DOMINICAN REPUBLIC: 2003-2004 INTERNATIONAL

UNCLAS SECTION 01 OF 07 SANTO DOMINGO 000148 SIPDIS DEPARTMENT FOR INL AND WHA/CAR JUSTICE FOR OIA, AFMLS, AND NDDS TREASURY FOR FINCEN DEA FOR OILS AND OFFICE OF DIVERSION CONTROL E.O. 12958: N/A TAGS: SNAR DR SUBJECT: DOMINICAN REPUBLIC: 2003-2004 INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT (INCSR) REF: A. STATE 324347 ¶B. STATE 328024 ¶1. Text of Dominican Republic draft 2002-2003 INCSR follows. Part One: Drugs and Chemical Control ¶I. Summary The Dominican Republic (DR) is a major transit country for South American drugs, mostly cocaine and heroin, moving to the United States and Europe. The Government of the Dominican Republic (GODR) continued to cooperate closely with the U.S. in counternarcotics matters. Last year (2003) saw a decrease in heroin seizures, an increase in cocaine interceptions, and a decrease in seizures of MDMA (ecstasy); negligible cooperation between the Government of the Dominican Republic (GODR) and the Haitian police; continued good results of the extradition process; and attempts to apply a strong anti-money laundering law to a notorious bank fraud case. (For details on the GODR's anti-money laundering initiatives in 2003, see the Money Laundering section of this report.) Although the GODR continued its efforts to combat corruption in 2003, corruption and weak governmental institutions remained an impediment to controlling the flow of illegal narcotics through the DR. In 2003, an estimated eight percent of the cocaine directed toward the U.S. flowed through Hispaniola, and nearly half this amount reached the DR's shores directly from South American sources. The DR is a party to the 1988 UN Drug Convention. II. Status of Country There is no significant cultivation, refining, or manufacturing of major illicit drugs in the DR. Dominican criminal organizations are increasingly involved in command and control of international drug trafficking operations, but the country's primary role in regional drug trafficking is as a transshipment hub. Seizures in 2003 continued to indicate that cocaine, heroin, and marijuana destined for the United States and, to a lesser extent, Europe were being transshipped through the DR and its territorial waters. Ecstasy seized in the DR was most often being transported from Europe to the United States. Puerto Rican authorities noted a decrease in drug smuggling via the ferries operating between Puerto Rico and the DR, probably due to the presence of a newly established counternarcotics canine unit at the Santo Domingo ferry terminal. Dominican nationals play a major role in the actual transshipment of drugs. Many "go-fast" crews in the Caribbean include Dominican nationals, mostly fishermen recruited from the local docks. The crews speak Spanish, the language of the source country smugglers; move easily throughout the Caribbean; and are recruited for very small amounts of money. The DR is not a producer of precursor chemicals, but there is continued concern about their importation. III. Country Actions Against Drugs in 2002 Policy Initiatives. The DR-initiated bilateral intelligence-sharing and interdiction efforts with Haiti, begun after Operation Hurricane in 2001, were not continued in 2003. The DR has continued to participate in annual Caribbean-wide counternarcotics operations. The National Directorate for Drug Control (DNCD),the law enforcement arm responsible for counternarcotics measures, and the National Drug Council (CND),the GODR's policy and planning organ, have adopted a computerized tracking system and are able to track seizures of assets in connection with drug-related offenses. Following the collapse of BANINTER, the third-largest Dominican bank, the Dominican Government struggled to implement anti-money laundering legislation passed in 2002. (See the Money Laundering section of this report.) The GODR instituted training, with U.S. and other international support, for implementing the revised criminal procedures code in 2004. This code will change the Dominican criminal system from a Napoleonic system, with a dossier of evidence evaluated by a judge, to an adversarial system of verbal process before a judge or a jury. Law Enforcement Efforts. The DNCD increased its canine program to 30 dogs and handlers. All canine teams were recertified, and unit commanders were certified as dog team trainers. No multinational counternarcotics exercises were conducted during 2003. The DNCD led a multi-year, U.S. Government-supported effort to share data among Dominican law enforcement agencies and to make information available on demand by field officers. Cultivation/Production. There is no known cultivation of coca or opium poppy in the DR. Cannabis is grown on a small scale for local consumption. The GODR's investigations into possible in-country manufacture of MDMA (ecstasy) have produced no definitive evidence of such activity. Drug Flow/Transit. The DNCD maintained its seizure rate, interdicting body-carried heroin and cocaine in the DR's international airports and larger quantities from vehicles and buildings. Through December 2003, with cooperation and assistance of the U.S. Drug Enforcement Administration (DEA), the DNCD seized 1,338 kilograms of cocaine, 59 kilograms of heroin, 51,965 units of MDMA (Ecstasy),and 1174 pounds of marijuana. Puerto Rican authorities seized 2,039 kilograms of cocaine as a direct result of intelligence supplied by the DNCD and the Santo Domingo DEA office. The DNCD continued to focus interdiction operations on the drug-transit routes in the DR's territorial waters along the northern border and on its land border crossings with Haiti, while attempting to prevent air drops and sea delivery of illicit narcotics to remote areas. The DNCD and their DEA counterparts concentrated increasingly on investigations leading to takedown of large criminal organizations, and several international rings were broken up as a result. In 2003, drugs were easily accessible for local consumption in most metropolitan areas. The DR attracted a growing number of tourists from Europe, the United States, and Canada who provided a customer base for local drug sales, especially at the beachfront vacation resorts. Traffickers often used drugs to pay low-level couriers and distributors. The DNCD made 3929 drug-related arrests in 2003; of these, 3692 were Dominican nationals and 237 were foreigners. There were 227 fewer drug-related arrests in 2003 than in 2002 and 62 fewer foreigners were among those arrested on drug charges than in 2002. Only 9 percent of the total cocaine and 61 percent of the total heroin seized in the Dominican Republic was seized in the airports. Seizures of Ecstasy were more successful in airports, resulting in 77 percent of all Ecstasy pills seized in the DR. Most of the significant seizures were made on land, in the big cities. There were some seizures made at the Haitian border in 2003, but quantities seized were limited. While the number of seizures made in Dominican airports was high, the actual amount of drugs seized was small. Maritime seizures remain a challenge for the DR, especially drugs hidden in commercial vessels for shipment to the US and/or Europe. In one December case, DNCD canine teams were dispatched at a moment's notice to search a suspect freighter in a small port near the Haitian border; that investigation continues. Extradition. The U.S.-Dominican Extradition Treaty dates from ¶1909. Extradition of nationals is not mandated under the treaty, and for many years Dominican legislation barred the extradition of Dominican nationals. Former President Fernandez signed legislation in 1998 allowing the extradition of Dominican nationals. In March 2000, the U.S. Marshals Service assigned two marshals temporarily to the DR. They received excellent cooperation from the DNCD's special Section for Fugitive Surveillance and other relevant Dominican authorities in locating fugitives and returning them to the U.S. to face justice. The marshals were withdrawn in 2002, then returned permanently during 2003. President Mejia's administration generally maintained its record of cooperation in 2003, and the GODR extradited 17 Dominicans to the United States during the year. The DNCD arrested 20 fugitives in 2003 in response to U.S. extradition requests. The National Police, working with the FBI, arrested and extradited two drug-related subjects. Eight individuals are now in custody pending extradition to the United States. In December 2003, with no fanfare, one of six persons arrested in the "Joselito.com" case and awaiting deportation to the United States was released on orders of the Attorney General. In response to Embassy protests, the Attorney General cited supposed inadequacies in the extradition request package. At year's end, President Mejia was aware of USG concerns, but no further action had been taken. Mutual Legal Assistance. The GODR cooperates with USG agencies, including the DEA, FBI, U.S. Customs Service, and U.S. Marshals Service on counternarcotics and fugitive matters. The DNCD housed and manned the DEA-sponsored Caribbean Center for Drug Information (CDI) at its facilities in Santo Domingo. An increasing number of Caribbean countries have found the CDI's intelligence analysis services useful and are now frequent contributors of new information. The Dominican Navy received six renovated patrol craft and two newly constructed 100 foot patrol ships, supplied under a U.S. $22 million commercial contract with a U.S. company, and plans were made to incorporate these vessels into multilateral counternarcotics and anti-migration patrol activities. Corruption. The GODR does not, as a matter of government policy, encourage or facilitate illicit production or distribution of narcotics, psychotropic drugs, and other controlled substances, nor does it contribute to drug-related money laundering. Dominican institutions remain vulnerable to influence by interest groups or individuals with money to spend, including narcotics traffickers. The GODR has not convicted any senior government official for engaging in, encouraging, or in any way facilitating the illicit production or distribution of illicit drugs or controlled substances, or the laundering of proceeds from illegal drug transactions. Legislation remains pending that would strengthen enforcement of a 1979 law that requires senior appointed, civil service, and elected officials to file financial disclosure statements. In what may be a regional model for transparency and an indication of the seriousness of the Dominican judiciary to uphold the ethical quality of employees, the sworn financial disclosure statements for all Dominican judges can be found on the Internet at http//www.suprema.gov.do/jueces/dj.htm. Nonetheless, an effective system to verify these statements has not yet been implemented and there are no sanctions for false statements. The GODR is a party to the Inter-American Convention Against Corruption and in 2001 signed the consensus agreement on establishing a mechanism to evaluate compliance with the Convention. Precursor Chemical Control. The Secretariat of Health is responsible for the control of chemicals entering and departing the DR. The CND has prohibited the re-exportation of certain chemicals. Domestic Programs (Demand Reduction). The DNCD conducted 79 youth events in various cities and neighborhoods, from basketball tournaments to chess matches, reaching over 200,000 young people to encourage competitive and recreational activities as better choices than drug abuse. A non-governmental organization, Foundation for Life (FUNVIDA), published with U.S. Government assistance a book entitled "Schools Without Drugs" and distributed it gratis at several neighborhood meetings in the capital area. Agreements and Treaties. In 1984, the United States and the DR entered into an agreement on international narcotics control cooperation. In May 2003 the Dominican Republic entered into three comprehensive bilateral agreements, on Cooperation in Maritime Migration Law Enforcement, Maritime Counter-Drug Operations, and Search and Rescue, granting permanent overflight provisions in all three agreements for the respective operations. The three agreements conclude a long bilateral effort to secure permanent overflight provisions; previous agreements provided only annual provisions. In addition, the Maritime Counter-Drug Agreement broadened the scope of operations agreed to by the parties. The DR remains an active participant in ongoing negotiations to reach a Caribbean regional maritime counternarcotics agreement. In 2002 the DR became the first country in the Western Hemisphere to sign an Article 98 agreement exempting U.S. military personnel in the DR from the jurisdiction of the International Criminal Court (ICC). In 2001, the United States and the DR exchanged instruments of ratification of the Treaty for the Return of Stolen or Embezzled Vehicles. Attempts to implement the treaty have been hampered by organizational weaknesses within the Dominican bureaucracy, and in 2003 no vehicles were repatriated under this treaty. The DR has signed but not ratified the UN Convention against Transnational Organized Crime, the Protocol to Prevent, Suppress and Punish Trafficking in Persons, the Protocol against the Smuggling of Migrants, and the Protocol against the Illicit Manufacturing of and Trafficking in Firearms. IV. U.S. Policy Initiatives and Programs Cocaine and heroin trafficking, money laundering, institutional corruption, and reform of the judicial system remain the United States' primary counternarcotics concerns in the DR. The USG and the GODR cooperate to develop Dominican institutions that can interdict and seize narcotics shipments and conduct effective investigations leading to arrests, prosecutions, and convictions. The USG will continue to urge the GODR to improve its asset forfeiture procedures and its capacity to regulate financial institutions, develop and maintain strict controls on precursor chemicals, and improve its demand reduction programs. During 2003, the United States provided essential equipment and training to expand the counternarcotics canine units, supported the DNCD's vetted special investigation unit and border intelligence units, provided radio equipment to facilitate communications along the DR's border with Haiti, and funded assessments of airport and port security against narcotics trafficking and terrorism. The United States delivered three harbor patrol craft and a fully refurbished go-fast boat, previously captured from drug smugglers, to the Dominican Navy. The United States also assisted the Dominican Navy in planning for a complete maintenance and training program for its maritime assets. The cornerstone of this effort is the reopening of the Navy's training and maintenance school, closed in 1997. The first step, establishment of a Navy maintenance command, was completed in ¶2003. The United States has funded training to the DNCD Fugitive Surveillance Unit, helping it locate, apprehend, and extradite individuals wanted on criminal charges in the United States. Enhanced computer training, database expansion, and systems maintenance support were provided to the DNCD. The Dominican Navy and Air Force have a direct communications agreement with the U.S. Coast Guard's regional operations center (GANTSEC) in San Juan, Puerto Rico. Dominican Navy vessels have participated in numerous maritime drug seizures. USAID's "Strengthened Rule of Law and Respect for Human Rights" program continues to work with the Dominican court and prosecutorial system to improve the administration of justice, enhance access to justice, and support anticorruption programs. Improvements achieved to date include speedier, more transparent judicial processes managed by better trained, technically competent, and ethical judges who insist upon stricter adherence to due process. The USAID program continued to provide training to prosecutors in basic criminal justice and prosecutorial skills. Several high-profile investigations are ongoing. The U.S. Department of Justice, through OPDAT, provided two weeks of training to prosecutors and investigators on basics of money laundering. The U.S. Department of Homeland Security worked closely with Dominican business associations to establish a Dominican chapter of the Business Anti-Smuggling Coalition (BASC). This voluntary alliance of manufacturers, transport companies, and related private sector entities has agreed to meet stringent security standards to prevent smuggling by means of their operations and to receive surprise inspections at any time. The BASC approach has proven successful in other Latin countries in minimizing contraband and promoting honest business activity. A third privately owned airport, at La Romana, joined those at Punta Cana and Santiago in upgrading counternarcotics measures, including co-funding with the U.S. Government of a DNCD canine unit. The United States is planning to deploy a U.S. mobile training team for the DNCD's border units and provide increased support for Dominican naval patrols of the Mona Passage. With U.S. Customs leadership and DEA support, the Port Authority improved security at the formerly chaotic Santo Domingo terminal of the ferry to Puerto Rico. An ongoing project has improved passenger processing and established controls to detect and prevent smuggling of drugs and other contraband. Customs also advised the owners of the new Caucedo container terminal, which began limited operations in December. The Drug Enforcement Agency (DEA)-funded Caribbean Center for Drug Information at DNCD headquarters now permits real-time sharing and analysis of narcotics-related intelligence among all the nations of the Caribbean Basin. Similar centers are established in Mexico, Colombia, and Bolivia. USG training programs have also targeted the DR military's intelligence units in order to improve their capacity to analyze, detect and interdict narcotics shipments. Two military officers received counternarcotics training at Fort Benning, Georgia. The Road Ahead. The immediate U.S. goal remains helping to institutionalize judicial reform and good governance. The DR and U.S. are working to build coherent counternarcotics programs that can resist the pressures of corruption and can address new challenges brought by innovative narcotics trafficking organizations. The U.S. Government and the GODR will continue strengthening drug control cooperation through sharing of information and developing closer working relations among principal agencies. The United States will continue providing training and equipment for the DNCD, focusing its attention on the information technology and intelligence exchange necessary to disrupt narcotics smuggling at Dominican land and sea borders and at airports. Support for the retraining and re-certification of the DNCD canine units will continue, as will establishment of new canine units in cooperation with DNCD. The DNCD's fugitive investigation teams will continue to receive hands-on U.S. support for their efforts pursuing Dominican fugitives from U.S. justice seeking refuge in the DR. The USG will continue to provide support to Dominican government and private sector counternarcotics efforts, including provision of specialized technical equipment and support of business and civil society demand reduction efforts. USAID and the U.S. Department of Justice's Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT) will provide further training to prosecutors and investigators, increasing their professionalism and ensuring that they are prepared to implement the new Criminal Procedures Code when it becomes effective in 2004. U.S. support for civil society's and the Mejia administration's efforts to curb corruption will continue, regardless of the outcome of 2004 presidential elections, through U.S.-funded programs to strengthen the Attorney General's Anticorruption Prosecution Department and through monitoring and reporting compliance with the Inter-American Convention Against Corruption. The USG will continue to work closely with the Anti-Money Laundering Commission to ensure full implementation of the Anti-Money Laundering Law. Part Two: Financial Crimes and Money Laundering Dominican Republic. The Dominican Republic remains a key point for the transshipment of narcotics moving from South America into Puerto Rico and the United States. The Dominican Republic's financial institutions engage in currency transactions involving international narcotics-trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States. The smuggling of bulk cash by couriers, and wire transfer remittances, are the primary methods for moving illicit funds from the United States into the Dominican Republic. Once in the Dominican Republic, currency exchange houses and money remittance companies facilitate the laundering of these illicit funds. In 2003, counternarcotics authorities of the DNCD pursued nine cases of money laundering related to narcotics, arresting three persons and seizing a total of 29 vehicles, 18 firearms, 12 buildings, and USD 184,701 in cash. Most of these seizures were connected with one large case. During 2003, three Dominican banks failed, including the third largest in the nation, BANINTER, where some USD 2.2 billion evaporated over several years. Failure of two smaller banks, Banco Mercantil and BANCREDITO, brought the total loss to about three billion. Charges of bank fraud were filed against five individuals related to BANINTER, but all were later released on bail. Preliminary investigations revealed no useful information as to the sources of the missing BANINTER funds or the presence of laundered accounts, but despite GODR guarantees for all depositors, several large accounts carried on bank books remained unclaimed by the owners. There have been notable legislative and regulatory efforts by the Government of the Dominican Republic (GODR) to combat drug trafficking, corruption, money laundering, and terrorism. Narcotics-related money laundering has been a criminal offense since the enactment of Act 17 of December 1995 (the "1995 Narcotics Law"). The Act allows preventive seizures and criminal forfeiture of drug-related assets, and authorizes international cooperation in forfeiture cases. While numerous narcotics-related investigations were initiated under the 1995 Narcotics Law and substantial currency and other assets confiscated, there have been only three successful money laundering prosecutions under the 1995 Narcotics Law. Under Decree No. 288-1996, the Superintendency of Banks, banks, currency exchange houses, and stockbrokers are required to know and identify their customers, keep records of transactions (five years),record currency transactions greater than USD 10,000, and report suspicious financial transactions (SARs) to the Superintendency of Banks. In 1997, a Financial Analysis Unit (FAU) was created within the Superintendency of Banks to receive, analyze, and disseminate SAR information. The FAU also refers SARs to the Financial Investigative Unit of the DNCD for follow up investigation. The FAU is a member of the Egmont Group, and is authorized to exchange information with other Financial Intelligence Units. In 1998, the GODR passed legislation that allows extradition of Dominican nationals on money laundering charges. In June 2002, the GODR augmented its measures to prevent and combat money laundering, drug trafficking, and related activities, with the passage of Law No. 72-02. This law expanded the predicate offenses for money laundering beyond illicit trafficking in drugs and controlled substances, to include other serious crimes such as any act related to terrorism, illicit trafficking in human beings or human organs, arms trafficking, kidnapping, extortion related to recordings and electronic film made by physical or moral entities, theft of vehicles, counterfeiting of currency, fraud against the State, embezzlement, and extortion and bribery related to drug trafficking. It broadened the requirements for customer identification, recordkeeping of transactions, and reporting of SARs, to numerous other financial sectors including: securities brokers; the Central Bank; cashiers of checks or other types of negotiable instruments; insurers/sellers/cashers of travelers checks or money orders; credit/debit card companies; funds remittance companies; offshore financial service providers; casinos; real estate agents; automobile dealerships; insurance companies; and certain commercial entities such as those dealing in firearms, metals, archeological artifacts, jewelry, boats, and airplanes. Law No. 72-02 also requires the reporting of cash transactions greater than USD 10,000 to the FAU; until now these needed only to be recorded internally by the financial institutions. Moreover, the legislation requires individuals to declare cross-border movements of currency that are equal to or greater than the equivalent of USD 10,000 in domestic or foreign currency. The GODR responded to U.S. Government efforts to identify and block terrorist-related funds. Although no assets were frozen, efforts continue through orders and circulars issued by the Ministry of Finance and the Superintendency of Banks, instructing all financial institutions to continually monitor accounts. On November 15, 2001, the GODR signed, but has not yet become a party to, the UN International Convention for the Suppression of the Financing of Terrorism. The Dominican Republic is a member of the Caribbean Financial Action Task Force (CFATF) and of the Organization of American States Inter-American Drug Abuse Control Commission (OAS/CICAD) Experts Group to Control Money Laundering. The Dominican Republic is a party to the 1988 UN Drug Convention and a signatory to the UN Convention against Transnational Organized Crime (December 2000),which is not yet in force internationally. Cooperation with U.S. Government law enforcement on fugitive and extradition matters remains strong. Effective implementation of the anti-money laundering law of June 2002 constitutes a priority for the Dominican Republic, as well as sustained anti-corruption efforts. The GODR should also remain vigilant concerning controls relating to its many free zones, which may represent vehicles to facilitate money laundering. Dominican Republic Statistics (1993-2003) 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 Seizures Cocaine (mt) 1.3 1.1 1.8 1.27 1.01 2.34 1.35 2.14 3.60 2.80 1.07 Heroin (mt) 0.059 0.115 0.017 0.020 0.012 0.069 0.008 0.005 - - - Marijuana (mt) 0.5 1.7 3.794 2.90 0.18 0.11 0.78 1.01 1.00 6.81 0.31 Arrests/Detentions Nationals 3,692 3,857 3,496 4,454 3,918 1,676 1,431 3,097 3,388 2,810 - Foreigners 237 299 212 161 111 - 50 69 11 158 - Total Arrests 3,929 4,156 3,708 4,615 4,029 1,676 1,481 3,166 3,399 2,968 5,635 MARSHALL