GREEK FIU: IMPROVED FUNCTIONALITY, BUT MORE NEEDED TO MAKE

UNCLAS ATHENS 001201

SENSITIVE
SIPDIS
DESK PASS TO TREASURY/FINCEN - ELHAM FARSAII

E.O. 12958: N/A
TAGS: ECIN KTFN MK PREL EFIN ECON GR
SUBJECT: GREEK FIU: IMPROVED FUNCTIONALITY, BUT MORE NEEDED TO MAKE
FULLY EFFECTIVE


1. (SBU) SUMMARY. In a meeting on July 9, Stelios Grozos, the
Chairman of the Hellenic Anti-Money Laundering Committee (aka the
Greek Financial Intelligence Unit or FIU),told A/EconCouns that he
largely agreed with the problems and recommendations identified in
the FATF's Fifth Follow-Up Report published in June 2009,
particularly those having to do with making Council members who
oversee the FIU's work full-time employees, hiring additional
qualified/specialized staff more quickly, and updating/modernizing
the FIU's computer systems. Grozos also told A/EconCouns that,
contrary to recent claims by Macedonian authorities in the press,
the Greek and Macedonian FIUs have very good cooperation and
exchanged information regularly. Grozos appears to be an honest,
hard-working technocrat who is very open to cooperation with
domestic Greek ministries, as well as the U.S. and other
international actors. Nevertheless, the same problems that have
plagued the FIU for several years (namely lack of staff and an
adequate IT system) continue to plague the FIU under Grozos,
leaving Post cautious about the pace of its progress towards
becoming fully effective. END SUMMARY.



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FATF Recommendations on the FIU

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2. (SBU) A/EconCouns met with Grozos to follow-up on progress made
in implementing Financial Action Task Force (FATF) recommendations
to help improve the functionality and effectiveness of the Greek
FIU. [NOTE: According to the latest follow-up report to the FATF's
June 2007 Mutual Evaluation Report (MER) that heavily criticized
Greece's FIU (Recommendation 26) and general AML/CTF regime, the
restructuring of the FIU under Greece's new AML/CTF law passed in
August 2008 has helped to improve the FIU's functionality. The
report noted, however, that the FIU still exhibits a few
deficiencies that limit its full effectiveness. These deficiencies
include extra powers and responsibilities beyond those normally
given to an FIU (such as law enforcement); lack of a full-time
overseeing Council of the FIU to carry out analysis of Suspicious
Transaction Reports (STRs) (current Council is part-time); presence
of representatives from the Ministry of Economy and Finance (MoEF),
which call into question the ability of the FIU to exercise full
operational independence; insufficient physical and electronic
security systems to protect FIU data; lack of an appropriate IT
system to track and process STRs; and lack of adequate human
resources to staff the FIU. END NOTE.] Grozos stated that he
largely agrees with the problems and recommendations made in the
follow-up report, and that he recently made many of these same
recommendations in a private report to the Parliamentary Special
Committee on Institutions and Transparency. Grozos stated that he
believes progress is being made to address these recommendations,
and more will progress will occur in the coming months.



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Progress in the Addressing the Recommendations

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3. (SBU) In his report to the Parliamentary committee, Grozos asked
for more assistance with seconding staff with the expertise he
desires from relevant ministries or offices, like the MoEF, the
Bank of Greece (Greece's central bank),and the Ministry of
Interior/Public Order. According to the new AML/CTF law, the FIU
should have up to 50 specialized staff (not including Grozos and
the eight members of the overseeing Council). Currently, however,
the FIU includes only 18 staff people. In addition, Grozos has
identified another 6 people with the specific financial skills he
believes are necessary to the FIU from the tax police (YPEE),the
central bank, and the MoEF. The problem, however, is in getting
these staff persons' home ministries to give them up. Grozos
indicated that the new AML/CTF law gives him the right to second
any staff within the GoG he wants in order to fulfill the FIU's
mandate. While he eventually gets the specific people for which he
asks, his requests get caught up in bureaucratic wrangling between
mid-level managers and his office. Ultimately, the Secretary
General or the Minister of the MoEF (administratively, the FIU sits


under the MoEF) must step in and force the lower level manager in
the MoEF or elsewhere to agree to the secondment, and this takes
time and effort. He would like the Minister of the MoEF to force
his managers or those of other ministries to agree to his choices
more quickly, thereby saving valuable time in acquiring the human
expertise necessary to run the FIU efficiently. He believes that
the Minister of the MoEF is willing to do this, which will mean
that the FIU can acquire the staff envisaged under the law more
quickly. Grozos believes that 50 staff people are enough to carry
out all of the FIU's powers and responsibilities.




4. (SBU) Grozos also recommended to the Parliamentary committee
that the eight Council members that oversee the FIU be made
full-time rather than part-time. Under the new AML/CTF law, this
Council is charged with analyzing incoming STRs and deciding upon
further action. Grozos indicated that while the current Council
members (which include members from the MoEF, the supervisory
authorities, and the police) are good and committed to the FIU's
work, he does not believe it will continue to be feasible to
analyze the FIU's STR workload (which is currently approximately
2,000 STR's per year) with anything other than full-time Council
members. Grozos said that changing the status of the Council to
full-time would require an amendment to the August 2008 AML/CTF
law. He is not sure if the GoG is willing to undertake this
change, but he believes it is largely technical.




5. (SBU) On the IT system and making the FIU's data more secure,
Grozos indicated that the MoEF has already approved 2.2 million
euro to develop and install a new system that will allow for the
electronic receipt of and response on STRs. Once operational,
according to Grozos, this IT system will help improve the flow of
and response time to STRs, as well as the security of FIU data.
The database, however, will not be operational until early 2011.
When asked, he indicated that there is not much that can be done to
hasten its implementation.




6. (SBU) Regarding whether the FIU is charged with too many
responsibilities under the new AML/CTF law, Grozos replied that he
believes he has the exact powers and responsibilities that allow
him and the FIU to effectively do their job. He does not believe
that the powers granted to the FIU (which include freezing assets
in domestic AML cases, law enforcement activities, and carrying out
audits) are too broad, and he does not think that the FIU will need
staff beyond the 50 envisaged under the law to carry out its
responsibilities. He also believes that the current budget granted
to the FIU (1.8 million euro/year) is sufficient, particularly
since all salaries continue to be covered by the home agencies of
staff seconded to the FIU. The budget is purely for administrative
costs (i.e. pens and paper).



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The FIU and UNSCR, etc. Lists

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7. (SBU) Grozos indicated that he receives all UNSCR, EU and U.S.
Executive Order lists and additions from the MoEF (Post usually
sends information from State demarches to MoEF and Bank of Greece
authorities). The FIU has never found information of domestic
activity by any of the people or companies on the lists. If it
did, it would provide the information to the MoEF, as the MoEF is
the entity tasked under the new AML/CTF law with freezing assets in
such cases.



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Cooperation with Macedonian FIU

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8. (SBU) When asked about Macedonian claims in the press that the
Greek FIU was not cooperating with STRs made by the Macedonian FIU,
Grozos said these were completely false. He expressed dismay that
the Macedonians would make such claims (made around the time of the
Egmont Group meeting in May in Doha) at all, let alone publicly.
Grozos said that despite continued disagreement on the name issue
at the political level, cooperation at the technical level between
the Greek and Macedonian FIUs was quite good and has been for some
time. He showed A/EconCouns STRs sent by the Macedonian FIU to the
Greek FIU and the Greek FIU's response. He even pointed out that
the Macedonian FIU used the name "Macedonia" when filing an FIU,
and the Greek FIU used the name "FYROM" in responding.



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Comment

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9. (SBU) Grozos, a sitting judge, has been in his position as head
of the FIU for almost one year, having come to power in October
2008, following the public ouster of the previous head, George
Zorbas. Where Kladas was often in the news for various reasons
(often seeking headlines and the limelight, according to Grozos),
including his public battles with then Minister of Finance,
Alogoskoufis, Grozos has taken a very different approach.
According to him, while he reports directly to the Minister of
Finance under the new AML/CTF law, he shies away from meeting the
Minister in person, knowing how public this could be, and how
easily the press could politicize any meetings. Instead, he
prefers to take a lower key and meet in person, when necessary,
with MoEF Secretary General Ioannis Sidiropoulos, who can relay
Grozos' messages/concerns to the Minister. Grozos appears to have
a strong desire to make the FIU a strong, efficient, and honest
organization. He took pride in introducing his hand-chosen staff
and describing their expertise to A/EconCouns during the meeting.
Grozos also appears to have a strong desire to cooperate with
domestic Greek ministries (on domestic AML cases) and
internationally with relevant entities in each country. He stated
several times that if there is anything he can do to help the U.S.
or to improve cooperation, we need merely mention it. He also
offered to meet more often with the Embassy or with Treasury/FinCen
staff in person if this would be helpful.




10. (SBU) COMMENT CONTINUED. Currently, the FIU is working on
several domestic cases ripped from the Greek and international
headlines, ranging from the Siemens scandal (e.g., tracing the
money flow of Greeks implicated in taking bribes) to the case of
the Greek shipping magnate kidnapped and released for a 40 million
euro ransom. While, Grozos appears to be on top of his roles and
responsibilities and that his heart and mind are in the right
place, whether the FIU can undertake all the powers granted to it
under the new AML/CTF law effectively will depend on having enough
qualified staff and resources at its disposal, continued support by
the Minister of Finance, and the sheer volume of work the FIU must
handle. The fact that almost 12 months following the
implementation of the new AML/CTF law and almost 10 months
following Grozos' appointment as Chairman, the FIU is still
grappling with the same issues as those under Zorbas (namely,
getting staff beyond 18 and implementing an effective IT system)
leave Post cautious about the pace of its progress towards becoming
fully effective. END COMMENT.
SPECKHARD