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Cablegate: Tunisia International Narcotics Control Strategy

VZCZCXRO2745
PP RUEHTRO
DE RUEHTU #1439/01 3031015
ZNR UUUUU ZZH
P 301015Z OCT 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 4054
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 7552
RUEHEG/AMEMBASSY CAIRO PRIORITY 1501
RUEHLO/AMEMBASSY LONDON PRIORITY 1376
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0914
RUEHFR/AMEMBASSY PARIS PRIORITY 1845
RUEHRB/AMEMBASSY RABAT PRIORITY 8448
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0147
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4142
RUEAWJB/DEPARTMENT OF JUSTICE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 TUNIS 001439

SIPDIS

SIPDIS

STATE FOR NEA/MAG (HARRIS), EEB/ESC/TFS, S/CT (NOVIS AND
WORMAN) AND INL
TREASURY FOR FINCEN
JUSTICE FOR AFMLS, OIA, OPTDAT
CAIRO FOR TREASURY (SEVERENS)

E.O. 12958: N/A
TAGS: EFIN KCRM KTFN SNAR PTER TS
SUBJECT: TUNISIA INTERNATIONAL NARCOTICS CONTROL STRATEGY
REPORT PART II -- MONEY LAUNDERING AND FINANCIAL CRIMES

REF: A. STATE 138226
B. 06 TUNIS 2472

1. There is no discernible money laundering or terrorist
finance activity occurring in Tunisia. Tunisia is not
considered an important regional financial center due in
large part to the very strict control exercised by the
Central Bank over financial transactions, particularly those
involving foreign currency. Since 2003, Tunisia has taken
important steps to create a legal framework for the
monitoring, investigation and prosecution of money laundering
and financial crimes. By creating an interagency Financial
Analysis Commission headed by the Central Bank Governor,
Tunisia has also established effective oversight and
coordination capabilities.

2. In December 2003, the Tunisian Parliament passed Law No.
2003-75, a comprehensive counterterrorism and anti-money
laundering law, to support international counterterrorism
efforts and to establish more severe sentences for
individuals convicted of terrorist acts. This law makes it a
crime to provide financial assistance or any other type of
support to terrorist activities, and provides for the
freezing of assets. Those suspected of violating the law can
be exempted from charges, however, if they report a planned
terrorist action to authorities. Money laundering is
punishable where false information is proffered relating to
the illicit origin of property or income arising directly or
indirectly from an offense. Money laundering is also defined
as investing, depositing, transferring or safekeeping of
property or income resulting from an offense. The law does
not delineate specific crimes; rather it broadly states that
money laundering related to "a crime or infraction" is
illegal. Tunisia's 1992 law (Law No. 1992-52) against
narcotics trafficking also includes provisions that
contribute to combating money laundering. Under Articles 2
and 30 of Law No. 1992-52, anyone aiding in narcotics
operations or the transfer of proceeds in connection with
these operations, including financial institutions, can be
prosecuted.

3. The Tunisian penal code also allows for the sequestering,
confiscation, or seizure of assets and property in certain
situations, including narcotics trafficking and terrorist
activities. The definition of "assets" is broad and covers
any number of financial or physical assets. Financial assets
are traced by the Central Bank and Financial Analysis
Commission, each of which has broad powers for investigating
and seizing financial assets. Following an initial freeze of
assets, authorities have four days to present additional
supporting evidence before the assets must be released. At
any time, the reviewing magistrate can release frozen assets
if he/she determines the evidence does not support such
measures. Tunisia has no legal provisions for sharing seized
criminal assets with other governments.

4. In 2003, Tunisia created an interagency Financial Analysis
Commission that includes representatives from the Central
Bank, Ministry of Finance, Ministry of Interior, Customs and
the judiciary. The Central Bank Governor acts as head of the
commission, which has both an investigatory and advisory role
in combating money laundering and terrorist financing. The
Financial Analysis Commission has oversight functions for
banks, non-banking financial institutions such as stock
brokerages, insurance companies and casinos, intermediaries
such as lawyers as well as non-governmental organizations.
In April 2006, the Financial Analysis Commission issued a
directive ordering all Tunisian banks to designate a
compliance officer, who serves as the direct liaison with the
Financial Analysis Commission.

5. Under Law 2003-75 all institutions or intermediaries must
report any suspicious, or unusual, transactions to the
Tunisian Financial Analysis Commission and freeze related
accounts. Financial institutions are also required to report

TUNIS 00001439 002 OF 003


all transactions above 5,000 dinars (US $3,780). Although
the Financial Analysis Commission reports a rise in the
number of suspicious transaction reports (STRs) received in
the past year, this is attributed to better reporting rather
than an actual increase in suspicious transactions. The
Financial Analysis Commission reports that none of the STRs
filed in 2007 have led to formal investigations or
prosecutions. To date, Tunisia has not had any
money-laundering or terror finance prosecutions.

6. Law 2003-75 also imposes obligations on all financial
institutions to gather full identifying information for
personal and business accounts. There are no anonymous or
numbered accounts allowed in Tunisia. Additionally, all
bookkeeping, accounting, and supporting documentation, in
both paper and electronic form, must be maintained for 10
years.

7. Banks report regularly receiving the US Government and
United Nations 1267 Sanctions Committee freeze lists from the
Central Bank. The Financial Analysis Commission reports that
it has never discovered any accounts or assets belonging to a
listed individual or entity.

8. The Central Bank retains strict control over foreign
currency operations. The Tunisian dinar is not fully
convertible and it is illegal to export dinars. Residents
are generally prohibited from holding or exporting foreign
currency except for certain purposes, such as travel or
business, and are limited in the value of foreign currency
that can be used for these purposes. Only certain categories
of individuals and businesses are allowed to open foreign
currency or convertible dinar accounts and all of these
accounts are monitored by the Central Bank.

9. The import and export of foreign exchange is regulated by
Article 76 of Law No. 2003-75. There is no explicit mention
of cash couriers or cash smuggling in Tunisian law.
Non-residents must declare the import of foreign exchange
equivalent to or in excess of a ceiling fixed by the Ministry
of Finance. Currently, the Ministry of Finance has set the
ceiling at the foreign currency equivalent of 25,000 dinars
(about US $19,200). Non-residents entering Tunisia with
foreign currency or other instruments worth less than 25,000
dinars are required to declare the total amount if they wish
to re-export or deposit more than 5,000 dinars (roughly US $
4,000). Non-residents do not need to declare currency
exports under 5,000 dinars. Customs may at any time require
declarations for gold or securities.

10. Although all fund transfers must go through formal
banking institutions or the National Post Office, these
restrictions and currency exchange controls may encourage
underground methods of moving money or transferring value in
and out of the country. Remittances from abroad are a major
source of hard currency, though there is no evidence of an
organized alternative transfer system such as hawala. A
significant black market in consumer goods does exist in the
country but is not believed to be funded by illicit proceeds.

11. All offshore financial institutions are held to the same
regulatory standards as onshore financial institutions.
Offshore financial institutions undergo the same due
diligence process as onshore banks and are licensed only
after the Central Bank investigates their references and the
Ministry of Finance approves their application. Anonymous
directors are not allowed. Tunisia currently has eight
offshore banks and a considerable number of offshore
international business companies. Offshore international
business companies are subject to all regulatory
requirements, except for tax requirements and currency
convertibility restrictions. There are five casinos in
Tunisia. Although Tunisians are not legally permitted to use
them, in practice Tunisians are able to circumvent this
restriction. Bearer financial instruments or shares are

TUNIS 00001439 003 OF 003


strictly prohibited (Act No. 35 of 2000).

12. Tunisia has two free trade zones, in Bizerte and Zarzis,
with a limited number of companies manufacturing products for
export. There are no offshore financial institutions located
in either free trade zone. There have been no reports of
trade-based money laundering or terrorist financing
activities using either free trade zone. Government customs
officials are present on site at the free trade zones and at
qualifying companies to supervise export activities. Prior
to opening a business in one of the two free trade zones, the
company must conclude a contract with the free trade zone
authority outlining project details, but are not required to
produce a company history.

13. Tunisia is a founding member of the Bahrain-based Middle
East North Africa Financial Action Task Force (MENAFATF),
approved in November 2004. Tunisia is a party to both the
1988 UN Drug Convention and the 1999 UN International
Convention for the Suppression of Financing of Terrorism.
Tunisia has signed and ratified the UN Convention against
Transnational Organized Crime. Tunisia signed the UN
Convention Against Corruption in 2004, but has not yet
ratified the agreement. Tunisia has submitted its candidacy
to the Egmont group. Tunisia has bilateral agreements on
"criminal matters" with 29 countries and is party to 12
international agreements on counterterrorism.

14. Embassy point of contact is Economic Officer Victoria
Taylor (E-mail: TaylorVJ@state.gov; Phone: 216-71-107-431).
GODEC

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