Identifier
Created
Classification
Origin
06PARAMARIBO66
2006-02-03 15:16:00
UNCLASSIFIED
Embassy Paramaribo
Cable title:  

SURINAME'S FIU FOCUSED ON CAR DEALERS FOR NON-

Tags:  ECON EFIN ELTN NS 
pdf how-to read a cable
VZCZCXRO5490
RR RUEHGR
DE RUEHPO #0066/01 0341516
ZNR UUUUU ZZH
R 031516Z FEB 06
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC 8025
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHAO/AMCONSUL CURACAO 0940
UNCLAS SECTION 01 OF 02 PARAMARIBO 000066 

SIPDIS

SIPDIS

DEPT FOR WHA/CAR: LLUFTIG, INL/LA: NBOZZOLO

E.O 12958: N/A
TAGS: ECON EFIN ELTN NS
SUBJECT: SURINAME'S FIU FOCUSED ON CAR DEALERS FOR NON-
COMPLIANCE OF REPORTING UNUSUAL TRANSACTIONS

REF: (A) 06 PARAMARIBO 028 (B) 05 PARAMARIBO 124 (C) 05

PARAMARIBO 198

PARAMARIBO 00000066 001.2 OF 002


--------
Summary
--------

UNCLAS SECTION 01 OF 02 PARAMARIBO 000066

SIPDIS

SIPDIS

DEPT FOR WHA/CAR: LLUFTIG, INL/LA: NBOZZOLO

E.O 12958: N/A
TAGS: ECON EFIN ELTN NS
SUBJECT: SURINAME'S FIU FOCUSED ON CAR DEALERS FOR NON-
COMPLIANCE OF REPORTING UNUSUAL TRANSACTIONS

REF: (A) 06 PARAMARIBO 028 (B) 05 PARAMARIBO 124 (C) 05

PARAMARIBO 198

PARAMARIBO 00000066 001.2 OF 002


--------------
Summary
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1. A significant increase in car imports in recent years,
especially those in the luxury class range valued at
US$25,000 and above, and suspected links between this
activity and money laundering have prompted a crackdown on
car dealerships by Suriname's Financial Intelligence Unit
(FIU). Last week, FIU head Radjendrekoemar Bhagwandas
announced in the press that the "non-financial sector"
category of compulsory reporters for unusual financial
transactions, of which car dealers are a part, would face
increased scrutiny in 2006. End summary.


2. Suriname's dramatic increase in car imports began
primarily after the Government of Suriname lifted the
import license requirement in early 2004, according to
Aroen Jadoenathmisier, Head of Import, Export and Foreign
Exchange Control of the Ministry of Trade and Industry. A
car dealer thereafter only had to be registered with the
Chamber of Commerce in order to operate. Jadoenathmisier
stated that the new system was meant to streamline and thus
increase the receipt of revenue by the government from
duties on imported vehicles. In 2005, government income
from the import of cars was 60 million SRD (about USD20.7
million) in import taxes, fees and VAT tax. As a result of
the looser licensing requirements, car dealerships sprang
up on seemingly every corner, including dealerships run by
the Yokohama Trading Company, whose owner was arrested and
convicted for money laundering in the Netherlands in
January (see ref A). This case underscores the suspected
link between car lots and money laundering.


3. Between 2003 and 2005, approximately 44,787 new and
used vehicles were imported into Suriname, a country with a
total population of some 490,000. Most of the car sales
are to people living in the major urban areas of Paramaribo
and Wanica. Comparing 2005 car imports to estimates of the
adult populations of those two urban areas, a rough
calculation would say these could allow about 8 percent of
the urban population to buy a car each year. Suriname's
estimated GDP per capita of just over USD 4,100 makes this
volume and the appearance of increasingly expensive cars on
the market, including luxury cars (such as Mercedes) with a
market value of US$23,000, all the more surprising. In
2005 alone, the import of personal vehicles, trucks, pick-
up trucks and buses was valued at 190 million SRD (or
US$67.9 million),25 million SRD more than in 2004. The
number of vehicles imported dropped from 15,697 in 2004 to
15,090 in 2005, yet the individual value of imported
vehicles increased.


4. In 2002, the Government of Suriname (GOS) passed and
implemented a law establishing the Financial Intelligence
Unit (FIU). The FIU is tasked with collecting reports on
unusual transactions from financial institutions, non-
banking financial institutions and natural legal persons
who conduct financial services (service providers). Since
its establishment, only banks have consistently reported
transactions to the FIU. Most other reporters were
sporadic in meeting this disclosure requirement. This was
especially true among car dealerships. According to FIU
regulations, car dealers are required to report all cash
transactions over US$25,000. Per Surinamese "Law on
Reporting Unusual Financial Transactions," non-complying
dealers could face a fine of up to 500,000 SRD
(approximately US$178,500) or 10 years in prison.
Bhagwandas believes that the threshold may be too high and
should be adjusted downward to reflect the appropriate
standard for a luxury car relative to Suriname income
levels. If so, the number of reports required to be
submitted would increase accordingly.


5. Since last week's remarks to the press, Mr. Bhagwandas
reports that there has been an increase in inquiries by car
dealers to the FIU seeking information on how to comply
with the regulations. The FIU has scheduled informational
sessions for car dealers to inform them of their
responsibilities. Every dealer will also be required to
assign a contact person who will remain in touch with the
FIU. Such outreach has previously been conducted by the FIU
for banks and notaries.

--------------
COMMENT

PARAMARIBO 00000066 002.2 OF 002


--------------


6. The increasing volume of car imports and the
investigation into the Yokohama Trading Company (and legal
action against its owners and associates) have long led to
suspicions that something (i.e., money laundering) was
afoot in this sector, making the FIU's enhanced attention
to car dealerships a positive step toward Suriname's fight
against financial crimes. End Comment.

LEONARD