VZCZCXRO6229
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHLN RUEHNEH RUEHPW RUEHVK RUEHYG
DE RUEHDBU #1407/01 3260329
ZNR UUUUU ZZH
R 210329Z NOV 08
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 1201
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEAIIA/CIA WASHDC 0237
RUCNCIS/CIS COLLECTIVE
RUEAWJA/DEPARTMENT OF JUSTICE WASHINGTON DC

UNCLAS SECTION 01 OF 04 DUSHANBE 001407 
 
SIPDIS 
 
STATE FOR SCA/CEN (HUSHEK) 
INL/AAE (BUHLER) 
JUSTICE (DUCOT AND NEWCOMBE) 
DEFENSE FOR OSDP/P 
 
E.O. 12958:  N/A 
TAGS: EFIN PGOV SNAR KCRM TI
 
SUBJECT:  TAJIKISTAN: 2008-2009 INTERNATIONAL NARCOTICS CONTROL 
STRATEGY REPORT, PART II 
 
General 
 
¶1. Is the jurisdiction considered an important regional 
financial center? 
 
1A. Tajikistan is not a major financial center in the region and its 
banking system is still developing.  Prosecutions for financial 
criminal activity are unusual.  In 2008, authorities did not 
prosecute or convict anyone for significant financial crimes. 
 
¶2. Do the criminal proceeds laundered in the jurisdiction derive 
primarily from domestic or foreign criminal activity? 
 
2A. Tajikistan has a weak formal economy, with growth fueled largely 
by foreign remittances from up to one million Tajik migrant workers 
in Russia.  In 2008, official remittances entering Tajikistan via 
the banking system are projected to reach nearly $2.5 billion.  The 
remittances form a significant portion of Tajikistan's 2008 $4.8 
billion Gross Domestic Product, up from $3 billion in 2007.  While 
the bulk of remittances enter the country via the formal banking 
system, these funds do not remain in the banking system, as 
individuals usually keep savings in cash, invest in property, or 
spend money on consumer purchases.  It is unknown what percentage of 
remittances comes from legal versus illicit sources on income. 
 
¶3. Is there a significant black market for smuggled goods in the 
country?  If so, is there evidence to suggest that it is 
significantly funded by narcotic proceeds or other illicit proceeds? 
 
 
3A. Domestic goods smuggling occurs in Tajikistan.  Consumer goods, 
mostly apparel and low-cost household appliances, are smuggled to 
avoid customs duties and local taxes.  There are several schemes for 
smuggling goods into the country.  In most cases, goods such as 
tobacco, alcohol, and fuel are not "officially" imported to 
Tajikistan.  For example, a shipment nominally intended for 
Kazakhstan transiting Tajikistan never reaches Kazakhstan.  The same 
practice occurs with goods nominally intended for Afghanistan. 
While there is certainly a market for smuggled goods, there is 
little evidence that most items are financed with narcotics money, 
with the exception of imported cars and other luxury items. 
 
3B. Drug traffickers can sell drugs outside the country, buy goods 
with the proceeds (or simply exchange drugs for goods), import the 
goods into Tajikistan, and sell them.  Such a scheme occurred a few 
years ago with Russian automobiles Q the traffickers sold the cars 
in Tajikistan at prices even lower than in Russia. 
 
¶4. Is the country considered an offshore financial center? 
 
 
4A. Tajikistan is not an offshore financial center.  There are no 
offshore companies or banks in Tajikistan.  Existing legislation 
does not favor offshore banks and financial centers.  There are 
foreign banks in Tajikistan, including an Iranian bank. 
 
4B. While concluding deals with foreign enterprises businesses often 
use offshore zones.  Tajikistan's largest commercial companies such 
as the management arm of the state-owned aluminum producer TALCO, 
and CDH International, the alumina supplier to TALCO, are connected 
to President Rahmon and are registered in the Virgin Islands or 
other offshore zones. 
 
¶5. Are there free trade zones operating in the jurisdiction?  If so, 
please give the number and name, and briefly describe their 
operations, capability and function? 
 
5A. In 2008, the President signed a resolution creating the free 
economic zones "Panji Poen FEZ" and "Sugd FEZ" which will operate 
Qeconomic zones "Panji Poen FEZ" and "Sugd FEZ" which will operate 
for 25 years.  "Panji Poen FEZ" is in the Kumsangir district of 
Khatlon Region in southern Tajikistan.  It will cover 400 hectares 
(988 acres)and focus on processing agricultural products and 
livestock. 
 
5B. "Sugd FEZ" in Khujand area of northern Tajikistan will total 320 
hectares (791 Acres)and will focus on increasing production capacity 
by building new plants and factories and attracting innovative 
technologies.  The Government announced the establishment in the 
near future of an additional FEZ in Ishkashim to create a trade zone 
in Gorno-Badakshan, and another in Khatlon to improve agricultural 
trade. 
 
Laws and Regulations to Prevent Money Laundering 
 
DUSHANBE 00001407  002 OF 004 
 
 
 
¶6. What laws and regulations exist in relation to AML/CTF? 
Is money laundering a criminal offense in this jurisdiction?  Does 
the law apply only to drug-related money laundering? 
 
6A. Tajik law prohibits money laundering.  This prohibition includes 
not only narcotics money laundering, but also circumvention of other 
financial currency controls (for example, unlawful transferring of 
currency into offshore zones, usage of charities, insurance 
companies, etc., to transfer funds and avoid complying with the 
law). 
 
¶7. Has the country enacted secrecy laws that prevent 
disclosure of client and ownership information by domestic 
and offshore financial services companies to bank supervisors and 
law enforcement authorities? 
 
7A. Banks are not required to know, record, or report the identity 
of customers engaging in significant transactions unless authorities 
opened criminal proceedings against a specific individual or 
organization.  Some civil proceedings can also trigger this 
scrutiny.  For example, in civil or administrative proceedings, a 
court can request information about accounts or the nature and value 
of property kept in banks, or request information, which is 
considered a "bank secret" in cases when the bank's client 
represents one of the sides in the criminal case. 
 
¶8. Are banks and other financial institutions required to 
know, record, and report the identity of customers engaging 
in significant transactions, including the recording of large 
currency transactions at thresholds appropriate to the country's 
economic situation?  What is the statutory threshold? 
 
8A. Banks and other financial institutions are not required to 
maintain records to reconstruct financial activity.  Financial 
institutions make no regular reports of transactions or other 
activity, and reporting officers have no special legal protections 
with respect to cooperating with law enforcement.  There is no legal 
mechanism to insure law enforcement access to the information 
related to illegal financial operations, such as money laundering, 
corruption, terrorism financing or other crime. 
 
¶9. Are there statutory requirements for limiting or 
monitoring the cross-border transportation of currency and 
monetary instruments? 
 
9A. The "Law on Banking Activity" prevents disclosure of client and 
ownership information to bank supervisors and law enforcement 
authorities for domestic and offshore financial services companies. 
While Tajikistan has not yet addressed the problem of international 
transportation of illegally-sourced currency and monetary 
instruments, and has a long way to go to meet "due diligence" 
standards, it has instituted cross-border currency reporting 
requirements. 
 
9B. In accordance with the "Joint Order of the National Bank and the 
Ministry of State Revenues and Duties", Tajik travelers may depart 
with a maximum amount of $3,000 without registering it in the 
customs declaration.  Tajiks, can depart with amounts up to $10,000 
with a customs declaration.  Foreigners may depart with a maximum of 
$3000 without a customs declaration.  When the amount exceeds $3,000 
a foreigner must present documents of origin, customs declaration, 
source of money, provide reasons why he has the funds, justify where 
he is going to take it, and prove which bank which gave him the 
funds.  Travelers may enter Tajikistan with unlimited quantities of 
Qfunds.  Travelers may enter Tajikistan with unlimited quantities of 
cash. 
 
 
¶10. Are the AML/CTF controls applied to non-bank financial 
institutions (NBFIs) and designated non-financial businesses and 
professions? 
 
10A. Money laundering controls are applied to all financial 
institutions, including exchange offices, brokerages, etc., that are 
licensed by the National Bank and subject to the same laws as banks. 
 There have been no arrests or prosecutions for money laundering or 
terrorist financing since January 1, 2002. 
 
Terrorist Finance 
 
¶11. Has the jurisdiction criminalized the financing of terrorism as 
required by the UN International Convention for the Suppression of 
the Financing of Terrorism? 
 
DUSHANBE 00001407  003 OF 004 
 
 
 
11A. Tajikistan has criminalized terrorist financing, as covered by 
the above-mentioned general money laundering statute.  Tajik 
authorities consider terrorist finance "serious crime."  There were 
no reported cases of authorities freezing suspected terrorist assets 
in 2008 because authorities did not discover any terrorist assets. 
 
 
11B. Tajikistan adopted several laws including the Civil Code, 
Article 284-Illegal Transactions with Precious Metals, Gems and Gold 
Q to address the misuse of gold, precious metals and gems. 
 
¶12. Does the jurisdiction acknowledge the existence and use 
of value transfer systems that bypass, in whole or part, the formal 
financial system? 
 
12A. The government has not addressed alternative remittance system. 
 Tajikistan is a party to the 1999 International Convention for the 
Suppression of the Financing of Terrorism.  Tajikistan signed the 
Convention in November 2001 and ratified it in October 2004. 
Remittances from labor migrants who are mainly in Russia and other 
CIS countries are seasonal.  The government waived a 30% fee on bank 
transfers, making remittances sent via banks more effective. 
 
International Cooperation 
 
¶13. Has the country adopted laws or regulations that allow 
for the exchange of records with the United States? 
 
13A. Tajikistan and the U.S. Government have agreed to exchange 
records in connection with investigations and proceedings relating 
to narcotics, terrorism, terrorist financing and other serious 
criminal investigations, and negotiations are currently underway 
regarding specific law enforcement cooperation.  The U.S. Government 
regularly sends information regarding designated individuals and 
organizations subjected to asset forfeiture to the Tajik Ministry of 
Foreign Affairs (MFA).  The MFA distributes this information to the 
State Committee for National Security, Ministry of Finance, Ministry 
of Internal Affairs, and other ministries that conduct appropriate 
checks. 
 
13B. Tajikistan has not adopted laws or regulations that ensure the 
availability of adequate records in connection with narcotics, 
terrorism, terrorist financing or other investigations.  USAID has 
contractors who work to improve the banking sector and to date these 
contractors have good access into Tajik banks and accounting 
systems. 
 
 
13C. The International Monetary Fund is currently auditing the Tajik 
National Bank for misreporting currency reserves under a previous 
loan which requires auditing of the National Bank and two major 
state-owned enterprises. 
 
¶14. Is the country a party to the UN International Convention for 
the Suppression of the Financing of Terrorism or other applicable 
agreements and conventions? 
 
14A. In spite of a primitive banking system and the use of a barter 
system in many rural areas, Tajikistan has entered into several 
international agreements and acceded to international conventions. 
Tajikistan signed the UN Convention for the Suppression of Financing 
of Terrorism, the CIS Agreement on the Legal Assistance and 
Cooperation on Civil, Family and Criminal Cases of January 22, 1993, 
and is a member of the CIS Antiterrorism Center. 
 
Asset Forfeiture and Seizure Legislation 
 
¶15. Has there been seizure and forfeiture of assets? 
 
15A. The Tajik Government passed Article 57 of the Criminal Code, 
which states that asset forfeiture is possible but the article also 
specified exceptions.  On March 20, 2008, the Tajik Parliament 
Qspecified exceptions.  On March 20, 2008, the Tajik Parliament 
adopted the "Law on Executive Proceedings" that enables 
asset-seizure mechanisms.  In previous years, the Drug Control 
Agency worked to gain authority to utilize this law as a means of 
achieving self-sustainability.  The Government, primarily the 
Prosecutor General's Office did not support the program. 
 
15B. In 2008 authorities used asset forfeiture procedures in the 
case against Maruf Oripov, the owner of the M&P Company and "ORIMA," 
Tajikistan's largest grocery store chain.  Oripov faced charges 
under three articles of TajikistanQs Criminal Code: giving bribes; 
 
DUSHANBE 00001407  004 OF 004 
 
 
tax evasion and forgery.  The Court sentenced him to eight years of 
imprisonment and property forfeiture.  Law enforcement detained 
Oripov in July 2007 when he was trying to give $10,000 in bribe to a 
State Committee for National Security investigator.  Inspections 
carried out by the National Security economic section in July 
revealed that more than 1,500 tons of confectionery and other 
products beyond their shelf life were stored in the M&P warehouses 
in Dushanbe. 
 
JACOBSON