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Cablegate: Peru's Financial Intelligence Unit- Reinvigorated

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C O N F I D E N T I A L LIMA 001675

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E.O. 12958: DECL: 2019/12/01
TAGS: EFIN EINT PTER SNAR PE KTFN DEA TRSY
SUBJECT: Peru's Financial Intelligence Unit- Reinvigorated

CLASSIFIED BY: Alexandra Z. Tenny, NAS...
id: 237473
date: 12/1/2009 19:27
refid: 09LIMA1675
origin: Embassy Lima
classification: CONFIDENTIAL//NOFORN
destination:
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C O N F I D E N T I A L LIMA 001675

SENSITIVE
SIPDIS
NOFORN

E.O. 12958: DECL: 2019/12/01
TAGS: EFIN EINT PTER SNAR PE KTFN DEA TRSY
SUBJECT: Peru's Financial Intelligence Unit- Reinvigorated

CLASSIFIED BY: Alexandra Z. Tenny, NAS Programs Officer, State, NAS;
REASON: 1.4(B), (D)

Peru's Financial Intelligence Unit - Reinvigorated



1. (C) Summary: The Peruvian Financial Intelligence Unit (FIU),
under new management since February 2009, has shown renewed vigor
as demonstrated by the exponential increase in the number of
intelligence reports entering the judicial system compared to 2008.
Based on these cases, the FIU estimates that more than three
billion USD moved through the Peruvian economy illegally in 2009,
more than 80 percent as a result of drug trafficking. The new FIU
Director, however, is in conflict with his boss, the Superintendent
of Banks. The FIU receives strong support from the Prime Minister's
office which is contemplating legislation to make the FIU fully
autonomous similar to the Colombian model. End Summary.


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The FIU - a Primer

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2. (C) The FIU, created in 2002, functioned under several
jurisdictions - including the Prime Minister's office, the Public
Ministry, and the Finance Ministry - until 2007, when it came under
the authority of the Superintendent of Banking, Insurance, and
Private Pension funds (SBS). In addition to responsibility for
analysis, prevention, and supervision, the FIU has a regulatory
role. It proposes strategies and polices to the Superintendent on
prevention and detection of asset laundering and terrorist
financing; drafts regulations on asset laundering and terrorist
financing; and coordinates with other agencies in developing
regulations. The FIU receives and analyzes Suspicious Transaction
Reports (STRs), may request additional information relevant to
cases or operations related to money laundering or terrorist
financing, provides Financial Intelligence Reports (FIR) to the
Public Prosecutor's Office, participates and/or requests joint
investigations, and coordinates with foreign FIUs and entities.
Finally, the FIU supervises the system of prevention of asset
laundering and has the authority to sanction entities for
non-compliance with regulations or deficiencies in their business
to prevent the laundering of assets.


-------------------

Under New Management

--------------------


3. (C) In 2008, Peru's Financial Intelligence Unit produced
Financial Intelligence Reports (FIR) for the Public Prosecutor
resulting in four cases entering the judicial system. Then-FIU
head Sylvia Wong stepped down from her position at the end of 2008
and in February 2009, Enrique Saldivar was appointed Director of
the FIU. The speculation at the time of her departure on the part
of NASOff contacts in the Public Ministry, Peruvian National
Police, and other places was that she had been removed for lack of
performance, though she has publicly claimed she was pressured into
stepping down because she "got too close" to uncovering "big
cases."


4. (U) As of February 2009, FIU has been under the leadership of
Ramon Enrique Saldivar Bocangel. Most recently having served as
advisor to the President of the Supreme Court, he has also been the
head of the Prime Minister's National Office of Electronic
Government and Information. Prior to these positions, Saldivar
worked in the private sector, including five years with Microsoft.
He holds multiple degrees from the best universities in Lima in
Economics and Business Administration and has attended the

Microsoft Latin American Executive Training Program in Bogota.


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FIU Progress in 2009

---------------------


5. (C) Of the 7,710 suspicious activity reports examined by FIU
analysts in 2009, 781 resulted in financial intelligence reports
sent to the Public Ministry for further processing and
investigation. Based on these 781 intelligence reports, the FIU
concludes more than 3 billion USD moved illegally through Peru's
financial sector in 2009. 83 percent of this amount, according to
the FIU, is related to drug trafficking. The other 17 percent is
reportedly related to fiscal fraud, corruption and illegal gun
dealing. Currently, 308 of these intelligence reports are at
various stages of investigation and prosecution in the legal system
- as compared to four cases in 2008. The FIU also reports tracking
cases similar to that of an OFAC-designated Al-Qaida element moving
money from Europe through Lima and on to India. Asked if this
Al-Qaida case was the first of its kind or they had seen similar
cases before, Saldivar told NASOff that they see about one case a
month.


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Challenges to the FIU

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6. (C) Saldivar told NASOff he often becomes frustrated by the
legal and bureaucratic obstacles encountered when pushing money
laundering cases through the judicial system. Any information
sharing between the FIU and other Peruvian entities involves a
paper intensive process through the Public Ministry (Attorney
General's Office). The FIU must contend, he said, with
institutions such as the Peruvian tax agency (SUNAT), which refuses
to share information, not because it is forbidden by law, but
because SUNAT does not believe FIU has safeguards to protect the
information. Saldivar argues that this is not the case and claims
it is more an issue of institutional jealousy than real security
concern. Furthermore, he asserted, SUNAT often hides behind tax
confidentiality laws although the tax code establishes exceptions
in cases typically investigated by the FIU. The FIU is receiving
strong support from the Prime Minister's Office, according to
Saldivar. Legislation to make the FIU fully autonomous similar to
the Colombian model, is being considered, he said. Saldivar did
not know, however, when this legislation would be introduced.


7. (C) According to Saldivar, anti-money laundering efforts in Peru
are hindered by several factors. He said, for example, there are
too many agents working on different aspects related to money
laundering and terrorist financing and their related offences.
Additionally, while the FIU is the coordinating body for anti-money
laundering and terrorist financing issues, the current legal
structure restricts inter-agency collaboration and information
sharing, including access to information such as tax and banking
records. Finally, Saldivar told NASOff that his own boss, the
Superintendent of Banks, is reluctant to push the banking sector in
terms of compliance. Currently, though the major banks have
complied with orders to freeze accounts, they are under no
obligation to comply quickly, according to Saldivar.


8. (C) Saldivar confided in NASOff that when he first began as the
Director of the FIU he met with the management of each of the major
international and Peruvian banks. He said he was rather taken
aback when the three largest international banks told him they had
no intention of cooperating with him. Scotia Bank, Saldivar said,

told him they had no intention of reporting to FIU anything related
to fiscal fraud and Commercial Bank informed him they would not
report to the FIU on counterfeit currency.


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Leaking Financial Information

-----------------------------


9. (C) Saldivar told NASOff he believes that the Banking
Superintendent is leaking sensitive information from FIRs to
political entities and the press. Both the Banking Superintendent
and Saldivar are being sued personally by Peru's Nationalist Party
because of an FIU investigation into one of its leaders. Saldivar
said he suspects that the Superintendent has leaked sensitive
information on this and other high profile cases for political
reasons due to his close connection with President Garcia and his
political party.


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Comment

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10. (C) Saldivar appeared stressed and worried when
discussing the issue of the leak and shared with NASOFF that four
months into his tenure as Director, he was told by the
Superintendent's chief advisor that he was "working too quickly."
The numbers speak for themselves in terms of the FIU's performance
in 2009 as compared to 2008 primarily due to Saldivar's leadership.
The FIU staff who less than six months ago reported to NASOff low
morale now reports a renewed energy in their work and excitement
for the vision of the new leadership. However, Saldivar's tenure
is in question, and he feels he is being prevented by other
officials from fully realizing the FIU's potential. Saldivar has
demonstrated results and NAS will continue to support the FIU's
work.
MCKINLEY

=======================CABLE ENDS============================

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