VZCZCXRO5926
RR RUEHMA RUEHPA RUEHTRO
DE RUEHNK #0016/01 0121508
ZNR UUUUU ZZH
R 121508Z JAN 10
FM AMEMBASSY NOUAKCHOTT
TO RUEHC/SECSTATE WASHDC 9016
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZK/ECOWAS COLLECTIVE
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS SECTION 01 OF 04 NOUAKCHOTT 000016 
 
SIPDIS 
 
DEPT FOR INL, SCT, AND EEB 
JUSTICE FOR AFMLS, OIA, AND OPDAT 
TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN PTER SNAR MR
SUBJECT:  MAURITANIA: 2009 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT (INSCR) MONEY LAUNDERING AND FINANCIAL CRIMES 
 
REF: STATE 114960 
 
¶1.  The Islamic Republic of Mauritania is a small, under-developed 
economy and is not a regional financial center.  Its economic system 
suffers from a combination of weak Central Bank oversight, lax 
financial auditing standards, porous borders, and corruption in 
government and the private sector.  The GIRM made some improvements 
in 2008 by strengthening the Central Bank's financial management 
system and making it more transparent by restructuring the foreign 
exchange system, and improving oversight of commercial banks. 
However, the political instability that followed the August 6, 2008 
coup d'etat has made the country more vulnerable to money laundering 
and informal and illegal economic activity. 
 
¶2.  Following internationally recognized elections in July 2009, a 
new government was formed, which has placed fighting corruption and 
terrorism at the top of its agenda.  While public pronouncements 
about the government's political will to fight corruption have been 
positive, the government has yet to issue a comprehensive strategy 
to address systemic corruption. 
 
¶3.  Mauritania is a transit country for a variety of smuggled goods, 
including cigarettes, diverted food aid, small arms, clandestine 
immigrants, vehicles, and narcotics.  Cocaine is the most commonly 
smuggled drug.  Mauritania is a transit country for South American 
cocaine destined for Europe.  A second transit route is for hashish 
and hashish resin that originates in Morocco and crosses Mauritania 
towards the Sahel. 
 
¶4.  Terrorism financing and narcotics proceeds are believed to 
constitute a small but growing portion of the sums laundered in 
Mauritania.  There are no reliable figures on the actual volume of 
narcotics trafficked through Mauritania.  The reported price of a 
kilogram of cocaine trafficked through Mauritania rose by 50 percent 
from 2008-2009 from 12,000 to 18,000 Euros.  The Mauritanian 
government has expressed fears that terrorist networks, including Al 
Qaeda of the Islamic Maghreb (AQIM) and Tuareg rebels in the north 
of Mali exploit the drug trafficking networks and smuggling routes 
to finance their activities. 
 
¶5.  Kidnapping of foreign citizens in Mauritania by AQIM who are 
held for ransom in exchange for large sums of money is on the rise 
in Mauritania.  Most recently in a presumed terrorist act, three 
Spanish citizens were kidnapped on November 29, 2009 and on December 
19, 2009, two Italian citizens were presumed to have been kidnapped. 
 These citizens continue to be held and press reports indicate that 
ransoms, as much as USD 7 million, have been demanded for their 
release.  Revenue from such kidnappings is assumed to financially 
support the activities of AQIM and other groups sympathetic to their 
cause. 
 
¶6.  Government officials acknowledge that money laundering occurs in 
Mauritania, but most involves profits from graft and small-scale 
illicit activity.  The GIRM worked with international donors, 
including the United States, until the coup d'etat in 2008 to train 
prosecutors, magistrates, and police on combating money laundering. 
However, weak oversight and public corruption allows the money 
laundering to continue.  The black market in Mauritania is limited 
primarily to stolen vehicles from Europe, but also exists to a much 
lesser extent for small arms and other smuggled goods.  Contraband 
smuggling generates modest funds that are laundered through the 
banking system. 
 
¶7.  Money laundering occurs on a small scale within local banks and 
in the non-bank financial system through illegal exchange houses. 
Mauritania is experiencing an increase in financial crimes, 
particularly since it began oil production in 2006.  In the absence 
of a stable government during the past two years, it is difficult to 
obtain figures on money laundering in the banking system. 
Transparency International ranked Mauritania 130 of 180 countries in 
its 2009 Corruption Perception Index. 
 
¶8.  In the fall of 2009, a major economic story has been the 
government's investigation and prosecution of corruption in the 
banking sector.  President Aziz embarked upon an ambitious, if not 
controversial, program to identify and punish those guilty of 
financial crimes.  The current anti-corruption push began in 
November 2009 when the Bureau of Economic Crimes arrested the former 
governor of the Central Bank for alleged economic crimes committed 
between 2000-2001. His arrest was quickly followed by the arrest of 
the former deputy governor of the Central Bank and the launch of an 
investigation into the business practices of 12 other prominent 
businessmen and bankers.  The individuals were questioned about 
their involvement with illegal transfers made through their banks 
 
NOUAKCHOTT 00000016  002.2 OF 004 
 
 
and businesses during the period of 2000-2001. The former Central 
Bank governor is accused of laundering approximately USD 95 million 
over the course of two years, the equivalent of nearly 10 percent of 
Mauritania's 2010 budget.  This occurred in 2000-2001 and the 
individuals have not been accused of laundering money for narcotic 
or terrorist networks.  This most recent investigation highlights 
the degree to which corruption in both the public and private 
sectors allows money laundering to occur.  These investigations are 
controversial as opposition figures claim the investigations are 
being used less the reduce corruption in Mauritania, but rather to 
settle political scores. 
 
¶9.  To post's knowledge, the country's financial institutions do not 
engage in currency transactions involving international narcotics 
trafficking proceeds that include significant amounts of United 
States currency or currency derived from illegal drug sales in the 
United States. 
 
¶10.  Mauritania is not an offshore financial center.  Offshore 
banks, international business companies, or other forms of exempt or 
shell companies or trusts are not permitted.  There are no free 
trade zones in Mauritania, although the Government of Mauritania 
(GIRM) does grant tax relief to certain small-scale export sectors 
of the economy. 
 
¶11.  Money laundering is a criminal offense in Mauritania.  The 1992 
law governing money laundering focuses specifically on laundering 
from narcotics-trafficking.  The GIRM drafted a new body of laws in 
2005 (2005-47 and 2005-48) that strengthened government control over 
money laundering related to terrorist groups and activities. These 
legal codes, adopted in 2005 were supplemented by a new law adopted 
by the new government in December of 2009 (2009/058), which 
authorized phone-tapping, email monitoring and the search of homes 
without the legal procedures previously required. The GIRM indicated 
that this law will also allow greater latitude when investigating 
financial crimes. 
 
¶12.  The GIRM has not enacted secrecy laws that prevent disclosure 
of client and ownership information by financial services companies 
to bank supervisors and law enforcement authorities. 
 
¶13.  The 2005 anti-money laundering law provides for the 
establishment and funding of the Financial Information and Analysis 
Commission (FIAC), equivalent to a financial intelligence unit 
(FIU).  The FIAC is an independent agency with a mandate to perform 
analytical duties as well as investigate suspicious financial 
transactions.  The FIAC became operational in 2008, but its capacity 
to conduct compliance investigations has not yet been proven. Since 
the election of the new government in July 2009, there has been no 
concrete action undertaken by the FIAC and there were no cases of 
arrests connected to terrorist financing; but it does not mean that 
such cases do not exist. Because Mauritania counts a population of 
only 3.4 million inhabitants, of which only 3 percent possess bank 
accounts, much of the financial activity undertaken occurs in the 
informal sector. 
 
¶14.  According to the office of the public prosecutor, there were 
only three cases of financial crimes in 2009, which amount to no 
more than USD 4.4 million. These figures do not include the current 
investigation and prosecution of the former Central Banker and 
prominent businessmen as these cases are still ongoing. 
 
¶15.  The Central Bank and the FIAC, if and when fully operational, 
will supervise and examine financial institutions for compliance 
with AML/CTF laws and regulations.  Banks are currently required to 
record and report to the Central Bank the identity of customers 
engaging in large-scale financial transactions.  Banks and other 
financial institutions are required to maintain records necessary to 
reconstruct significant transactions through financial institutions 
for ten years.  AML/CTF controls are applied to non-bank financial 
institutions such as exchange houses and to intermediaries including 
lawyers, accountants, and broker/dealers.  The Central Bank 
supervises these entities for compliance. 
 
¶16.  Financial institutions may report transactions that they 
consider suspicious to the Central Bank.  However, such reporting is 
done on a voluntary basis.  Exchange houses are the main non-bank 
financial institution in Mauritania.  However, most operate outside 
of the formal economy and do not report such transactions. 
Reporting individuals are protected by law with respect to their 
cooperation with law enforcement entities. 
 
¶17.  There are four government bodies responsible for investigating 
financial crimes: the FIAC, the Central Bank, the Ministry of the 
 
NOUAKCHOTT 00000016  003 OF 004 
 
 
Interior, and the state Inspector General.  These bodies lack 
adequate staff and training. 
 
¶18.  Mauritania has enacted laws for identifying, tracing, freezing, 
seizing, and forfeiting narcotics-related assets as well as assets 
derived from or intended for terrorist financing and other serious 
crime.  The authority comes from the 1992 law governing money 
laundering from drug trafficking and the 2005 laws governing 
terrorism, money laundering, and terrorist financing, and the newly 
passed 2009 anti-terrorism legislation.  However, these laws have 
not been fully implemented.  The Ministry of Interior is responsible 
for tracing, seizing, and freezing assets.  Frozen assets are 
confiscated by the Ministry of the Interior. 
 
¶19.  To post's knowledge, the current investigation into Central 
Bank corruption was the first time the banking community has ever 
been asked by the GIRM to cooperate with enforcement efforts to 
trace funds and seize/freeze bank accounts.  However, it should be 
noted this was purely an investigation into financial money 
laundering with not charges of terrorist or narcotic financing. The 
GIRM's enforcement of existing asset seizure and forfeiture laws has 
been limited primarily to cash or vehicles directly involved in drug 
trafficking.  Post does not believe that the GIRM has seized other 
assets related to money laundering or drug trafficking.  The GIRM 
likely does not have adequate police powers and resources to trace, 
seize and freeze assets.  The Government does not have an 
independent national system and mechanism for freezing terrorist 
assets. 
 
¶20.  In 2009, there were two cases of drug trafficking arrests in 
Mauritania. A French citizen was arrested in May 2009 in Senegal, 
and then extradited to Mauritania.  In November 2009, a Mauritanian 
trafficker of drugs was arrested in Senegal, where he had taken 
refuge, then extradited to Mauritania to be judged. He is accused of 
trafficking in drugs, but his case has not yet been prosecuted. 
 
¶21.  The Government of Mauritania criminalized the financing of 
terrorism as required by United Nations Security Council Resolution 
¶1373.  On July 27, 2005, it adopted law 2005-47 criminalizing 
terrorism and law 2005-48 criminalizing money laundering and 
terrorist financing. It was supplemented by a new law adopted by the 
new government elected in 2009 (2009/058). To post's knowledge, the 
GIRM has not circulated to its financial institutions the list of 
individuals and entities that have been included on the UN 1267 
sanctions committee's consolidated list as being linked to Usama bin 
Laden, members of the al Qaeda organization or the Taliban.  To 
post's knowledge, the GIRM does not circulate the list of terrorist 
organizations/financiers that the USG or the EU have designated 
under relevant authorities. 
 
¶22.  The GIRM acknowledges the existence and use of indigenous 
alternative remittance systems that bypass financial institutions. 
The GIRM has attempted to take steps to reduce the disparity between 
the official exchange rate and the parallel exchange rate to make 
black market exchanges less attractive.  It has also increased 
patrols along its borders and in remote areas of the country to 
counter cross border cash smuggling. The Mauritanian economy has 
been weakened by the global financial crisis and political 
instability following the 2008 coup d'etat.  As a result the amount 
of exchange in the black market has continued to grow.  In 
Mauritania it remains very easy to exchange large sums of money 
without using the traditional banking system. 
 
¶23.  The Ministry of the Interior monitors and supervises the misuse 
of charitable and or non-profit entities as conduits for the 
financing of terrorism.  In 2003, the GIRM shut down the Saudi 
Institute, a charitable organization linked to terrorist financing. 
The Central Bank is in charge of monitoring overseas financial 
transactions to prevent potential terrorist financing. 
 
¶24.  Cross-border transportation of currency and monetary 
instruments is limited to the equivalent of $3000.  The Central Bank 
can grant exceptions to transport larger amounts of currency across 
the border.  Declaration forms are not used at border crossings. 
Cash smuggling reports are not entered into a data base. 
 
¶25.  The GIRM has not adopted laws or regulations that allow for the 
exchange of records with the United States on investigations and 
proceedings related to narcotics, all-source money laundering, 
terrorism and terrorist financing.  The Government has demonstrated 
a willingness to cooperate with the United States on combating 
terrorist financing and related issues, but local efforts are 
hampered by a serious lack of resources, knowledge, and expertise in 
this area.  Law enforcement and judicial procedures and systems for 
 
NOUAKCHOTT 00000016  004 OF 004 
 
 
identifying and freezing assets related to illegal activity are, at 
best, still in their initial phases.  Although no significant legal 
loopholes exist to allow traffickers or terrorist financiers to 
shield assets, such loopholes are not really necessary given the 
very weak enforcement of current money laundering laws. 
 
¶26.  Mauritania is a party to the UN International Convention 
against Illicit Traffic in Narcotic Drugs and Psychotropic 
Substances. It signed three anti-narcotic international conventions: 
The Convention on Narcotics in 1961, The Convention on Psychotropic 
Substances in 1971 and The Convention on the Illicit Traffic of 
Narcotics and Psychotropic Substances signed in Vienna in 1988 and 
ratified by Mauritania in 1993.  Mauritania has also signed the UN 
Convention Against Transnational Organized Crime (Palermo 
Convention), the UN Convention Against Corruption, the International 
Convention for the Suppression of the Financing of Terrorism, and 
the Organization of African Unity Convention on the Prevention and 
Combating of Terrorism of July 1999.  It is a party to the UN 
International Convention for the Suppression of the Financing of 
Terrorism. Mauritania is a member of MENA-FATF (Middle East and 
North Africa Financial Action Task Force). 
 
¶27.  Post contact is Economic Officer:  Stephen Kochuba, 
KochubaSC@state.gov 
 
BOULWARE