VZCZCXRO5075
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0779/01 2301012
ZNR UUUUU ZZH
R 181012Z AUG 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 7078
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 SINGAPORE 000779 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TREASURY FOR MNUGENT 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD EINV PGOV PREL ID MY SN TH VM
 
SUBJECT: READOUT OF SOUTHEAST ASIA ISSUES DISCUSSED AT TWELFTH 
ANNUAL MEETING OF ASIA PACIFIC GROUP ON MONEY LANUDERING 
 
¶1.  (U) The 12th annual meetings of the Asia Pacific Group on Money 
Laundering (APG) convened July 5 through 10 in Brisbane, Australia. 
The APG highlighted challenges in Southeast Asia in anti-money 
laundering (AML) and combating financing of terrorism (CFT) and 
identified many acute training needs in those areas.  The APG 
discussed and adopted seven Mutual Evaluation Reports (MER), 
including MERs that covered Vietnam and the Philippines.  The MERs 
reviewed and assessed different jurisdictions' AML-CFT regimes using 
the Financial Action Task Force (FATF) "40+9 Recommendations" as a 
benchmark.  The report on the Philippines centered on deficiencies 
in ratifying and implementing UN instruments, but acknowledged 
progress made in financial sector supervision.  The MER on Vietnam 
described a range of deficiencies in Vietnam's AML-CFT regime and 
outlined gaps that must be addressed in order to improve Vietnam's 
compliance.  At the ASEAN donors meeting, ASEAN members identified 
the need to strengthen and build the capacity of FIUs (financial 
intelligence units) and law enforcement agencies as their top 
technical assistance and training (TA & T) needs.  Singapore will 
host the 13th annual APG meetings in 2010.  End Summary. 
 
Singapore 
--------- 
 
¶2.  (SBU) Singapore's presentation at the Asia Pacific Group (APG) 
on Money Laundering meetings provided a progress report on its 
AML-CFT regime since the Joint FATF-APG MER on Singapore in 2008. 
Singapore reported that it is currently reviewing methods to better 
regulate the real estate sector and improve professional standards. 
The Assistant Director of the Commercial Affairs Department Ian Wong 
said that the reported drop in Singapore's 2008 money-laundering 
conviction rate was not entirely accurate, as not all convictions 
were concluded in 2008 and some cases are still pending before the 
courts.  He asserted that Singapore maintains a 100 percent 
conviction rate on money laundering charges. 
 
¶3.  (SBU) Outside the MER discussions, Monetary Authority of 
Singapore's (MAS) Head of External Relations LEONG Sing Cheong said 
that the MAS cannot enforce AML-CFT on real estate agents as they 
are not under MAS jurisdiction, making it difficult to monitor 
all-cash real estate transactions.  The Ministry of National 
Development regulates real estate agents and has initiated a review 
of the real estate sector and how to apply AML-CFT standards. 
However, he noted that it will take time to incorporate real estate 
agents into Singapore's AML-CFT efforts and build greater 
understanding of how to comply with rules on suspicious transaction 
reports (STRs). 
 
¶4.  (U) Singapore will host the 13th APG meeting in 2010. 
 
Indonesia 
--------- 
 
¶5.  (U) Indonesia presented its follow-up report on progress made 
since its MER was reported to the 2008 plenary.  In response to a 
query about whether Indonesia has a timeline in mind to pass 
legislation to strengthen its AML-CFT regime, Indonesia reported 
that Bank Indonesia (its central bank) issued a declaration on July 
1 this year to improve its rules/guidelines on correspondent banking 
and shell banks, but that there is no timeline for passage of the 
legislation.  Indonesia noted that in a similar situation a draft 
AML law was submitted to the Indonesian parliament in September 2006 
but the law has yet to be passed three years later. 
 
Thailand 
-------- 
 
¶6. (U) Thailand provided an update on its AML-CFT work and some 
specific details on the proposed legislation designed to enhance 
parts of Thailand's AML-CFT regime governing financial institutions. 
 Thailand said that its amended AML legislation will be enacted by 
August and that the legislation incorporates rules that: require 
financial institutions to record and verify their customers' 
identity; keep identity and other transactional records for five 
years; and conduct risk studies to classify the AML-CFT risk of 
banking customers.  Thailand said that it monitors cross-border 
foreign exchange transactions by requiring all travelers carrying 
over US$20,000 to make declarations at all custom gateways. 
Thailand's AML Office intends to further enhance its surveillance 
ability in partnership with Thai Customs through its planned 
electronic border control system, which should be operational by 
year-end 2009. 
 
Philippines 
----------- 
 
 
SINGAPORE 00000779  002 OF 003 
 
 
¶7. (U) The plenary reviewed and approved the Philippines' 
second-round MER, which was led by the World Bank.  The on-site 
evaluation took place from September 22 to October 6, 2009.  The 
Philippines received a rating of "Compliant (C)" or "Largely 
Compliant (LC)" on fourteen of the Recommendations, and received 
ratings of either "Partially Compliant (PC)" or "Non-Complaint (NC)" 
on 35 of the recommendations.  The assessment team highlighted the 
key AML-CFT deficiencies in the Philippines, including: the omission 
of several offenses from the predicate crime list; the deficient 
implementation of UN Security Council (UNSC) resolutions; the 
failure to make terrorism financing a stand-alone offense; the 
failure to include designated non-financial businesses and 
professionals (DNFBP) under the AML Act provisions; and the lack of 
access to bank records by the AML Council and law enforcement 
agencies. 
 
¶8.  (SBU) The Philippines said that it has taken significant steps 
since passing the AML Act in 2001, even though draft legislation to 
criminalize terrorist financing, regulate DNFBPs, and expand bank 
obligations have not yet been passed.  The Philippines pointed out 
that its central bank and Philippines securities commission have 
adopted measures and issued guidelines to fight AML-CFT.  The 
Philippines explained the structure and responsibilities of the AML 
Council (made up of the central bank governor, head of the 
securities commission and the head of the insurance commission) and 
Secretariat.  The Philippines AML Council sets policy as empowered 
by law while the Secretariat is the operational arm that serves as 
the financial intelligence unit (FIU). 
 
¶9. (SBU) During the plenary session, Indonesia, Singapore and 
Thailand made motions to upgrade the Philippines' rating on Special 
Recommendation 1 (on ratification and implementation of UN 
instruments) from NC to PC.  Thailand highlighted the Philippines' 
guidelines issued to banks as proof of its implementation of UN 
instruments, while Singapore testified to the Philippines' 
cooperation in matters relating to financing terrorism.  Canada and 
the United States opposed the upgrade based on the fact that the 
Philippines has not criminalized terrorism finance.  Japan said it 
needed more substantial proof that the Philippines complied with 
Special Recommendation 1 given that it has not yet criminalized 
terrorism finance. 
 
¶10.  (SBU) The MER assessment team defended the Philippines' rating, 
saying that the Philippines' actions were insufficient evidence for 
an upgrade based on FATF recommendations that require terrorism 
finance be explicitly criminalized under law.  The Philippines has 
not yet passed the law which would satisfy this requirement.  The 
plenary declined to upgrade the Philippines' rating, keeping it at 
NC.  However, in separate discussions, Philippines' delegation 
confided to U.S. officials that the NC rating may be helpful in 
spurring the authorities in the Philippines to do more to address 
the gaps identified in the MER. 
 
Vietnam 
------- 
 
¶11. (U) This plenary marked the first time that the APG evaluated 
Vietnam's AML-CFT regime, and the plenary discussion showed that 
Vietnam has laid the foundation for an AML-CFT regime, though 
substantial work remains.  Vietnam received only one C rating and 
three PC ratings, with 23 PC ratings and 20 NC ratings.  The 
Vietnamese delegation appeared at times bewildered by the rating 
process and objected vigorously to many of the ratings. 
Specifically, the Vietnamese delegation attributed their low ratings 
to insufficient time allowed for translating the assessment team's 
report from English to Vietnamese.  The officials said that 
Vietnamese laws, which are based on Vietnamese Civil Code, are 
comprehensive and cover most of the short-comings in the legal 
system highlighted by the MER assessment team.  Despite a lengthy 
debate between the MER assessment team and the Vietnamese 
delegation, the plenary did not support any rating upgrades. 
 
¶12. (U) The MER discussion revealed several key AML-CFT deficiencies 
in Vietnam, including: the lack of criminalization of terrorism 
finance as an autonomous offense; no constitutional limitation of 
the criminal liability of legal person; criminal liability for 
individuals, which is punishable by only administrative and not 
criminal sanctions; deficiencies in the laws to protect bona fide 
third parties whose property is subject to seizure or frozen by the 
authorities; insufficient laws  governing Vietnam's ability to 
respond to Mutual Legal Assistance requests.  The report also 
highlighted: the lack of resources for Vietnam's FIU and Vietnam's 
AML Information Centre (AMLIC), which has a staff of 23; the failure 
of the non-banking credit institutions in Vietnam to implement 
guidelines on AML-CFT; and the lack of effective regulations 
 
SINGAPORE 00000779  003 OF 003 
 
 
covering DNFBPs.  Vietnam has also yet to ratify or accede to the UN 
Convention against Transnational Organized Crimes (Palermo 
Convention). 
 
¶13. (U) The MER on Vietnam contains 15 pages of recommended actions 
to improve Vietnam's AML-CFT regime.  Vietnam will now have to 
develop its own action plan and report on its progress at subsequent 
annual APG meetings.  According to the IMF, Vietnam has requested 
technical assistance on banking supervision as well as information 
technology (IT) development (which the IMF cannot provide).  The IMF 
is currently working on the first request, which will take 
approximately 18 months to provide. 
 
ASEAN Donor Issues 
------------------ 
 
¶14. (U) In the regional meeting of ASEAN members, the ASEAN 
Secretariat's Dr. Aladdin Rillo and the APG Secretariat's Cecilia 
Marian reported on the results of the TA & T survey sent out to 
members in May 2009.  The results identified six TA & T needs: 
strengthening and enhancing FIU capacity; building capacity of AML 
supervisors and law enforcement agencies; developing a supervisory 
framework for DNFBP and the non-profit organization (NPO) sector; 
and enhancing cross-border cash movements.  For their TA & T needs, 
ASEAN members decided to focus their efforts on strengthening and 
building the capacity of FIUs and law enforcement agencies.  The 
APG/ASEAN Secretariats will work with the Donors and Providers Group 
on these issues. 
 
¶15. (U) Dr. Rillo told ASEAN members that the senior official 
meeting on transnational crime (SOMTC) adopted a plan of action and 
urged members to implement it.  The plan of action addresses crimes 
related to terrorism, money laundering, human trafficking and 
narcotics trafficking, but needs further development on 
implementation.  The ASEAN Secretariat committed to work more on the 
plan to ensure it corresponds to the TA & T needs of ASEAN members. 
 
¶16. (SBU) Representatives from Thailand expressed concern that there 
is an apparent gulf between what the political leaders in ASEAN 
believe is happening on AML-CFT and what the countries are actually 
doing to implement their AML-CFT action plans.  Dr. Rillo said that 
the ASEAN Secretariat highlights AML-CFT issues during meetings with 
central bank and finance ministry officials, but agreed that more 
can be done such as better coordination between member countries' 
FIUs and the ASEAN Secretariat's Transnational Crime Unit.  The 
representative from Laos voiced concern that senior levels of the 
government were not sufficiently focused on AML-CFT concerns, and 
asked the APG Secretariat for support in raising this with senior 
Laotian government officials whenever possible.  The APG Secretariat 
agreed to work with Laos to help sensitize the government to the 
issues, to the extent possible within the APG's mandate. 
 
¶17. (U) Various donors outlined their regional training programs. 
The International Monetary Fund (IMF) reported that it will be 
placing a regional resident AML-CFT expert in Singapore, who will be 
responsible for coordinating IMF assistance with other donors' 
regional experts.  The resident expert will focus primarily on 
Vietnam, Thailand, Cambodia and Laos PDR.  The IMF also reported 
that the IMF Training Institute in Singapore will conduct training 
for would-be MER assessors and AML-CFT officials in countries that 
will be assessed.  The Asian Development Bank (ADB) informed the 
meeting that they provide support directly to the ASEAN Secretariat 
in the area of customs, immigration, quarantine and security (CIQS) 
to help counter trade-based money laundering. 
 
¶18. (U) Further information on the MERs discussed at the 12th annual 
APG meetings can be found on the APG website www.apgml.org. 
 
¶19. (U) This cable was drafted by Emboff/Singapore and cleared with 
the head of the United States delegation to the APG. Any USG 
official with technical questions regarding the Vietnam or 
Philippines MERs or general APG matters may contact the United 
States Head of Delegation Colleen Stack via email at 
Colleen.Stack@do.treas.gov. 
 
SHIELDS