LIBERIA: 2008-09 INTERNATIONAL NARCOTICS CONTROL STRATEGY

UNCLAS SECTION 01 OF 03 MONROVIA 000976

SENSITIVE
SIPDIS

DEPARTMENT FOR INL, SCT AND EEB
JUSTICE FOR AFMLS, OIA AN OPDAT
TREASURY FOR FINCEN

E.O.12958: N/A
TAGS: KCRM EFIN KTFN SNAR ECON LI
SUBJECT: LIBERIA: 2008-09 INTERNATIONAL NARCOTICS CONTROL STRATEGY
REPORT (INSCR) PART II - MONEY LAUNDERING AND FINANCIAL CRIMES

REF: STATE 103815


1. Attached is the text of Liberia's 2008-09 INSCR report. The text
has been e-mailed as instructed reftel. Monrovia POC is economic
officer Lucy Abbott abbottlk@state.gov. (Note: URLs exceeding 55
characters have been removed but are included in the text sent via
e-mail. End note.)


2. Begin text
Liberia is not a significant regional financial center but financial
controls are weak and it is likely that money laundering occurs.
Both Liberian and U.S. dollars are legal tender in Liberia, making
it easier to launder U.S. currency. There is a significant market
for smuggled goods and borders are porous. There is little
information on whether money laundering is linked to the sale of
narcotics, but few hard drugs are interdicted in Liberia. There are
no confirmed cases of money laundering or terrorist financing in the
Liberian banking sector. (Note: All currency amounts are in U.S.
dollars. End note.)

Offshore Financial Centers
--------------

Liberia is not an offshore financial center and the country does not
license offshore banks or businesses including casinos. Anonymous
directors are not allowed nor are bearer shares permitted for banks
or companies.

Free Trade Zones
--------------

Liberia does not have a designated free trade zone.

Legal Foundation of the AML Regime
--------------

Laundering the proceeds of "criminal conduct" is a criminal offense
according to a 2002 amendment to Title 26, chapter 15, sub-chapter G
of the Penal Code. "Criminal conduct" is defined as an act that
occurs in Liberia that constitutes a non-bailable first-degree
felony or an act that occurs outside Liberia that would be
considered an offense if it had occurred in Liberia. (The only
non-bailable crimes in Liberia are treason, armed robbery, and
rape.) The law does not specifically refer to drug-related money
laundering. The law also outlines measures to be taken by financial
institutions to prevent money laundering. There are criminal
penalties associated with carrying out relevant financial business
in contravention to the Act. Drug trafficking is not a criminal act
in Liberia, but possession of drugs is.

The country has not enacted secrecy laws, but information is not
easily available. A draft Freedom of Information Act has been
presented to the Legislature but has not been passed.

Financial Sector
--------------

The Central Bank of Liberia (CBL) supervises financial institutions.
Regulations on Know-Your-Customers (KYC) and Customer Due Diligence
(CDD),issued by the CBL in 2005, require that a financial
institution should, at a minimum, have a customer acceptance
procedure, a customer identification procedure, a procedure for
on-going monitoring and scrutiny of transactions of high risk
accounts, an appropriate risk management system, and a system for
suspicious activity reporting. Banks are required to freeze the
assets of a suspicious account pending results of the government's
investigation. Records must be kept for five years.

Under Central Bank KYC and CDD guidelines, banks should maintain
integrity, promote ethical and professional standards, and combat
the misuse of the financial system by criminal elements. The
threshold for suspicious transactions or transfers is $25,000 or
more for individuals and $40,000 or more for corporations.

Banks should report suspicious transactions but normally do not.
Under the regulations, the CBL is authorized to carry out spot
supervision to determine compliance with regulations. Reporting
institutions are protected by law if they report in compliance with
regulation. However, Liberia's justice sector is weak and legal
protection is not always guaranteed. Financial institutions that
requested guidance from the CBL on how to handle a suspicious
transaction were reportedly advised to "use your discretion." The
CBL does not have data on suspicious transaction reports, but told
us that a bank did note some suspicious transactions this year and
reported them directly to the Ministry of Justice. The

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ineffectiveness of Liberia's judicial system ensures that action on
cases referred to the Ministry of Justice is unlikely.

Financial institutions and non-financial institutions, including
insurance companies and foreign currency exchange houses, are
supervised and controlled by the CBL. Stock brokerages do not
exist, but they would be supervised by the CBL. There are three
casinos in Liberia's capital. Casinos are registered as businesses,
but taxation and profit-sharing are negotiated directly with the
government. The Central Bank does not regulate casinos and there is
no specific law regulating money laundering activities linked to
casino operations.

Financial Intelligence Unit/Investigations
--------------

There is no Financial Intelligence Unit (FIU). Intelligence related
to money laundering and other financial crimes is handled by various
government security organizations in an uncoordinated fashion.
There is no reporting on the number of suspicious transaction
reports. The Liberian National Police (LNP) investigates financial
crimes through the Criminal Investigation Division's Technical
Investigation Unit and the National Bureau of Investigation (NBI)
investigates crimes through the Economic Crimes and Transnational
Crimes Divisions. The Ministry of National Security and the
National Security Agency (NSA) all have intelligence units and are
marginally responsible for investigating financial crimes. None of
the agencies are adequately staffed or resourced.

Large amounts of remittances enter Liberia every year through
institutions such as Western Union or Moneygram. According to 2004
regulations governing money remittance entities, amounts over
$5,000 must be sent through a bank. There are numerous illegal
money changers but no known alternative remittance systems that
by-pass financial institutions. The Liberian government has done
little to combat illegal money changers. Porous borders make cash
smuggling likely.

Asset Forfeiture and Seizure Legislation
--------------

The anti-money laundering law provides for seizure of laundered
assets including property, land, securities, and cash. However,
there have been no arrests, prosecutions or convictions for money
laundering or terrorist financing. The Liberian government has not
frozen the assets of any of the Liberians (including four Liberian
legislators) on the UN asset-freeze list. The banking community may
cooperate with enforcement efforts with the involvement of the CBL
or court order. The police and other security officials have the
power to seize drug-related assets, but need permission from the
courts. Implementation of laws is hampered by political
interference, judicial corruption, and lack of adequate resources.

Terrorist Financing
--------------
Liberia has not criminalized the financing of terrorism as required
by United National Security Council Resolution 1373. Liberia's
anti-money laundering law does not cover "all serious crimes" and
makes no specific mention of terrorist financing. The Liberian
government does not have a mechanism for circulating the UN
terrorist financing list to financial institutions.
Cross-Border Transportation of Currency and Negotiable Instruments
The CBL regulations on international transportation of currency were
issued in "Regulations Dealing with the Physical Movement of Foreign
Currency Bank Notes" issued November 23, 2001, and on the Transfer
of Foreign Currency, issued the same day. The documents outline
statutory requirements limiting or monitoring the international
transport of currencies.
International bank transfers from accounts are not limited, provided
the funds have been in the account for three days. Individuals
without an account may make over-the-counter transfers of up to
$5,000.
Any person wishing to move foreign currency banknotes out of Liberia
shall be allowed an undeclared limit of up to $7,500 or its
equivalent in other foreign currencies. Any amount in excess of
$7,500 may be carried by one person only in the form of bank drafts,
traveler's checks, money orders, and/or other similar instruments.
Any amount of foreign currency banknotes is allowed into Liberia,
but cash (banknotes/coins) in excess of $10,000 or its equivalent in
other foreign currencies must be declared to the authorities of the
CBL at the port of entry.
International Cooperation
--------------
Liberia has accepted but not signed the UN International Convention
against Illicit Traffic in Narcotic Drugs and Psychotropic

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Substances (Vienna Convention),the UN Convention against
Transnational Organized Crimes (Palermo Convention),the UN
Convention Against Corruption, and the UN Convention for Suppression
of the Financing of Terrorism.
Liberia is not a member of the Financial Action Task Force, but does
work with the Basle Committee for Banking Supervision for West and
Central Africa and with GIABA (the regional Intergovernmental Agency
Against Money Laundering).
The government has not adopted any specific laws or regulations that
allow for the exchange of records with the United States on
narcotics and narcotics related money laundering, all-source money
laundering, or terrorism finance investigations. Liberia does have
an extradition treaty with the United States, but we do not believe
the Liberian courts have correctly interpreted the provisions of the
treaty in recent cases. The United States and Liberia do not have a
mutual legal assistance treaty.
THOMAS-GREENFIELD