FINAL
REPORT
I.
BACKGROUND
Following
the adoption of the CICAD Model Regulations on Money Laundering
in 1992, the Ministers responsible for combating money
laundering in each of the countries met in Buenos Aires,
Argentina on December 2 1995, under the mandate of the 1994
Summit of Americas, and agreed to recommend a Plan of Action for
adoption by their respective governments in furtherance of a
coordinated hemispheric response to combat money laundering. The
Plan included specific items for further action by OAS/CICAD and
its money laundering control expert group in particular.
In
furtherance of the foregoing, the Expert Group met in 1996 and
with CICAD’s approval began to meet twice yearly beginning in
May 1997.
In May
1999, during the 25th Regular Session of CICAD held
in
Washington
,
D.C.
, the Commission decided that each Group of Experts should
present to a work plan and after being analyzed and adopted, the
Commission would decide if the Group of Experts would meet and
when. At this time, it was also decided that the Commission
would select member states, not individuals, to
Chair the Group of Experts.
At
the last meeting of the Group, held in
Washington
,
D.C.
July 20-22, 1999, it was decided that the experts would present
a work plan for the 2000-2001 period.
Argentina
,
Colombia
, the
United States
and
Mexico
sent to the Executive Secretariat work plan proposals that were subsequently
approved by the Commission. These proposals, which
are attached as Annex A to this report, formed the basis of the agenda
of this meeting.
II.
INAUGURAL, OPENING, WORKING AND CLOSING SESSIONS
On
July 11, 2000 at 9:00 a.m., in accordance with the Schedule of
Activities, the inaugural session was held in the Padilha Vidal
Room at the headquarters of the Organization of American States
in
Washington
,
D.C.
Opening remarks
were made by the Chair of the Group of Experts, Mr. Lorenzo
Cortese of
Argentina
, and by the Assistant Executive Secretary of CICAD, Mr. Alberto
Hart.
The meeting was carried out in six
plenary sessions, which addressed the following matters referred
to in the agenda: the report by the Executive Secretariat on the
election of the Chair and the approval of the Work Plan proposed
by the experts for the 2000-2001 period; typology exercises
(methods to launder money); legislation for the establishment of
Financial Intelligence Units; a Manual of Operations for the
operation of the Financial Intelligence Units; training
activities for the control of money laundering undertaken by the
Executive Secretariat and the Caribbean Financial Action Task
Force; the ongoing evaluation of the Plan of Action of Buenos
Aires; information on the possible creation of a Financial
Action Task Force for South America; a
report by the Executive Secretariat on the consideration by
the General Assembly of a convention on money laundering; as
well as other matters raised by the experts, of which are
reflected in the conclusions and recommendations of this final
report.
The closing session was held on July
13, 2000. Mr. Rafael Franzini Batlle of the Executive
Secretariat of CICAD summarized the topics that were considered
and the conclusions and recommendations reached by the Group.
The delegations, the Assistant
Executive Secretary of CICAD and the Chair thanked all the
participants, the Executive Secretariat as well as the work of
the translators.
III.
AUTHORITIES AND PARTICIPANTS
The
names of the attending experts are contained in the Directory of
Participants, (CICAD/LAVEX/doc.5/00).
IV.
DOCUMENTATION
The
working documents of the meeting compiled
by the Executive Secretariat are included in the list of
Documents, (CICAD/ LAVEX/doc.1/00).
V.
CONCLUSIONS AND RECOMMENDATIONS
1.
Agenda, Order of the Day and General Consideration of the
issues
At
the proposal of
Argentina
, the Group decided to delete from point 4.3 of the Agenda the
following phrase: “future of the mechanism bearing in mind the
possible creation in
South America
of an entity having the characteristics of the Financial Action
Task Force.” At the request of the same country, it was
decided to not consider the impact on the activities of the
Group of Experts by the creation of said entity.
At
the proposal of
Argentina
, the Group decided to include in the Agenda consideration of
the possible use of the RETCOD system for communication purposes
with respect to money laundering.
With
these changes, the draft Agenda was approved.
The Executive Secretariat informed
the Group that the delegation from Spain, which had been
expected to give a presentation on progress towards
the creation of an entity having the characteristics of the
Financial Action Task Force in South America, would not be able
to attend the meeting and that in its place, Argentina and
Brazil would provide information on the matter.
2.
Report
by the Executive Secretariat on the Work Plan
The
Executive Secretariat gave its report on the Work Plans proposed
by
Argentina
,
Colombia
, the
United States
and
Mexico
(see Annex A) and approved by CICAD at its 26th
regular session. The
Secretariat indicated how the proposals contained therein were
used to structure the Agenda and Schedule of Activities for the
meeting. He also
explained, point-by-point, how each of the topics submitted by
the countries corresponded with the items on the
Agenda.
The delegations from Argentina,
Mexico and the United States asked the Executive Secretariat on
the best date to send their proposals for the Work Plan for the
2001-2002 period so that these could be included in the topics
to be decided by CICAD at its 28th regular session to
be held in Trinidad and Tobago in October of this year.
The Executive
Secretariat, taking into account the experience of last year,
requested that the proposals be sent to it by August 30, 2000
and in reply to the request of the Chair it was agreed that, if
necessary, the date could be extended to September 15, 2000.
This decision, if made, would be communicated to the
Permanent Missions to the OAS. The Group accepted these
proposals.
The Chair urged each of
the countries to develop proposals so that the greatest
number of countries would be involved in developing
the policies of the Group of Experts.
3.
Typologies
The
delegate from Mexico, Ms. Luz Nuñez Camacho expounded on
various money laundering methods employed in cases investigated
in Mexico and the lessons
learned from them. The first case, known
as the “Choza Rica Transaction” was one
in which front companies were used to solicit lines of
credit and conduct foreign commerce operations. The second case
referred to the “Pitufo (“Smurf”)
Transaction” and involved the use of various agents to deposit
proceeds from the sale of drugs through cashiers and travelers
checks in a number of accounts of various banks.
The third case, about transactions known as
“Peso Broker” transactions, consists in buying dollars
at wholesale which
are then exchanged in
another country at a lower rate, with the difference in the
transfers passed on to
drug traffickers who then use them for the purchase of goods and
services. The fourth case made reference to the use of
underground banks for the
remittance and transfer of illicit resources. The fifth case
referred to the use of offshore enterprises created to receive
dollars from illicit activities.
The delegate from Venezuela referred
to various methods to launder money in which the Venezuelan
financial system was used. Among others, he highlighted the use of the black peso market by smurfs;
the use of the black market of a producing country in which
a bank in one country,
the black market exchange of another and the purchase of goods in a free zone in a third were parties to
the laundering. The presentation also referred to the use of
“money orders” as a vehicle to transfer funds to
banks in order to launder proceeds from drug trafficking.
Lastly, the delegate highlighted the
use of undercover agents to detect these operations.
A number of countries intervened after the presentations
to find out sources of information for the detection of these
cases. They also requested that these cases not only be
presented at these meetings but also immediately when money
laundering was detected. The presenting countries undertook to
provide this information
and the Executive Secretariat offered its services to include
the information on its new
web page that is being developed for this purpose.
To this effect, the delegation of Mexico presented a
CD-Rom containing the cases presented.
4.
Financial Intelligence Units
The
delegations of Brazil, Mexico, Bolivia and Colombia, Ms.
Adrienne de Sena, Ms. Luz Nuñez Camacho, Mr. Ramiro Rivas and
Mr. Rodolfo Uribe Uribe respectively, made presentations on the
legislative models
for the establishment of Financial Intelligence Units (FIU) in
their countries and the manuals of operations they
use to carry out their activities.
Ms. de Senna indicated that the FIU,
under her direction, began its work in 1998 thanks to the
enactment of a money laundering law, in which money laundering
for serious offences was criminalized and which gave the FIU the
power to regulate certain activities that are not regulated by
any other body. Ms. de Senna also referred to the composition of
this body and the scope of its functions.
Ms. Nuñez Camacho also referred to the structure and
norms governing the FIU that she manages, its location in the
administrative framework of Mexico’s government and how it
performs its functions. Ms. Nuñez added that the FIU developed
a manual, which was made available to financial institutions to
assist them in complying with the provisions that control money
laundering.
Mr.
Rivas gave an outline of the creation of the Financial
Information Unit in Bolivia and made reference to the manual
being used in order to carry out its activities. Mr. Rivas also
referred to the different departments that make up the Unit and
how they operate in practice.
Mr. Uribe spoke of the technical
operation of the FIU that he manages and the creation of
mathematical systems to detect deviations in economic activities
that may explain the presence of money laundering. Mr. Uribe
noted that the objective of the FIU is to anticipate the actions
of criminal organizations by the analysis of assets. Mr. Uribe
also made reference to the creation of a self-help guide for use
in the investigation of money laundering cases.
All of the presenters made available
information on their respective FIUs and copies of their
presentations, which the Executive Secretariat undertook to
provide to all delegations as soon as they have been translated.
The
delegation from Uruguay asked that countries that have FIUs send
to the Executive Secretariat the legislation, regulations and
any other relevant documentation that explain their
establishment and operation so that the Executive Secretariat
can organize them and make available useful models of FIUs for
countries such as Uruguay that are considering establishing
these types of entities. The Group decided that the delegates
would provide the information within 45 days and that the
Executive Secretariat would have 60 days thereafter to compile
and organize the information
into a draft manual of operations for presentation to the
countries.
5.
Training Activities
The
Executive Secretariat reported on the advancements of the
training activities commended to it by the Group of Experts.
Reference was made to the CICAD-Inter-American
Development Bank (IDB) pilot project to train bankers and
regulators of the financial sector, which concluded in June of
this year. The countries that participated were Argentina,
Colombia, Chile, Peru and Uruguay. The Executive Secretariat
noted that it had received requests from those countries to
continue with the execution of the program, but they are waiting
for the evaluation of the project by the IDB before proceeding.
The Executive Secretariat also commented that since the
intellectual property rights belonged to CICAD and the IDB a
decision had to be made by both organizations on the matter
before the materials could be duplicated.
In respect to the project for the
training of FIU personnel, the Group was informed that a program
has been developed and forwarded to the IDB for financing
considerations.
The Executive Secretariat then
referred to the training programs for judges and prosecutors and
informed the Group that a program has been developed and been
forwarded to a donor
country for its consideration.
The
countries that participated in the CICAD-IDB pilot project, with
the exception of Chile, which did not send a representative to
the meeting, made presentations on the presenting of the courses
in their respective countries. In general, it was agreed that
the project was a success. Recommendations were made on how to
better carry out the project, including improving certain
aspects of course coordination, the computer programs used to
create the graphic files used by the countries for the
reproduction of the course materials, and the short time-frame
of each course.
The delegations that had
participated in the course reiterated to the Executive
Secretariat their interest in obtaining the necessary permission
from the IDB to reproduce the materials and it was decided,
supported by the United States, Mexico, Venezuela, Jamaica,
Barbados and the Chair of the Group, to ask the IDB to give
permission for the reproduction of the materials on the basis
that it is necessary to provide the materials to the private
financial sector in order to facilitate their compliance with
the applicable money laundering legislation.
Mr. Brian J. Reynolds, Programme Manager of the Caribbean
Financial Action Task Force (CFATF), thanked the Group for the
invitation to attend the meeting and emphasized that his
presentation was being made in relation to the cooperation that
should exist when these types of activities are being
undertaken. Mr.
Reynolds gave an overview of the objectives of his program and
the areas in which training was being provided
Mr.
Reynolds said the objective is to train personnel of financial
institutions and other regulatory bodies, judges and
prosecutors, and personnel from law enforcement agencies.
Mr.
Reynolds further indicated the necessity for the coordination
among international organisms that are responsible for these
efforts. He cited CFATF’s program of anti-money laundering
training in the Caribbean as a reason why, provided there was
appropriate coordination, CICAD need not have to set aside
resources to train in fields or sectors already covered by CFATF.
He added that it should also be taken into account that in the
Caribbean region, that almost all of the countries share the
same language and legal system, with the exception of the
Dominican Republic. In
the latter case CICAD should provide training courses for that
country through joint coordinated efforts. The Executive
Secretariat asked whether in that case, financial help from the
CFATF could be counted on. Mr. Reynolds replied that this matter
would have to be raised with the donor countries of CFATF’s
program.
Canada
indicated that in addition, this type of coordination should be
established with the United Nations and Jamaica expressed the
importance of CICAD and CFATF maintaining contact in order to
coordinate their activities. In this regard, Mr. Reynolds stated
that he would send to the Executive Secretariat a copy of the
quarterly reports produced for CFATF’s program.
Following
interventions by the United States, the Dominican Republic,
Jamaica and Argentina, the Chair proposed that the member States
send to the Executive Secretariat, within 30 days, the training
courses they received from different international
organizations, so that the Executive Secretariat can compile a
list, and within 30 days thereafter, distribute it to the member
States. The Group
approved this proposal.
6.
Plan
of Action of Buenos Aires
The
Executive Secretariat reported on the current state of
countries’ responses to the Plan of Action of Buenos Aires
on-going evaluation questionnaire. The Secretariat noted that
ten countries had still not answered the questionnaire and that
many countries had answered but had not updated their responses.
The
Executive Secretariat also gave the reasons why it had prepared
a report on the
background of the Plan of Action of Buenos Aires, the different
evaluation mechanisms being carried out in the Hemisphere, and
the table comparing the questions of the Plan of Action and the
indicators of the Multilateral Evaluation Mechanism (MEM).
The
United States delegation asked the Executive Secretariat to
explain why some of the questions in the Plan of Action did not
have a counterpart in the MEM indicators.
The Executive Secretariat explained that the reason for
this situation is that there might be no specific question in
the MEM indicator, but that the manner in which the countries
are required to respond to the MEM questionnaire, the evaluators
would receive more information than that produced by the Plan of
Action of Buenos Aires. The Secretariat indicated that, for
example, if a country responds in the MEM that its legislation
is in accordance with the CICAD Model Regulations, it must
indicate what the legislation is and what aspect of the Model
Regulations covers it. This provides more information than what
is requested in the evaluation questionnaire for the Plan of
Action of Buenos Aires.
The
delegation of Mexico stated that when it had to evaluate its
legislation for membership in the Financial Action Task Force (FATF),
it carried out a comparison of what is required to be reported
under the Plan of Action of Buenos Aires, the MEM and the FATF
and they concluded that the information was the same in all
cases. Uruguay intervened to state that it did not seem to be a
good use of the resources of the Executive Secretariat to be
carrying out two similar evaluations, especially bearing in mind
that one of them produced better results than the other.
The
Assistant Executive Secretary of CICAD, Mr. Alberto Hart,
reviewed the indicators on money laundering included in the MEM
and the history of their adoption. He explained that the experts
who decided on the inclusion of these indicators sought to
ensure that it would be possible, through the countries’
responses, to know in what manner they were complying with the
Model Regulations, the FATF recommendations and the Plan of
Action of Buenos Aires. He
also noted that that the number of indicators on money
laundering was substantive, particularly if one took into
account, for example, that there were more indicators for money
laundering than for demand reduction. Finally, he commented that
the 12 indicators on money laundering for this round of
evaluations are not all the ones that were approved and that the
system of MEM indicators itself will be reviewed next year.
The
Chair reviewed the institutional, practical and economic aspects
that have had an influence upon the consideration of this topic.
He indicated that as well, CICAD has given priority to the
development of the MEM over other activities and that the
countries have acted in consequence, using their economic
resources even in critical times for their economies.
The
delegate from the Dominican Republic indicated that the Group
should take into account that CICAD, and in particular the
Group, had been entrusted to carry out the evaluation of the
Plan of Action of Buenos Aires, but they had not been told how
to move forward in their efforts, for which reason he found that
it would not be inappropriate to use for the evaluation of the Plan, the information contained in the MEM which is more complete
and up to date. The delegations from Peru, Mexico and the United
States supported this position
The
Group, taking into consideration the different interventions,
decided to bring forward to CICAD an account of the results of
the Plan of Action of Buenos Aires which has not produced
complete nor updated information, and therefore to propose the
use of the information produced by the MEM to evaluate the money
laundering situation in the Hemisphere and to develop policies
in that regard. At the instance of Argentina, the Group decided
that, in the future, they would analyze the MEM indicators
regarding money laundering and then bring forward to CICAD
suggestions on how to help strengthen the questionnaire
accordingly.
7.
Possibility of the Establishment of a South American FATF
The
delegate from Brazil, Ms. de Senna, summarized the activities
being taken for the convening of a technical meeting August
16-17 this year in Brasilia towards the establishment in South
America of a group having FATF characteristics. Ms de Senna
indicated that the governments of Argentina and Brazil had sent
letters to the rest of the countries in South America, with the
exception of those who are members of the CFATF, inviting them
to the meeting. The conclusions of the meeting will help serve
as guidelines for a memorandum of understanding to establish the
group.
Mr.
Marcelo Sain of the Argentine delegation added that in a meeting
of the MERCOSUR and its associated countries, Bolivia and Chile,
held in April, 2000, a technical support committee was created
in order to help pursue the execution of mutual evaluations at
the subregional level. Mr. Sain specified that the invitation,
made to the officials directly responsible for money laundering
in the countries of South America, was not made by Argentina as
a country perceiving itself as taking a leading role in the
effort, but rather simply to advance discussion on how to go
ahead with the establishment of a South American FATF-type
group, bringing to fruition the process initiated by the
political will at the Summit of Cancun in February, 2000.
The
delegation from Mexico indicated that although Mexico had not
participated in the process of creating such a group, it
wholeheartedly supported the effort, as expressed at the summit
in Cancun.
The
delegation from Barbados indicated that a transparent
relationship should exist between regional anti-money laundering
groups and the FATF. She
indicated her opinion that this relationship has deteriorated
due to the publication of a list of non-cooperative countries
and jurisdictions of the Caribbean that are also members of the
CFATF.
Colombia
reiterated its intention to be included in the process,
indicating that its situation and reality makes clear that that
they should be a member of this group and not the CFATF that
they were invited to join several years ago. They also proposed
to the Group that it should raise to CICAD the recommendation
that the Executive Secretariat assist technically the countries
in their efforts to create a South American entity with the
characteristics of the FATF. The Group approved this proposal.
8.
Consideration
by the General Assembly of a Convention on Money Laundering
The
Executive Secretariat referred to the process followed by the
Group to carry out a technical report on the feasibility of an
Inter-American Convention for the control of Money Laundering.
The conclusion of this process, the Executive Secretariat
indicated, came with the report being considered by the General
Assembly of the OAS that met in Windsor, Canada of this year.
The General Assembly approved the conclusions of the report
produced by the Group included in document CICAD/LAVEX/doc.10/99.
The
Assistant Executive Secretary of CICAD stated that any further
continuation of this matter lies with the Permanent Council. The
delegate from Colombia indicated that in that case, Colombia
would support the approval of an Inter-American Convention.
9.
Miscellaneous Matters
In
furtherance of the request of Argentina to include in the Agenda
the possible use of the RETCOD system for communication purposes
with respect to money laundering, a discussion was held on
whether to recommend to the next meeting of CICAD the use of
this communication system for money laundering. The Group
approved this proposal.
The
Executive Secretariat announced the distribution to countries
whose criminal systems find their origins in continental Europe,
a manual on the criminalization of money laundering. It also
indicated that this manual had already been used to provide
technical assistance to various countries and that the
distribution of the document was to help various countries,
among them Mexico, who had asked for legal research on this
subject.
10.
Future Meetings of
Expert Group
Peru
offered to host the next meeting of the Group of Experts. This
proposal will be presented to CICAD for its consideration at its
next regular session to be held in Trinidad and Tobago in
October of this year.
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