Cross-border Transfer of Currency or Assets through Informal Systems or Networks for

Use in the Financing of Terrorism

CICTE

Ninth Regular Session

Washington D.C., March 5, 2009

Contents

• International legislation and standards on the financing of terrorism

• What is GAFISUD? • Situation in the region• GAFISUD actions

– Best practices– Typologies– Cross-border currency control exercises

Financing of TerrorismSpecial Recommendations

I. Ratification and implementation of UN instruments

II. Criminalizing the financing of terrorism (FT)

III. Freezing terrorist assts

IV. Reporting suspicious transactions

V. International cooperation

VI. Alternative remittance

VII. Wire transfers

VIII. Non-profit organizations

IX. Cash couriers

FT / Wire transfers

• Special Recommendation VI: Alternative remittance

• Special Recommendation VII: Wire transfers

• Special Recommendation IX: Cash couriers

Special Recommendation VI Alternative Remittance

Objective• To increase transparency in cash

movements, ensuring that jurisdictions establish anti-money laundering and terrorism financing controls, especially in those sectors outside the formal financial system.

Special Recommendation VI Alternative Remittance

Essential elements• To require wire transfer company licensing or

registration • To ensure that wire transfer companies

implement the FATF recommendations applicable to financial institutions on:– Customer identification– Record-keeping– Reporting suspicious transactions

• To implement administrative, civil, or criminal oversight and sanctioning procedures

Special Recommendation VII

Objective

• To prevent easy access by terrorists and other criminals to wire transfers to move their funds and to detect this illicit practice when it occurs.

Special Recommendation VII

Essential elements

• Minimum information for accurate identification of transfer originators

• Information remains available through the payment chain.

• Scrutiny and monitoring of suspicious wire transfer activities with incomplete originator or beneficiary information.

Special Recommendation IX

Objectives• To prevent terrorists and other criminals from

financing their activities or laundering the proceeds of their crimes through cross-border transport of currency or any other bearer negotiable instrument.

• To stop or restrain cash and bearer negotiable instruments that are suspected to be related to terrorist financing or money laundering, or that are falsely declared or disclosed.

Special Recommendation IX

Essential elements• A declaration system or other disclosure obligation to

detect the physical cross-border transport of currency and bearer negotiable instruments.

• Legal authority to restrain money concealed or falsely declared.

• Effective, proportionate and dissuasive sanctions against persons who make false declarations.

• Pertinent measures, including legislative ones, to confiscate currency or bearer negotiable instruments potentially related to terrorist financing or money laundering

What is GAFISUD?

MENAFATF

GAFISUD MONEYVAL

GAFIC

APG

GAFI

Working groups

DNFAPs WG

Legal WG preventive compliance

monitoring WG.

Police WG

FIU WG

GAFISUD

Situation in the region

  * Value assigned to each category: NC = 1 PC = 2 MC = 3 C = 4

Argentina Bolivia Brazil Chile Colombia Ecuador México Paraguay Peru Uruguay

Rec.   2nd Round   2nd Round 3rd Round 2nd Round 3rd Round 3rd ROUND 3RD ROUND 2ND ROUND

VI   1   2 4 1 2 1 2 1

VII   2   2 3 1 2 1 2 1

IX   1   2 1 1 2 1 2 1

GAFISUD Activities

• Wire transfer guidelines• Guidelines on physical cross-border transport of

currency or assets• Study of GAFISUD typologies of complex asset

laundering and terrorism financing techniques• Regional currency and asset border control

exercises

Wire Transfer Guidelines

• Main measures:– Specific designation of an agency to issue regulations

and effect supervision– Licensing or registration as a prior requirement for

carrying out the activity • Minimum capital • Shareholder suitability

– Guidelines for, inter alia, customer identification, reporting suspicious transactions, maintaining transaction records, and civil, administrative, and criminal sanctions

Guidelines on Physical Cross-border Transport of Currency or Assets

Main measures:• To implement declaration system or other

disclosure obligation, whose reports are available to FIUs.

• To authorize authorities to request additional information on the origin and destination of falsely declared funds detected.

• To grant authority to retain and confiscate falsely declared funds.

• Creation of a database of over-threshold transactions.

GAFISUD typologies. Study of complex ML/FT techniques

Three key aspects (one or any combination)

• Wire transfer companies: controls may or may not be imposed in the region in accordance with international recommendations in this area

• Exchange sector: lack of or inadequate supervision and regulation in some countries of the region

• Physical cross-border transport: thresholds, or lack thereof, for currency entry and departure

GAFISUD typologies. Study of complex ML/FT techniques

• Typology name• Description: Explanation of the “money

laundering” process used by criminals in each typology.

• Alert signal: Any element that may allow for the detection of “money laundering” transactions related to the described typology.

• Example: Presentation of a generic case related to the typology.

• Example diagram: Graphic representation of the example.

Scheme

Regional Cash and Asset Border Control Exercises

• In the last two years, the GAFISUD Police Working Group conducted four currency and asset control exercises per border – Countries control entry/departure for 24 hours

at border posts and airports– Information entered in a spreadsheet and

analyzed by the Group

Regional Cash and Asset Border Control Exercises

Conclusions

• Lack of training of personnel to detect and analyze cash smuggling situations (a drug-detection approach has been taken)

• Lack of currency detection technology• Lack of departure controls (forms are

required and efforts targeted at country ports of entry)

Thank you!

www.gafisud.org

contacto@gafisud.org

José Alberto Balbuena Balbuena

uifmex@hacienda.gob.mx