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Cablegate: Persuading Nicaragua to Create an Fiu

VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #2351/01 2902258
ZNR UUUUU ZZH
R 172258Z OCT 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1530
INFO RUEHME/AMEMBASSY MEXICO 4824
RUEHBO/AMEMBASSY BOGOTA 1781
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPARTMENT OF TREASURY WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC

UNCLAS MANAGUA 002351

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/CEN, WHA/EPSC, INL/LP AND EEB
JUSTICE FOR OIA, AFMLS, NDDS
JUSTICE PASS TO OPDAT CDELUIGI
TREASURY FOR FINCEN
TREASURY FOR SARA GREY
TREASURY PASS TO IRS-CI/NFULLER, AALDECOA, TMAHONEY
MEXICO FOR IRS AARROYO
BOGOTA FOR FGROENE

E.O. 12958: N/A
TAGS: EFIN PTER PGOV SNAR ECON NU

SUBJECT: Persuading Nicaragua to Create an FIU

1. (U) Summary: Speeches delivered by the Ambassador, Nicaraguan
Superintendent of Banks Victor Urcuyo, and Caribbean Financial
Action Task Force (CFATF) President Willie Zapata at the opening
ceremony of an Embassy-hosted financial investigation training
seminar sparked renewed public debate and reinvigorated local
efforts to pass Financial Intelligence Unit (FIU) legislation in the
National Assembly. Post will follow up on the success of this event
by hosting a working group meeting in late November for key players
in the effort to create a FIU for Nicaragua. End Summary.

Speeches Spice Up FIU Debate
-------------------------------

2. (SBU) Embassy Managua held a week-long financial investigation
training seminar between September 24-28. The event was funded by
INL and had participation from the Justice and Treasury Departments.
Post made the opening ceremony for the training a public event which
highlighted Nicaragua's lack of a FIU. The Ambassador, Nicaraguan
Superintendent of Banks Victor Urcuyo, and Caribbean Financial
Action Task Force (CFATF) President Willie Zapata delivered strong
speeches detailing the risks for average Nicaraguans it its
government delayed creation of an FIU any longer. Zapata's speech
in particular clearly pointed out the possibility of Nicaragua
falling onto the "black list" of countries that do not have adequate
money laundering safeguards. (Note: Nicaragua is the only country
in Central America without an FIU and is one of the few countries in
the Western Hemisphere that is not a member of the Egmont Group. End
Note.) The audience included high ranking GON members including the
Vice Minister of Foreign Affairs, the President of the Central Bank,
the Director of Customs, the Director of Taxes, and the Director of
Economic investigations of the National Police.

3. (U) The speeches were well-covered in major national news
outlets, with front page headlines in El Nuevo Diario (center-left,
circ. 30,000) prominently warning of the possible black-listing of
Nicaragua as a country with weak safeguards against financial
crimes. The media attention touched off a firestorm of debate, with
critics such as Nicaraguan Supreme Court Chief Justice Manuel
Martinez, Associate Justice Sergio Cuarezma, and Partido Liberal
Constitutionalista (PLC) Deputy and Economic Commission Head
Francisco Aguirre Sacasa declaring that the creation of an FIU would
be tantamount to creating a "police" or "gestapo" state. Martinez,
in particular, even pledged to declare any law creating an FIU
unconstitutional. (Note: In 2005, Manuel Martinez was implicated
in an embezzlement scandal involving the disappearance of USD
$600,000 of seized drug money from the Supreme Court's operating
account. End Note.)

4. (U) PLC Deputy and Justice Commission Head Jose Pallais
subsequently ridiculed Martinez's "absurd" comments and explained
that an FIU would only investigate suspicious transactions worth
more than $10,000 and thus would not delve into the financial
affairs of average Nicaraguans. Sandinista (FSLN) National Assembly
leader Edwin Castro made a surprising joint appearance with American
Chamber of Commerce President Cesar Zamora to assert that the
proposed FIU is not only constitutional but necessary to stimulate
more overseas investment and encourage continued economic growth.
The Association of Private Banks of Nicaragua jumped into the fray
by taking out a full page advertisement in La Prensa (center-right,
circ. 40,000) expressing its support for the creation of a FIU and
providing basic information on the structure and functions of the
proposed unit. Both major dailies also ran longer, more detailed
pieces more accurately explaining the structure and purpose of a
FIU.

The Financial Investigation Training Seminar
--------------------------------------------- -

5. (SBU) Special agents from the Department of the Treasury's
Criminal Investigation Division and trainers Angel Arroyo, Nolan
Fuller, Thomas Mahoney, Alicia Aldecoa, and Resident Legal Advisor
Fernando Groene conducted a week-long training session on financial
investigations and money-laundering detection and enforcement
techniques to 30 trainees. The trainees hailed from various
Nicaraguan government entities, including the National Police's
vetted anti-corruption unit, the National Prosecutor's office, the
Nicaraguan Revenue Service, and Nicaraguan Customs and the Office of
the Superintendent of Banks. The Nicaraguan Attorney General's
Office was invited but declined to participate. The participants
uniformly agreed upon the timeliness and utility of the specialized
knowledge they received and expressed a strong desire to learn more
advanced money-laundering enforcement techniques.

November FIU Workshop - "Now Is the Moment"
--------------------------------------------

6. (SBU) Comment: In the opinion of the RLA and trainers, some of
the participants are well versed in the methodology of how to
conduct appropriate financial investigations but the Nicaraguan
legal framework lacks a solid operational enforcement mechanism to
allow successful and secretive investigations. Further, it appears
that the great politicization of law enforcement and judicial
institutions prevents the development of a fair, impartial and
reliable legal system. End Comment.

7. (SBU) Post will take advantage of the momentum generated by this
successful event to organize an FIU Workshop in late-November for
key local players in the FIU debate. The goals of the workshop are
two-fold: to educate participants about the functions and
structures of FIUs around the world and present options for ensuring
a FIU's independence and protecting it from political abuse. As one
official in the banking sector told us recently, "Now is the moment
to act."

8. (U) This cable has been cleared by the Department of Treasury and
the Department of Justice.

TRIVELLI

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