SHOW ME THE MONEY - LATVIA TACKLES CASH COURIERS

C O N F I D E N T I A L RIGA 000200

SIPDIS

SIPDIS

EB/ESC/TFS KATHERINE LEAHY
EB/ESC/TFS LEANNE CANNON
S/CT PATTY HILL
S/CT FINANCE GALER AND NOVIS

E.O. 12958: DECL: 03/14/2017
TAGS: PGOV KCRM SNAR LG
SUBJECT: SHOW ME THE MONEY - LATVIA TACKLES CASH COURIERS

REF: SECSTATE 16120

Classified By: Pol/Econ Chief Tamir Waser for reasons 1.4 b. and d.


1. (U) Summary: Per reftel, PolOff delivered background
notes on Cash Couriers to Viesturs Burkans, head of Latvia's
Financial Intelligence Unit (FIU) and Agnese Vilde of the
Ministry of Foreign Affairs Legal Department. In response,
Vilde and Burkans outlined the key provision of Latvia's new
legislation entitled "Law on Declaration of Cash at the State
Border" which institutes a cross border currency declaration
requirement and came into effect July 1, 2006, provisions are
detailed below. The law defines the obligation to declare
cash, authority by competent Latvian institutions, as well as
utilization of the obtained information. Burkans reports
that Latvia is in compliance with all FATF standards.
Training has been given to all customs and border guards.
This new cash declaration law appears to have improved
interagency cooperation on this issue. End Summary.


2. (U) Prior to July 2006, individuals were able to cross
the border with any amount of cash with no obligation to
declare. The intent of most known cases of cash couriers
into Latvia was to smuggle cash into the EU, to buy property,
or to move money into the Latvian financial institutions with
little notice. Shortly after Latvian independence, it was
common for individuals to carry cash out of Latvia to Russia,
Belarus, or Ukraine so as to avoid taxes. This particular
method became less common after 2000 once Latvia began
putting more controls in place in the financial sector.


3. (C) In November 2005, the Latvian Parliament passed
legislation entitled "Law on Declaration of Cash at the State
Border" which institutes a cross border currency declaration
requirement effective July 1, 2006. The law obligates the
declaration of cash, designates the State Revenue Service
(Customs) as the lead institution on this matter, and lays
out how the information obtained surrounding a cash courier
case would be used by other institutions. The law was
developed in response to the implementation of the European
Union (EU) Regulation on declaration of cash at the border of
the EU. The Latvian Cash Declaration law meets the
requirements of FATF Special Recommendation IX "Cash
Couriers" and the UN Convention on Transnational Organized
Crime. Burkans himself will be meeting with the various
heads of departments to raise awareness of the importance of
this issue.


4. (U) The Cash Declaration law requires that, upon entering
Latvia, cash equal to or more than ten thousand Euros must be
declared. Individuals completing the cash declaration form
must also specify the owner of the cash, the intended
recipient of the cash, and amount and nature of the cash, the
intended use of the cash, the transport route, and the means
of transport.


5. (C) The State Revenue Service (Customs Service) is the
lead agency on all cash declaration matters. At certain
border crossing points where there are no customs officers,
however, the State Border Guard has the authority to act on
behalf of the Customs Service. Customs officials have the
authority to detain individuals and their luggage either
because of direct intelligence or randomly. Additionally,
Customs officials may confiscate undeclared or improperly
declared cash. All declarations submitted at the borders are
turned over to the State Revenue Service office on a regular
basis. That information is then compiled and given to the
FIU. Finally, the FIU has the right to send the information
to the competent authorities of other states or the European
Commission should it be necessary or requested.


6. (U) Should an individual not declare or improperly
declare their cash when crossing the state border of Latvia -
either entering into the EU or exiting the EU - he/she is
fined for the offense. (NOTE: there is no requirement to
declare when crossing the border between two EU countries)
If the same individual fails to declare or properly declare
cash repeatedly within a year, this individual can be jailed
for up to two years or receive a hefty fine. If an
individual does not declare or falsely declares cash that has
been obtained in a criminal manner or if the individual is
acting on behalf of an organized criminal group, the sentence
is up to five years in prison or a hefty fine.


7. (U) All Customs officials and border guards receive
training at the Institute of International Economical Affairs
as well as the Customs of Riga Technical University. The
training includes all new developments including border
crossing requirements, money laundering, money falsification,
etc. Additionally, each port of entry has large
instructional signs in Latvian, English and Russian.


8. (C) Prior to the requirement to declare cash, there was
no mechanism in place for Customs to assist other law
enforcement institutions in combating financial crime and
money laundering. Since July 2006, Embassy contacts in the
Latvian Customs and Border Control report an improved
capability to address these issues and an increase in
cooperation. Customs is satisfied with the new method and
describes it as a clear way to communicate and pass
information to the FIU. Burkans reports that the FIU is
indeed receiving all the declaration reports from the State
Revenue Service.


9. (C) Burkans reports that there have been no known cash
courier cases associated with terrorism and does not feel
that this is a major concern. In the recent IMF audit report
on Latvia, the IMF also noted that there was no indication
that terrorists have used Latvia as a means to move money or
finance terror.


ANTWEILER