. The GOCI has not
entered into any bilateral agreements with any countries for the purpose
of exchanging information on money laundering.
Money laundering from drug and non-drug crimes is a criminal offense.
Banks are required to maintain records on large currency transactions;
to report the data to the GOCI; and to maintain for an adequate time the
records necessary to reconstruct significant transactions through
financial institutions. Bankers are protected by law with respect to
their cooperation with law enforcement entities. The GOCI has, to date,
not been formally requested to cooperate with any law enforcement agency
of the usg in investigating financial crimes related to narcotics. The
GOCI has not addressed the problem of international transportation of
illegal-source currency and monetary instruments. There are controls on
the amount of currency which can be brought into and out of Cote
D'Ivoire. Individual bankers are not accountable for the activities of
their institutions. Money laundering controls are not applied to non-
banking institutions. There were no arrests or prosecutions for money
laundering in 1995.
Cuba. (Low Medium) The growing tourist trade, Cuba's aggressive pursuit
of foreign investment, the establishment in Cuba during 1995 of several
foreign banks, and Cuba's procedures for purchasing materials around the
US trade embargo through third countries like Panama provide a potential
framework for significant money laundering operations. Should Cuba
permit shell corporations and protected bank accounts so as to compete
with its neighbors, it could attract substantial sums of licit and
However, at present, the Cuban Peso is not accepted in international
markets and Cuba is not considered an important financial center in the
Caribbean region. There is little evidence to support or refute Cuba's
claim that no corruption, including money laundering, occurs in Cuba.
The exact quantity of US dollars in Cuba is unknown.
The Cuban penal code has no specific provision making money laundering a
criminal offense. Section 4 of Article 190 of the code states that
anyone who "helps or assists" drug offenders is subject to the same
sentence as the offender. There are no known requirements for banks to
report large currency transactions or other suspicious transactions.
There were no reported arrests or prosecutions for money laundering
during 1995. Cuba has no specific system for seizing and forfeiting
assets derived from international narcotics trafficking, although the
government regularly seizes and retains property suspected of being
connected with illegal activity.
The lack of preventive action by the Cuban government and the potential
for abuse prompt its inclusion in the Low-Medium category -- a country
to be watched.
Cyprus. (Medium High) Despite passage of anti-money laundering and
asset seizure laws, Cyprus is of increasing concern to the US as a
center for laundering proceeds from a range of serious crimes, not
limited to drug trafficking. The ranking for Cyprus has been raised to
Medium-High -- a country where the US hopes to see remedial action and
countermeasures in the coming year.
The certainty that performance, not just the passage of laws, is the
true measure of political will, is well confirmed by the situation in
Cyprus. Drug money laundering is but one of the USG financial crime
concerns which have a common root in the penetration of Cyprus by
organized criminal elements. A central question, given the laws and
regulations which are described below, is why the situation is
worsening. Just three years ago, the INCSR report said money laundering
occurred outside the banking system, that Cyprus was a meeting ground
where money and drugs were transferred.
Now, it is apparent that the concerns expressed in the 1995 INCSR were
well-founded. There is increasing evidence of activity by Russian
organized crime groups and other criminals exploiting some of the more
than 15,000 offshore companies registered on Cyprus. There is also
heightened concern about the offshore banks which have been established
in Turkish Cyprus, and the possibility of a conduit for moving illicit
funds to and from Turkey through branches of these banks located on the
Turkish mainland. Not least, there is the concern that Cypriot banks
have been used to facilitate financial crimes.
In July, the Cypriot Parliament ratified the Council of Europe
convention on "laundering, search, seizure and confiscation of the
proceeds from crime," which criminalizes money laundering from all
illicit funds. Legislation to implement the convention is currently
being drafted. The challenge Cyprus must confront is to implement as
well as pass that legislation. Parallel to this legislative activity,
cooperation between Cyprus and other countries in the field of mutual
legal assistance, training and exchange of information is likely to be
The Cyprus police force has organized a working group of financial
investigators and central bank officials to identify suspicious banking
transactions and accounts. The central bank requested that all banks
appoint a member of their managerial staff as the "money laundering
compliance officer" to report suspicious transactions to the police.
The central bank has also recommended that bank employees participate,
on an on-going basis, in special training programs to combat money
The central bank, in cooperation with the association of commercial
banks, is preparing a "code of conduct" to prevent the criminal use of
the banking system for the purpose of money laundering.
Restrictions on foreign ownership of property and controls on currency
and bullion transiting Cyprus are among the measures which discourage
efforts to launder money through the domestic economy. Cyprus law
strictly controls the amount of money that residents and non-residents
can take out of the country each year. The central bank of Cyprus
approves foreign currency accounts by authorized dealers and monetary
activities in general. Cyprus customs and excise department closely
monitors more stringent currency declaration requirements for transiting
Cyprus has a growing offshore banking sector comprised of a reported
twenty banks. The central bank has supervisory powers over both sectors
and has monitored large cash transfers to the offshore sector. Cypriot
offshore banks may not accept foreign currency cash deposits unless
accompanied by the appropriate customs declaration form. Over the
years, the central bank has issued a series of circulars and
recommendations to the financial sector, aiming to combat money
laundering through the financial system. All banks in Cyprus, including
domestic and offshore, have been requested to implement the
recommendations (including "know your customer" policies). Also all
banks are to notify the central bank of any cash deposits over usd
10,000 in local or foreign currencies.
Czech Republic. (Medium) Intensified concerns about the money
laundering problem prompted raising the priority for the Czech Republic
from Low to Medium.
Money laundering in the Czech Republic started to become a problem with
the onset of (mostly) Russian organized crime activities in
Czechoslovakia and the opening of the Czech economy. Recognizing its
vulnerability to trafficking and money laundering, the government
continued vigorous police efforts against trafficking; gave police the
power to conduct undercover operations; and proposed a money laundering
The proposed law, introduced in November 1995, would criminalize money
laundering, and, in addition to the current requirement for reporting
all transactions above 100,000 crowns (which would rise to 500,000
Crowns or about US$38,000), require banks and all other financial
institutions to confirm and retain records of identification for persons
conducting transactions above that level, and also require them to
report unusual transactions. A lower reporting threshold of 200,000
Crowns would be required for casinos, and 100,000 crowns for exchanges.
The proposed law would require reporting of cash crossing the Czech
border. The Czech Republic signed the Council of Europe's convention on
money laundering, seizure, and confiscation of proceeds from crime in
December. As a successor to the Czech and Slovak Republic, the Czech
Republic is a party to the 1988 UN Convention.
While the government has enacted laws authorizing asset forfeiture
related to money laundering, it does not permit the sharing of funds.
Similarly, banks are required to cooperate with domestic investigations,
but at not permitted to cooperate with investigations by other
Denmark. (Low Medium) There were no known cases of money laundering in
Denmark in 1995, where both drug and non-drug related money laundering
are crimes. Denmark has complied with FATF recommendations and
requirements of the 1988 UN Convention.
Dominican Republic. (Medium) The Dominican Republic is not yet an
important financial center nor an important tax haven or offshore
banking center. But, indicators warn of its potential increased
importance as a venue for money laundering. Those indications, coupled
with an absence of preventive measures and enforcement actions, prompt
raising the priority from Low-Medium to Medium for 1996.
President Balaguer took a very positive step on December 18, 1995, when
he signed into law amendments to the narcotics laws which establish
penalties for money laundering activities, require financial
institutions to report suspicious transactions, and provide for seizure
of assets derived from crime. The Bank Superintendent's Office and the
National Drug Control Directorate are charged with enforcement of the
new law. Financial institutions are now required to supply the courts,
the National Drug Control Directorate and other government security
agencies with any information they request, as soon as possible.
Foreign exchange transactions are legally supposed to go through the
commercial banking system, but an informal process also exists for such
transactions. Bank regulations have been modified to allow dollar
accounts, but without further modification of the law, this is not
profitable. There is no provision for money laundering in the new
financial monetary code. Money gained from illegal drug activities by
Dominicans in the United States is widely used to purchase or finance
legitimate businesses, but there is no statistical data available as to
the amount. The DNCD Financial Action Task Force exists in name but has
been powerless to act. There have been no arrests for money laundering
related offenses in the Dominican Republic. The GODR has been
responsive to USG requests for information and assistance. Dominican
representatives attend CFATF meetings. Money laundering is not a
criminal offense. There are no restrictions on the importation of hard
currency and up to US$ 5,000 can be freely exported. Justifications for
larger movements are not difficult to obtain. There is no law allowing
for the sharing of seized assets with other countries. There are no due
diligence or banker negligence laws. While on paper the CND receives
proceeds and disburses them for law enforcement and prevention programs,
in reality few assets are turned over by the courts. Some seized
airplanes, for example, are still in the legal process after 12 years.
Shielding assets is not difficult. The CND court watch program now
focuses only on assets in any given case. The current law allows only
for criminal forfeiture. To our knowledge, traffickers have taken no
retaliatory actions. There is a bank secrecy law in the country, but the
superintendent of banks has full access to commercial bank records.
Banks are usually willing to cooperate with law enforcement agencies.