On 8 January the
International Monetary Fund published a 466-page status report on the fight
against money laundering (ML) and the financing of terrorism (FT) in Georgia Tbilisi South Ossetia , but not so hard
to thwart potential attacks against other locales (e.g., Chechnya North Ossetia , Moscow Georgia Georgia
Below are some
excerpts from the report. (Emphasis as
per original. Acronyms: STR = suspicious
transaction report, FIU = financial intelligence unit, AML = anti-money
laundering, CDD = customer due diligence, PEP = politically exposed person.)
EXECUTIVE SUMMARY
Preventive Measures–Financial
Institutions
14. The
requirement for reporting ML and FT suspicious transactions and other information
is largely in line with the standard; however, its implementation should be improved.
The number of STRs submitted to the FIU
is relatively high. [...] While there are
known FT risks in Georgia
2. LEGAL SYSTEM AND RELATED INSTITUTIONAL MEASURES
2.2. Criminalization of Terrorist
Financing (SR.II)
2.2.1. Description and Analysis
Implementation and Statistics (R.32):
241. At the time of the assessment, Georgia has had one
investigation for FT resulting in the prosecution of three individuals. The
investigation related to conduct that occurred in the break-away zones and
involved the provision of arms and US$4,000 in cash to support the commission
of a terrorist act in Tbilisi. The case was pending at the time of the on-site
visit. There have been no ML cases involving FT.
Effectiveness:
242. In discussions with the authorities it was indicated
that the risk from domestic terrorists or terrorist organizations was perceived
as low and, accordingly, FT was not a major area of concern in a domestic
context.
243. However, the authorities stated that since 2009,
numerous acts of terrorism were planned and organized from the breakaway-zones
and carried out in Tbilisi. This view is also reflected in the Evaluations of Threats Faced by Georgia 2007–2009 issued through presidential decree, where it
is stated that “limited control of state borders […] increases the probability
of terrorism.” In Georgia’s 2006 report to the UN Security Council Committee
established pursuant to Resolution 1267, it is stated that “The conflict zones
on the territory of Georgia, in particular, the territories of the Autonomous
Republic of Abkhazia and the Tskhinvali Region/South Ossetia, that are beyond
the jurisdiction of Georgia, also pose a danger. The separatist regimes fail to
control the situation in the above regions that have led to establishment of
favorable conditions for activities of terrorist groups as well as for
flourishing smuggling, trafficking, and other transnational organized crimes”.
As noted above, the information has not been examined by the assessors.
3.
PREVENTIVE MEASURES—FINANCIAL INSTITUTIONS
3.2. Customer Due Diligence, Including Enhanced or
Reduced Measures (R.5 to 8)
Existing Anonymous-account Customers—CDD Requirements
(c. 5.18):
614. The existence of anonymous accounts has been prohibited
in Georgia since 2008, and Article 6.7-1 AML Law prohibits “ to open or
maintain anonymous accounts.” Nonetheless, the law did not require FIs to
perform CDD measures on any such accounts that existed prior to the passage of
the 2008 and the new 2011 AML/CFT Law.
Implementation:
615. Even if new anonymous accounts have only been
prohibited in 2008, financial institutions met by the assessors have indicated
that this type of account was not commonly used in Georgia before that date.
616. In addition, the NBG has declared that no anonymous
accounts were present in the banking sector and that neither on-site
inspections nor the information presented by banks confirmed the existence of
such accounts.
Effectiveness:
617. The December amendments to the AML Law have improved
the legal framework for CDD measures, The widespread view that ML/FT risks are
absent in the financial sector, together with the existing gap between the
legal framework and FIs practices, makes the CDD regime generally ineffective
at preventing major ML/FT risks, especially in relation to CDD applied to legal
persons, legal arrangements, and the identification of the beneficial
ownership.
618. This view of vulnerabilities related to implementation
deficiencies contrasts with the widespread degree of confidence across the
financial institutions that there are no (or very low levels of) risks of ML or
FT, in spite of: i) existence of customers which are offshore companies and
whose beneficial owners are not verified; ii) nonresident deposits currently
growing fast; iii) the development of private banking activities including a
clientele of foreign PEPs; iv) the existence of large Georgian-led criminal
organizations abroad which are known for having transferred proceeds to Georgia
in recent years; v) the stated existence of a terrorist threat in relation to
Abkhazia and Tskhinvali Region/South Ossetia; and vi) domestic statistics
demonstrating the existence of major proceeds generating crimes such as
corruption, tax evasion, drug, and human trafficking.
Source:
Georgia:
Detailed Assessment Report on Anti-Money Laundering and Combating the Financing
of Terrorism (2013-01-08)
In other news, on 8
January at 16:00 three masked
gunmen robbed a branch of Bank of Georgia (სს “საქართველოს ბანკი”) located at 78 Nutsubidze
Street Tbilisi Chavchavadze
Avenue
Bank of Georgia was
ranked #1 among commercial banks in Georgia by total assets as of 30 September
2012, with total assets (მთლიანი აქტივები) of 5,177,594,727 GEL (2.43
bln EUR), or 36.8% of the total assets of Georgia’s 19 commercial banks. At 30 September the bank’s total deposits
from non-bank customers (მთლიანი არასაბანკო დეპოზიტების) were 2,613,970,819 GEL (1.23 bln
EUR), or 34.9% of the total for the 19 commercial banks. (1 EUR = 2.133 GEL as of 30 Sept. 2012 ,)
Sources:
Consolidated assets and liabilities of commercial
banks: კომერციული ბანკების კრებსითი
აქტივები და პასივები (2012-12-28)
Assets and liabilities of Bank of Georgia as of 30 Sept. 2012 : სს `საქართველოს ბანკის~ ფინანსური ანგარიშგება 30.09.2012 მდგომარეობით (2012-10-23)
Mark Pleas
[contact]
