BURKINA FASO: 2009-2010 INSCR PART II MONEY LAUNDERING AND

UNCLAS SECTION 01 OF 08 OUAGADOUGOU 001166 SIPDIS SENSITIVE DEPT PLEASE PASS TO INL, SCT, EEB, AND AF/W MICHAEL HACKETT TREASURY FOR FINCEN JUSTICE FOR AFMLS, OIA, AND OPDAT E.O. 12958: N/A TAGS: KCRM EFIN KTFN SNAR UV SUBJECT: BURKINA FASO: 2009-2010 INSCR PART II MONEY LAUNDERING AND FINANCIAL CRIMES REF: STATE 114960 ¶1. (U) Per reftel request, below is Part Two of the International Narcotics Control Strategy Report concerning Money Laundering and Financial Crimes. ¶2. (U) The following are the responses for Burkina Faso to the 2010 INCSR, Part II, Money Laundering and Financial Crimes (paragraph numbers are keyed to REFTEL): (Begin text) GENERAL QUESTIONS -------------- ¶18. (U) Is the jurisdiction considered an important regional financial center? What is its significance in terms of money laundering? Burkina Faso is not a regional financial center. It is not perceived as a significant money laundering conduit. ¶19. (U) To the extent it is known, is money laundering/terrorist financing primarily related to proceeds from illegal narcotics, psychotropic substances, and chemical precursors? (If applicable, specify drug.) If not, what is/are the major source/s of the proceeds? Also, to the extent known, do the criminal proceeds laundered in the jurisdiction derive primarily from domestic or foreign criminal activity? Are the money laundering proceeds controlled by drug-trafficking organizations, organized crime, or terrorist groups operating locally? What is the extent that public corruption contributes to money laundering/terrorist financing in the host country? If applicable, please provide examples. No examples of corruption in the domain of drug trafficking have been reported by GOBF officials, journalists or by any NGO. ¶20. (U) Is there a significant black market for smuggled goods in the country? If so, is there evidence to suggest that it is significantly funded by narcotic proceeds or other illicit proceeds? Does contraband smuggling generate funds that are laundered through the financial system? Although the smuggling of goods does take place in Burkina Faso, there is no evidence to suggest that large-scale money laundering is linked to this activity. ¶21. (U) Does money laundering/terrorist financing occur in the formal financial sector, within an offshore financial center or free trade zone, or in the non-bank financial system (e.g. exchange houses) or via alternative remittance systems, such as hawala, hundi, or other systems? Please note if the country is experiencing an overall increase or decrease in financial crimes. Burkina Faso's economy is primarily cash-based; and most economic activity takes place in the informal sector. Only an estimated six percent of the population has bank accounts. The country is serviced by a traditional banking sector composed of 11 commercial banks and three specialized credit institutions called, "Etablissements Financiers." Banks include: the Banque Internationale pour le Commerce, l'Industrie et l'Agriculture du Burkina Faso (BICIA-B),the Banque Internationale du Burkina (BIB),the Societe Generale de Banques du Burkina (SGBB),the Banque Commerciale du Burkina (Arabo-Libyan),(BCB),the Banque Agricole et Commerciale du Burkina (BACB), Ecobank, Bank of Africa, and Banque Sahelo-Sahelienne pour l'Investissement et le Commerce (BSIC),and Coris Banque International, Banque Atlantique. (22. (U) To the post's knowledge, do the jurisdiction's financial institutions engage in currency transactions involving international narcotics trafficking proceeds that include significant amounts of U.S. currency or currency derived from illegal drug sales in the United States or that otherwise significantly affect the United States? No. ¶23. (U) Is there any indication that trade-based money laundering occurs in the post's jurisdiction? There have been unsubstantiated reports of some foreign-owned OUAGADOUGO 00001166 002 OF 008 businesses engaging in money laundering and narcotics trading. Others have openly speculated about the source of money for the many high end homes in the upscale development, Ouaga 2000. President Blaise Compaore has publicly stated that the illegal narcotics trade is one of the most serious national security threats faced by Burkina Faso, although the problem is still small scale by regional standards. -------------- OFFSHORE FINANCIAL CENTERS -------------- ¶24. (U) Is the country considered an offshore financial center? There are no offshore banking institutions. ¶25. (U) Are offshore banks, international business companies, or other forms of exempt or shell companies or trusts permitted? N/A ¶26. (U) Please provide the number of offshore casinos or internet gaming sites. N/A ¶27. (U) Is there a separate regulatory agency for the offshore sector, or is the offshore financial center regulated by the onshore regulator? N/A -------------- FREE TRADE ZONES (FTZs) -------------- ¶28. (U) Are there free trade zones operating in the jurisdiction? There are no free trade zones in Burkina Faso. ¶29. (U) Is there any indication that these FTZs are being used in trade-based money laundering schemes or by the financiers of terrorism? N/A ¶30. (U) What types of supervisory programs and/or due diligence procedures are in place to monitor activities in the FTZ zone? N/A -------------- LEGAL FOUNDATION OF AML REGIME -------------- ¶31. (U) What laws and regulations exist in relation to AML/CFT? Is money laundering a criminal offense in this jurisdiction? Does the law apply only to drug-related money laundering? Does the jurisdiction list specific crimes as predicate offences or take an "all serious crimes" approach? In some jurisdictions, anti-money laundering laws are applicable to predicate offences defined as "all serious crimes," crimes that carry a threshold minimum sentence in the jurisdiction's penal code. If there is a threshold minimum sentence, what is that threshold? If the country has a "list" approach, what offenses are covered? In 2000, the Economic Community of West African States (ECOWAS) established the Intergovernmental Group for Action against Money Laundering (GIABA),a Financial Action Task Force (FATF) style regional body based in Dakar, Senegal. GIABA is charged with promoting legislation against money laundering and coordinating the activities of West African Economic and Monetary Union (WAEMU) member countries. Burkina Faso outlaws the use, possession, and selling of all forms of drugs. There are also laws against corruption and money laundering. Each of these laws is implicated in supporting counter-drug efforts. On May 3-5, 2009 the country participated to the 11th meeting of the Technical Commission of the Intergovernmental Group of Action against Money Laundry and Terrorism Funding in West Africa in Bamako, Mali. March 2003, WAEMU adopted a uniform law to combat money laundering from a variety of sources and created Cellule Nationale de OUAGADOUGO 00001166 003 OF 008 Traitement des Informations Financieres(CENTIF). The six members of the CENTIF were put in place October 1, 2009 for a term of three years with the possibility to serve one additional term. Regulation 17 article 55 of 2004 allows the government to investigate any wealth without proof of legitimate origin. ¶32. (U) Has the country enacted secrecy laws that prevent disclosure of client and ownership information by domestic and offshore financial services companies to bank supervisors and law enforcement authorities? Burkina Faso has not enacted secrecy laws that prevent the disclosure of client or ownership information. -------------- FINANCIAL SECTOR -------------- ¶33. (U) Are bearer shares permitted for banks and/or for companies? Post has not been able to determine whether bearer shares are permitted or not. ¶34. (U) Which entities supervise and examine financial institutions for compliance with AML/CFT laws and regulations? What is their capacity to conduct compliance investigations (i.e. are they adequately staffed and trained)? CENTIF is empowered to investigate, demand documents, propose reforms as needed to combat money laundering. It produces a report annually on its activities. ¶35. (U) Are banks and other financial institutions required to know, record, and report the identity of customers engaging in significant transactions, including the recording of large currency transactions at thresholds appropriate to the country's economic situation? What is the statutory threshold? Financial institutions are obligated to confirm the identity and address of their clients before they enter into any type of financial transaction or open an account. Clients must present their original national identity card and provide a current home and work address. For those transactions amounting to more than 5,000,000 F CFA, all parties to the transaction must be disclosed. ¶36. (U) Are banks and other financial institutions required to maintain for an adequate time records necessary to reconstruct significant transactions through financial institutions in order to be able to respond quickly to information requests from appropriate government authorities in narcotics-related or other money laundering or terrorist finance cases? For how long? Financial organizations must keep records of accounts for ten years. They must be made available to judicial authorities, state agents investigating possible wrong doing and the authorities of CENTIF. ¶37. (U) Do financial institutions report suspicious transactions? Which ones? Is such reporting mandatory or voluntary? Is reporting required for all suspicious transactions, or is there a threshold amount below which suspicious transaction reports are not required? The Central Bank of West African States (BCEAO),based in Dakar, Senegal, is the Central Bank for countries in the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Guinea-Bissau, Cote d'Ivoire, Mali, Niger, Senegal, and Togo, all of which use the French-backed CFA franc currency. The BCEAO requires that all bank deposits over $13,500 in member countries must be reported. In March 2003, WAEMU adopted a uniform law to combat money laundering from a variety of sources. The law imposes due diligence obligations on financial institutions and directs them to report suspicious transactions to the Cellule Nationale de Traitement des Informations Financieres (CENTIF) of each WAEMU member state. ¶38. (U) Are reporting individuals protected by law with respect to their cooperation with law enforcement entities? Yes. OUAGADOUGO 00001166 004 OF 008 -------------- INFORMAL FINANCIAL SECTOR AND NONFINANCIAL BUSINESSES AND PROFESSIONS -------------- ¶39. (U) Are the AML/CFT controls as described in the preceeding 5 paragraphs applied to non-bank financial institutions (NBFIs) and designated non-financial businesses and professions (DNFBPs),such as exchange houses, stock brokerages, cash couriers, casinos, dealers in jewels and precious metals, insurance companies, pawn shops, realtors, high-worth dealers in art and vehicles, and to intermediaries, such as lawyers, accountants, notaries, or broker/dealers? Which are subject to the requirements to report suspicious transactions and/or large transactions? Which entities have actually filed such reports? In late 1998, Burkina Faso adopted rule R #09, governing foreign financial relations. Under this rule, banks and other financial institutions are required to report all cash or bond payments of 5 million CFA (USD 10,000) or more and all operations in excess of 10 million CFA (USD 20,000). They must also verify the identity of both the originator and recipient of these funds as well as details of the operation involved in the transaction. Institutions must keep records for 10 years following closure of an account or finalization of a transaction. -------------- --- FINANCIAL INTELLIGENCE UNIT (FIU)/INVESTIGATIONS -------------- --- 40 - 43, 45. (U) CENTIF is an autonomous entity under the Ministry of Finance, funded by the GOBF, UEMOA and various NGOs. It has yet to be voted on by the National Assembly and the legal framework is not presently in place although the six members of CENTIF have been identified. It will have reciprocal agreements with financial institutions for the exchange of information and must report suspicious transactions to judicial authorities, the government, and to the BCEAO. CENTIF draws on the expertise of the Customs Bureau, the Department of the Treasury, the Ministry of Finance, the Department of Importation, the Director of Central Administration, magistrates, the police, and the BCEAO. ¶44. (SBU) How many suspicious transaction reports (STRs) were received in 2009? How many were the subject of investigation or resulted in referrals to law enforcement for investigation? There are two cases pending judgment. One involves a national of Niger who entered Burkina Faso with a large, unjustified sum of money. The second involves a national of Burkina Faso who is not able to justify the origin of some of his money. CENTIF will be the organization that will track these types of cases in the future and will be able to provide more complete reporting. -------------- ASSET FORFEITURE AND SEIZURE LEGISLATION -------------- ¶46. (U) Have there been arrests, prosecutions, and convictions for money laundering or terrorist financing since January 1, 2009? How many? Please report highlights of any major cases not previously reported. No. ¶47. (U) The seizure and forfeiture of assets (including but not limited to bank accounts, other financial assets, airplanes, autos, residences, other property) derived from international drug trade, money laundering, terrorist financing or other serious crimes can be important elements in efforts to control drug trafficking, money laundering, terrorist financing and organized crime activity. Has the country enacted laws and established systems for identifying, tracing, freezing, seizing, and forfeiting narcotics-related assets as well as assets derived from, or intended for, terrorist financing and other serious crimes? If so, please describe the authority (regulatory or judicial). Are new legislation or changes in current laws, regulations, judicial or administrative authorities being considered? OUAGADOUGO 00001166 005.2 OF 008 The primary piece of legislation outlawing drugs is law number 017, voted into existence in 1999 by the National Assembly. According to this law, all types and quantities of drugs are illegal with the exception of medical prescriptions. Sentencing of offenders depends on the type and the quantity of the drug found in possession, on whether the offender is believed to be dealer, a consumer or a producer, and on the number of similar charges on the offender's record. To combat drug trafficking, the Government of Burkina Faso (GOBF) has created the Inter-Ministerial National Committee against Drugs (NCAD),which is directed by the Ministry of Security and includes representatives from 24 of the 34 ministries. NCAD is a member of both the United Nations Drug Committee(UNDC)and the African Union Drug Committee. There are currently plans underway to link this committee directly to the Prime Ministry, allowing it an even greater source of financial resources. ¶48. (U) What are the obstacles or disincentives to enacting such laws, regulations, other authorities? Burkina Faso has a very low capacity to conduct investigations due a significant lack of equipment and training. - According to Police Commissary Adama Ouedraogo from the NCAD, Burkina Faso is a transit-country because of: --the porosity of its borders --the difficulty and lack resources necessary to police the borders, --the very low capabilities of Ouagadougou International Airport to detect drugs. ¶49. (U) What are the major provisions in current and/or proposed legislation? For example, what assets can be seized? Do they include: instruments of crime such as conveyances used to transport narcotics, property on which illicit crops are grown or are used to support terrorist activity, or intangible property such as bank accounts? Can substitute assets be seized or must a relationship to the crime be proven? Can legitimate businesses be seized if used to launder drug money, support terrorist activity, or are otherwise related to other criminal proceeds? In late 2006, the GOBF adopted #026-2006/AN, an anti-money laundering law, which provides an effective mechanism to combat financial crimes. This Anti-Money Laundering/Counter-Terrorism Finance (AML/CTF) legislation states that "it is illegal to transform, conceal, or acquire any goods or funds that result from participation in a criminal action." According to #026-2006/AN, AML/CTF controls are applicable to all individuals and entities involved in the deposit, exchange, conversion or movement of funds. The law specifically includes the following entities: the Treasury, BCEAO, all financial organizations, the national lottery, members of the judicial profession who counsel clients on the purchase or sale of goods, commercial enterprises, real estate agents, merchants selling high value items, fund transporters, casino owners, travel agents and non-governmental organizations (NGOs). Banks and financial institutions are also required to implement programs to centralize client records, train employees on the identification of suspicious transactions, and establish internal controls to prevent money laundering. ¶50. (U) What government entities are responsible for tracing, seizing assets and freezing assets? Is there a period of time ascribed to the action of freezing, after which the assets are released? Are frozen assets confiscated? If yes, by what government entity? Is there an asset forfeiture fund? What entity/s receive/s proceeds from asset seizures and forfeitures? Which agencies manage and have reqponsibility for seized assets? What is their capacity to manage seized assets? 026-2006/AN also gives the investigating magistrate authority to order the seizure of assets relating to money laundering and terrorist financing. Individuals convicted of attempted or actual money laundering activities face prison sentences of three to seven years, mandatory confiscation of their merchandise, and fines triple the amount of the goods or money that was laundered. AML/CTF legislation calls for the protection of all individuals who cooperate with law enforcement entities on money laundering or terrorism issues. ¶51. (U) Does the banking community cooperate with enforcement efforts to trace funds and seize/freeze bank accounts? OUAGADOUGO 00001166 006 OF 008 WAEMU has a directive on combatting money laundering. According to this directive, all the banks in Burkina and the other WAEMU member countries should declare any suspect operation to the CENTIFs which exist in each country. If a decision of seizing or freezing accounts is taken, banks should implement it. ¶52. (U) Does the law allow for civil as well as criminal forfeiture? Yes. ¶53. (U) Does the government enforce existing asset seizure and forfeiture laws? Does the jurisdiction have adequate police powers and resources to trace, seize and freeze assets? If so, can the jurisdiction freeze assets without undue delay? The police have a special unit dedicated to countering drug trafficking, although this unit is not well trained or well equipped. The police, the gendarmerie, and the forest guards, especially those working at borders, receive training from the NCAD. Additionally, lawyers working for the NCAD receive training on Burkina Faso's drug laws. ¶54. (U) Does the government have an independent national system and mechanism for freezing terrorist assets? BCEAO and WAEMU have this authority. ¶55. (U) What was the dollar amount of narcotics--related, terrorist-related and other criminal-related assets frozen, seized, and/or forfeited in the past year? How does this amount compare to amounts seized/forfeited/frozen in previous years? For the first six months of 2009 law enforcement officials seized: --619,877 Kg of cannabis --1,235 Kg of cocaine --0,285 Kg of heroine --Illegal medical 4,400 tons ¶56. (U) Has the country enacted laws for the sharing of seized assets with other governments? Is the government engaged in bilateral or multilateral negotiations with other governments to enhance asset tracing, freezing and seizure? No. -------------- TERRORIST FINANCING -------------- ¶57. (U) Has the jurisdiction criminalized the financing of terrorism as required by the UN International Convention for the Suppression of the Financing of Terrorism and UN Security Council Resolution 1373? If so, please provide title of act, date of enactment, and pertinent details. If the jurisdiction has an "all serious crimes" anti-money laundering law, please indicate if terrorism and terrorist financing are considered serious crimes. If the country has listed the predicate offenses for money laundering, please indicate if terrorism and terrorist financing are on the list. In January 2006, GIABA's mandate was revised to fully incorporate the imperative to fight terrorism financing. In June 2007, the GOBF established the Cellule Nationale de Traitement des Informations Financihres (CENTIF),which is responsible for detecting and investigating financial crimes, including money laundering and terrorist finance. CENTIF is an autonomous entity under the Ministry of Finance, funded by the GOBF, UEMOA and various NGOs. It has reciprocal agreements with financial institutions for the exchange of information and must report suspicious transactions to judicial authorities, the government, and to the BCEAO. CENTIF draws on the expertise of the Customs Bureau, the Department of the Treasury, the Ministry of Finance, the Department of Importation, the Director of Central Administration, magistrates, the police, and the BCEAO. ¶58. (U) Has the jurisdiction circulated to its financial institutions the list of individuals and entities that have been included on the UN 1267 sanctions committee's consolidated list as being linked to Usama bin Ladin, members of the Al Qa'ida organization or the Taliban? Does the jurisdiction OUAGADOUGO 00001166 007 OF 008 circulate the list of terrorist organizations/financiers that the USG or the European Union (EU) have designated under relevant authorities? Did the jurisdiction identify, freeze, seize, and/or forfeit related assets in 2009? If so, please provide dollar amount. June 2003, WAEMU issued a directive which provided a legal basis for governments to implement the asset freeze proisions of UNSCR 1373. It also directed member govrnments to circulate the names of suspected terrrists and terrorist organizations on the UNSCR 1267 Sanctions Committee's onsolidated List to all financial institutions. ¶59. (U) Does the jurisdiction acknowledge the exstence and use of value transfer systems outsidethe formal financal system? Describe the steps he jurisdiction has taken regarding regulating alernative remittance systems, such as hawala or huni; the exploitation thereof, including blackmarket exchanges; money remitters; trade-based money laundering; cross-border cash smuggling; or the misuse of precious metals and stones. Because the country's borders tend to be largely unregulated, illegal narcotics operations and black market currency exchanges could easily flow in an unregulated manner in and out of the country and from one country to another within the region. ¶60. (U) Discuss the efforts the jurisdiction has taken to thwart the misuse of charitable and or non-profit entities that can be used as conduits for the financing of terrorism. For example, is there a government entity that regulates or supervises the sector? If so, please name the entity. Does it monitor the sector for potential terrorist financing abuse? How are overseas financial transactions monitored to prevent potential terrorist financing? None at this time. -------------- CROSS-BORDER TRANSPORTATION OF CURRENCY AND NEGOTIABLE INSTRUMENTS ¶61. (U) Are there statutory requirements for limiting or monitoring the cross-border transportation of currency and monetary instruments? If so, please describe cross-border currency reporting requirements for both inbound and outbound currency, including those that apply to cash couriers, including the monetary threshold that would require a report to be filed. Are mandatory declaration forms used at border crossings? One should make declaration if the amount exceeds CFAF 5 million. ¶62. (U) Are cash declaration or smuggling reports entered into a database? Is such data shared between host government agencies, in particular with an existing FIU? No. -------------- INTERNATIONAL COOPERATION -------------- ¶63. (U) Has the country adopted laws or regulations that allow for the exchange of records with the United States on investigations and proceedings related to narcotics, all-source money laundering, terrorism and terrorist financing? Has the jurisdiction reached agreement with the United States authorities on a mechanism for exchange of records in connection with such investigations and proceedings? If not, is the country negotiating in good faith with the United States to establish such an exchange mechanism? Does the jurisdiction have similar arrangements with other jurisdictions? No. ¶64. (U) Identify all treaties, agreements, or other mechanisms for information exchange that the host country has entered into with the USG or other countries, including agreements between the FIU and its counterparts, as well as membership in the Egmont group, and those with home country supervisors to facilitate the exchange of supervisory information regarding banks and trust companies operating in the host country. Describe the status of efforts to update such OUAGADOUGO 00001166 008 OF 008 agreements or arrangements. See references to BCEAO and WAEMU. ¶65. (U) Has the country cooperated, when requested, with appropriate USG law enforcement agencies and other governments investigating financial crimes related to narcotics, terrorism, terrorist financing and other crimes? If the country has cooperated on important cases with USG agencies, please describe. In August, 2009, the embassy relayed, under cover of diplomatic note, an official request for assistance related to a Department of Justice narcotics trafficking investigation. The note requested that the government of Burkina Faso investigate and verify information presented in the case, which involved the seizure of nearly $300,000 from a Burkinabe national for suspected trafficking. The Ministry of Security completed its investigation and returned the gathered information, complete and as requested, to the embassy in November 2009. ¶66. (U) Please detail any instances of refusals to cooperate with foreign governments, as well as any actions taken by the USG and any international organization to address such obstacles, including the imposition of sanctions or penalties. None. ¶67. (U) Is the country a party to the UN International Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention),the UN Convention Against Transnational Organized Crime (Palermo Convention),the UN Convention Against Corruption, and the UN International Convention for the Suppression of the Financing of Terrorism or other applicable agreements and conventions? If the country ratified or acceded to these conventions in 2009, please provide the date of ratification/accession. Burkina Faso has signed the following multi-lateral agreements: the United Nations Protocol against the Illicit Manufacturing and Trafficking in Firearms, Their Parts and Components and Ammunition, supplementing the United Nations Convention against Transnational Organized Crime (entered into force March 2005); the United Nations Convention Against Transnational Organized Crime (entered into force September 2003); United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (entered into force November 1990). Burkina Faso is also a party to the UN International Convention for the Suppression of the Financing of Terrorism. ¶68. (U) Does the country adhere to relevant international money laundering standards, such as the recommendations of the Financial Action Task Force (FATF)? If so, what steps is it taking to implement the standards? Is it a member of any FATF-style regional body? If not, what, if any, steps is the country taking to become a member of a body or to implement AML/CFT measures? Key challenges faced by Burkina Faso in the fight against money laundering, illegal narcotics and terrorism finance include: ineffective regional cooperation, ineffective capital controls for cross border transactions, regional corruption, lack of resources, and weak and overburdened judicial and law enforcement systems.(End text) ¶3. (U) Embassy Ouagadougou's point of contact for inquiries is Economic Officer Sarah Gourde (gourdesm@state.gov). Backup POC is Economic Commercial Assistant, Francois Cabore (caborefh@state.gov). HANKINS