PERU'S FINANCIAL INTEL UNIT MERGING WITH BANKING

UNCLAS LIMA 001944 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EFIN KTFN ECON SNAR PGOV PE SUBJECT: PERU'S FINANCIAL INTEL UNIT MERGING WITH BANKING SUPERINTENDENCY ¶1. (SBU) SUMMARY: On May 31, the Peruvian Congress passed a law moving Peru's Financial Intelligence Unit (FIU) into the Superintendency of Banking, Securities and Pension Funds (SBS). This law reverses the GOP's March 1 Supreme Decree which ordered the FIU's incorporation into the Ministry of Economy and Finance (MEF). The FIU and others successfully convinced the Congress that incorporation into the MEF would reduce the FIU's autonomy, necessary for carrying out its anti-money laundering mandate. Post had urged the GOP to maintain the FIU's independence regardless of where it would be placed. The SBS Superintendent told us May 22 that the FIU would function normally within the independent SBS, but that he would have the prerogative to replace and name the head of the FIU. Current FIU head Carlos Hamann will most likely be replaced, as he had actively resisted the merger. END SUMMARY. ¶2. (U) On May 31, the Peruvian Congress passed a law moving Peru's Financial Intelligence Unit (FIU) into the Superintendency of Banking, Securities and Pension Funds (SBS). The FIU had been an autonomous entity -- with its own, separate offices -- loosely affiliated with the Ministry of Justice (although it had once been attached to the SBS). On March 1, as part of a broader effort to streamline government agencies through elimination and mergers, the GOP issued a Supreme Decree incorporating the FIU into the Ministry of Economy and Finance (MEF) as a General Directorate. ¶3. (U) The FIU and others criticized this move, claiming the FIU would lose the autonomy necessary to carry out its anti-money laundering activities. Post also raised the importance of maintaining the FIU's autonomy with congressional and executive branch officials. The FIU found a champion in the Decentralization Committee of the Peruvian Congress, which convinced the GOP to delay the merger pending congressional deliberations. The Committee presented the legislation that blocked the move to the MEF and instead incorporated the FIU into the independent SBS. The SBS Superintendent is named by the President and approved by the Congress. ¶4. (SBU) Felipe Tam, named SBS Superintendent in late March, told us on May 22 that the FIU would retain its independence as part of the independent SBS. He said the merger would improve anti-money laundering efforts, as the SBS already played a key role through its access to bank information and review of suspicious transaction reports. With the merger, the Superintendent has the right to replace and name the head of the FIU. Tam gave us the impression that he would most likely replace current FIU head Carlos Hamann, but keep the FIU's technical staff. Hamann's relations with others in the GOP are strained due to his resistance of the merger. Tam also told us he will name the SBS's Silvia Wuan as his principal advisor and coordinator for FIU and money laundering issues. COMMENT -------------- ¶5. (SBU) There are several pending money laundering cases involving large sums of money. The fact that the FIU would receive a percentage of these resources helped lead to calls for a merger, as some in the GOP felt increased oversight of the unit was necessary and others wanted a share of the funds. Merging the FIU with the SBS clearly makes more sense than putting the FIU within the MEF bureaucracy. It will be easier to maintain the FIU's autonomy within the SBS, and the merger of two entities key to Peru's anti-money laundering efforts could streamline anti-money laundering activities to some degree. However, the merger will not speed the prosecution of a long-standing cue of money laundering cases now in the hands of the Public Ministry. STRUBLE