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 Group of Experts in particular.

In furtherance of the foregoing, the Group of Experts met in 1996 and with CICAD’s approval began to meet twice yearly beginning in May 1997.

      In May 1999, during the 25^th Regular Session of CICAD held in Washington, D.C., the Commission decided that each Group of Experts should present 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 Lima, Peru, July 11-13, 2001, it was decided that the experts would present a work plan for the 2002-2003 period. Argentina, Brazil, Mexico, Peru and the United States 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 16, 2002 at 10:00 a.m., in accordance with the Schedule of Activities, the inaugural session was held in the main conference room of the headquarters of the Attorney General of the Republic. Opening remarks were made by the Attorney General of the Mexican Republic, Lic. M. Rafael Macedo de la Concha, the Chair of the Group of Experts, Ms. Luz Nuñez Camacho and by the Unit Manager of the Anti-Money Laundering Unit of CICAD, Mr. Rafael Franzini Batlle.

The meeting was carried out in five plenary sessions, which addressed the following matters referred to in the agenda: the report by the Executive Secretariat on the resolution of CICAD at its 30^th regular session to approve the Work Plan proposed by the experts for the 2002-2003 period and on the election of the Chair; the broadening of the mandate of the Expert Group; proposed revisions to the Model Regulations; analysis of the money laundering offence; Financial Intelligence Units; typologies exercises on terrorist financing and on a case presented by the Financial Analysis Unit of Bolivia; as well as other matters raised by the experts of the countries in attendance which are reflected in the conclusions and recommendations of this final report.

The closing session was held on July 18, 2002. The representative of the Executive Secretariat of CICAD, emphasized the importance of the work of the Group within the CICAD context, and the importance of the Group bringing forward concrete proposals to the Commission so that these can be considered at its next regular session to be held in Mexico City in December of this year.

The Chair and the delegations of Argentina and Mexico expressed their appreciation for the work of the participants, the organizers of the meeting as well as that of the interpreters.

III. AUTHORITIES AND PARTICIPANTS

The names of the attending experts are contained in the Directory of Participants, (CICAD/LAVEX/doc. /02).

IV.               DOCUMENTATION

The working documents of the meeting compiled by the Executive Secretariat are included in the list of Documents, (CICAD/LAVEX/doc. /02).

V.                 CONCLUSIONS AND RECOMMENDATIONS

1.             Agenda, Order of the Day and General Consideration of the issues

The draft Agenda was approved without change.

2.            Report by the Executive Secretariat on the Work Plan and the Election of the Chair

The Executive Secretariat gave its report on the proposed Work Plan (see Annex A) as approved by CICAD at its 30th regular session held in Caracas, Venezuela, November 12-15, 2001. (CICAD/doc. /02).

Likewise, the Secretariat representative reported on the election to the Chair of Lic. Luz Nuñez Camacho, for the period 2001 –2002 (CICAD/doc. ).

The Executive Secretariat, in accordance with the guidelines for the Work Plan of the Group of Experts as decided at the 30^th regular session of the Commission and taking into account the experience of last year, requested that the proposals for the Work Plan for 2003 - 2004 be sent to it by September 15, 2002 so that these could be included in the topics to be decided by CICAD at its 32nd regular session to be held in Mexico D.F. in December of this year. The Group accepted this proposal.

3.                  Broadening of the  Mandate of the Expert Group to consider adoption of the 8 Special Recommendations of the FATF

Following a discussion of the subject among the delegations of the United States, Brazil, Bolivia, Argentina, Guatemala, Mexico, Peru, Honduras and Chile, and comments by the representatives of the respective secretariats of the Financial Action Task Force (FATF) and the Inter-American Committee against Terrorism, the Group decided to recommend to CICAD the adoption of the proposal that financing terrorism should be made a predicate offense to money laundering. The Group also considered the content of the FATF’s 8 Special Recommendations on terrorist financing and decided that these too should be recommended to the Commission to be reflected in the Model Regulations. To this end the Group established an ad hoc working group to consider how these and other related matters should be addressed, whether in the text of or as an Annex to the Regulations.

The ad hoc group presented a report to the plenary (attached as Annex 1) which was approved by the Group for recommendation to CICAD after discussion by Antigua and Barbuda, Argentina, Bolivia, Brazil, Dominican Republic, El Salvador, Guatemala, Mexico, the United States, Venezuela and the representative of the CICTE Secretariat.

4.                  Analysis of the legal definition of Money Laundering

In its consideration of this subject, the Group considered three major points:

(a)   the autonomy of the offense;

(b)   the possibility of creating an offense of money laundering through negligence;

(c)   the responsibilities of legal persons.

The Peruvian representative gave a presentation on the first issue, having made specific proposals on this subject at the Group’s last meeting held in Lima, in July 2001. The second and third points were addressed in presentations, also containing specific proposals, by the delegation of Mexico.

After discussion by the delegations of Peru, Mexico, Panama, Argentina, El Salvador, Chile, Antigua and Barbuda, Bolivia, Guatemala and Venezuela it was determined that the definition of the offense in the Model Regulations in their current version captures the autonomy of the offense, reflects an offense based upon negligence (delito culposo) and contains provisions identifying legal persons subject to criminal prosecution for the commission of money laundering offenses.

Notwithstanding the foregoing, delegations present expressed their interest in attempting to clarify definitions of the offense that would be of assistance to law enforcement authorities in legal hearings, evidence gathering and sentencing. To that end, the Chair proposed and the meeting agreed to create a second ad hoc group to study these three points and make a proposal on amending the Model Regulations to the plenary for its consideration and possible recommendation to CICAD.

The ad hoc group presented a report to the plenary (attached as Annex 2), which was approved by the Group after further discussion involving Brazil, United States, Chile, Peru Argentina, Mexico and Antigua and Barbuda.

5.                  Financial Intelligence Units (FIUs)

The delegation of Peru referred to the recent creation of an FIU in that country, noting that not having an agency with these powers had prevented greater cooperation in the Vladimir Montesinos case.  It also expressed the point of view that such agencies could assist the judiciary if they could provide the judges with evidence of money laundering.

For its part, Brazil noted that Financial Intelligence Units (FIUs), as constituted for purposes of the Egmont Group, do not exist for the purpose of providing evidence to the judiciary, rather their function is to analyze financial information, share it with other pertinent national authorities and their counterparts in other countries, and, wherever pertinent, to report the findings to the competent authorities so that criminal proceedings can be instituted. This view was sustained by several other delegations present.

Pursuant to the agenda, the Brazilian representative also gave a presentation on international cooperation among Financial Intelligence Units noting that such cooperation could be effected directly in cases where this was an authority conferred on the units under national law and where there was a memorandum of understanding (MOU) between the countries concerned. The representative provided the meeting with a model MOU designed for this purpose.  At the behest of the Chair, it was decided to recommend to CICAD that the model be included in the Annex of the Model Regulations which refers to FIUs.

The delegations of Argentina, Bolivia, the United States, Panama and Guatemala each made reference to their respective Intelligence Units and their capability for sharing their information with other FIUs, or with law enforcement authorities, noting that not all national laws on the subject are the same. A number of delegations stressed the importance of membership in the Egmont Group since it afforded participation in the Egmont net through which information could be received from the other members of that Group.

On another matter the delegation of the United States, reminded that in accordance with the 8 Special Recommendations of the FATF on the financing of terrorism, FIUs had broadened the scope of their actions to include functions for the control of financing terrorism.

6.                  Typologies Exercise

In accordance with the Agenda, three typologies exercises were presented:

(1)              a report on businesses performing wire transfer services from one country to another, by the delegation of  Mexico;

(2)              a presentation on the “Lebanese” case, by the delegation of Bolivia; and

(3)              a report on financing terrorism by Mexico and the United States.

Copies of each of the presentations are included among the documents listed in the list of Documents, (CICAD/LAVEX/doc. /02= and will be distributed by the Executive Secretariat.

7.         Other business

A representative of the Federation of Latin American Banks (FELABAN) gave a presentation on the impact on the financial sector of the region of the United States of America’s Patriot Act. The presentation set out the points of focus of FELABAN and indicated that among other things, that Latin America’s financial sector is willing and able to move forward to combat the financial activities associated with financing terrorism. In that respect FELABAN considers itself an entity very concerned with the subject of money laundering in that private and correspondent banking can be used for these purposes. (The full presentation is attached to this report).

The representative of the Secretariat of the Inter-American Committee against Terrorism made a presentation on the background and the activities of the Committee and some possible forms of cooperation and collaboration with CICAD and its money laundering Group of experts. The presenter noted that included the Committee’s activities for 2002 –2003, it is proposed to coordinate training and information programs on the means of attacking the financing of terrorism and related activities. (The full presentation is attached to this report).

8.         Next  Meeting of the Group of Experts

Bolivia made known its interest in hosting the next meeting of the Group of Experts. The Executive Secretariat will officially present this proposal to the thirty-second session of the Commission.