SURINAME: 2007-2008 INTERNATIONAL NARCOTICS CONTROL

UNCLAS SECTION 01 OF 04 PARAMARIBO 000604 SIPDIS SIPDIS STATE FOR INL, SCT, EEB STATE FOR WHA/CAR - JROSHOLT, KWILLIAMS JUSTICE FOR AFMLS, OIA, OPDAT TREASURY FOR FINCEN E.O. 12958: N/A TAGS: SNAR EFIN KCRM KTFN NS SUBJECT: SURINAME: 2007-2008 INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT (INCSR),Part II, Money Laundering and Financial Crimes REF: SECSTATE 137250 PARAMARIBO 00000604 001.2 OF 004 ¶1. (U) 1. Post presents its 2008 INTERNATIONAL NARCOTICS CONTROL STRATEGY REPORT (INCSR),Part II, Money Laundering and Financial Crimes. Suriname: ¶I. Summary: Suriname is not a regional financial center and is not yet a significant site for money laundering when compared to other countries in the region. Money laundering occurs as a result of poorly regulated private sector activities, such as casinos and car dealerships, the non-banking financial system (including money exchange businesses or "cambios"),and a variety of other means including but not limited to construction, the sale of gold purchased with illicit money, and the manipulation of commercial bank accounts. Narcotics-related money laundering is closely linked to transnational criminal activity related to the transshipment of Colombian cocaine. Domestic drug trafficking organizations and organized crime are believed to control much of the money laundering proceeds, which are "invested" in casinos, real estate, and private sector businesses. Suriname is not an offshore financial center and has neither an offshore sector nor free trade zones. Suriname has a significant parallel economy of which the majority is not linked to money laundering proceeds. II. Legislation: Based on the recommendations of the Caribbean Financial Action Task Force (CFATF),the Government of Suriname (GOS) passed a package of anti-money laundering legislation in September 2002. The legislation addresses multiple issues related to all types of money laundering, including (a) criminalizing money laundering, (b) reporting of unusual transactions in the provision of services, and (c) requiring service providers request identification from each customer making a transaction. The legislation applies to both banking and non-banking financial institutions. III. Financial Sector: The law, "Reporting of Unusual Transactions in the Provision of Services," provides for the establishment of a Financial Intelligence Unit (FIU) and requires financial institutions, non-banking financial institutions, and "natural legal persons" (as opposed to companies) who provide financial services to report suspicious transactions to the FIU. In total, approximately 130 entities in Suriname are required to report to the FIU. While the FIU has informed all entities of their reporting requirements, to date only the banking sector is in full compliance. In accordance with international conventions, objective and subjective indicators have been approved to identify suspicious transactions for financial institutions. A suspicious transaction is defined as any transaction that deviates from the usual account as well as any customer activities that are not "normal" daily banking business. Reporting is mandatory if financial transactions are above a certain threshold; however, non-compliance sanctions are currently not enforced. The thresholds for financial institutions range from 5,000 USD for money-transfer offices to 10,000 USD for banks, insurance companies, money exchange offices, and savings and credit unions. Thresholds for non-banking financial institutions and "natural legal persons" are 5,000 USD for casinos, 10,000 USD for dealers of precious metals and stones, and 25,000 USD for notaries, accountants, lawyers, and car dealerships. In addition, service providers are required to confirm the identities of individual or corporate clients before completing requested services, and to retain photocopies of identity documents and all other relevant documents pertaining to national and international transactions for a period of seven years. The legislation includes a due diligence section that holds individual bankers responsible if their institution launders money, and ensures confidentiality to bankers and others with respect to their cooperation with law enforcement officials. Statutory requirements limit the international transportation of currency and monetary instruments; amounts in excess of 10,000 USD must be reported to authorities before entering or leaving Suriname. Suriname does not recognize PARAMARIBO 00000604 002.2 OF 004 indigenous alternative remittance systems. There is a gold economy in gold mining regions in the country's interior. There are no known cases of charitable or non-profit entities serving as conduits for financing terrorism. IV. Financial Intelligence Unit: In early 2003, the FIU opened an office with material support from the U.S. Government. The FIU received extensive training from a Dutch expert in 2004 through the Caribbean Anti-Money Laundering Program (CALP). The FIU, which falls under the auspices of the Attorney General's Office, is an administrative body that performs analytical duties. Its responsibilities entail requesting, analyzing, and reporting to the Attorney General's office information on transactions that may constitute money laundering. If necessary, the FIU may request access to the records of other government entities. To facilitate interagency coordination, Suriname has an Anti-Money Laundering Project Team, which consists of representatives from the FIU, Judicial Police, the Attorney General's Office, and the judiciary. Bureaucracy and the lack of financial and human resources have made it difficult for the FIU to perform to its best capabilities. On the basis of a Memorandum of Understanding (MOU),Suriname shares information regarding money laundering with the FIU in the Netherlands. Another MOU was concluded with the Netherlands Antilles in October 2007. Government representatives dealing with the issue of money laundering attended training abroad on financial investigative techniques in June 2007, and on combating money laundering in October 2007. The number of suspicious transactions tagged by the FIU in 2007 is not public information. Suriname's money laundering regime was enhanced in 2004 with the establishment of a Financial Investigation Team (FOT) that is under the authority of the Judicial Police. Upon making a determination that a suspicious activity report is sufficient to initiate an inquiry, the FIU refers the matter to the Attorney General's Office. If the Attorney General's office concurs with that determination, it directs the FOT to conduct an investigation. The FOT is the body responsible for investigating all suspicious transactions identified by the FIU. Prosecutors use evidence collected from FOT investigations to build legal cases. To help strengthen the FOT, a U.S. government technical adviser mentored investigators in 2005. Nonetheless, the FOT continued to suffer from a lack of personnel and resources which rendered it largely ineffective over the past year. The 2004 sentencing of someone to seven years imprisonment for intentional money laundering and for attempting to export a small amount of cocaine remains the most significant success and longest sentence to date. Resource constraints -- and a severe shortage of judges -- is proving to be a limiting factor in expanding this success. A new class of seven judges could partially redress the problem, but they will not complete their judicial training until 2008. While the number of prosecutions in 2007 related to money laundering was not public information, there were several significant convictions in 2007 related to illegal transfers of money. In August 2007, De Surinaamse Bank President Siegmund Proeve and former Bank President Edward Muller were sentenced to six months imprisonment for the illegal transfer of approximately USD 14.5 million in casino profits to foreign countries between 1998 and ¶2003. The defendants were charged with transferring funds without the permission of the Foreign Exchange Commission and for the transfer of amounts over USD 10,000 without reporting it to the Central Bank. Other defendants in the case were Procurement Officer Patrick Bagwandin, who was sentenced to a conditional three month imprisonment, and Canadian Dorsett Group staffer Jeffrey Claque, who was sentenced to six months. The bank was fined USD 358,000. The defendants are appealing the case and are serving their sentences while the case is under appeal. In July, a judge handed down the verdict in a 2006 case in which 3 people were arrested with a large sum of money and charged with money laundering. Two of the defendants were arrested after police put up a roadblock between Paramaribo and the country's most western district, Nickerie. The police seized the money and the vehicle the two were driving. The three were sentenced to 12 weeks imprisonment and each paid an additional fine of 3,600 USD. The prosecution filed an appeal in this case, as is possible under Suriname law, PARAMARIBO 00000604 003.2 OF 004 because they thought the sentences too lenient. Close cooperation between Suriname and the Netherlands led to the investigation and arrest of Bidjai Parmessar, a major drug trafficker who was sentenced in December 2005 to ten years imprisonment in the Netherlands for narcotics trafficking and money laundering. The cooperation between the two countries also led to the 2005 arrest of three persons in a high profile money laundering scandal. In January 2006, one of the three was sentenced by a Dutch Court to two and a half years imprisonment for money laundering. In August 2006, the second suspect was convicted in Suriname, also on money laundering charges, and sentenced to one and a half years in prison. The third suspect was former Minister of Trade and Industry Siegfried Gilds, who resigned his position after the Attorney General announced he was under investigation for laundering money and membership in a criminal organization. The former Minister is alleged to have laundered close to 1,270,000 USD between 2003 and ¶2005. His trial is ongoing. In December 2005, police officers seized 388,525 USD from a Guyanese national attempting to cross the border between Suriname and Guyana. He was acquitted in August 2006 due to lack of evidence and was fined 350 USD for violating currency transporting regulations. Public prosecutors are appealing the case because they think the judge's ruling was too lenient. Suriname has not yet signed the UN Convention for the Suppression of the Financing of Terrorism; draft legislation was prepared by the Ministry of Justice and Police and is awaiting the Council of Ministers' approval. Suriname does have legislation that allows the authorities to freeze assets of those suspected of money laundering. The Central Bank of Suriname circulates to commercial banks the names of individuals/entities that are designated by the United Nations 1267 Sanctions Committee list as associates of Al Qaeda, the Taliban, or Usama bin Laden. In 2002, Suriname signed the OAS Inter-American Convention against Terrorism but has not yet ratified it. Anti-terrorism legislation -- required to fully satisfy UN Security Council Resolution 1373, which deals with suppressing financing for and improving international cooperation on terrorism -- is still in the drafting stage. ¶V. Cross Border Transportation of Currency and Negotiable Instruments Any person who wishes to take money in excess of USD 10,000 out of the country must notify the Military Police. The Central Bank of Suriname also requires that all transactions in excess of USD 10,000 be reported. VI. Asset Forfeiture and Seizure Legislation An amendment to the criminal code enacted in 2003 allows authorities to confiscate illegally obtained proceeds and assets obtained partly or completely through criminal offenses; however, assets cannot be converted to cash or disposed of until the case is settled. New assets forfeiture legislation, which would make this possible, is under consideration in Parliament. There are no provisions for civil forfeiture, and there is no legal mechanism that designates the proceeds gained by the sale of forfeited goods to be used directly for law enforcement efforts. There is no entity for the management and disposition of assets seized and forfeited for illicit drug trafficking and money laundering offenses. There have been cases in court where the Attorney General seized financial assets related to the narcotics trade. VII. International Cooperation On June 2nd, 1887, an extradition treaty was signed between the United States and The Kingdom of The Netherlands which entered into force on July 18th, 1889. An amendment to this treaty followed in ¶1904. As Suriname was a colony of the Kingdom of the Netherlands at that time, the enforcement of this treaty also applied to Suriname. Upon its independence in 1975, Suriname automatically adopted this treaty into its own legislation and it still serves as the extradition treaty between the United States and the Republic of Suriname. The GOS has an agreement with the Netherlands on extradition of non-nationals and mutual legal assistance with regard to criminal matters but, under Surinamese law, citizens of Suriname PARAMARIBO 00000604 004.2 OF 004 "will not be extradited." Money laundering is an extraditable offense. Suriname is party to the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. In May 2007, Suriname acceded to the UN Convention against Transnational Organized Crime. Suriname has bilateral treaties and cooperation agreements with the United States on narcotics trafficking, and with Colombia, France and the Netherlands Antilles on transnational organized crime. In January 2006, Suriname, the Netherlands Antilles, and Aruba signed a Mutual Legal Assistance Agreement allowing for direct law enforcement and judicial cooperation between the countries, making it no longer necessary for the process to be first routed through The Hague. Parties to the Agreement, which covers cooperation with regard to drug trafficking, trafficking in persons, and organized crime, had a follow-up meeting in March 2007 and expanded the cooperation to include information sharing on transnational crime and financial crimes. In October 2006, Suriname hosted an anti-narcotics conference attended by many regional and international players, including the United States. The "Paramaribo Declaration," which was endorsed in principle at the end of the conference, is a framework to establish an intelligence-sharing network, coordinate and execute sting operations, and tackle money laundering. Suriname is a member of the CFATF and the OAS Inter-American Drug Abuse Control Commission Experts Group to Control Money Laundering (OAS/CICAD). Suriname signed the Inter-American Convention against Terrorism in June 2002, but has not yet ratified it. In February 2006, a joint team consisting of members of the Financial Transactions Reports Analysis Center of Canada (Fintrac) and the American Financial crimes Enforcement Network (Fincen) visited Suriname and agreed to sponsor Suriname's FIU in the Egmont membership procedure. The two organizations proposed steps to be taken by the country to file an application for Egmont membership in the beginning of 2007; one of the required steps is ratification of the Inter-American Anti-Terrorism Convention. SCHREIBER HUGHES