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

UNCLAS  WARSAW 002252 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE FOR EUR/NCE TARA ERATH AND MICHAEL SESSUMS 
USDOC FOR 4232/ITA/MAC/EUR/JBURGESS AND MWILSON 
TREASURY FOR OASIA MATTHEW GAERTNER 
FRANKFURT FOR TREASURY JIM WALLAR 
 
E.O. 12958:   N/A 
TAGS: EFIN ECON PREL PL
SUBJECT:  Polish Finance Ministry Releases Annual Report on 
Anti-Money Laundering and Terrorist Finance Activities 
 
REF:  (A) Warsaw 791 (B) 2004 Warsaw 5558 
 
 (U) This cable is sensitive, but unclassified, and NOT for 
Internet distribution. 
 
¶1. (SBU) Summary and Introduction: The Polish Ministry of 
Finance's Financial Intelligence Unit (the General 
Inspectorate for Financial Information, or GIIF), released 
an annual report in April on its activities in 2004 to 
combat money laundering and terrorism finance.  The Polish 
Government has made combating these scourges a top political 
priority, based on which GIIF has set up Europe's most 
comprehensive financial reporting requirements.  As of last 
July 1, all transactions (not just cash) worth 15,000 Euro 
or more must be reported.  GIIF's main achievement in 2004 
was setting up a sophisticated computer system to store and 
track all of these reports.  As it expands its staff, GIIF 
hopes to send more cases to prosecutors for prosecution.  In 
2004, the largest number of money laundering cases GIIF 
found involved fuel smuggling, closely followed by trade in 
scrap metal.  GIIF noted its concern that the Polish 
Government has difficulty tracking large amounts of cash 
which individuals from CIS countries and Asia declare at 
entry points.  GIIF singled out cooperation with the United 
States for special mention in its report.  End Summary and 
Introduction. 
 
¶2. (SBU) The 2004 report notes that GIIF's most important 
achievement in 2004 was getting its Information Technology 
system up and running to handle requirements which went into 
effect on July 1 that a wide range of financial institutions 
in Poland ("obligated institutions") report all transactions 
worth 15,000 Euro or more.  This requirement covers not just 
cash transactions, but all transactions.    In the six 
months since this requirement went into effect, GIIF has 
received an average of 1.5 million reports a month, 
necessitating a very powerful computer system to receive and 
store the reports.  The EU provided assistance which helped 
GIIF procure the necessary hardware.  As part of our 
bilateral INL program with Poland, the U.S. provided 
analytical software in early 2003 which will allow GIIF to 
begin tracing relationships between these transactions to 
better identify potential sources of money laundering or 
terrorism finance. 
 
¶3. (SBU) GIIF worked very hard in 2004 to provide training 
to the obligated institutions to educate them about their 
responsibilities under the new system, as well as to 
instruct them how to submit reports electronically.  GIIF 
published and distributed 10,000 copies of an anti-money 
laundering guide for these institutions, including 
typologies of common money laundering schemes.  GIIF also 
set up an e-learning program on its web site to train 
compliance officers at obligated institutions.  GIIF 
conducted more intense training for compliance officers four 
times in 2004, as well as providing training for Polish 
Government officials in the tax, customs and betting 
offices.  GIIF also set up direct secure computer links with 
the Justice and Interior Ministries which has allowed them 
to accelerate coordination and response to investigative 
queries.  This focus on technology has obliged GIIF to 
become one of the most advanced technological institutions 
in Poland; GIIF was the first to use electronic signature 
authority nationally. 
 
¶4. (SBU) GIIF is pleased with the response of obligated 
institutions to date.  As these institutions have become 
more familiar with their responsibilities and with the 
potential threats, they have submitted a greater number of 
suspicious transaction reports (STR).  In 2004, 1,397 STR's 
were submitted, a significant increase over 2003's 965 and 
2002's 614.  While more than 60% of the STR's in 2004 came 
from obligated institutions (mainly banks), there was a 
sharp increase in the number of reports filed by cooperating 
institutions such as tax and customs inspectors.  Based on 
these STR's, GIIF opened 643 investigations, which in turn 
enabled them to send 148 notifications to the state 
prosecutor of a possible crime.  After proper judicial 
review, GIIF stopped 5 financial transactions worth 2.6 
million Zloty (approximately $750,000) and blocked 13 
accounts worth 12 million Zloty (approximately $3.4 
million).  Of the reports filed by tax and customs 
authorities, many involved entities under or over-estimating 
the value of declared goods.  GIIF noted that 10% of the 
 
 
STR's filed came from insurance and stock brokers, currency 
exchanges and notaries. 
 
¶5. (SBU) The 2004 report notes several trends.  Sixty of the 
148 cases GIIF sent to the prosecutors involved fuel imports 
worth 717 million Zloty (approximately $205 million).  In 
many cases, GIIF found that criminals set up companies for a 
very short duration to import crude oil or refined products 
as home heating oil, taking advantage of lower excise taxes 
for the latter and reselling the product in Poland.  As the 
police increasingly cracked down on this trade, GIIF noticed 
a trend to apply the same methodology to import scrap metal. 
GIIF also noted a growing number of cases involving trade in 
securities.  Most of these cases involved companies from the 
Commonwealth of Independent States (CIS) buying shares from 
individuals or small companies in Poland.  GIIF noted that, 
in several cases, the ultimate source of the money from the 
CIS entity was not clear.  GIIF also noticed a trend for 
Russians, Ukrainians and Byelorussians to declare the 
importation of large amounts of cash which could not 
subsequently be traced in the Polish banking system.  Often, 
the addresses or firm names supplied on the currency 
declarations proves to be false.  GIIF noted similar 
concerns with some Asian individuals resident in Poland 
(with fake addresses) filling out currency declarations. 
GIIF is also concerned about a growing trend of imports and 
exports from tax haven countries. 
 
¶6. (SBU) GIIF noted that several methodologies were commonly 
employed to launder money, including declaring fictitious 
loans or donations to charities, blending of legal and 
illegal revenues, setting up fake accounts, over or under- 
pricing of assets and breaking deposits down into amounts 
below the reporting threshold. 
 
¶7. (SBU) GIIF increased its enforcement efforts in 2004, 
conducting 12 inspections of obligated institutions (9 
banks, and one each foreign exchange facility, insurance 
broker and casino), identifying a number of problems which 
GIIF inspectors later monitored.  Based on these 
inspections, GIIF altered its training and outreach 
activities.  As GIIF increases its staff, it expects to be 
able to conduct more enforcement inspections, as well as to 
analyze more cases for submission to prosecutors. 
 
¶8. (SBU) Based on its performance, the EU selected GIIF as 
one of a handful of model institutions to include on a study 
tour for Indonesian authorities.  GIIF officials report that 
several EU FIU's have asked to tour their facilities to pick 
up tips on converting their systems from paper to electronic 
submissions. 
 
¶9. (SBU) The GIIF report also noted the importance of 
international cooperation.  GIIF currently has agreements 
with 27 other countries on money laundering.  Thirteen of 
these agreements also contain clauses on cooperating against 
terrorism finance.  GIIF is in the process of negotiating 
with the other 14 countries to include similar counter- 
terrorism finance language in the existing agreements.  GIIF 
is an active member of a number of international 
organizations, including Money Val, BALTCOM and Egmont. 
Poland also works closely with the EU under the PHARE 
program to provide assistance to other countries in these 
fields.  GIIF concluded its report with a special section on 
cooperation with the United States, noting that it enjoys 
particularly close cooperation with U.S. authorities. 
 
Comment: 
- - - - - 
 
¶10. (SBU) In four short years, GIIF has come a long way, and 
Poland now boasts the most comprehensive financial reporting 
requirements in Europe.  This progress reflects the priority 
the Polish Government has placed on combating both money 
laundering and terrorism finance.  Even though it has been 
challenging at times to put this system in place, GIIF 
officials tell us they are determined to begin processing 
these reports, and send more cases to prosecutors.  The 
Ministry of Finance is also counting on this reporting 
system to reduce the scope of the gray, or undeclared 
economy.   We are particularly gratified that GIIF singled 
out cooperation with the United States for special mention 
in its (first ever) annual report. 
 
 
Munter 
 
 
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 2005WARSAW02252 - Classification: UNCLASSIFIED