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Cablegate: 2005-2006 International Narcotics Control

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS COLOMBO 002094

SIPDIS

STATE FOR INL AND SA/INS

EB/ESC/TFS

JUSTICE FOR OIA AND AFMLS

TREASURY FOR FINCEN

E.O 12958: N/A
TAGS: KTFN EFIN PTER SNAR KCRM MV
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL
STRATEGY REPORT (INCSR) PART II, MONEY LAUNDERING AND
FINANCIAL CRIMES, MALDIVES

REF: STATE 210691

1. UPDATED RESPONSE TO REFTEL FOLLOWS:

2. The Maldives is not an important regional financial
center. The financial sector of the Maldives is very
small, with five commercial banks (one international
bank, three branches of public banks from neighboring
countries and the state owned bank), two insurance
companies, and a government provident fund. There are
no offshore banks.

3. The Maldives Monetary Authority (MMA) is the
regulatory agency for the financial sector. The MMA
has authority to supervise the banking system through
the Maldives Monetary Authority Act. These laws and
regulations provide the MMA with access to records of
financial institutions and allow it to take actions
against suspected criminal activities. Banks are
required to report any unusual movement of funds
through the banking system on a daily basis. Separate
laws address the narcotics trade, terrorism, and
corruption: Law No. 17/77 on Narcotic Drugs and
Psychotropic Substances prohibits consumption and
trafficking of illegal narcotics. The law also
prohibits laundering of proceeds from the illicit
narcotics trade. Law No 2/2000 on Prevention and
Prohibition of Corruption prohibits corrupt activities
by both public and private sector officials. It also
provides for the forfeiture of proceeds and empowers
judicial authorities to freeze accounts pending a court
decision.

4. The Government of Maldives has drafted anti-money
laundering legislation with IMF assistance. The
government has also created a Financial Intelligence
Unit (FIU) within the MMA. According to the MMA, the
main functions of the FIU are to receive information on
suspicious transactions, analyze and refer to
investigation and law enforcement agencies. The FIU is
not yet fully functional. Currently, there are no laws
or regulations governing the FIU. Regulations to cover
the FIU are expected to be included in the money
laundering legislation.

5. Law No. 10/90 on Prevention of Terrorism in the
Maldives deals with some aspects of money laundering
and terrorist financing. Provision of funds or any form
of assistance towards the commissioning or planning of
any such terrorist activity is unlawful. The MMA has
issued "know your customer" directives and other
instructions to banks, including freezing order
requests, which are binding on banks and other
financial institutions. The MMA monitors unusual
financial transactions through banks, financial
institutions, and money transfer companies through its
bank supervision activities. The four foreign banks
operating in the country also follow directives issued
with regard to terrorist financing by their parent
organizations. To date, there have been no known cases
of terrorist financing activities through banks in the
Maldives.

6. The Maldives is a party to the 1988 UN Drug
Convention and to the 1999 UN International Convention
for the Suppression of the Financing of Terrorism. The
Maldives has not signed the UN Convention against
Transnational Organized Crime and the UN Convention
against Corruption.
Lunstead

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