International Narcotics Control Strategy Report

1 InternationalNarcotics ControlStrategy ReportVolume IIMoney LaunderingMarch 2021 United States Department of StateBureau of International Narcoticsand Law Enforcement AffairsInternationalNarcotics ControlStrategy ReportVolume IIMoney LaunderingMarch 2021 United States Department of StateBureau of International Narcoticsand Law Enforcement AffairsINCSR 2021 Volume II Money Laundering 2 Table of Contents Common Abbreviations .. 5 Definitions .. 8 Legislative Basis and Methodology for the INCSR .. 13 Overview .. 15 Training Activities .. 18 Board of Governors of the Federal Reserve System (FRB) .. 18 Department of Homeland Security .. 19 Customs and Border Patrol (CBP) .. 19 Immigration and Customs Enforcement Homeland Security Investigations (ICE HSI).

2 19 Department of Justice .. 20 Drug Enforcement Administration (DEA) .. 20 Federal Bureau of Investigation (FBI) .. 20 Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT) .. 21 Department of State .. 22 Department of the Treasury .. 25 Financial Crimes Enforcement Network (FinCEN) .. 25 Internal Revenue Service, Criminal Investigations (IRS-CI) .. 25 Office of the Comptroller of the Currency (OCC) .. 26 Office of Technical Assistance (OTA) .. 26 Comparative Table Key .. 28 Comparative Table .. 30 Afghanistan .. 35 Albania .. 37 Algeria .. 39 Antigua and Barbuda .. 41 Argentina .. 43 Armenia .. 45 Aruba .. 48 Bahamas .. 50 Barbados .. 52 Belgium .. 54 Belize .. 55 Benin .. 58 Bolivia .. 60 Brazil .. 62 British Virgin Islands .. 64 Burma .. 66 Cabo Verde .. 68 Canada .. 70 Cayman Islands .. 72 China, People s Republic of .. 74 Colombia.

3 76 INCSR 2021 Volume II Money Laundering 3 Costa Rica .. 78 Cuba .. 80 Curacao .. 82 Cyprus .. 84 Dominica .. 88 Dominican Republic .. 90 Ecuador .. 92 El Salvador .. 95 Georgia .. 96 Ghana .. 98 Guatemala .. 101 Guyana .. 103 Haiti .. 105 Honduras .. 107 Hong Kong .. 109 India .. 111 Indonesia .. 113 Iran .. 115 Italy .. 117 Jamaica .. 119 Kazakhstan .. 121 Kenya .. 123 Kyrgyz Republic .. 125 Laos .. 127 Liberia .. 129 Macau .. 132 Malaysia .. 134 Mexico .. 136 Morocco .. 138 Mozambique .. 140 Netherlands .. 142 Nicaragua .. 144 Nigeria .. 147 Pakistan .. 149 Panama .. 151 Paraguay .. 153 Peru .. 155 Philippines .. 157 Russian Federation .. 159 St. Kitts and Nevis .. 161 St. Lucia .. 163 St. Vincent and the Grenadines .. 165 Senegal .. 168 Sint Maarten .. 170 INCSR 2021 Volume II Money Laundering 4 Spain.

4 172 Suriname .. 174 Tajikistan .. 176 Tanzania .. 177 Thailand .. 179 Trinidad and Tobago .. 181 Turkey .. 183 Turkmenistan .. 185 Ukraine .. 187 United Arab Emirates .. 190 United Kingdom .. 192 Uzbekistan .. 194 Venezuela .. 196 Vietnam .. 198 INCSR 2021 Volume II Money Laundering 5 Common Abbreviations 1988 UN Drug Convention 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances AML Anti-Money Laundering APG Asia/Pacific Group on Money Laundering ARS Alternative Remittance System BMPE Black Market Peso exchange CBP Customs and Border Protection CDD Customer Due Diligence CFATF Caribbean Financial Action Task Force CFT Combating the Financing of Terrorism CTR Currency Transaction Report DEA Drug Enforcement Administration DHS Department of Homeland Security DHS/HSI Department of Homeland Security/Homeland Security Investigations DNFBP Designated Non-Financial Businesses and Professions DOJ Department of Justice DOS Department of State EAG Eurasian Group to Combat Money Laundering and Terrorist

5 Financing EC European Commission ECOWAS Economic Community of West African States EDD Enhanced Due Diligence EO Executive Order ESAAMLG Eastern and Southern Africa Anti-Money Laundering Group EU European Union FATF Financial Action Task Force FBI Federal Bureau of Investigation FinCEN Department of the Treasury s Financial Crimes Enforcement Network FIU Financial Intelligence Unit FTZ Free Trade Zone GABAC Action Group against Money Laundering in Central Africa INCSR 2021 Volume II Money Laundering 6 GAFILAT Financial Action Task Force of Latin America GDP Gross Domestic Product GIABA Inter Governmental Action Group against Money Laundering IBC International Business Company ILEA International Law Enforcement Academy IMF International Monetary Fund INCSR International Narcotics Control Strategy Report INL Bureau of International Narcotics and Law Enforcement Affairs IRS Internal Revenue Service IRS-CI Internal Revenue Service, Criminal Investigations ISIL Islamic State of Iraq and the Levant KYC Know-Your-Customer MENAFATF Middle East and North Africa Financial Action Task Force MER Mutual Evaluation Report MLAT Mutual Legal Assistance Treaty MONEYVAL Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism MOU Memorandum of Understanding MSB Money Service Business MVTS Money or Value Transfer Service NGO Non-Governmental Organization NPO Non-Profit Organization NRA National Risk Assessment OAS Organization of American States OAS/CICAD OAS Inter-American Drug Abuse Control Commission OECD Organization for Economic Cooperation and Development OFAC Office of Foreign Assets Control OPDAT Office of Overseas Prosecutorial Development.

6 Assistance and Training OTA Office of Technical Assistance PEP Politically Exposed Person SAR Suspicious Activity Report INCSR 2021 Volume II Money Laundering 7 STR Suspicious Transaction Report TBML Trade-Based Money Laundering TTU Trade Transparency Unit UN United Nations UNCAC United Nations Convention against Corruption UNGPML United Nations Global Programme against Money Laundering UNODC United Nations Office on Drugs and Crime UNSCR United Nations Security Council Resolution UNTOC United Nations Convention against Transnational Organized Crime USAID United States Agency for International Development INCSR 2021 Volume II Money Laundering 8 Definitions 419 Fraud Scheme: An advanced fee fraud scheme, known as 419 fraud in reference to the fraud section in Nigeria s criminal code.

7 This specific type of scam is generally referred to as the Nigerian scam because of its prevalence in that country. Such schemes typically involve promising the victim a significant share of a large sum of money, in return for a small up-front payment, which the fraudster claims to require in order to cover the cost of documentation, transfers, etc. Frequently, the sum is said to be lottery proceeds or personal/family funds being moved out of a country by a victim of an oppressive government, although many types of scenarios have been used. This scheme is perpetrated globally through email, fax, or mail. Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT): Collective term used to describe the overall legal, procedural, and enforcement regime countries must implement to fight the threats of money laundering and terrorism financing. Bearer Share: A bearer share is an equity security that is solely owned by whoever holds the physical stock certificate.

8 The company that issues the bearer shares does not register the owner of the stock nor does it track transfers of ownership. The company issues dividends to bearer shareholders when a physical coupon is presented. Black Market Peso exchange (BMPE): One of the most pernicious money laundering schemes in the Western Hemisphere. It is also one of the largest, processing billions of dollars worth of drug proceeds a year from Colombia alone via trade-based money laundering (TBML, defined below), smurfing, cash smuggling, and other schemes. BMPE-like methodologies are also found outside the Western Hemisphere. There are variations on the schemes involved, but generally drug traffickers repatriate and exchange illicit profits obtained in the United States without moving funds across borders. In a simple BMPE scheme, a money launderer collaborates with a merchant operating in Colombia or Venezuela to provide him, at a discounted rate, dollars in the United States.

9 These funds, usually drug proceeds, are used to purchase merchandise in the United States for export to the merchant. In return, the merchant who imports the goods provides the money launderer with local-denominated funds (pesos) in Colombia or Venezuela. The broker takes a cut and passes along the remainder to the responsible drug cartel. Bulk Cash Smuggling: Bulk cash refers to the large amounts of currency notes criminals accumulate as a result of various types of criminal activity. Smuggling, in the context of bulk cash, refers to criminals subsequent attempts to physically transport the money from one country to another. Cross-border currency reporting: Per FATF recommendation, countries should establish a currency declaration system that applies to all incoming and outgoing physical transportation of cash and other negotiable monetary instruments. Counter-valuation: Often employed in settling debts between hawaladars or traders.

10 One of the parties over-or-undervalues a commodity or trade item such as gold, thereby transferring value to another party and/or offsetting debt owed. INCSR 2021 Volume II Money Laundering 9 Currency Transaction Report (CTR): Financial institutions in some jurisdictions are required to file a CTR whenever they process a currency transaction exceeding a certain amount. In the United States, for example, the reporting threshold is $10,000. The amount varies per jurisdiction. These reports include important identifying information about accountholders and the transactions. The reports are generally transmitted to the country s FIU. Customer Due Diligence/Know Your Customer (CDD/KYC): The first step financial institutions must take to detect, deter, and prevent money laundering and terrorism financing, namely, maintaining adequate knowledge and data about customers and their financial activities.