VZCZCXYZ0018
PP RUEHWEB

DE RUEHDG #1998/01 2361748
ZNR UUUUU ZZH
P 241748Z AUG 07
FM AMEMBASSY SANTO DOMINGO
TO RUEHC/SECSTATE WASHDC PRIORITY 9044
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SANTO DOMINGO 001998 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CAR, TREASURY FOR SARA GRAY 
 
E.O. 12958: N/A 
TAGS: EFIN DR
SUBJECT: BUILDING AN INTERNATIONAL FINANCIAL CENTER IN THE 
DR 
 
REF: SD 0992 
 
¶1. (U) Plans to build a privately operated international 
financial center in the Dominican Republic are moving forward 
with construction slated to begin as early as the end of this 
year.  On August 6, Charge met with representatives from the 
Independent Financial Centre of the Americas (IFC) and their 
lawyers from Patton Boggs to discuss the proposed project 
which will be located in Guayacanes, about an hour east of 
Santo Domingo.  Patton Boggs has helped to draft a law that 
may be considered by the Dominican Congress later this month 
to create a financial trade zone that would exempt IFC from 
local banking and financial regulations.  The Chief Executive 
of IFC, Gaetan Bucher, said IFC,s independent regulatory 
framework will be based on best practices from around the 
world.  Despite the fact that IFC will not be subject to 
local financial laws and will only do business outside of the 
DR, Bucher believes the project will improve the DR,s global 
image by helping to overcome negative perceptions of the 
country,s weak financial sector (Reftel). 
 
Scope of the Project 
 
¶2. (U) IFC,s long-term goal is to establish an investment 
banking platform for the Latin American region in the DR. 
According to Bucher, IFC currently has 88 employees and has 
invested USD 46 million in research since 2004.  Bucher said 
they are talking to U.S. banks regarding a potential bond 
issuance in order to raise additional funds.  IFC outlined 
their 25-year business plan to build a financial center as 
well as homes, schools and other &first-world quality8 
public services, including electricity and water, on 7000 
acres of land located along the southeast coast an hour from 
Santo Domingo.  IFC estimates it will create 26,000 jobs over 
25 years, half of which would be in financial services and 
the other half would be support positions.  Construction is 
targeted to begin at the end of this year and the center 
would open for business in 2010 or 2011.  IFC is planning to 
market the Caribbean lifestyle, as well as the availability 
of first world services, including healthcare, within the 
financial zone, to help attract high quality financial 
experts from around the world.  IFC,s Head of Security noted 
that there would a strong emphasis on security to counteract 
the DR,s reputation for high crime rates.  Initially most of 
the financial sector employees would be recruited from 
overseas since the DR does not have the human resources 
necessary to staff the financial center.  Bucher noted that 
he plans to work with local universities to offer 
scholarships and tailor the curriculum to increase capacity 
in the financial sector.  However, this is a long-term goal 
that will take time to achieve. 
 
Regulatory Oversight 
 
¶3. (U) According to Bucher, IFC will establish an independent 
oversight board that will then choose the members of a 
separate regulatory board.  Although IFC insisted the 
independent boards would help to insulate the company from 
political influence, IFC said it would present a slate of 
candidates for the oversight board to the Dominican 
government,s Monetary Board for review.  The company is 
seeking independent funding for these two boards in order to 
keep them separate from the owners of IFC.  The draft law 
that Patton Boggs has written in consultation with a local 
law firm requires that all financial transactions take place 
with entities outside of the DR.  IFC would be subject to 
local criminal laws, however none of the local banking or 
financial regulation laws would apply.  Patton Boggs said 
they hope the draft legislation will be considered by the 
Dominican congress later in August.  They did not seem to 
have any doubt that it would be approved. (A copy of the 
draft legislation will be sent to WHA/CAR by email.) 
 
¶4. (SBU) When asked by EMBOFFs what precautions would be 
taken against money laundering, IFC said it would establish 
linkages to the Financial Action Task Force on Money 
Laundering (FATF) and the Financial Crimes Enforcement 
Network (FinCEN), as well as create a specialized financial 
intelligence unit (FIU) that will correspond with the GODR 
FIU and other FIUs around the world.  Bucher acknowledged 
that an independent FIU, that is not a government entity, is 
a new concept and it is not clear how it would interact with 
its government counterparts.  IFC said its FIU would have an 
investigative unit, but that it would be unable to pursue 
criminal charges.  Bucher said he did not think the DR,s 
weak financial system would impede IFC from being successful. 
 He also added that he believes IFC could help improve the 
DR,s global image.  However, he did not address the need for 
 
reform to strengthen the financial sector. 
 
¶5. (U) Bucher, the Chief Executive of IFC, is a Swiss banker 
who grew up in the DR.  He has close ties to the Vecini 
family, which has a controlling interest in various sectors 
of the economy and is the main investor in IFC.  Bucher said 
IFC has been working closely with Deloitte London and Patton 
Boggs on the creation of the regulatory framework for the 
project.  IFC hired Thomas Quinn, former Director of the U.S. 
Air Marshal Service and Secret Service officer, as the Head 
of Security.  They are hoping to recruit financial experts 
from Europe, as well as the U.S., to emphasize the global 
nature of the center.  Bucher noted that they are seeking to 
attract high profile financial experts to serve on the 
regulatory and oversight boards.  He hopes the inclusion of 
several well known names will enhance the credibility of the 
project and send a message that the company is serious about 
maintaining strong oversight.  IFC said they have support 
from contacts in Washington for the project, including former 
U.S. Ambassador to the DR Charles Manatt.  According to 
Bucher, IFC and Patton Boggs have briefed some members of 
Congress, including Rep. Donald Payne, Chairman of the 
Caribbean Caucus, and officials at Treasury on their plans. 
 
Comment 
 
¶6. (SBU) A DHS representative in attendance at the meeting 
noted the GODR must work to amend its weak monetary and 
financial law.  DHS also commented that the GODR FIU is not 
very effective and that the government must improve basic 
infrastructure before it can bring the financial system to a 
higher standard.  Although the DR stands to gain from IFC,s 
large investment in jobs and infrastructure development, it 
is not clear that it will see any improvement where it is 
needed most, in the weak financial and banking industries. 
It is of course possible that these weaknesses are part of 
the attraction for IFC which is seeking freedom from local 
regulatory oversight.  This project raises concerns about the 
attraction of locating a company in a country that does not 
have a strong record of enforcing laws against corruption and 
money laundering. 
BULLEN