LATVIA FRAUD SUMMARY: MARCH 2009 Q AUGUST 2009

UNCLAS SECTION 01 OF 08 RIGA 000486 SIPDIS DEPT FOR CA/FPP DHS FOR CIS/FDNS FRANKFURT FOR RCO, KERRY L. BROUGHAM E.O. 12958: N/A TAGS: KFRD CVIS CPAS CMGT ASEC LG SUBJECT: LATVIA FRAUD SUMMARY: MARCH 2009 Q AUGUST 2009 REF: (A) STATE 057623; (B) RIGA 170; (C) RIGA 472; (D) RIGA 90; (E) RIGA 165; (F) RIGA 359; (G) 08 RIGA 628; (H) 08 RIGA 692 Per reftel A, Post has prepared its semi-annual fraud report for the period between March and August, 2009. Please replace prior version of post's fraud report (reftel B) with the following text: ¶A. COUNTRY CONDITIONS Latvia is a member of the EU and NATO. Until 2008, Latvia's economy was one of the fastest-growing in the region, posting double-digit growth rates in real GDP. However, the country is currently mired in economic crisis, with soaring unemployment rates, falling real property values, a tightened credit market, and a sizeable national deficit. In fact, the Latvian economy contracted over the last 12 months, posting a GDP decline of 18.7 percent in the 2nd quarter of 2009, calculated on a year-over-year basis (GOL Central Statistical Bureau). In light of these difficulties, the Government of Latvia (GOL) is struggling with very difficult choices as its leaders seek to reduce the annual deficit in accordance with existing agreements with LatviaQs creditors (e.g. International Monetary Fund, European Union, et al.). Over the past several years, Latvia experienced significant labor force migration to other EU countries, most notably Ireland, Great Britain, and Germany (GOL Central Statistical Bureau). The increasing official unemployment rate Q which measured 12.3 percent in August, 2009 (GOL State Employment Agency data) - is expected to motivate even more people to look for jobs abroad. The August index reflects an increase of 2.8 percentage points since February and 7.1 percentage points compared to August, 2008. This loss of jobs has been widespread: while the eastern part of Latvia (Latgale) has been especially hard hit (current unemployment rate is between 18-26 percent, except for Daugavpils district with 12.1 percent),the current index is above 10 percent in all regions of Latvia. The European harmonized unemployment rate for Latvia was 17.4 percent in July 2009, the second highest rate in the European Union. Of those without work, almost half (45 percent per GOL State Employment Agency data) have general secondary education, 37.7 percent have professional education, and 14.1 percent have higher education, the rest have elemetary school education or their education level is unknown. Construction and real estate, two of the most robust industries of the last few years, have been among the hardest-hit sectors. Demographic studies provided by the GOL Central Statistical Bureau indicate that the jobless rate is highest (30.5 percent) for men and women in their early twenties. According to data from the same source, the average net salary in the Latvian public sector dropped 10 percent between June, 2008, and June, 2009. Due to the widening national deficit, GOL ordered significant salary cuts RIGA 00000486 002 OF 008 across the board for all government agencies, including local municipalities and their subordinate agencies. Further cuts may be expected in the coming months. Average net salary in the private sector remains the same as in ¶2008. Actual average net salaries in the outlying regions ranged from 271 to 313 LVL (or 565 to 661 USD, per current ROE) per month in June, 2009. The average monthly net salary was higher in Riga Q 408 LVL (or 841 USD, per current ROE). By comparison, the estimated minimum cost of living (poverty wage) in Latvia in June, 2009, was 168 LVL (or 344 USD, per current ROE). As a result, QunofficialQ wages grew in popularity in Latvia as entities and individuals tried to evade paying social and income taxes, which increase employer salary expenses by up to 50 percent. Latvia is essentially a bilingual country consisting of a Latvian majority and a Russian-speaking minority. The relations between the two are sometimes strained. According to statistical data, about 82.3 percent of 2.26 million Latvian residents hold Latvian citizenship, whereas 15.5 percent are Latvian non-citizens. The remaining 2.2 percent of the population are third country nationals (TCNs) holding Latvian residency permits. Of this latter category, the majority are Russian citizens. While Latvian non-citizens hold GOL-issued passports, their non-citizen status limits them from exercising some rights, for example, voting. A significant number of non-citizens do not speak Latvian, the country's official state language, which restricts their employment opportunities and ability to naturalize. Latvian non-citizen passport holders are authorized to travel without a visa to Schengen countries for a stay of up to 90 days, but are not eligible for the U.S. Visa Waiver Program. The U.S. visa reciprocity schedule is the same for Latvian citizens and non-citizens. Over the last few years, many business sectors in Latvia experienced shortages in skilled and unskilled labor. In response, the number of residency permits and work permits issued by GOL kept increasing over the last few years. According to GOL State Employment Agency data, the majority of TCNs employed in Latvia are from Ukraine (about 40 percent of the total of employed TCNs), Moldova, Uzbekistan, Russia, Thailand, and Belarus. Most of these individuals are employed in the construction, manufacturing, transportation, and hospitality industries. ¶B. NIV FRAUD NIV fraud is low in Riga. Wide-ranging fraud schemes are rarely encountered. In some cases, visa applicants present bogus employment documents to establish their bona fides, or omit information about their criminal records. Post has not yet encountered attempts from NIV applicants to falsify Police Clearance Letters. Post continues to perform document checks in conjunction RIGA 00000486 003 OF 008 with all NIV cases. The number of cases involving fraudulent documents has not increased during this reporting period. Latvian law enforcement institutions are working to combat organized crime groups, money laundering, and trafficking-in-persons schemes. Recent cost- cutting measures by GOL have affected the work of these institutions. Latvia joined the Visa Waiver Program on November 17, 2008. This has resulted in a considerable decrease in the number of NIV applications at Post. More specifically, Post processed 2,383 NIV applications between March and August of 2009, representing a 50 percent decrease compared to the same time period in 2008. The refusal rate (excluding G refusals) during the reporting period was 5.28 percent. Over the same reporting period last year, the refusal rate was 5.52 percent. According to post's annual B1/B2 visa validation survey, the visa misuse rate remains very low. The latest validation study indicated a 1.6 percent misuse rate for visa holders issued by post between June, 2007, and June, 2008 (see reftel E). Of the NIVs issued by Post from March until August, 2009, about 60 percent were C1/D visas. In absolute numbers, the number of applications for C1/D visas has increased approximately 30 percent, measured year-over-year (from 925 applications to 1204). C1/D visa fraud is rare and the refusal rate remains very low (0.16 percent). Post has established good cooperation with local crewing agencies. Previous validation surveys showed a 100 percent visa compliance rate for sailors (see reftel F). Post issued 139 J1 visas between March and August of 2009, representing a 4 percent increase over the same reporting period one year before. Almost all applications were from qualified applicants, with the exception of two Summer Work & Travel (SWT) applicants. Post requested additional information from these individuals, but they never returned. The 2008 SWT visa validation study (see reftel G) showed a 100 percent visa compliance rate. The updated validation study for this category will be performed at the end of October, ¶2009. The last survey on Au-pair program participants revealed 2 instances (7 percent) wherein visa holders overstayed the authorized period of stay (see reftel H). Because of worsening economic situations, J1 visa fraud remains an area of concern. Post does not process a high number of visas in other NIV categories. Fraud cases involving other types of visas tend to mirror similar schemes being tried at multiple posts in the region. For example, post has noticed that the limited number of H1B visas issued to fashion models has led several U.S. agencies to try using the B1 visa category to facilitate paid work in the U.S. In these cases, the model typically says he or she intends to "meet with fashion photographers" - while the actual plan is to appear in RIGA 00000486 004 OF 008 fashion shoots and runway shows. Similarly, Post has recently received applications from a number of professional minor league hockey players, who request B1 visas for their try out, but readily disclose their intention to work during their travel should they make the team. ¶C. IV FRAUD Post has no IV fraud to report. In October, 2007, post began processing immigrant visas for children adopted from Latvia. Warsaw processes all other immigrant visa categories for residents of Latvia. Upon request, FPU in Riga assists Warsaw in verifying authenticity of documents and other information submitted by the applicants. Post has requested authorization from the Department to begin processing all categories of immigrant visas during fiscal year 2010. ¶D. DV FRAUD Warsaw adjudicates immigrant visas for Latvian Diversity Visa cases. Post receives many DV-related inquiries from individuals who have received e-mails or phone calls from third parties. Post generally forwards these e-mails to RSO and FPU KCC as well. These letters often contain the Department of State logo, presumably copied from Internet resources. A warning message about DV fraud is displayed on postQs website. ¶E. ACS FRAUD Post has no ACS or passport fraud to report. ¶F. ADOPTION FRAUD Post has no Adoption fraud to report. There is no evidence of instances involving corrupt GOL officials, adoption agencies, or orphanage officials handling adoption cases. The Ministry of Welfare (previously the Ministry for Children, Family, and Integration Affairs),which is the central authority for adoption purposes, strictly monitors local adoption agencies and Latvian orphan courts. Post has no current concerns about fraud related to Latvian government procedures for making eligible orphans available for adoption. Orphan courts in Latvia carry out functions similar to those of social workers in the U.S. Orphan courts have the authority to decide if the birth parents' rights can be terminated, if an orphan should be placed in an orphanage, if custody will be transferred to someone else, and if inheritance rights apply when a child's parents die. In the context of international adoptions, the orphan courtQs main role is to establish that adoption would be in the child's best interest. In light of extensive negative publicity on adoption in Russia and other CIS countries, there is a certain degree of opposition among officials in the Latvian government and the general public in relation to adoption. This has contributed to a general sense of reluctance to promote local and RIGA 00000486 005 OF 008 international adoption. As of March 1, 2008, applications for intercountry adoption are approved only when the adoptive parents file to adopt: a)a sibling group of three or more children; b) a child over age 9; c) a child with severe health problems; or d) a child not adopted by Latvians, who is subsequently released for intercountry adoption. As of April 1, 2008, intercountry adoption from Latvia to the USA is carried out under guidelines established in the Hague Convention on Protection of Children and Co-operation in Respect of Intercountry Adoption. ¶G. USE OF DNA TESTING Riga has requested DNA testing in very few ACS cases in the past. Latvian DNA laboratories are EU-certified, but none cooperate directly with any U.S. laboratories that are authorized to provide testing for immigration law purposes. Currently, tests can be done with the assistance of Post's panel physician, who contacts a U.S. laboratory to conduct the test. The laboratory in the U.S. then sends the results directly to Post and the applicant. DNA tests have never uncovered any evidence of fraud in Riga. Post monitors the panel physician on a regular basis to mitigate potential fraud concerns. ¶H. ASYLUM AND OTHER DHS BENEFITS Post is aware of very few cases when Latvian passport holders traveled to the USA and claimed asylum. Before issuing a Transportation Letter to a Lawful Resident of the U.S., post verifies applicantsQ immigrant status with DHS. Post has seen no evidence of any other DHS-benefit fraud. ¶I. ALIEN SMUGGLING, TRAFFICKING IN PERSONS, ORGANIZED CRIME, TERRORIST TRAVEL Since Latvia joined the Schengen zone, land border checkpoints between Schengen zone countries have been eliminated. Latvia continues to have border checkpoints on the Latvian-Russian and Latvian-Belarus borders. Due to the open borders, Latvia has become more attractive as a transit state for smugglers attempting to bring aliens into the EU and Schengen travel zone. The number of asylum seekers and third country nationals (TCNs) detained for being present in Latvia without appropriate documentation or trying to leave for other EU countries without proper travel documents has increased significantly. Similarly, the number of people detained for alien smuggling has also increased significantly. Specifically, 3 persons were detained between January and June of 2008, but 15 were held for this offense in the corresponding period in 2009. The majority of asylum seekers and TCNs in Latvia without proper travel documents are from the former USSR countries. Several Syrian, Chinese, Bangladesh, Indian, and Iraqi nationals have also been detained. The number of bogus marriages between Latvian nationals and TCNs (e.g. Pakistanis, Indians, et. al.) continues to increase (see reftels C RIGA 00000486 006 OF 008 and D). These fraudulent unions are generally arranged by marriage brokers to make TCNs eligible for EU immigration benefits. This year Latvia reportedly has been a source country for human trafficking (TIP) victims. During 2009, no cases were identified in which Latvia was used as a transit or destination country for TIP victims; however, it is difficult to estimate the magnitude of TIP in Latvia since no formal surveys have been performed on the issue (see reftel D). Victims are most often women deceived by spurious employment offers who are trafficked as prostitutes to Great Britain, Belgium, the Netherlands, Norway, Italy, Germany, and Cyprus. As tens of thousands of Latvian men and women leave the country in search of better employment abroad, the NGO community believes that there are cases involving unidentified Latvians being trafficked for labor exploitation. Law enforcement continued investigating a case involving more than 50 victims purportedly trafficked to the U.K. as forced labor. With the Latvian economy in crisis and the local unemployment rate among the highest in the EU, there is a reason to believe that more Latvians may now be at risk of becoming TIP victims. Since Latvia has entered the Schengen travel zone, identification of potential TIP instances has become more challenging (see reftel D). The nature of organized crime (OC) in Latvia has evolved and become more sophisticated over the last two decades. OC groups benefit from improved information technology and from holes in legislation that minimize scrutiny, as long as criminals avoid violent acts. OC groups are most commonly involved in drug trafficking, car thefts, and economic crimes. With reduced or eliminated border control within the EU, OC groups perform more cross-border activities. According to Latvian police statistics, the number of murders has decreased by 75 percent over the last 15 years. Crimes involving the use of guns and explosives have decreased similarly. The number of drug-related crimes, however, has increased tenfold, and combating narcotics has become a major priority for Latvian law-enforcement institutions in Latvia. Latvia is both a transit as well as a destination country for drug trafficking. Police report many instances of drug-related cases of theft, prostitution, human trafficking, and money laundering. So far, post has not encountered any individuals with known terrorist ties. Upon receiving or obtaining credible data about individuals sentenced or arrested for serious crimes involving moral turpitude, organized crime, Trafficking in Persons, or alien smuggling, post enters quasi-hits or L lookouts in the Independent Name-Check System, if there is reason to believe that the individuals might apply for visas or visa free travel in the future. RIGA 00000486 007 OF 008 ¶J. DS CRIMINAL FRAUD INVESTIGATIONS Riga's Consular Section enjoys excellent cooperation with the Regional Security Office. Post has established a memo format for referring cases to the RSO for investigation. The Consular Section and the RSO in Riga regularly cooperate in conducting security checks on visa applicants who may be ineligible under certain sections of the Immigration and Nationality Act. With the RSO's assistance, the Consular Section can promptly obtain background from RSO contacts within various law-enforcement agencies. ¶K. HOST COUNTRY PASSPORT, IDENTITY DOCUMENTS AND CIVIL REGISTRY Latvia has two different types of passports - citizen and non-citizen passports. In November, 2007, Latvia began issuing biometric passports that meet ICAO standards to both citizens and non-citizens. Passports issued after September, 2008, also incorporate fingerprints. Citizen passports of the older type, i.e. those issued before July 2002, have been invalid for international travel since July 1, 2008. Passports are issued by the Office of Citizenship and Migration Affairs of Latvia (OCMA). In early January 2008, a large-scale scheme was discovered wherein more than 150 Latvian passports were issued illegally to non-citizens and third country nationals between 1998 and 2005. A number of government officials, mostly OCMA employees, accepted bribes and misused their powers to facilitate illegal issuance of Latvian passports. OCMA employees issued genuine passports by first creating a false identity in the national citizenship registry, then issuing a genuine passport for that fraudulent identity. It is believed that wealthy Russian nationals purchased these passports to secure free movement within the EU. Post has created over one hundred CAT1 files to reflect the fraudulent passport holders' fake identities. There are two types of Latvian driver's licenses: a new, EU-promulgated photo- digitized driving license and an older-type driving license with the photo affixed under laminate. Driver's licenses are generally accepted as proof of identity by public and private institutions in Latvia. The Road Traffic Safety Authority has implemented an anti-corruption program and cases involving bribery and the illegal purchase of driving licenses have significantly decreased. Forgeries are usually based upon older-type driverQs licenses. The Road Traffic Safety Authority reports that these licenses mostly are used for travel abroad rather than within Latvia. There is no evidence of fraud in relation to the issuance of Latvian civil records, such as birth, marriage, or death certificates. Latvia does not yet issue national identity cards. ¶L. COOPERATION WITH LATVIAN GOVERNMENT AUTHORITIES RIGA 00000486 008 OF 008 Post receives good cooperation from and has excellent contacts within Latvian government institutions, including the Security Police, Criminal Police, Maritime Administration, and State Border guards. It is not difficult to carry out the verification of civil documents through the Civil Registry. The Security Police and the State Police have proven to be useful contacts when post wishes to check an applicant's criminal record. The Maritime Administration is forthcoming about verifying sailors' credentials and in addressing concerns about the licensing of crewing agencies. ¶M. AREAS OF CONCERN According to the GOL State Employment Agency and OCMA, working-age adults in Latvia are increasingly likely to look for employment abroad, given the current economic climate. Post receives an increasing number of phone inquiries from Latvians who are eager to learn about living and working in the U.S. It is clear that B1 business visas are sometimes being confused with visas for temporary workers, investors, and intra-company transferees, perhaps due to a misinterpretation of the word QbusinessQ. In response, Post will perform additional public outreach to better explain the purpose of B1 business visas. ¶N. STAFFING AND TRAINING Consul Timothy P. Buckley is Post's Fraud Prevention Manager. Zane Zvigule is the Fraud Prevention Programs Analyst, and also performs visa processing and interpretation duties. GARBER