Identifier
Created
Classification
Origin
05SANTIAGO1886
2005-09-13 14:27:00
CONFIDENTIAL
Embassy Santiago
Cable title:  

A/S GLASER TALKS MONEY LAUNDERING AND TERRORIST

Tags:  SNAR PGOV EFIN PTER CI TERRORISM 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 SANTIAGO 001886 

SIPDIS

DEPT OF TREASURY FOR A/S GLASER; DEPT OF HOMELAND SECURITY
FOR THOMPSON; FINCEN FOR JENNIFER SHOWELL

E.O. 12958: DECL: 09/05/2015
TAGS: SNAR PGOV EFIN PTER CI TERRORISM
SUBJECT: A/S GLASER TALKS MONEY LAUNDERING AND TERRORIST
FINANCE DURING AUGUST 25-26 VISIT TO CHILE


Classified By: Ambassador Craig A. Kelly for reasons 1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 03 SANTIAGO 001886

SIPDIS

DEPT OF TREASURY FOR A/S GLASER; DEPT OF HOMELAND SECURITY
FOR THOMPSON; FINCEN FOR JENNIFER SHOWELL

E.O. 12958: DECL: 09/05/2015
TAGS: SNAR PGOV EFIN PTER CI TERRORISM
SUBJECT: A/S GLASER TALKS MONEY LAUNDERING AND TERRORIST
FINANCE DURING AUGUST 25-26 VISIT TO CHILE


Classified By: Ambassador Craig A. Kelly for reasons 1.4 (b) and (d).


1. (C) Summary: Department of Treasury A/S Glaser and a
five-member delegation met with key Chilean counterparts in
the financial sector to discuss terrorist finance and money
laundering. A/S Glaser noted during his meetings that while
Chile is a few steps ahead of its regional neighbors, Chile's
restrained Financial Intelligence Unit, its new Public
Ministry, and weak legislation hamper its ability to
effectively combat terrorist finance. The Finance Ministry
reiterated support for counter-terrorist finance legislation.
However, it confirmed the GOC cannot freeze assets of
terrorists, thereby limiting Chile's compliance with
international standards. Chilean interlocuters noted that
legislation to modify stringent bank secrecy laws sits in the
Senate after passing the lower house. End Summary.


2. (SBU) A/S Daniel Glaser (Acting),Office of Terrorist
Financing and Financial Crime of the Department of Treasury,
was accompanied by Cynthia Medina, Policy Advisor, Office of
Terrorist Financing and Financial Crime, Department of
Treasury; Kristofer Doucette, Intelligence Analyst, Office of
Intelligence and Analysis, Department of Treasury; Angel
Rodriguez, Analyst, US Southcom-J2, Department of Defense;
Jennifer Showell, Regional Country Specialist, Financial
Crimes Enforcement Network; and David Thompson, Section
Chief, Money Laundering Coordination Center, ICE Financial
And Trade Investigations Division, Department of Homeland
Security.


3. (C) During his visit, A/S Glaser reiterated the
importance of the enforcement of international standards and
transparency in the financial sector. He noted the necessity
of modifying bank secrecy laws in order to allow appropriate
access by law enforcement officials. UNSCR 1267 and 1373
regulations were also emphasized, and A/S Glaser acknowledged
the difficulty of enforcing UNSCR 1373 due to the lack of a
uniform international list of terrorist financiers. A/S

Glaser pointed out that any action taken against financial
networks by governments is positive. He also announced an
upcoming terrorist finance designation of 16 derivitives (12
individuals and 4 entities) from the original Hizbollah
designation. While Chile is ahead of its neighbors by
criminalizing terrorist finance, he observed that the
inability to freeze assets hinders effective action against
terrorism.

--------------
Financial Intelligence Unit
--------------


4. (C) The delegation met with Victor Ossa, Director of
Chile's Financial Intelligence Unit (UAF),Carmen Ovalle
Andrade, Chief of Research, and Pablo Cruz Novoa, Chief of
the Analysis Division. Ossa clarified that the UAF reports
only to the Public Ministry, which in turn informs law
enforcement agencies. Although the UAF preferred to label
Chile's banking laws as "confidentiality laws" rather than
"bank secrecy laws," Ossa noted that the Bank Superintendent
does not review bank transactions during its regulatory
processes. The UAF reported receiving 10-15 STRs per month
from the banking sector, unchanged from six months ago. When
asked about the risk potential of casinos, Ossa reiterated
that the gaming industry in Chile is not susceptible to money
laundering because proceeds are only distributed in cash.
(Note: Ossa had conveyed the same message to the gaming
assessment team from Treasury's Office of Technical
Assistance in July. Per request by the Superintendent of
Gaming, OTA will return to Chile in September to assist with
processing bids for about 24 casino installations. End
Note.) Money exchange houses, which have submitted a few
STRs to the UAF, are of greater concern, said Ossa. This
past year, the UAF declined several calls from exchange
houses for "assistance," which entailed a request for a
certificate authenticating the solvency of money exchange
house operations, he noted.

--------------
Finance Ministry
--------------


5. (C) Undersecretary of Finance Maria Eugenia Wagner
expressed concern about the risk of terrorist finance in
Chile, noting the correlation between corruption, money
laundering and terrorist finance. Emphasizing money
laundering is not a big problem now, the GOC at the same time
wants to prevent problems in the future. She further noted
the financial market needs to be protected from money
laundering in order to facilitate growth and eliminate
poverty, which will only occur with transparent fiscal
policy. Wagner then discussed the new legislation (which is
currently in the Senate after passing the lower chamber),
which she said will modify Chile's bank secrecy laws in order
to provide some access by law enforcement entities. She
acknowledged Chile's history of prioritizing privacy and
therefore stringent bank secrecy laws, but said this focus
will waylay as the new generation matures and deepens their
focus on transparency. In discussing terrorist finance,
Wagner agreed that a key problem in Chile is the lack of
legislation to support the freezing of assets.

--------------
In-House
--------------


6. (C) A/S Glaser told the Country Team that the Department
of Treasury, in coordination with FINCEN, will forward names
of suspected or actual terrorist financiers to the UAF,
Chilean banks and law enforcement entities. The Country Team
asked the delegation that the Embassy be advised of all
information forwarded to the GOC. Glaser noted that any
follow-up by Chile is considered a success.

--------------
Bankers Dinner
--------------


7. (C) The Delegation met with nine representatives from
banks and the Association of Banks. Bankers voiced differing
opinions, including the position that banks must pro-actively
take measures to prevent money laundering, while others
commented that the responsibility primarily fell with the
government. Bankers also differed on how much money
laundering occurs in Chile.

--------------
Investigative Police
--------------


8. (SBU) Hector Soto, Chief of Economic Crimes for the
Investigative Police (PICH),and members of his staff
described internal relations among the 70-detective member
staff and with the new Prosecutor's Office (MP) as positive.
All cases are channeled through MP. In 2004, PICH
investigated 9000 economic crimes, up from 5600 such crimes
in 2001. The cybercrime unit focuses on child pornography,
economic crimes, technology-related crimes and forensic
analysis. The money laundering unit has no autonomy in
investigations, as mandated by law, and the unit actively
advocates for updated legislation to modify bank secrecy
laws. Most money laundering is associated with drug
trafficking.

--------------
Congress
--------------


9. (C) Congressman Jorge Burgos, joined by his Chief of
Cabinet, Raul Oyarzun, called the bank secrecy debate
"absurd" with no constitutional backing. He said the reason
behind the constitutional court rescinding bank secrecy
legislation in early 2004 was based on some members of
Congress believing that the agencies able to access
information could hurt or endanger the rights of privacy of
individuals, which is a consitutional guarantee. Although
this "right wing" understanding pervaded the court, Burgos
believes no Chilean wants to protect criminal activity, and
most are open to access of information if reasonable
suspicion exists.


10. (C) Burgos emphasized the importance of combating
terrorist finance and money laundering, but believes
legislation started late. He noted that the current bill
that will restore some power to the UAF by easing bank
secrecy laws has passed the lower chamber. On August 19,
Burgos and several congressional colleagues obtained
agreement from the GOC to fast-track the bill, and Burgos
believes the Senate will pass the bill shortly.


11. (C) When discussing the lack of action against non-Al
Qaeda terrorists (i.e. UNSCR 1373) by the international
community, Burgos noted that only a few structural
organizations exist in the Latin American region to support
counter-terrorist measures. Most efforts to combat terrorism
and terrorist finance are via bilateral agreements, which
presents challenges to a transnational problem.

--------------
Public Ministry
--------------

12. (SBU) Mauricio Fernandez, Director of Money Laundering
and Organized Crime, told the delegation that the Public
Ministry (MP) is an independent, operational and
constitutionally-created organization. Overseeing 16
regions, the National Prosecutor (equivalent to the Attorney
General),who is appointed by the Supreme Court and approved
by 2/3 majority of the Senate, heads MP for an eight-year
term. Each region has an office and regional prosecutors;
Santiago, given its size, is divided into four sub-regions.
MP contains specialized offices including money laundering
and organized crime, sexual crimes, drug trafficking and
corruption. MP leads all investigations, and enjoys good
relations with the FIU, police, customs, Chile's IRS (SII)
and other agencies.


13. (C) According to Fernandez, the major concern for MP and
the Central Bank are money exchange houses. These units are
not subject to regulation, have no reporting requirements,
and are not included in the new legislation, he said. In
addition, banks traditionally provide as little information
as possible; the UAF and MP are dependent on them to channel
information, but sanctioning and other means of checking
compliance and holding banks accountable is not available.


14. (C) Fernandez reiterated that terrorist finance
legislation does not allow Chilean law enforcement to freeze
assets. The MP can stall an investigation, but Chile is not
able to comply with this international standard. An
additional challenge for the MP is that they do not report to
the Ministry of Justice, which can create administrative and
coordination challenges.


15. (U) A/S Glaser departed Post prior to reviewing this
report.
KELLY