VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #2351/01 2902258
ZNR UUUUU ZZH
R 172258Z OCT 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1530
INFO RUEHME/AMEMBASSY MEXICO 4824
RUEHBO/AMEMBASSY BOGOTA 1781
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPARTMENT OF TREASURY WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC

UNCLAS MANAGUA 002351 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, INL/LP AND EEB 
JUSTICE FOR OIA, AFMLS, NDDS 
JUSTICE PASS TO OPDAT CDELUIGI 
TREASURY FOR FINCEN 
TREASURY FOR SARA GREY 
TREASURY PASS TO IRS-CI/NFULLER, AALDECOA, TMAHONEY 
MEXICO FOR IRS AARROYO 
BOGOTA FOR FGROENE 
 
E.O. 12958: N/A 
TAGS: EFIN PTER PGOV SNAR ECON NU
 
SUBJECT:  Persuading Nicaragua to Create an FIU 
 
¶1. (U) Summary: Speeches delivered by the Ambassador, Nicaraguan 
Superintendent of Banks Victor Urcuyo, and Caribbean Financial 
Action Task Force (CFATF) President Willie Zapata at the opening 
ceremony of an Embassy-hosted financial investigation training 
seminar sparked renewed public debate and reinvigorated local 
efforts to pass Financial Intelligence Unit (FIU) legislation in the 
National Assembly.  Post will follow up on the success of this event 
by hosting a working group meeting in late November for key players 
in the effort to create a FIU for Nicaragua.  End Summary. 
 
Speeches Spice Up FIU Debate 
------------------------------- 
 
¶2. (SBU) Embassy Managua held a week-long financial investigation 
training seminar between September 24-28.  The event was funded by 
INL and had participation from the Justice and Treasury Departments. 
Post made the opening ceremony for the training a public event which 
highlighted Nicaragua's lack of a FIU.  The Ambassador, Nicaraguan 
Superintendent of Banks Victor Urcuyo, and Caribbean Financial 
Action Task Force (CFATF) President Willie Zapata delivered strong 
speeches detailing the risks for average Nicaraguans it its 
government delayed creation of an FIU any longer.  Zapata's speech 
in particular clearly pointed out the possibility of Nicaragua 
falling onto the "black list" of countries that do not have adequate 
money laundering safeguards.  (Note: Nicaragua is the only country 
in Central America without an FIU and is one of the few countries in 
the Western Hemisphere that is not a member of the Egmont Group. End 
Note.)  The audience included high ranking GON members including the 
Vice Minister of Foreign Affairs, the President of the Central Bank, 
the Director of Customs, the Director of Taxes, and the Director of 
Economic investigations of the National Police. 
 
¶3. (U) The speeches were well-covered in major national news 
outlets, with front page headlines in El Nuevo Diario (center-left, 
circ. 30,000) prominently warning of the possible black-listing of 
Nicaragua as a country with weak safeguards against financial 
crimes.  The media attention touched off a firestorm of debate, with 
critics such as Nicaraguan Supreme Court Chief Justice Manuel 
Martinez, Associate Justice Sergio Cuarezma, and Partido Liberal 
Constitutionalista (PLC) Deputy and Economic Commission Head 
Francisco Aguirre Sacasa declaring that the creation of an FIU would 
be tantamount to creating a "police" or "gestapo" state.  Martinez, 
in particular, even pledged to declare any law creating an FIU 
unconstitutional.  (Note:  In 2005, Manuel Martinez was implicated 
in an embezzlement scandal involving the disappearance of USD 
$600,000 of seized drug money from the Supreme Court's operating 
account. End Note.) 
 
¶4. (U) PLC Deputy and Justice Commission Head Jose Pallais 
subsequently ridiculed Martinez's "absurd" comments and explained 
that an FIU would only investigate suspicious transactions worth 
more than $10,000 and thus would not delve into the financial 
affairs of average Nicaraguans.  Sandinista (FSLN) National Assembly 
leader Edwin Castro made a surprising joint appearance with American 
Chamber of Commerce President Cesar Zamora to assert that the 
proposed FIU is not only constitutional but necessary to stimulate 
more overseas investment and encourage continued economic growth. 
The Association of Private Banks of Nicaragua jumped into the fray 
by taking out a full page advertisement in La Prensa (center-right, 
circ. 40,000) expressing its support for the creation of a FIU and 
providing basic information on the structure and functions of the 
proposed unit.  Both major dailies also ran longer, more detailed 
pieces more accurately explaining the structure and purpose of a 
FIU. 
 
The Financial Investigation Training Seminar 
--------------------------------------------- - 
 
¶5. (SBU) Special agents from the Department of the Treasury's 
Criminal Investigation Division and trainers Angel Arroyo, Nolan 
Fuller, Thomas Mahoney, Alicia Aldecoa, and Resident Legal Advisor 
Fernando Groene conducted a week-long training session on financial 
investigations and money-laundering detection and enforcement 
techniques to 30 trainees.  The trainees hailed from various 
Nicaraguan government entities, including the National Police's 
vetted anti-corruption unit, the National Prosecutor's office, the 
Nicaraguan Revenue Service, and Nicaraguan Customs and the Office of 
the Superintendent of Banks.  The Nicaraguan Attorney General's 
Office was invited but declined to participate.  The participants 
uniformly agreed upon the timeliness and utility of the specialized 
knowledge they received and expressed a strong desire to learn more 
advanced money-laundering enforcement techniques. 
 
November FIU Workshop - "Now Is the Moment" 
-------------------------------------------- 
 
¶6. (SBU) Comment: In the opinion of the RLA and trainers, some of 
the participants are well versed in the methodology of how to 
conduct appropriate financial investigations but the Nicaraguan 
legal framework lacks a solid operational enforcement mechanism to 
allow successful and secretive investigations. Further, it appears 
that the great politicization of law enforcement and judicial 
institutions prevents the development of a fair, impartial and 
reliable legal system. End Comment. 
 
¶7. (SBU) Post will take advantage of the momentum generated by this 
successful event to organize an FIU Workshop in late-November for 
key local players in the FIU debate.  The goals of the workshop are 
two-fold:  to educate participants about the functions and 
structures of FIUs around the world and present options for ensuring 
a FIU's independence and protecting it from political abuse.  As one 
official in the banking sector told us recently, "Now is the moment 
to act." 
 
¶8. (U) This cable has been cleared by the Department of Treasury and 
the Department of Justice. 
 
TRIVELLI