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

UNCLAS SECTION 01 OF 04 WARSAW 004067 
 
SIPDIS 
 
STATE FOR EUR/NCE DKOSTELANCIK AND MSESSUMS, 
STATE FOR EUR/ERA, EB/ESC/TFS 
STATE FOR INL 
JUSTICE FOR OIA AND AFMLS 
TREASURY FOR FINCEN 
DEA FOR OILS AND OFFICE OF DIVERSION CONTROL 
 
E.O. 12958: N/A 
TAGS: SNAR KTFN PL
SUBJECT: POLAND 2005-2006 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT (INCSR) PART II - FINANCIAL CRIMES AND MONEY 
LAUNDERING 
 
REF: SECSTATE 210351 
 
¶1. Poland's geographic location places it directly along one 
of the main routes between the former Soviet Union republics 
and Western Europe used by narcotics-traffickers and 
organized crime groups. According to Polish government 
estimates, narcotics-trafficking, organized crime activity, 
auto theft, smuggling, extortion, counterfeiting, burglary, 
and other crimes generate criminal proceeds in the range of 
$2-3 billion yearly. The Government of Poland (GOP) 
estimates the unregistered or gray economy, used primarily 
for tax evasion, may be as high as 15 percent of Poland's 
$280240 billion GDP; it believes the black economy is only 
one percent of GDP. Poland's entry into the European Union 
(EU) in May 2004 increased its ability to control its 
eastern borders, thereby allowing Poland to become more 
effective in its efforts to combat all types of crime, 
including narcotics-trafficking and organized crime. 
¶2.  Poland's banks serve as transit points for the transfer 
of criminal proceeds. As of December 2004, 55 commercial 
banks were licensed for operation in Poland, as were 
slightly less than 590 "cooperative banks" that serve the 
rural and agricultural community. The GOP considers the 
nation's banks, insurance companies, and brokerage houses to 
be important venues of money laundering. Polish casinos may 
likewise be sites for money laundering activity. According 
to the GOP, fuel smuggling, during which local companies and 
organized crime groups seek to avoid excise taxes by forging 
gasoline delivery documents, is a major source of proceeds 
to be laundered. It is also believed that some money 
laundering in Poland derives from Russia and/or other 
countries of the former Soviet Union. 
¶3.  The Criminal Code criminalizes money laundering. Article 
299 of the Criminal Code addresses self-laundering and 
criminalizes tipping off. In June 2001, the parliament 
passed amendments that broadened the definition of money 
laundering to encompass all serious crimes ("Act on 
Counteracting Introduction into Financial Circulation of 
Property Values Derived from Illegal or Undisclosed 
Sources," known as the "Act of 16 November"). In March 2003, 
Parliament further amended the law to broaden the definition 
of money laundering to include assets originating from 
illegal or undisclosed sources. 
¶4.  The National Security Strategy of Poland has labeled the 
anti-money laundering effort as a top priority. The GOP has 
worked diligently to bring its laws into full conformity 
with EU obligations. On November 16, 2000, a law went into 
effect that improves Poland's ability to combat money 
laundering (entitled "the November 2000 Act on Counteracting 
Introduction into Financial Circulation of Property Values 
Derived from Illegal or Undisclosed Sources"). The GOP has 
updated this law several times to bring it into conformity 
with EU standards and to improve its operational 
effectiveness. This law increases penalties for money 
laundering and contains safe harbor provisions that exempt 
financial institution employees from normal restrictions on 
the disclosure of confidential banking information. The law 
also provides for the creation of a Financial Intelligence 
Unit (FIU), the General Inspectorate of Financial 
Information (GIIF), housed within the Ministry of Finance, 
to collect and analyze large and suspicious transactions. 
¶5.  A major weakness of Poland's initial money laundering 
regime was that it did not cover many non-bank financial 
institutions that had traditionally been used for money 
laundering. To remedy this situation, between 2002 and 2004, 
the Parliament passed several amendments to the 2000 money 
laundering law. The amendments expand the scope of 
institutions subject to identity verification, record 
keeping, and suspicious transaction reporting requirements. 
Financial institutions subject to the reporting requirements 
prior to March 2004 amendments included banks, the National 
Depository for Securities, post offices, auction houses, 
antique shops, brokerages, casinos, insurance companies, 
investment and pension funds, leasing firms, private 
currency exchange offices, real estate agencies, and 
notaries public. The March 2004 amendments to the money 
laundering law widen the scope of covered institutions to 
include lawyers, legal counselors, auditors, and charities, 
as well as the National Bank of Poland in its functions of 
selling numismatic items, purchasing gold, and exchanging 
damaged banknotes. It also requires casinos to report the 
purchase of chips worth 1,000 euros or more. The law's 
extension to the legal profession was not without 
controversy. Lawyers strongly opposed the new amendments, 
claiming that the law violates client/attorney 
confidentiality privileges. 
 
SIPDIS 
¶6.  In 2002, Parliament adopted measures to bring the 
nation's anti-money laundering legislation into compliance 
with EU standards regarding the reporting threshold, and 
also amended Poland's customs law to require the reporting 
of any cross-border movement of more than 10,000 euros in 
currency or financial instruments. In addition to requiring 
that the GIIF be notified of all financial deals exceeding 
15,000 euros, covered institutions are also required to file 
reports of suspicious transactions, regardless of the size 
of the transaction. Polish law also requires financial 
institutions to put internal anti-money laundering 
procedures into effect-a process that is overseen by the 
GIIF. 
¶7.  The GIIF began operations on January 1, 2001. In its 
first year of existence, the GIIF received over 350 
suspicious transaction reports (STRs). In 2002, the GIIF 
received 670 STRs, from which prosecutors prepared 70 cases. 
In 2003, the GIIF received 965 STRs, resulting in the 
development of 152 cases by the Prosecutor's Office, and in 
2004, there were 1397 STRs and 148 cases respectively. 
Between January and October 2005, the GIIF received 1,425 
STRs, resulting in the creation of 169 cases. Banks filed 
eighty percent of the STRs submitted in 2004 and 90 percent 
of STRs in 2005. At a minimum, all reports submitted by the 
GIIF to the Prosecutor's Office have resulted in the 
instigation of initial investigative proceedings. Although 
Tthere were only 24four  convictions under the money 
laundering law in 2004 (this figure is twice the number from 
2003), and is number that is expected to further increase 
further in 2005. Mmany of the investigations begun by the 
GIIF have resulted in convictions for other non-financial 
offenses. As of October 2005, the GIIF received 26.1 million 
reports on transactions exceeding the threshold level. The 
GIIF receives on average 1.8 million reports per month. 
¶8.  The vast majority of required notifications to the GIIF 
are sent through a newly developed electronic reporting 
system, which is Europe's most technically sophisticated and 
collects more complete information than the previously 
required report regarding the transaction in question (e.g., 
how payment was made-cash or credit, where and when). Only a 
small percentage of notifications are now submitted by 
paper, mainly from small institutions, which lack the IT 
capacity to use the electronic system. Although the new 
system is an important advance for Poland's anti-money 
laundering program, the processing and analyzing of the 
large number of reports that are sent to the GIIF iswill 
prove to be a challenge for the understaffed FIU. To help 
improve the FIU's efficiency in handling the large volume of 
reports filed by obliged institutions, the GIIF plans to 
installed new analytical software that will permits advanced 
and detailed analysis of financial information. 
¶9.  The GIIF also does on-site training and compliance 
monitoring investigations. In 20054, the GIIF carried out 
195 (15 in 2004) compliance investigations as compared to 15 
in 2004, and received several hundred follow-up reports from 
institutions responsible for routinely supervising covered 
institutions. In January 2004, the GIIF introduced a new 
electronic learning course designed to familiarize obliged 
institutions with Poland's anti-money laundering 
regulations. In March 2005, an updated version of the course 
has been  was installed on the Ministry of Finance website. 
¶10.  The Polish Code of Criminal Procedure, Article 237, 
allows for certain Special Investigative Measures. However, 
money laundering investigations are not specifically 
covered, although the organized crime provisions might apply 
in some cases. Two main police units deal with the detection 
and prevention of money laundering: the General 
Investigative Bureau and the Unit for Combating Financial 
Crime. Overall, both police units cooperate well with the 
GIIF. The Internal Security Agency (ABW) may also 
investigate the most serious money laundering cases. 
¶11.  A recognized need exists for an improved level of 
coordination and information exchange between the GIIF and 
law enforcement entities, especially with regard to the 
suspicious transaction information that the GIIF forwards to 
the National Prosecutor's Office. To alleviate this problem 
the GIIF and the National Prosecutor's Office signed a 
"cooperation agreement" in 2004. The agreement calls for the 
creation of a computer-based system that would facilitate 
information exchange between the two institutions. Work on 
the development of this new system is currently underway. 
¶12.  The GIIF is authorized to put a suspicious transaction 
on hold for 48 hours. The Public Prosecutor then has the 
right to suspend the transaction for an additional three 
months, pending a court decision. In 2004, Article 45 of the 
criminal code was amended to further improve the 
government's ability to seize assets. On the basis of the 
amended article, an alleged perpetrator must prove that his 
assets have a legal source; otherwise, the assets are 
presumed to be related to the crime and as such can be 
seized. Both the Ministry of Justice and the GIIF desire to 
see more aggressive asset forfeiture regulations. However, 
because the former communist regime employed harsh asset 
forfeiture techniques against political opponents, lingering 
political sensitivities make it difficult to approve 
stringent asset seizure laws. In 20042003, the GIIF 
suspended 520 transactions worth 9 million euros and blocked 
9 accounts worth 5.2 million euros. During the first 
teneleven months of 20054, the GIIF suspended 5 transactions 
worth 650,000 euros and blocked 3112 accounts, worth 2.1 
million euros.  the total value of which amiounts to 9 
million euros. 
¶13.  The GOP recently created an office of counterterrorist 
operations within the National Police. The office 
coordinates and supervises regional counterterrorism units 
and trains local police in counterterrorism measures. Poland 
has also created a terrorist "watch list" of entities 
suspected of involvement in terrorist financing. The list 
contains data based on information derived from similar 
lists published by the UN, the EU, and the United States 
Treasury Department. All covered institutions are required 
to verify that their customers are not included on the watch 
list. In the event that a covered institution discovers a 
possible terrorist link, the GIIF has the right to suspend 
suspicious transactions and accounts. Despite these efforts, 
Poland has not yet criminalized terrorist financing, arguing 
that all possible terrorist activities are already illegal 
and serve as predicate offenses for money laundering and 
terrorist financing investigations. The Ministry of Justice 
has completed draft amendments to the criminal code that 
would criminalize terrorist financing as well as elements of 
all terrorism-related activity. The amendments have been 
presented to the Minister of Justice, but have not yet been 
approved by Parliament. 
¶14.  Poland is a party to the 1988 UN Drug Convention, the 
UN International Convention for the Suppression of the 
Financing of Terrorism, the European Convention on 
Extradition and its Protocols, the European Convention on 
Mutual Legal Assistance in Criminal Matters, and the Council 
of Europe Convention on Laundering, Search, Seizure, and 
Confiscation of the Proceeds from Crime. In November 2001, 
Poland ratified the UN Convention against Transnational 
Organized Crime, which was in fact a Polish initiative. 
¶15.  As a member of the Council of Europe, Poland 
participates in the Council of Europe's Select Committee of 
Experts on the Evaluation of Anti-Money Laundering Measures 
(MONEYVAL) and has undergone first and second round mutual 
evaluations by that group. The GIIF is an active participant 
in the Egmont Group and in FIU.NET, the EU-sponsored 
information exchange network for FIUs. Poland continues to 
behas expressed an interested in joining the Financial 
Action Task Force (FATF). 
¶16.  A Mutual Legal Assistance Treaty between the United 
States and Poland came into force in 1999. In addition, 
Poland has signed bilateral mutual legal assistance treaties 
with Sweden, Finland, Ukraine, Lithuania, Latvia, Estonia, 
Germany, Greece, and Hungary. Polish law requires the GIIF 
to have memoranda of understanding (MOUs) with other 
international competent authorities before it can 
participate in information exchanges. The GIIF has been 
diligent in executing MOUs with its counterparts in other 
countries, signing a total of 270 MOUs between 2002 and 
¶20043. The GIIF-FinCEN MOU was signed in fall 2003. An 
additional sixeven memoranda on exchange of financial 
information with Guernsey, Chile, Croatia, Indonesia, 
Macedonia, and Switzerland Andorra, Cyprus, Monaco, Germany, 
Portugal, Thailand, and Ukraine were signed in 20054. 
Because Poland is an EU member state, the exchange of 
information between the GIIF and the FIUs of other member 
states is regulated by the EU Council Decision of October 
17, 2000. All information exchanged between the GIIF and its 
counterparts in other EU states takes place via FIU.NET. For 
the first teneleven months of 20054, 5840 requests regarding 
171124 entities were received by the GIIF from foreign 
authorities. During the same time period, the GIIF made 
147104 requests regarding 270227 entities to foreign 
authorities. 
¶17.  Over the past several years, the Government of Poland 
has worked diligently to implement a comprehensive anti- 
money laundering regime that meets international standards. 
Further improvements could be made by promoting additional 
training at the private sector level and by working to 
improve communication and coordination between the General 
Inspectorate of Financial Information and relevant law 
enforcement agencies. The Code of Criminal Procedure should 
also be amended to allow the use of Special Investigative 
Measures in money laundering investigations. This would help 
to attain a better record of prosecutions and convictions. 
Poland should also pass specific counterterrorist financing 
legislation. 
 
 
 
HILLAS