GAFISUD WILL SUSPEND BOLIVIA, COLOMBIA, PARAGUAY

C O N F I D E N T I A L BUENOS AIRES 002272

SIPDIS

SIPDIS

TREASURY FOR TFFS, OFAC, FINCEN

E.O. 12958: DECL: 11/29/2027
TAGS: KTFN EFIN PTER PREL PARM MNUC AR BL CO PA
SUBJECT: GAFISUD WILL SUSPEND BOLIVIA, COLOMBIA, PARAGUAY
DECEMBER 1, BUT RECENT PROGRESS GIVES HOPE FOR
REINSTATEMENT

REF: BUENOS AIRES 2217

Classified By: EconOff Chris Landberg For Reasons 1.4 (B and D).

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

1. (C) The Executive Secretary of GAFISUD (the South American
Financial Action Task Force),Alejandro Montesdeoca, told
TreasAttache November 29 that Bolivia, Colombia, and Paraguay
will have their membership in GAFISUD suspended as of
December 1. Following Bolivia and Paraguay's recent partial
payments and presentation of payment plans, Montesdeoca will
argue for their reinstatement during the December 6-7 GAFISUD
plenary in Buenos Aires. Colombia reportedly passed a law
November 28 allowing payments to international institutions,
but alleged Foreign Ministry opposition may block its entry
into force. GAFISUD members will decide during the plenary
on next steps for Colombia, which could include a letter to
the President and/or sending a GAFISUD delegation to Bogota
for high-level meetings. End Summary.

Bolivia and Paraguay -- Making an Effort
--------------

2. (C) In contrast to earlier reports (reftel),Montesdeoca
said that the Government of Bolivia (GoB) appears to be
making an effort to pay off its arrears to GAFISUD. The GoB
did not pay any dues from 2000 (when GAFISUD was founded)
through 2005, but since 2005 made four payments covering
2000-2004, and a fifth payment made just recently for 2005.
According to Montesdeoca, Bolivia still owes dues for 2006
and 2007, but has presented a payment plan, promising to
clear all arrears during first quarter 2008.


3. (C) Montesdeoca said Paraguay's President Nicanor Duarte
Frutos had just signed a decree to pay three of the
Government of Paraguay's (GoP) past due payments by early
December (Paraguay has not paid dues to GAFISUD since its
2000 founding). The GoP has also presented a letter to
GAFISUD proposing to pay the remaining back due payments by
March/April 2008. In addition, the new decree assures that
SEPRELAD, Paraguay's Financial Investigative Unit (FIU),has
within its annual budget funds to pay dues going forward.
Montesdeoca gave the credit for these positive developments
to Gabriel Gonzalez, the new head of SEPRELAD. Gonzalez
conducted a last-ditch campaign to get the word out to the
media and within the GoP about the possible negative affects
of losing GAFISUD membership.

Colombia -- Law Passed but Questions Remain
--------------

4. (C) Since 2000 the Government of Colombia (GoC) has made
three payments to GAFISUD, the last in 2004. Montesdeoca
said that the Colombian Congress had passed a law on/about
November 28 allowing the GoC to make payments to
international institutions, including to GAFISUD. However,
he has heard that it still requires some form of
administrative approval, and there is reportedly strong
enough opposition from within the Foreign Ministry to block
its entry into force. Montesdeoca reiterated previous
comments (reftel) that GAFISUD has not received any
communication recently from the GoC's National Coordinator to
GAFISUD. (Comment: As reported reftel, Colombia's National
Coordinator has avoided all GAFISUD efforts to reach out to
the GOC, and is not responding to emails or telephone calls.
End Comment).

Actions for GAFISUD Plenary
--------------

5. (C) During the upcoming Plenary, Montesdeoca plans to
recognize Bolivia and Paraguay's efforts to pay their arrears
and come current on dues payments, and he will propose that
GAFISUD lift the suspension of their memberships.


Montesdeoca will also propose the temporary suspension of the
sanctions that GAFISUD earlier imposed on both countries
(blocking voting rights and access to GAFISUD technical
assistance programs). He will argue for giving the two
countries until July 2008 to comply with the payment plans
they have submitted, and the sanctions would be eliminated
entirely if/when Bolivia and Paraguay come up to date on
their payments.


6. (C) Montesdeoca said GAFISUD members would decide during
the plenary what next steps to take with Colombia. He
suggested two options. First GAFISUD could send a letter to
Colombian President Uribe and National Coordinator,
highlighting the problems with the GoC's arrears to GAFISUD
and notifying the GoC of its suspension from GAFISUD. The
letter would emphasize the negative impact this suspension
could have on Colombia, the region, and on GAFISUD. Second,
Montesdeoca also thought it likely that GAFISUD members would
agree during the plenary to send a delegation to Colombia to
meeting with high-level GoC officials to press the issue.
WAYNE