Cablegate: The Push for Money Laundering Legislation


DE RUEHLP #3040/01 3132039
P 092039Z NOV 06





E.O. 12958: N/A


1. (SBU) Bolivia's current anti-money laundering regime fails
to comply with international norms and is ineffective. Based
on INL's recommendations, post has encouraged the GOB to
enact a comprehensive money laundering law, including
terrorism finance provisions, has formed an informal working
group led by President Morales' legal adviser Dr. Gironda
which has met periodically for five months, and has
contracted a money laundering expert to push the GOB's draft
anti-corruption and money laundering legislation in the right
direction. Post has forwarded draft laws on corruption and
money laundering, created by the working group, to DEA and to
INL for comment by DOJ and GAFISUD (Financial Action Task
Force of South America). GAFISUD comments have been received
and forwarded to the GOB. However, in the last working group
meeting on October 24, Dr. Gironda said that he planned to
significantly condense the combined corruption and money
laundering draft law and put the extracted details into two
decrees to be issued by the GOB subsequent to passage of the
law. The GOB is focused on anti-corruption; it remains to be
seen if the Morales administration has the political will to
implement effective, comprehensive money laundering
legislation. End summary.


2. (SBU) Bolivia's anti-money laundering regime is based on
Law 1768 of 1997. That law modified the Penal Code and
criminalized money laundering, but only as it relates to
narcotics trafficking, organized criminal activities, and
public corruption. It does not cover terrorism finance. The
law established Bolivia's financial investigation unit (the
UIF), within the Office of the Superintendent of Banks and
Financial Institutions. Supreme Decree 24471, issued July
31, 1997, set forth the powers and duties of the UIF. Many
non-bank financial institutions are not obligated to report
to the UIF, and the system has become dysfunctional. To
date, there has been only one conviction under Law 1768.

3. (SBU) On April 26, 2006, the GOB promulgated Supreme
Decree 28695 (Organizational Structure for the Fight against
Corruption and Illicit Enrichment). Among a number of other
provisions, it referenced (in Article 18) a Financial and
Property Intelligence Unit (UIFP) that does not currently
exist (but is presumed to mean the UIF in some reconstituted
form), while it repealed Supreme Decree 24771 that gave the
current UIF its powers. After Embassy legal advisers pointed
out to the GOB that it had effectively put the UIF out of
business until it could assume its new mission of "fighting
corruption and illicit enrichment," on May 13, 2006, the GOB
issued Supreme Decree 28713, restoring the UIF's functions
and duties for a period of 240 days (until early January),
but moving the unit from the Banking Superintendent to the
Ministry of Finance. Presidential Legal Adviser Eusebio
Gironda assured Econoff on October 24 that the GOB would
issue another decree to extend the UIF if the Marcelo Quiroga
Santa Cruz law and corresponding regulations to create the
new UIFP were not in place by year-end.

INL Recommendations

4. (SBU) Based on Vice President Alvaro Garcia Linera's
acceptance of Ambassador Anne Patterson's offer of USG
assistance on corruption and money laundering during her
visit, corruption and money laundering experts from INL,
Diane Kohn and Gary Peters, visited Bolivia in June. Peters
met with the presidents of the senate and chamber of
deputies, who responded positively to Peters' suggestions to
draft comprehensive anti-money laundering legislation.
Peters also met with the former director of the Financial
Investigation Unit (UIF), Ramiro Rivas. In July, Peters
issued an assessment report with recommendations to post. He
recommended that NAS hire Rivas and that the GOB form a
working group to proceed with AML legislation.

Informal Working Group

5. (SBU) An informal working group with Presidential Legal

Adviser Dr. Eusebio Gironda, including representatives from
NAS, USAID, Checchi (USAID contractor), and Ecopol had begun
meeting in May to discuss the decrees concerning the UIF
mentioned above. The legal advisor from Checchi produced
talking points which helped encourage the GOB to issue a
second decree reinstating the UIF after the first decree has
disbanded it. Because Dr. Gironda was leading the GOB's push
to enact anti-corruption legislation, including anti-money
laundering components, this group has continued to meet
periodically from June through the present, as convened by
Dr. Gironda. Based upon Peters' suggestions, which were made
by Ecopol representatives to Dr. Gironda, the meetings were
also at times attended by Senate President Santos Ramirez's
adviser, Victor Cossio; Ramiro Rivas, whose contract was
finalized by NAS in October; representatives from the Finance
Ministry, and DEA officials.

Development of Draft Laws

6. (SBU) The working group took as its base documents various
drafts of the Marcelo Quiroga Santa Cruz (MQSC)
Anti-Corruption law, created by the Morales administration,
and prior GOB draft money laundering laws from the Finance
Ministry and the UIF. The documents were modified by Dr.
Gironda, with input from legal advisors from Checchi, USAID,
Ramiro Rivas, the Finance Ministry and the UIF to create two
draft laws -- one on anti-corruption and one on money
laundering. Ecopol forwarded the draft laws to DEA and INL
for comment. INL shared the drafts with DOJ and the regional
FATF-style body, GAFISUD, for input. GAFISUD comments were
received by Ecopol in early November and shared with Dr.
Gironda and Senate President Santos Ramirez. Post is waiting
to receive comments from DOJ.

Executive Branch Support for AML Weak

7. (SBU) Ecopol and NAS, in accordance with Peters'
recommendations, have attempted to convince Dr. Gironda that
the GOB should promulgate two laws -- one on anti-corruption
and a second on money laundering -- to ensure that Bolvia's
money laundering regime is comprehensive and includes
terrorism finance. Senator Santos Ramirez has demonstrated
some support for a second money laundering law and sent a
formal letter to the Embassy in September to request USG
support on anti-corruption, illicit enrichment, legitimation
of illicit earnings, related crimes, financing of organized
crime and terrorism, and observing the recommendations of
GAFISUD and UN conventions. However, Dr. Gironda, who is
close to President Morales and represents the executive
branch's view, is adamant that the MQSC anti-corruption law
should include money laundering provisions, but not terrorism
finance. He stated several times during September and
October that the Ministry of Foreign Affairs would send a
formal request to the Ambassador for USG assistance outlining
the themes the GOB intends to cover; however, post has not
received this request. Ecopol and NAS requested this letter
to be assured that the administration actually intended to
enact comprehensive money laundering legislation. The
Embassy is concerned that the executive does not have the
political will to back an anti-money laundering law,
including terrorism finance provisions. Without executive
support, it would be difficult for an AML law to be passed
and extremely difficult for it to be implemented.

Draft Law to Be Condensed

8. (SBU) During the working group's last meeting on October
24, Dr. Gironda said that some revisions had been made to the
MQSC draft law. He said that he was working on condensing
the law and would give group members a copy of the updated
version at the next meeting, which was originally scheduled
for October 31, but was postponed by Gironda until November
14. He explained that the details to be extracted would be
implemented through regulations and decrees by the GOB after
the law was passed by congress. It is unclear what this
condensed version will include, but post will forward the
draft to INL once it is received. Gironda explained that the
congressional session had been extended until mid-December
and that the GOB wanted to pass the MQSC law by that date.
Ramiro Rivas met with Dr. Gironda the first week in November.
He told Econoff on November 6 that Gironda planned to
condense the MQSC law and that the GOB would issue two
decrees after passage of the law -- one on anti-corruption
and one on money laundering. Rivas, in collaboration with
Checchi, planned to prepare suggestions for the condensed
draft at the next meeting with Gironda on November 14.


9. (SBU) Political leaders and some working group members
have expressed concern that the anti-corruption law would be
used by the GOB to hunt political enemies. The new UIFP,
under the Finance Ministry, should have more teeth than the
old UIF, under the Bank Superintendency. This could be
positive, because the former UIF was ineffective; however,
the UIFP could also be more politicized if it depends on a
ministry. Post will continue to seek to positively influence
the GOB's legislative process to produce money laundering
legislation that conforms with international norms, but is
not extremely optimistic about the ultimate outcome. End

© Scoop Media

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