VZCZCXRO7346
RR RUEHGI RUEHMA RUEHROV
DE RUEHKH #1779/01 3191503
ZNR UUUUU ZZH
R 151503Z NOV 07
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC 9173
RHMFIUU/DEPT OF JUSTICE WASHDC
RUEATRS/DEPARTMENT OF TREASURY WASHDC
INFO RUCNFUR/DARFUR COLLECTIVE

UNCLAS SECTION 01 OF 04 KHARTOUM 001779 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR AF/SPG, INL, SCT, AND EEB 
STATE PLS PASS USAID FOR AFR, AND ALSO PASS USAID 
JUSTICE FOR AFMLS, OIA, AND OPDAT; 
TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: EFIN KCRM KTFN SNAR SU
SUBJECT: SUDAN CHAPTER: 2007-2008 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT (INCSR), PART II, MONEY LAUNDERING AND FINANCIAL 
CRIMES 
 
REF: STATE 138226 
 
¶1.  Attached, below, is the draft text for the Sudan chapter of the 
INCSR, Part II, Money Laundering and Financial Crimes.  To our 
knowledge, this is the first time the report has been submitted for 
Sudan.  POC at post for this report is Paul J Martin: email 
martinpj@state.gov; tel: (011-249-1-83-) 774-700  ext. 6374; cell 
phone: (011-249-1-83-) - (0) 912-178-518. 
 
¶2.  Numbering of paras below are keyed to paras of instruction 
cable. 
 
BEGIN TEXT OF DRAFT REPORT: 
 
¶14.  The National Assembly passed the Money Laundering Combating Act 
of 2003 and the Central Bank of Sudan (CBOS) issued Circular No. 
9/2007 to banks and financial institution, which includes measures 
to combat money laundering and terrorist financing.  In 2007, twenty 
(20) suspected cases of money laundering were identified by the 
AML/CTF unit at the CBOS. 
 
¶15.  Among the main deterrents to more effective host government 
responses in Sudan are the inefficiency of the Sudanese financial 
system, the lack of impartiality and independence of the judiciary, 
and widespread corruption. 
 
General Questions 
----------------- 
 
¶16.  Sudan is not considered an important regional financial center. 
 
 
¶17.  According to the director of Public Administration of Drug 
Combating at the Ministry of Interior, money laundering in Sudan is 
primarily related to the proceeds from narcotics trafficking 
(especially of marijuana, known locally as "bango.").  Money 
laundering proceeds are controlled by local drug-trafficking groups 
and organized crime organizations. Public corruption, including in 
the banking sector, is a reality in Sudan.  However, it probably 
does not contribute much to money laundering, which is not 
considered a large problem in the country. 
 
¶18.  There is no significant black market for smuggled goods in 
Sudan. There is little smuggling of contraband to generate funds to 
be laundered through the banking system in the country. 
 
¶19.  According to officials at the Central Bank of Sudan (CBOS), 
money laundering/terrorist financing generally is not suspected in 
domestic banks. There are no offshore financial centers or free 
trade zones serving Sudan.  The country has not experienced an 
increase in financial crimes. 
 
¶20.  To Post's knowledge, no financial institutions in Sudan are 
engaged in currency transactions involving international narcotics 
trafficking proceeds that include significant amounts of United 
States currency.  Because of U.S. sanctions, monetary transfers 
between the U.S. and Sudan have not been possible since 1997. 
 
¶21.  Sudan is not considered an offshore financial center. 
 
¶22.  Sudan prohibits dealings with shell companies as well as the 
opening of correspondent accounts for any bank or any institution 
rendering correspondence services to shell companies. 
 
¶23.  There is not a separate regulatory agency for the offshore 
sector.  There are no differences in regulations governing offshore 
banks and businesses from regulations governing domestic banks and 
businesses. 
 
Free Trade Zones 
---------------- 
 
24-25. The Sudanese Free Zones Company (SFZ) was established in 
¶1993. The SFZ is exempt from customs duties. All travelers arriving 
in the country by air, land or sea benefit from this exemption. 
There are three free trade zone areas in Sudan:  Port Sudan, 
Khartoum and the El-Gaili area (60 km north of Khartoum). The 
objective of the SFZ is to promote transfer of foreign technology 
and to create new job opportunities.  The Free Zones Act stipulates 
that no property, assets, funds or other possessions of a firm can 
be nationalized or confiscated.  There is no indication that the SFZ 
is being used for trade-based money laundering schemes. 
 
¶26.  Due diligence conditions are applied to all individuals working 
 
KHARTOUM 00001779  002 OF 004 
 
 
in the SFZ.  In addition, the Government of Sudan is drafting 
legislation to bring free zone administration into line with 
international standards. 
 
Laws and Regulations to Prevent Money Laundering and the Financing 
of Terrorism 
--------------------------------------------- ------- 
 
¶27.  Money laundering is a criminal offense in Sudan. The law 
applies to any transaction or proceeding aimed at concealing or 
changing the identity of illegally obtained money so that it appears 
to have originated from a legitimate source.  Such misuse of the 
financial system is considered money laundering. The law also 
applies to using illegally obtained money to acquire fixed assets, 
and to using such money in such a manner to make the process appear 
to be a normal financial transaction.  The Central Bank of Sudan 
(CBOS) must be informed of any account that is used improperly. 
Banks are required by law to pay special attention to transactions 
not in line with the normal transaction of the accounts, such as 
multiple international transactions, cash deposits in large amounts, 
or deposits in small amounts carried out at regular periods without 
having any obvious reason. 
 
¶28.  Sudan has not enacted secrecy laws preventing the disclosure of 
client and ownership information.  All  banks and financial 
institutions are required to identify a Desk officer responsible for 
reporting suspicious cases to the Unit for Anti-Money Laundering 
/Counter-Terrorist financing (AML/CTF) of the CBOS according to 
specific reporting procedures. 
 
¶29.  Under current legislation, the CBOS is to establish an 
independent financial intelligence unit (FIU). 
 
Financial Sector 
---------------- 
 
¶30.  The Central Bank of Sudan's (CBOS) Anti-Money Laundering and 
Combating Terrorist Financing Unit (AML/CTF) is the entity charged 
with supervising and examining financial institutions for compliance 
with AML/CTF laws and regulations. 
 
¶31.  Banks and other financial institutions are required to exert 
due diligence in establishing any continuous relationship with a 
client, and to report any transaction exceeding USD 12,000.  They 
are prohibited from entering into a banking relationship with 
unknown persons or individuals or entities with phony names. 
 
¶32.  All banks and financial institutions must retain records and 
documents relating to customers' transactions for a period of at 
least five years from the execution date of the transaction or 
termination of the relationship, whichever is longer, taking into 
consideration Article (45) of the adaptation (adjustment) program of 
the Positions Project of 1994 concerning the safekeeping of 
documents. 
 
¶33.  All banks and financial institutions working in Sudan will be 
subject to the AML/CTF regulations, along with all such 
institutions' branches and subsidiary companies wherever their 
headquarters may be. The CBOS's AML/CTF supervises these entities. 
 
¶34.  The designated Desk Officer for any given financial institution 
is responsible for notifying the AML/CTF unit at the CBOS regarding 
suspicious transactions in the bank or the financial institution. 
The NBFIs (private exchange dealers) are required to report 
suspicious transactions that exceed USD 12,000. This reporting is 
mandatory. 
 
¶35.  The reporting Desk Officers are protected under Sudan's laws. 
 
Financial Intelligence Unit (FIU) / Investigations 
--------------------------------------------- ----- 
 
¶36.  The Central Bank of Sudan (CBOS) is mandated to establish an 
independent Financial Intelligence Unit (FIU) within the Banks' 
Headquarters.   The Unit has yet to be established.  Officials at 
the CBOS say that they will work with the Ministry of Justice and 
other related ministries to draft legislation, although a timetable 
for doing so has yet to be fixed. 
 
¶37.  n/a (yet to be established) 
 
¶38.   According to CBOS officials, the FIU will have access to 
records and data bases of other government entities and financial 
institutions. 
 
KHARTOUM 00001779  003 OF 004 
 
 
 
¶39.  In 2007, 20 suspicious cases were received by AML/CTF unit.  Of 
those, one was referred to the court. 
 
¶40.  The Minister of Justice has formed a Money Laundering Offences 
Administrative Committee, bringing together representatives of the 
12 government entities responsible for oversight of financial 
crimes.  These include:  the Prosecutor-General of the Republic of 
Sudan; the Deputy Governor of the Bank of Sudan; Ministry of Foreign 
Relations; Ministry of Foreign Trade; Ministry of Finance and 
National Economy; Director, Investigations of Crimes General 
Administration; Director, International and Regional Police 
Organizations (Interpol); Customs Police; Taxation Chambers; the 
Banking Development Organ; the Economic Sector Security Circuit 
(National Security Organ); and the National Information Center. 
Together, these bodies bear responsibility for investigating 
financial crimes, including money laundering and terrorist 
financing.  We are not able to assess whether they are adequately 
staffed.  Adequate training for these complex tasks is often 
lacking, according to officials at the Central Bank of Sudan. 
 
¶41.  Since January 1, 2007, AML/CTF identified 20 suspicious cases. 
As noted above, one was referred to legal authorities.  In one case, 
several individuals were arrested and are awaiting trial. 
 
¶42.  Sudan criminalized the financing of terrorism as per UNSC 
Resolution 1373.  This was accomplished by the Money Laundering Act 
of 2003.  It is also criminalized by the AML/CTF Act, which is now 
in the process of ratification, and the Central Bank of Sudan 
Circular No. 9/2007. 
 
¶43.  The AML/CTF unit has circulated to banks and the financial 
institutions the list of individuals and entities that have been 
included on the UN 1267 sanctions committee's consolidated list, as 
well as the USG's list of terrorist organizations/financiers.  CBOS 
officials do not know the amount of frozen, seized and/or forfeit 
related assets in 2007. 
 
44-45.  The CBOS circular NO. 9/2007 regulates alternative 
remittance systems and also monitors/supervises the financial 
activities of charitable and non-profit entities. 
 
Cross Border Transportation of Currency and Negotiable Instruments 
------------------------------------------- 
 
46-47.  The FIU to be established will be responsible for monitoring 
cross-border transportation of currency and monetary instruments. 
 
48-51.  The Money Laundering Offences Administrative Committee has 
authority to seize and confiscate assets derived from money 
laundering or connected to terrorist financing. The Committee is to 
deposit seized assets in a special fund, which the Committee is to 
establish and manage. The proceeds are to be used to combat money 
laundering, and pay rewards to persons or bodies that provide 
information about money laundering activities.  Any kind of property 
related to money laundering can be seized.   With the help of the 
World Bank and FSA, Sudan currently is drafting a new AML/CTF law, 
which aims to establish an independent FIU / CTF in line with 
international standards. 
 
¶52.  The banking system cooperates with enforcement efforts to trace 
funds and seize/freeze bank accounts. 
 
¶53.  The FIU/CTF is able to act through civil or criminal courts to 
seize assets involved in money laundering. 
 
¶54.  The Government attempts to enforce existing asset seizure and 
forfeiture laws.  However, government and banking officials say they 
need more training in the effective identification and seizure of 
tainted assets. 
 
¶55.  The AML/CTF unit at the Central Bank of Sudan has the authority 
to recommend freezing of terrorist assets.  It is an independent 
body. 
 
¶56.  No figures are available on the dollar amount of 
narcotics-related, terrorist-related and other criminal-related 
assets frozen, seized, and/or forfeited in the past year or in 
previous years. 
 
¶57.  Sudan has an agreement with Saudi Arabia that allows for the 
sharing of seized assets.  It is engaged in negotiations with 
neighboring countries to enhance tracing, freezing and seizure of 
assets. 
 
KHARTOUM 00001779  004 OF 004 
 
 
 
International Cooperation 
------------------------- 
 
¶58.  Because of the current strained state of Sudan-U.S. relations, 
there have been no initiatives to cooperate with the United States 
on investigations and proceedings related to narcotics and 
all-source money laundering.  Cooperation with the U.S on terrorism 
and terrorist financing has been very good. 
 
¶59.  With the help of the World Bank and FSA, Sudan currently is 
drafting a new AML/CTF law, which aims to establish an independent 
FIU / CTF according to international standards. In 2006 Sudan became 
a member of the Middle East /North Africa Financial Action Task 
Force (MENFATF).  It signed an MOU with Venezuela dealing with money 
laundering. 
 
¶60.  The Government of Sudan has been very cooperative with the USG 
in counter-terrorism efforts.  It has cooperated, when requested, 
with appropriate USG law enforcement agencies and other governments 
investigating financial crimes related to narcotics, terrorism, 
terrorist financing and other crimes. 
 
¶61.  There have been no known instances of refusal to cooperate with 
foreign governments. 
 
¶62. Sudan is a party to the UN International Convention against 
Illicit Traffic in Narcotic Drugs and Psychotropic Substances 
(Vienna Convention), and the UN Convention against Transnational 
Organized Crime (Palermo Convention). Sudan adheres to the 
international money laundering standards of the Financial Action 
Task Force (FATF). Sudan is in the process of acceding to the UN 
Convention against Corruption as well as to the UN International 
Convention for the Suppression of the Financing of Terrorism.  No 
ratifications or accessions took place in 2007. 
 
63  Post believes that responses, above, fairly describe the 
situation with regard to anti-money laundering/terrorist financing 
plans, programs and timetables adopted by Sudan, as well as the 
legal and law enforcement measures taken to combat money laundering 
and terrorist financing. 
 
END TEXT OF DRAFT REPORT. 
Fernandez