REDOUBLED EFFORTS TO COMBAT BULK CASH SMUGGLING AS

UNCLAS SECTION 01 OF 02 ALGIERS 001634

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR EEB/ESC/TFS, S/CT (NOVIS),INL
PARIS FOR ICE ATTACHE (JOLLES)

E.O. 12958: N/A
TAGS: EFIN ETTC KTFN KCRM PREL PTER AG
SUBJECT: REDOUBLED EFFORTS TO COMBAT BULK CASH SMUGGLING AS
INTERDICTIONS DROP

REF: STATE 152088


1. (SBU) SUMMARY: Algeria criminalized bulk cash smuggling in
1996 and maintains strict reporting requirements and a
non-convertible currency that limit most Algerians' access to
foreign exchange. The value and frequency of smuggled cash
interdictions dropped from 2005 to 2006, although this may
have less to do with the customs service's diligence than a
drop in demand for black market foreign currency over the
last two years. The government recently launched a
three-year, USD 150 million action plan to provide additional
training to customs agents and encourage international
cooperation to combat cash smuggling. In this regard, post
is organizing with the Department of Homeland Security's
Immigration and Customs Enforcement (ICE) a four-day training
seminar November 11-14 on bulk cash smuggling targeted at
Algerian customs and police officials. END SUMMARY.

STRONG LEGAL FRAMEWORK...
--------------


2. (SBU) On July 9, 1996, Algeria adopted ordinance 96-22
regarding exchange regulations and currency movements abroad.
The law criminalized cash smuggling as well as the failure
to respect reporting requirements for the transfer of cash
into or out of Algeria. The maximum value of cash that may
be carried by an individual at any given time is the
equivalent of 7,600 Euro (roughly USD 11,000). Higher sums
may only be legally sent abroad by wire transfer. Given the
non-convertibility of the Algerian dinar, even sums less than
the 7,600 Euro threshold must be accompanied by a bank
statement declaring that the holder acquired the foreign
currency with the authorization of the central bank. Holders
of foreign currency without such a declaration, such as
individuals who traded dinars for foreign exchange on one of
Algiers' many forex black markets, risk confiscation. In
addition to foreign currency, the ordinance applies to other
liquid financial instruments, precious metals, and gemstones.
Penalties for non-compliance range from three to five years
of imprisonment or a fine valued of up to twice the value of
the seized property.

...YET OFFICIAL INTERDICTIONS DROPPING
--------------


3. (SBU) The Algerian customs service reported 373 cases of
cash smuggling in 2006 with a total value of USD 5.6 million.
These cases occurred in 11 of the country's 50 wilayas
(regional departments). In 2005, customs reported 426 cases
with a total value of USD 2.7 million. The total fines
levied against smugglers were USD 41 million in 2006. (Note:
It is not readily apparent why the frequency and value of
interdictions dropped sharply from 2005 to 2006. The
collapse of Algeria's parallel currency markets, for which
the spread between the official and the black markets rates
has dropped from 15 percent to roughly par in the last two
years, is one possible explanation. Another explanation may
be the drop in demand for foreign currency as Algeria slowly
moves to replace cash transactions with automated tools such
as the real-time gross settlements system introduced last
year. End Note.)

CUSTOMS TO WELCOME ICE SEMINAR NEXT WEEK
--------------


4. (SBU) The Algerian government recently launched a USD 150
million action plan for 2007-2010 to provide additional
training to customs agents and intensify international
cooperation. Customs plans to increase the number of agents
by 1,500 per year to reach 20,000 by 2010. The customs
service is also working with French authorities on smuggling
operations conducted in 2004 and 2005 valued at more than USD
500,000.


5. (SBU) In this vein, post is working with the Department of
Homeland Security's Immigration and Customs Enforcement (ICE)
on a four-day training seminar November 11-14 on bulk cash

ALGIERS 00001634 002 OF 002


smuggling for Algerian officials. The government is
providing the venue for the event and intends to send
representatives from the customs service, the Directorate of
National Security, and the Gendarmerie Nationale to the
seminar conducted by ICE officials. We have collaborated
with the Algerian financial intelligence unit, CTRF, to
invite a member of the CTRF board seconded from the customs
service to give opening remarks and describe Algeria's legal
framework. We look forward to the ICE seminar and future
dialogue with Algerian agencies on this key element of
anti-money laundering and counter-terrorist financing
enforcement.
FORD