HONDURAS MAKES IMPORTANT GAINS AGAINST ILLICIT

UNCLAS TEGUCIGALPA 000338 SIPDIS SIPDIS STATE WHA FOR ELIA TELLO, PETER MAIER STATE EEB FOR JEFFREY IZZO, MARGOT SIEMER; STEVE BONDY AND JAY JALLORINA TREASURY FOR SARA GRAY TREASURY PLEASE PASS TO FINCEN E.O. 12958: N/A TAGS: EFIN PTER HO SUBJECT: HONDURAS MAKES IMPORTANT GAINS AGAINST ILLICIT FINANCING ¶1. Summary. The Honduran Congress passed long-pending changes to the criminal code on March 27, making terrorist financing a distinct crime. The new legislation imposes strict mandatory sentences and brings Honduras into full compliance with several international conventions and recommendations. The change is one of a series of positive steps Honduras is taking in the fight against various forms of illicit financing, including other important reforms to the money laundering code in February, and convening of an interagency working group co-hosted by the Embassy and the Judicial School. We will be looking for implementations of these legislative changes and meetings through prosecutions and convictions in the next year. End Summary. ¶2. The Honduran Congress passed long-pending changes to the criminal code, making terrorist financing a distinct crime. Previously, though terrorism was a crime, the financing of terrorism was not. The new code includes mandatory, non-commutable prison terms of 20 to 30 years and fines of between USD 50,000 and 250,000 for terrorist financing. The changes were drafted after World Bank made recommendations in a November 2007 assessment of illicit financing in Honduras, and says the change brings Honduras into full compliance with the 1999 International Convention for the Suppression of the Financing of Terrorism. Drafted by the National Banking and Insurance Commission (CNBS),the new legislation also satisfies one of the nine special recommendations of the Financial Action Task Force (FATF),the international body which implements the UN Terrorist Financing Convention. The CNBS expects the new laws will lead to positive conclusions after a scheduled 2009 assessment by the Caribbean Financial Action Task Force (CFATF),the regional FATF body of which Honduras is a member. ¶3. The changes to the criminal code are not the first action Honduras has taken against illicit financing this year. In February, Congress passed reforms to the money laundering code that expand regulations to non-financial entities such as jewelers, auto dealers and remittance houses. The U.S. Embassy and the National Judicial School are collaborating to host monthly operational-level working group meetings. Participants in the first two meetings include prosecutors, judges, police, intelligence officers, and the head of the confiscated assets unit. Previous workshops have focused on improving communication between agencies, improving electronic information sharing between ministries. During the next workshop on May 8, the working group will attempt to convince the President of the CNBS, to reconvene CIPLAFT, a high-level interagency working group chaired by the President of CNBS and heads of relevant ministries which was created by decree in 2005 but has not functioned. Quarterly meetings of the CIPLAFT are among the World Bank recommendations to demonstrate Honduran commitment to fighting financial crimes and would be an important signal of commitment for the 2009 FATF inspection. ¶4. Comment: The new legislation shows that Government of Honduras is aware of its international commitments to pass legislation and talk about necessary coordination on illicit financing. However, translating the changes from paper to action - through prosecutions and convictions - will be the true test of the GOH's true commitment to fighting financial crimes. In the last year several high profile cases have been put on hold by the prosecutor's office because it was waiting for new legislation and there have been no convictions for financial crimes in the last year. End Comment. Ford