ILLICIT CASH COURIERS IN LAOS

UNCLAS VIENTIANE 000290

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/MLS ED BESTIC

E.O. 12958: N/A
TAGS: EFIN ETTC KTFN LE PREL PTER LA
SUBJECT: ILLICIT CASH COURIERS IN LAOS

REF: STATE 16120


1. (SBU) Summary: Econoff met with Bank of Laos (BOL)
Deputy Director General Mr. Leuane March 16, and NAS Director
met with Lao Customs Deputy Director of International
Relations Mr. Vongchan April 5 to discuss reftel and deliver
nonpaper. DDG Leuane understands
Financial Action Task Force (FATF) Special Recommendation #9.
However, Laos is not a member of the FATF, and his focus is
currently on creating an effective Financial Intelligence
Unit (FIU)within the bank that can actively track bulk cash
transactions throughout the Lao banking
sector. Mr. Vongchan said Laos was well aware of criminal
organizations using cash couriers and noted the amount of
illicit cash seized has risen in 2007. He blamed narcotics
smuggling for the rise and said any additional training the
U.S. could provide would be greatly appreciated. End Summary


2. (SBU) Econoff met March 16th to discuss reftel with Mr.
Leuane Vongphranakhorn, Deputy Director General in the Bank
of Laos' Supervision Department and Chair of the FIU,
currently a committee within the BOL. Mr. Leuane was well
aware of the Financial Action Task Force (FATF) Special
Recommendation #9 and agreed that bulk cash smuggling was
dangerous and disruptive. As he pointed out, however, Laos
is not currently a member of the FATF, and his goal is
currently to see the FIU committee become a full-time
stand-alone department within the Bank of Laos that can
effectively track suspicious transactions, including large
movements of cash. According to Leuane, the BOL is currently
receiving assistance from AUSTRAC, the Australian Transaction
Reports and Analysis Center. AUSTRAC has
helped with the design of a Secure Transaction Report (STR)
Form for the BOL and is providing additional support.


3. (SBU) The BOL is also working with the United Nations
Office on Drugs and Crime (UNODC) in Hanoi on a Cash
Transaction Report (CTR) Form for domestic cash transactions
over $3,000. According to Leuane, international cash
transactions over $10,000 must currently be reported,
although he is considering lowering the limit and asked for
our opinion. Econoff suggested a lower limit,
considering Laos' level of development. Leuane ended the
conversation by requesting increased technical assistance for
the Financial Intelligence Unit and additional training when
possible.


4. (SBU) On April 5, the Embassy Narcotics Affairs Director
delivered reftel talking points and non-paper to Vongchan
Lawkhamphromtakoun, Deputy Director of the International
Relations Division, Lao Customs Department. Vongchan stated
the GOL was well aware of the use of cash couriers by
criminal organizations in Southeast Asia and had become
increasingly concerned about this issue as the
number of cash seizures at Lao border crossings has increased
in the past year. During 2006, $29,000 in undeclared
currency was seized by Lao Customs at Wattay Airport in
Vientiane. In 2007, this jumped to more than $300,000 in
only the first three months, most of the cash in Thai Baht.
Cash couriers included Chinese, Sri Lankan, and Vietnamese
nationals. Some used concealment devices, such as hollow
books, as a means of smuggling currency.


5. (SBU) Vonchan said that the BOL is the lead agency on
penal actions for violations of currency laws. Laos limits
the import and export of cash to $5,000. The GOL will seize
50% of any amount it finds in excess of that limit, and 100%
of any cash used for illicit purposes, such as
narcotics smuggling. Vonchan said that the latter was a
major factor in the increased cash seizures that Customs had
made this year. He also said that any training that the U.S.
could provide in this area would be greatly appreciated.
HASLACH