Identifier
Created
Classification
Origin
05ATHENS3229
2005-12-23 08:09:00
UNCLASSIFIED
Embassy Athens
Cable title:  

2005-2006 INTERNATIONAL NARCOTICS CONTROL

Tags:  SNAR KTFN EFIN GR 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 04 ATHENS 003229 

SIPDIS

STATE FOR EUR/SE, EUR/ERA, EB/ESC/TFS, INL

JUSTICE FOR OIA AND AFMLS

TREASURY FOR FINCEN

E.O. 12958: N/A
TAGS: SNAR KTFN EFIN GR
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL
STRATEGY REPORT (INCSR) PART II FINANCIAL CRIMES
AND MONEY LAUNDERING - GREECE

REF: A) STATE 210691; B) STATE 20958; C) STATE 20960;
D) STATE 20961

UNCLAS SECTION 01 OF 04 ATHENS 003229

SIPDIS

STATE FOR EUR/SE, EUR/ERA, EB/ESC/TFS, INL

JUSTICE FOR OIA AND AFMLS

TREASURY FOR FINCEN

E.O. 12958: N/A
TAGS: SNAR KTFN EFIN GR
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL
STRATEGY REPORT (INCSR) PART II FINANCIAL CRIMES
AND MONEY LAUNDERING - GREECE

REF: A) STATE 210691; B) STATE 20958; C) STATE 20960;
D) STATE 20961


1. The following is the 2005-2006 International
Narcotics Control Survey Report (INSCR) Part II
Financial Crimes and Money Laundering for Greece.


2. While not a major financial center, Greece is
vulnerable to money laundering related to narcotics-
trafficking, prostitution, contraband cigarette
smuggling, and illicit gambling activities conducted
by criminal organizations originating in former
Soviet constituent countries, as well as in Albania,
Bulgaria, Romania and other Balkan countries. Money
laundering in Greece is controlled by organized local
criminal elements associated with narcotics
trafficking, and narcotics are a primary source of
laundered funds. Most of the funds are not laundered
through the banking system. Rather, they are most
commonly invested in real estate, hotels, and
consumer goods such as automobiles. Implementation of
regulatory requirements documenting the flow of large
sums of cash via financial and other institutions --
such as Greece's five private and two state-owned
casinos -- should be more vigorous. The cross-border
movement of illicit currency and monetary instruments
is a continuing problem. Greece is not considered an
offshore financial center. Greek laws allow banking
authorities to check transactions of international
business companies established in Greece with
offshore operations. Senior Government of Greece
(GOG) officials are not known to engage in or
facilitate money laundering. Currency transactions
involving international narcotics-trafficking
proceeds are not believed to include significant
amounts of U.S. currency.


3. Greece has three free-trade zones, located at
Piraeus, Thessalonica and Heraklion port areas where
goods of foreign origin may be brought into without
payment of customs duties or other taxes and remain
free of all duties and taxes if subsequently
transshipped or re-exported. Handling operations are
carried out according to EU regulations 2504/88 and
2562/90. There is no indication that these free
zones are being used in trade-based money laundering
schemes or by the financiers of terrorism.



4. The GOG criminalizes money laundering derived
from all crimes in the 1995 Law 2331/1995. That law,
"Prevention of and Combating the Legalization of
Income Derived from Criminal Activities," imposes a
penalty for money laundering of up to ten years in
prison and confiscation of the criminally derived
assets. The law also requires that banks and non-bank
financial institutions file suspicious transaction
reports (STRs). Legislation passed in March 2001
targets organized crime by making money laundering a
criminal offense when the property holdings being
laundered are obtained through criminal activity or
cooperation in criminal activity. Money laundering
became an offense in Greece under Presidential Decree
2181/93.


5. The GOG passed in November 2005 new legislation
revising Law 2331/1995 to bring Greek legislation in
line with EU directive 2001/97/EC. The new law,
3424/2005, extends the criminal base for money
laundering by increasing the cases considered as
money laundering to include terrorism financing,
trafficking of people, electronic fraud and stock
market manipulation. It also broadens the scope of
individuals who are required to report suspicious
transactions by including more professionals involved
such as auction dealers and accountants. The new law
also broadens the power of supervisory authorities
and clarifies gray zones of previous legislation by
deconflicting confidentiality rules and anti-money
laundering requirements imposed on banking and other
financial institutions. It also provides supervisory
authorities stronger and clearer legislative
authority to prohibit transactions where money
laundering is suspected.


6. In 2003 Greece enacted legislation (Law 3148)
that incorporates European Union (EU) provisions in
directives dealing with the operation of credit
institutions and the operation and supervision of
electronic money transfers. Under this legislation,
the Bank of Greece has direct scrutiny and control
over transactions by credit institutions and entities
involved in providing services for fund transfers.
The Bank of Greece issues operating licenses after a
thorough check of the institutions, their management,
and their capacity to ensure the transparency of
transactions.

7. Law 3259/August 2004 allowed individuals and
legal entities that pay taxes in Greece to repatriate
capital from any bank account held outside Greece by
paying a three percent tax on the transferred funds
within six months (later extended to 9 months). The
Bank of Greece, the nation's Central Bank, has issued
a circular to financial institutions that receive
repatriated funds, instructing them on how to
scrutinize the transfers for possible money
laundering. The Ministry of Economy and Finance has
issued detailed instructions on the documentation and
auditing procedures required for repatriating
capital. According to the Bank of Greece, about 500
million euros have been actually transferred back to
Greece under this law, considerably less than the
amount anticipated.

8. The Bank of Greece (through its Banking
Supervision Department),the Ministry of National
Economy and Finance (which supervises the Capital
Market Commission),and the Ministry of Development
(through its Directorate of Insurance Companies)
supervise and closely monitor credit and financial
institutions. Supervision includes the issuance of
guidelines and circulars, as well as on-site
examinations aimed at checking compliance with anti-
money laundering legislation. Supervised institutions
must send to their competent authority a description
of the internal control and communications procedures
they have implemented to prevent money laundering. In
addition, banks must undergo internal audits. Bureaux
de change are required to send to the Bank of Greece
a monthly report on their daily purchases and sales
of foreign currency.


9. Under Decree 2181/93, banks in Greece must demand
customer identification information when opening an
account or conducting transactions that exceed 15,000
euros. If there is suspicion of illegal activities,
banks can take reasonable measures to gather more
information on the identification of the person.
Greek citizens are asked to provide a tax
registration number if they conduct foreign currency
exchanges of 1,000 euros or more, and full
identification of the transaction including name of
recipient in exchanges of 12,500 euros or more. Banks
and financial institutions are required to maintain
adequate records and supporting documents for at
least five years after ending a relationship with a
customer, or in the case of occasional transactions,
for five years after the date of the transaction.


10. Every bank and credit institution is required by
law to appoint an officer to whom all other bank
officers and employees must report any transaction
they consider suspicious. Reporting obligations also
apply to government employees involved in auditing,
including employees of the Bank of Greece, the
Ministry of Economy and Finance, and the Capital
Markets Commission. Reporting individuals are
required to furnish all relevant information to the
prosecuting authorities. Reporting individuals are
protected by law.

11. Greece has adopted banker negligence laws under
which individual bankers may be held liable if their
institutions launder money. Banks and credit
institutions are subject to heavy fines if they
breach their obligations to report instances of money
laundering; bank officers are subject to fines and a
prison term of up to two years. In November 2005, the
Bank of Greece announced that in 2005 the Bank had
imposed fines of a total amount of 8.8 million euros
to 13 credit institutions and 7 bureaux de change and
revoked the license of one bureau de change for
violations of money laundering laws. The Bank had
imposed similar fines and administrative sanctions to
financial institutions, including prohibiting the
opening of new branches, in previous years as well,
since enactment of money laundering law 2331 of 1995.
There have been no objections from banking and
political groups to the Greek government's policies
and laws on money laundering.

12. All persons entering or leaving Greece must
declare to the authorities any amount they are
carrying over 2,000 euros. Reportedly, however,
cross-border currency reporting requirements are not
uniformly enforced at all border checkpoints.


13. Law 2331/1995 establishes the Competent
Committee (CC) to receive and analyze STRs and to
function as Greece's Financial Intelligence Unit
(FIU). The CC is chaired by a senior judge and
includes representatives from the Bank of Greece, the
nation's Central Bank; various government ministries;
and the stock exchange. If the CC believes that an
STR warrants further investigation, it forwards the
STR to the Financial Crimes Enforcement Unit, a
multi-agency group that functions as the CC's
investigative arm. In 2004, the Financial Crimes
Enforcement Unit was renamed the Special Control
Directorate (YPEE) and placed under the direct
supervision of the Ministry of Economy and Finance.
The CC is also responsible for preparing money-
laundering cases on behalf of the Public Prosecutor's
Office.


14. Law 3424 passed in November 2005 upgrades the CC
to an independent authority, which is authorized
access to public and private files without being
prevented by tax confidentiality. The committee's
authority in the evaluation of information
transmitted by different sources in Greece and by
international organizations is broadened. The
committee is authorized to block suspects' funds and
to impose penalties not only to money laundering
incumbents but also to those who fail to report
illegal transactions. The committee is also obliged
to respond back to banks and inform them of actions
taken so that there is continuity in reported cases.

15. There have been several arrests for money
laundering since January 2002. These involved the
Greek owners (and their spouses) of vessels
transporting cocaine from Colombia and other Western
Hemisphere countries. The guilty parties received
five-year sentences.

16. With regard to the freezing of accounts and
assets, Law 3424/2005 harmonizes Greece's laws with
relevant legislation of the EU and other
international organizations. The new law incorporates
elements of the EU Framework Decision on the freezing
of funds and other financial assets and the EU
Council regulation on combating the financing of
terrorism. The Greek Government says it will
promulgate regulations implementing law 3424/2005 in
the first quarter of 2006. YPEE has established a
mechanism for identifying, tracing, freezing,
seizing, and forfeiting assets of narcotics-related
and other serious crimes; the proceeds are turned
over to the GOG. According to the 1995 law, all
property and assets used in connection with criminal
activities is seized and confiscated by the GOG
following a guilty verdict. Legitimate businesses can
be seized if used to launder drug money. The GOG has
not enacted laws for sharing seized narcotics-related
assets with other governments.

17. The Ministry of Justice unveiled legislation on
combating terrorism, organized crime, money
laundering, and corruption in March 2001; Parliament
passed the legislation in July 2002. Under a new
counterterrorism law (Law 3251/July 2004),anyone who
provides financial support to a terrorist
organization faces imprisonment of up to ten years.
If a private legal entity is implicated in terrorist
financing, it faces fines of between 20,000 and 3
million euros, closure for a period of two months to
two years, and ineligibility for state subsidies. The
new law incorporates the Financial Action Task Force
(FATF) Special Eight Recommendations on Terrorist
Financing and Law 3424/2005 completed the task by
revising Law 2331/1995. According to the GOG, FATF
Special Recommendation on cash couriers will be
adopted at a later date following the issuance of a
relevant EU directive.

18. The Bank of Greece and the Ministry of National
Economy and Finance have the authority to identify,
freeze, and seize terrorist assets. The Bank of
Greece has circulated to all financial institutions
the list of individuals and entities that have been
included on the UNSCR 1267 Sanctions Committee's
consolidated list as being linked to Usama Bin Laden,
the al-Qaida organization, or the Taliban, or that
the EU has designated under relevant authorities.
Suspect accounts (of small amounts) have been
identified and frozen.

19. There are no known plans on the part of the GOG
to introduce legislative initiatives aimed at
regulating alternative remittance systems. Illegal
immigrants or individuals without valid residence
permits are known to send remittances to Albania and
other destinations in the form of gold and precious
metals, which are often smuggled across the border in
trucks and buses. The financial and economic crimes
police as well as tax authorities closely monitor
charitable and nongovernmental organizations; there
is no evidence that such organizations are being used
as conduits for the financing of terrorism.

20. Greece is a member of the FATF, the EU, and the
Council of Europe. The CC is a member of the Egmont
Group. The GOG is a party to the 1988 UN Drug
Convention, and in December 2000 became a signatory
to the UN Convention against Transnational Organized
Crime. On April 16, 2004, Greece became a party to
the UN International Convention for the Suppression
of the Financing of Terrorism. Greece has signed
bilateral police cooperation agreements with Egypt,
Albania, Armenia, France, the United States, Iran,
Israel, Italy, China, Croatia, Cyprus, Lithuania,
Hungary, Macedonia, Poland, Romania, Russia, Tunisia,
Turkey, and Ukraine. It also has a trilateral police
cooperation agreement with Bulgaria and Romania, and
a bilateral agreement with Ukraine to combat
terrorism, drug trafficking, organized crime and
other criminal activities.

21. Greece exchanges information on money laundering
through its Mutual Legal Assistance Treaty (MLAT)
with the United States, which entered into force
November 20, 2001. The Bilateral Police Cooperation
Protocol provides a mechanism for exchanging records
with U.S. authorities in connection with
investigations and proceedings related to narcotics
trafficking, terrorism, and terrorist financing.
Cooperation between the U.S. Drug Enforcement
Administration and YPEE has been extensive, and the
GOG has never refused to cooperate. The CC can
exchange information with other FIUs, although it
prefers to work with a memorandum of understanding in
such exchanges.

22. The Government of Greece is moving forward well
in adjusting its legislation to international
standards by gradually incorporating all EU
directives on money laundering and terrorism
financing. 2006, however, will be a year in which
Greece needs to begin aggressive implementation of
the good legislative tools it now has at its
disposal. Greece should also ensure uniform
enforcement of its cross-border currency reporting
requirements and take improved steps to deter the
smuggling of precious gems and metals across its
borders.
COUNTRYMAN