GOU CRACKDOWN ON CASH "SMUGGLING"

C O N F I D E N T I A L SECTION 01 OF 02 TASHKENT 001292

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/16/2017
TAGS: EFIN PGOV CASC UZ
SUBJECT: GOU CRACKDOWN ON CASH "SMUGGLING"

REF: TASHKENT 503

Classified By: CDA Brad Hanson for reasons 1.4 (b) and (d).


1. (C) Summary: Uzbek law requires that cash brought in to,
or taken out of Uzbekistan, be declared and establishes
limits on the amount of cash that can be taken out of the
country. Enforcement of these regulations, historically
weak, appears to have been stepped up in recent months,
particularly at Tashkent airport. Anecdotal accounts suggest
that the increased enforcement has focused on foreign
travelers. These efforts are consistent with the Government
of Uzbekistan's ongoing efforts to control the amount and
location of money in the country, at least in part to ensure
that it is not used to finance anti-government activities.
The apparent focus on foreigners taking money out of the
country also suggests that simple greed may play a role in
the clamp down. End summary.


2. (U) Uzbek law requires all persons to declare in writing
the amount of cash they are bringing in to, or taking out of,
Uzbekistan. There is no limit to the amount of foreign cash
that may be brought in to Uzbekistan, provided it is
declared, but only 50 times the minimum monthly wage in Uzbek
soum may be imported (currently about $600 total).
Uzbekistan residents are allowed to take up to $2,000 in
foreign currency and up to 50 times the minimum monthly wage
in Uzbek soum out of the country without obtaining a permit.
Amounts above these limits may be taken out of Uzbekistan
with permission from the Central Bank. Non-residents are
allowed to take out of Uzbekistan only the same amount of
cash that they brought in to the country, as declared on
their customs forms. The Central Bank also may grant
exceptions to this rule. Violations of cash import/export
regulations result in confiscation of undeclared cash and may
also be punished by fines of up to 300 minimum monthly wages
($3,600),two years of correctional labor, or five years
imprisonment. Violations "in especially large amounts,"
which is conveniently left undefined, are punishable by fines
of up to 600 minimum monthly wages ($7,200),three years of
correctional labor, or five to eight years in prison.


3. (C) According to Embassy contacts, enforcement of the cash
declaration requirements historically has been spotty,
particularly with regard to foreign travelers. Tried and
true methods to avoid the requirements are well known in
Tashkent. For example, Embassy contacts say that one of the
best ways to avoid a rigorous customs inspection is to arrive
at the airport late on a busy morning, as Customs officers
typically conduct much less rigorous inspections of
passengers so as to avoid delaying aircraft departures.
Likewise, making "alternative arrangements" with a particular
Customs inspector (i.e., paying him or her a bribe) also is a
possibility.


4. (C) Embassy contacts suggest, however, that in the last
six to eight months the Government of Uzbekistan has started
to crack down on cash smuggling, particularly at Tashkent
International Airport. Embassy contacts report that every
Customs inspection station at the airport is now monitored by
remote video camera and that Customs inspectors are being
called on the carpet for conducting poor inspections. As a
result, an increasing number of passengers are being routed
to secondary inspection, where discovery of illicit cash is
much more likely. Likewise, anecdotal evidence points to
increased focus on foreign travelers. On July 11, the
government-controlled press printed an article reporting
recent incidents involving Russian and Israeli citizens
arrested at the airport for cash smuggling. The article,
purportedly written by a Tashkent City Criminal Court
official, contains a clear warning that foreign citizens will
be arrested and prosecuted if caught trying to take
undeclared cash out of the country. Furthermore, during a
recent incident involving an AmCit traveler (see below),
Customs officials told Conoff that six or seven Americans had
been caught smuggling cash out of the country in the last
several months, more than they used to detain in an entire
year.


5. (C) On June 26, an AmCit traveler was detained at the
airport for cash smuggling. He had arrived in Uzbekistan
about two weeks previously and declared $200 upon entry.
Upon departure, he declared $1,000 on his Customs forms. The
Customs inspector compared the two amounts, informed him that
he could not take out more money than he brought in, and
instructed him to complete a new customs declaration. The
AmCit, in the presence of the Customs official, completed a
new form and declared that he was taking $200 out of the
country. He was immediately referred to secondary
inspection, where it was discovered that he had $2,400 in

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cash. Customs officials confiscated $2,200 (the "undeclared"
amount of cash) and detained the AmCit for several hours
before allowing him to leave the airport. An airport Customs
officer told Conoff that the case would be sent to a Tashkent
court for disposition. In theory, the court could decide to
return the confiscated money to the AmCit, but the Customs
officer said that in his experience this never happened.


6. (C) Comment: The government has substantially increased
controls on cash and other financial resources since May
2005, at least partially out of paranoia that uncontrolled
money is funding efforts to create the next "color
revolution." The crackdown on cash smuggling is consistent
with these efforts. Most of the incidents of which Post is
aware, however, have involved foreigners trying to take cash
out of Uzbekistan. In theory, any money seized goes to the
state budget, although in practice it is likely that
government officials, from working level Customs officers up,
take a cut before passing the cash along. To the extent that
increased enforcement is focused on foreigners departing the
country, simple greed also may be a motivating factor for the
clamp down.
HANSON